Candace A. Martinez, of Champaign, holds a B.A. degree in Spanish and French, a M.A. degree in E.S.L. and a M.B.A. in International Business from the University of Illinois at Urbana-Champaign. She is pursuing her Ph.D in Strategic Management at Illinois.

Ms. Martinez has lived and worked abroad in Mexico, Spain, and France. She is studying globalization, with a focus on how multinational corporations assess political risk when they decide to conduct foreign direct investment. Martinez has researched how multinational firms sustain economic growth despite uncertainty. In Spring 2000 she was awarded a grant to research the impact that the Helms-Burton Law has had, if any, on European Union investment in Cuba. In the summer of 2000, Martinez traveled to Cuba and to Spain. The following manuscript reports the conclusions that Ms. Martinez drew from the EU grant that made the research possible.

EU INVESTMENT IN CUBA AND HELMS–BURTON
Candace A. Martinez

Before leaving for Cuba in mid-June of this year, a University of Illinois professor who had just returned from a fact-finding mission there gave me a good piece of advice. He said that in Cuba, as everyone knows, it is hard to find out the real story. Information is guarded, secrecy seems to be interwoven into the fabric of their closed society, and people, in general, are reluctant to tell foreigners, especially Americans, anything that might reflect badly on their country. He went on to say that there are probably five versions to whatever topic I researched: the official and unofficial government versions, the official and unofficial business versions, and, finally, the real story. Having spent approximately nine days in Havana, it would be presumptuous of me to think that I got the real story, but I think I did manage in that short time to begin to understand, at least, the issues I had set out to explore.
One of the things working to my advantage was that I am fluent in Spanish. In Spain, they say that Cubans have conversation coming out of their elbows. This image seems pejorative, but it is not meant to be. It merely means that Cubans love to talk. For my purposes, this gift of gab was an asset since I could communicate in Spanish with everyone I met, Cuban officials and European businessmen alike, as well as the man on the street. More often than not, the officials I talked to, Cuban and non-Cuban, towed the party line.
Cuban officials in the Chamber of Commerce and the Ministry of Foreign Investment, for example, bragged about the statistics that “proved the miracle of Cuba.” They extolled the virtues of the new Cuba, its outward-looking perspective, its potential for growth, and its friendliness towards foreign investors. Non-Cuban officials working in European chambers of commerce, embassies and ministries were usually non-committal, focusing their insights on how things have changed for the better in Cuba within the past few years. The businessmen I interviewed formally in their offices also tended to stick to their company’s official story and seemed to be less than forthcoming. I was told that Cuba is the country of the future, its growth rate is the highest of any island in the Caribbean, its work force is highly skilled, and its government encourages foreign direct investment. The unofficial business conversations I had were mostly with the Cuban secretaries or assistants who chatted with me while I waited to meet with their bosses. Some of the most original and interesting insights I got were from these women and, in particular, one secretary whose boss had left after waiting for me for twenty minutes (I had been unable to find a taxi or a telephone!). She confided in me about the “problems” Spanish businessmen were having in the country. Little did she realize that she was the first person in the Havana business world who had even mentioned the word problemas to me. I hope she did not notice my ears perk up.
At one meeting I had with a businessman in the travel-tour sector, I was told that not he or anyone else in the business community in Havana was going to give me any real insights about doing business in Cuba as long as they were sitting at their desks in their offices. He stated that if I were going to be in Havana a longer time, I should try to get myself invited to dinner parties where people tend to let their guard down and I could get the “real” story.
Real story or not, I got real impressions in my brief stay in Havana. My overall research objectives were to flesh out the numbers, statistics and myriad facts I had read about Cuba. I wanted to find out if the Helms–Burton law had had any effect on companies from the European Union member state that made investments on the island. I wanted to find out what kind of entry strategy (export, licensing, joint venture or wholly owned subsidiary) these firms chose as they made their decisions to invest in the face of high uncertainty and political risk. I also set out to learn if current EU policy has changed towards Cuba and whether the official EU stance has helped or hindered investment in the area. Finally, I wanted to know what, if any, incentives the Cuban government was giving foreign firms who decided to invest there.
