The Sunshine Economy: Cuba & Commerce After Fidel Castro

Nov 28, 2016

Fidel Castro may be dead, but his shadow lurks over the Cuban economy even as it absorbs -- oftentimes resists -- the biggest changes in its relationship with the U.S. in more than a half century. At the same time, a new American president-elect has promised to extract more freedoms and restitution from Cuba if the new economic engagement is to continue. The Sunshine Economy looks at this double challenge in the economic dealings between South Florida and the island.

 

 

 

 


  Fidel may be dead, but the Castro regime lives on. Despite the small reforms Raúl Castro has undertaken during his presidency, they have been forced by the economic realities on the island. And the rapprochement between America and Cuba faces new political realities here in the U. S.

 

"The figure of Fidel Castro was a heavy psychological burden on the Cuban people," said South Florida  Republican U.S. Rep. Carlos Curbelo, to The Sunshine Economy. "The fact that he is no longer on the face of the earth certainly opens the door. There can be a true change in Cuba toward a freer, more democratic, more open society."

 

Curbelo, who before the election said he would not vote for Donald Trump, has been critical of President Barack Obama's executive orders loosening travel, trade and financial restrictions on Americans visiting and doing business on the island. During a September campaign stop in Miami, Trump called the changes "a bad deal." Curbelo says while he has not spoken to the president-elect, he would not support Trump meeting with the Cuban regime.

 

"I don't think a meeting with Raúl Castro would in any way be productive," Curbelo said. He believes any engagement between the U.S. and Cuban government officials should include pre-conditions.

Curbelo heads back to Congress in January for his second term with Republican control of the White House and both houses of Congress. While specifics are unclear how President-elect Trump will treat President Obama's normalization strategy, Curbelo says the president is betting on "stability in Cuba."

 

 Beyond Rum And Cigars 

When President Obama visited Havana in March, he had already eased up on travel restrictions, some American export rules and a few banking regulations. The travel and trade changes get a lot of attention -- especially the lifting of limits of bringing back Cuban rum and cigars.  But it’s the banking rules that may well determine the economic fate of any normalization between the two countries.

Cash (and credit) is the lifeblood of international economic relations. Cubans in Cuba can now open bank accounts in the U. S. American banks are now allowed to process business deals involving Cuba if they are done in U. S dollars.

 

South Florida is home to international banking for the Caribbean and Latin America, yet "it's still very limited," says Carlos Saladrigas, chairman of the Cuba Study Group and former chairman of Premier American Bank in Miami. "The whole purpose of [easing the banking regulations] is to help the small entrepreneur on the island have access and be able to put a bank account here."

As President-elect Trump tweeted Monday, critics of the Obama administration's efforts toward Cuba say the U.S. changes haven't seen reciprocal changes in Cuban banking rules. "They have not moved as quickly," says Juan Del Busto, former regional executive with the Miami Branch of the Federal Reserve Bank of Atlanta. "Some individuals in the Cuban banking system were moving more quickly, but they were stopped for how quickly they were moving. Who stopped them we don't know."

Entrepreneurs In Exile

In 1992, Ubaldo Huerta left his native Cuba. It was the beginning of what would become known as the Special Period. It is an Orwellian phrase that belittles the suffering on the island. After the Soviet Union collapsed,  it stopped sending billions of dollars in aid to Cuba. The island’s economy was went into a freefall.

Huerta left after studying computer engineering with no computer. Once outside Cuba, he founded a website in Barcelona that was like Craigslist and eBay bought it in 2005.

Hiram Centelles went to the same schools as Huerta a decade and a half later. He also studied computer engineering, but by then the schools had computers. What they didn’t have was the Internet. 

Hiram Centelles left Cuba in 2008. He lives in Spain today. He thinks of himself as an expat Cuban not an immigrant.
Credit courtesy: Hiram Centelles

  Centelles also founded his own website business that borrowed the Craigslist concept. But he did it inside Cuba. However, in 2008, less than a year after starting the website, the Cuban government shut it down. Centelles also left Cuba and moved to Spain.

These two entrepreneurs in exile  are in business together now with a company called Fonoma. The service allows users to buy cell phone service time and Wi-Fi internet time for an existing cell phone number in Cuba. It’s kind of a 21st Century type of remittance.

 

"Since 2014, I have to maintain a mindset of thinking of myself as an expat instead of an immigrant," says Centelles. The difference is that an ex-pat looks to return to his or her home country.

 

Both Centelles and Huerta travel to Cuba for family and business reasons and moving back is not out of the question, but just not yet. "I have to wait and see if whether there is a climate of economic and political freedom that will let me live there. In the current situation I cannot live there more than part-time. I don't feel totally welcome," says Huerta from Barcelona.