Another aspect of this exploratory research trip, however, was to get a sense of what is really going on in Cuba. I was curious to see firsthand what the business and non-business climate really is in Castro’s Cuba. Many of the articles, papers, and other sources I had read prior to my trip seemed to have a hidden agenda. Being such a politically charged country, it is hard to find objective observers, especially from the United States. Add to that the Elian Gonzalez conflict, which was in full bloom at the time I visited Cuba, and it is not surprising that in the spring of this year practically every written source about the island-country I located had a political edge to it. The everyday people I talked to, though, from the young man who gave me a ride on his taxi-bicycle to the old musician who spontaneously started chatting with me at a downtown café, were extremely open and honest and very helpful in helping me construct my personal cognitive map of what life is like there.
The focus of this white paper, then, is to convey not only the findings regarding my research questions, but also my impressions of daily life on the island and the impact, if any, the growth in foreign direct investment has had. I should add that I concentrated my time in Havana and all interviews were conducted in the capital. All European businessmen requested anonymity; the Cuban sources I spoke to shall also remain nameless, although I will identify their place of work. Any generalizations I make about Cuba are deduced from what I learned in Havana.
The Official and Unofficial Government Versions
Let me start off by saying that there is no such thing as an unofficial Cuban government version. Everyone who is a Cuban public servant, from the highest-ranking officials I spoke to down to their minions, basically tells the same story. No one told me anything “off the record.” Everything is on the record in Cuba; it is, after all, a police state. All government servants seem to be very aware of the hand that feeds them.
Not surprisingly, then, the conversations I had with Cuban officials paint a rosy picture of the investment climate in Cuba. The high ranking civil servant I had an hour-long personal interview with at the Centro de Promocion de Inversiones of the Ministry for Foreign Investment, gave me a detailed account of how businesses can operate in Cuba and how the government is ever “flexible” to study individual company’s requests. While he never stated that concrete incentives are given, it was clear from our conversation that the Cuban government does what it can to convince companies it wants to invest to do so. By the same token, it is the government that decides the conditions under which a firm can operate and in which industries. No flexibility was apparent to me when looking at the conditions for foreign firms forming joint ventures with Cuban partners. The government makes the rules and those firms who are willing to abide by the rules are allowed to play. If not, they are not.
This impression was reinforced when I spoke to a Spanish banker whose bank has been doing business in Cuba for about seven years. He told me that as far as risk is concerned, Cuba is no riskier than any place else, with one difference: “The government makes it easy for you here. You either follow their rules or get out. End of story.”
The rules of the game, as spelled out to me that hot June afternoon in the Ministry office, are as follows:
Types of Investment under Law 77
There are different ways to conduct operations in Cuba, all of which require a local partner to support the project.
100 Percent Subsidiary
A fully owned subsidiary of a foreign company cannot be created unless a Cuban company of the same sector advocates its creation with the tutelary ministry. In addition, such a subsidiary is not allowed to hire a local workforce. The Cuban workforce must be subcontracted to a Cuban company.
As of the summer of 2000, only one such company had been authorized. Although the civil servant I interviewed did not want to tell me what company had received this privilege, I later learned that a Panamanian electric company runs a 100 percent-owned venture on the Island of Youth (la Isla de la Juventud), but that it is assumed that the ownership will transfer to the Cuban state over time. No one I talked to knew any details of the agreement between the company and the government—another example of the secrecy surrounding most business matters in Cuba.
Joint Venture (JV)
In most cases, the majority stake in the joint venture belongs to a Cuban company but it is not a matter of law. Joint ventures are independent companies with restricted rights to import goods. There may be several partners inside the joint venture. The Canadian government advertises Canadian companies as being the best match for joint venture investments in Cuba. They offer to run the joint venture instead of Japanese or European companies. As a pundit in Fortune once stated, if you want to invest in Cuba, just buy Canadian stocks. Indeed, there are Commonwealth-based funds that market a portfolio of equity investments in Cuba (a Swiss fund, Beta Gran Caribe Ltd. at Guernsey, a Canadian and European fund, the Cuba Growth Fund Ltd. in the Bahamas, as well as the Commonwealth Development Corporation, a public capital-development).
I was quoted many figures from different sources, but it appears that approximately 374 joint ventures in Cuba have permission to exist and that about 350 currently are operating. Of these, about 87 are joint ventures with Spanish partners, 72 with Canadian partners, and the rest are with Italian, French and other international partners. This is the most frequent way to set up a business in Cuba, although the government is strict about the sector the firm can operate in and the capital it must come up with in order to become a viable partner. There is also a law that says a JV partner must have been doing business in Cuba for three years prior to the partnership, presumably as a trading company (exporting/importing) or as a partner in another JV, and that it must agree to a minimum 5-year contract (although this was disputed by some sources I spoke to).
Other Ways of Investing
I was told that firms have other opportunities for investing, but that the joint venture mode of entry is by far the most common. For example, for a short term, ad-hoc project, a firm might be allowed to set up what is known as a UTE, (Union Temporal de Empresa). This type of investment permission is temporary; it is specifically designed for concrete jobs or projects that will take a limited amount of time to set up and then the foreign presence will leave the country. Nevertheless, a Cuban partner is required.
Another type of investment that the Cuban government allows concerns those multinational firms that want to set up a branch in the country. This type of investment would be appropriate for firms that sell or trade, but they are not allowed to import or distribute. The law demands that the multinational parent must have been doing business in country for at least three years and has been in existence in the home country for at least five years. Again, it is prerequisite to have a Cuban partner.
Taxation and Profit Remittance
There is no significant limitation to profit remittance in Cuba, to the extent that the by-laws of the joint venture authorize full repatriation. Indeed the law provides only that the companies must book 5 percent of their profits into the “insurance fund” item until this item amounts to 15 percent of the social capital. By international standards, the level of these legal reserves is even somewhat low.
Taxation is codified by law 73 of 1995. General tax rules provide that stable establishments must pay their taxes. Although stable establishments were not required to pay their taxes until 1997, the law is definitely now enforced. Paying taxes is part of the international firm’s price of doing business in Cuba, but the tax rate is no steeper than the typical 35 percent flat rate paid in Spain for sociedades anonimas.
In one of the business journals I was given by an official at the French Chamber of Commerce in Havana, there is an article in which a Cuban official boasts that tax revenues from all sources of business are growing every year. This can hurt the small Cuban firms that have started to operate in the past few years, as the son of a restaurant owner in the old section of the Havana explained to me. Since a few years ago, the Cuban government allowed individuals to open up their homes as restaurants, provided they do not surpass the maximum seating allowed for twelve diners. The privately run restaurants, called paladares, sprung up everywhere but the flat tax rate of $800 per month was too steep for many owners. Hundreds closed down within a two-year period. The young man I spoke to told me that since their Cuban customers pay only a Cuban peso fraction of the $8 per meal price that tourists pay in dollars, it is very difficult to come up with the $800 cash (in American currency) every month for the tax collector. He also told me that it was an extra $100 monthly to put up a sign over the front door of a paladar, so he and his family decided to take down their sign after a couple of months.
Law 77 of 1996 provides that taxes are 30 percent for joint ventures. It appears, however, that the Council of the Ministries can grant any level of tax exemption to joint ventures. In real life, it appears that every venture bargains the tax rates with the government, although this is the “unofficial” perspective.
Tax rates can be as high as 50 percent for mining companies, but in the case of a hundred-percent subsidiary of a foreign company, the tax rate is 35 percent.
Free Trade Zones
Law 165 of 1996 created Free Trade zones. There are two parties, the concessionaire and the investor. The concessionaire is the Ministry of Foreign Investment and Economic Cooperation (MINVEC). The concession is granted after approval by the Council of Ministers.
The investor can be a part of a joint venture or any other type of investment scheme, as long as he has a partner to sell the maximum quota of twenty-five percent of the firm’s production (manufactured goods or services). Seventy-five percent of production in a free trade zone must be exported. The production must be one of those allowed in the law on foreign investments. The investor can hire foreign managers but is restricted in his hiring of Cuban residents. They either show on the local partner’s payroll in the case of an International Cooperation Agreement or are appointed by the Ministry of Welfare and the MINVEC (through Cubalse, a part-time service company). Labor laws, especially minimum wages and taxes on wages, also apply in the Free Trade Zones.
Three free trade zones are currently operating in Cuba and by all accounts are very successful—so much so that the government is thinking of opening up another one. The strategy behind the free trade zones was to stimulate production in Cuba, generate jobs and bring know-how into the country. According to a public relations booklet I was given at the Ministry, about three hundred foreign operators are working in these free zones, “encouraging the development of export-oriented productive activities.”
Another high-ranking civil servant, this one a woman at the Cuba Chamber of Commerce in Havana, told me that Cuba is participating in more and more ferias or trade fairs through a group called Al-Invest, which promotes trade between European countries and Latin America. She had just returned from one that took place in Brussels and was very optimistic that an increasing number of foreign companies would soon invest in Cuba. “Our government is open to international companies,” she boasted.
Other Cuban official views on investment in Cuba were equally as optimistic. I met with three members of a state enterprise called the Centro de Gerencia de Ciencia y Tecnologia, or the Center for the Management of Science and Technology. This firm is an example of the pseudo-private firms the Cuban government has newly created to meet the demand of foreign firms looking for partners in Cuba and to give them advice about how to go about setting up operations on the island and complying with all necessary paperwork. In short, it is a business consultancy.
With a decrepit Russian refrigerator proudly plunked in the corner of the lounge where I waited for my interview, it was evident to me that the Cubans are new at this game. The interview was duly formal, but friendly, and the three people I spoke with, two men and a woman, assured me that the sooner foreign firms invest in Cuba, the better. They see their country’s potential as limitless, especially in the tourist sector, and believe the U.S. is making a big mistake by continuing with the trade and investment blockade. I did not pursue that line of conversation in order to avoid the Elian controversy, but I did ask them if some foreign firms were put off by the lack of an adequate infrastructure necessary for a smooth distribution channel. Not a problem, I was told. Roads are better than ever, and more important, the Cuban work force is the best educated and most highly qualified of all the Caribbean, if not of all Latin America. Most people I talked to—government and business folks alike—echoed this mantra: the strength of Cuba’s human resources. The preparedness of the Cuban populace to work and produce in foreign firms is viewed as one of the country’s most important assets. Cubans are proud that literacy in their country is at 96 percent, at a par with Argentina’s and tied for the highest in Latin America.
One exception to this rose-colored viewpoint came from a non-Cuban official, an EU representative, with whom I had a face-to-face interview in Havana. She gave me a somewhat more realistic picture of how the Cuban government can be fickle and foreign firms have no choice but to put up with it or leave. A case in point is the question of private ownership. The monthly rent foreigners pay for their apartments in Havana rivals that paid in European capitals for comparable square footage, the EU representative told me. Therefore, many foreigners, especially those who plan to be in Cuba for the long term, have decided to invest in a second home—and the Cuban government has allowed them to do so as of a few years ago. The glossy ads in Business Tips on Cuba, a journal published in Havana and aimed at European, Canadian and Latin American investors, show beautiful, pastel-colored, balconied apartment buildings that boast “plena propiedad” or full ownership. Well, not as of this past May. In an unexpected move, the Cuban government suddenly rescinded its permission for foreigners to purchase property on the island, and, as of this writing, no more property can be bought or sold by foreigners in Cuba. Although I have not seen any reference to this new law in print, the EU official I met with in Brussels in July, who is in charge of EU–Cuban affairs, corroborated this story, as did an international attorney I met with in Madrid in August whose area of expertise is Cuban affairs.
I should mention at this point what I was able to glean about the impact of the Helms–Burton Act on foreign direct investment in Cuba. Among the Cuban and non-Cuban officials I spoke to it is verboten to mention it. No information was forthcoming—either by telephone or in person. How many firms actually do business in Cuba? Sorry, “Informacion Clasificada.” What are the company names and what countries do they represent? Sorry, “Informacion Clasificada.” Do you think the Helms–Burton law has had an effect on the level of foreign investment in Cuba? Sorry, “Informacion Clasificada.” If anyone knows the answers, no one was telling me. This was true both for the Cuban and non-Cuban government officials I spoke to as well as for the European businessmen I met with. There was a big difference, however. For the officials, the Helms–Burton law is perceived as yet another attempt by the Yankee behemoth to the North to control the world and everyone in it. For the businessmen I spoke to the Helms–Burton was seen not only as an illegal attempt by the U.S. government to strong-arm non-U.S. businesses into following their decrees, but also as a completely ridiculous, arbitrary and ineffective way to scare off non-American firms from gaining ground (making profits) in Cuba while American companies chafe at the bit. But as far as I was able to gather, firms did not take into consideration what Uncle Sam threatened to do to them as they made their plans to invest, and to keep on investing in Cuba.
Furthermore, the attorney I spoke to in Madrid claimed that no one had ever been put in jail because of the Helms–Burton law, although a Spanish businessman, Javier Ferreiro, had been jailed in Miami for six months for carrying on trade with Cuba. According to the Spanish lawyer, however, Ferreiro’s incarceration was on the grounds of the “Trading with the Enemy Act,” although it was not made clear to me the distinction.
The lawyer also mentioned that the CEO of the Canadian mining firm, Sherritt, has been banned from traveling to the United States expressly because of his company’s involvement with Cuba. No other cases of the enforcement of the Helms–Burton were mentioned to me by this attorney who deals with Spanish businessmen who work with Cuba or by any of the people I interviewed. Nor have I found any reference in any published source about another instance of an executive being prohibited from entering the U.S. based on the Helms–Burton act.
The Official and Unofficial Business Versions
Every businessman I interviewed in Havana, about six in person and three by telephone, told me that the reason their company decided to invest in Cuba is to make money. It is as simple as that. The risk may be higher, but so is the profit potential. Castro’s easing of earnings repatriation and his government’s apparent willingness to listen to any type of business offer (as long as the sovereignty of the state is not compromised) augurs well for future investment. What was repeated to me over and over, though, is that the rules of the game are completely out of the control of the firms; if Castro sneezes, the foreign firms catch cold. That Cuba desperately needs foreign investment money is clear. Ever since the Russian departure in 1992 and the economy plummeted to double-digit negative growth figures, Cuba has opened its arms to foreign investors and now welcomes them. This is not to say that it easy to do business—just possible.
At least there are no more blackouts—or at least many fewer. More than one businessperson commented to me that as recently as a year ago, blackouts caused by lack of energy fell upon the city with an annoying frequency. And they could, and often did, last for hours. Not any more. I was told that the government has the generators up and working, although according to a U.S. government report published in Havana, Cuba ranks 19th of 20 countries in the region in electricity production. Only Haiti produces less.
Gasoline does not appear to be as in short supply as it once was, either. Cuba is buying petroleum from Venezuela and apparently the shortages that plagued the island since the Russian pullout no longer occur. That being said, however, there are gas stations for tourists only and others for locals only; one assumes that it is a question of available quality and quantity. Once when I went to buy gasoline for my rented car I was told that they the supply was agotado (“all out”) and to try my luck elsewhere. I was able to find gas. But the specter of not being able to buy such a basic necessity as car fuel did give me a glimpse, albeit a brief one, of a shared daily hardship of citizens and to a lesser extent business people in the city.
What the business people and officials I spoke to neglected to tell me was about the difficulties in obtaining foreign loans. Interest rates have been as high as 20 percent for investments in Cuba, due in part to the U.S. embargo, Cuba’s exclusion from the multilateral financial institutions, and its $11 billion foreign debt. One Spanish businessman I met with in Madrid in August is a retired executive of Eli Lilly who sold pharmaceuticals to Cuba for over twenty years via a Spanish joint venture with the American company. He told me that the foreign loan problem is a dark side of the Russian pullout that no one seems to write about. He explained to me that as long as the former U.S.S.R. supported the Cuban economy, most loans were run through banks in the then East Germany. When the Wall came down in 1988, that source of financing was halted over night. The Russians struggled to keep financing projects on the island as long as they could, until they, too, gave up in 1992. Loans continue to be a problem for foreign firms in Cuba.
Another problem I alluded to earlier was told to me by the Cuban secretary at the Association of Spanish Businessmen in Cuba and attests to the fickleness of the Cuban government and the little recourse foreigners have in challenging it. She told me that the Association, a non-profit organization started five years ago, is the only foreign association authorized in Cuba. It has approximately one hundred and thirty members. One of the most pressing problems that the association is dealing with is the Cuban government’s sudden hike in property taxes. Cuba charged foreigners the same rate as most countries in Europe charge, approximately 0.2 percent of the value of a home. The taxes were suddenly raised to 2 percent, however, and Spanish owners of apartments in Havana were outraged. The way the association works, the secretary explained to me, is to make an official complaint to the Spanish Embassy, which then relays the message via other official channels to the Cuban minister in charge of foreign matters on the island.
Over the past few years, the Association has been able to resolve two conflicts. One involved getting permission for Cuban employees to stay in 4 or 5-star hotels when business trips called for it. The Association secured the needed permission. Another conflict had to do with Cuban employees who needed to rent cars. While renting cars is forbidden to Cubans, the Spanish Association put pressure on the government to concede so that under special circumstances, those Cubans working for foreign firms and who needed to rent a car would be able to do so. Evidently, the Cuban government did give in on this point and, according to this source, the problem has been resolved for now.
The “Real Picture”
What I call the “real picture” is a combination of all the information I gleaned from my various interviews with officials and businessmen in and outside of Cuba coupled with the information I got on two other fronts. One of these fronts consisted of the images of life in Cuba I received from the numerous informal conversations I had with different people outside the business and government circles, that is, the average person on the street. While these impressions are clearly anecdotal, I think it is fair to say that they added to round out my “official” knowledge of the island. The other front consisted of the information I was told by two EU representatives in Brussels as well as the very current written material I was given at the Institute for European–Latin American Relations in Madrid. Together these additional sources not only added to my understanding of what is going on in Cuba but also led me to the most recently published articles on the situation there.
While in Brussels I learned about one of the most striking bits of news this summer: Cuba’s withdrawal of their request for admission to the Africa, Caribbean and Pacific (ACP) group convention. The ACP convention replaces the former Lome convention and it is made up of seventy-one nations that were former European colonies, most of which are in Africa. Its goal is to “eradicate poverty” and the ACP group receives preferential treatment by the European Union member states in the form of aid pacts. Cuba’s announcement in mid April that they were retracting their petition for entry came as a shock because they had been seeking it so actively. It would have meant Cuba would have access to all levels of EU development cooperation and increase its already strong trading relationship with Europe, which currently accounts for 45 percent of its total trade. The general wisdom is that Cuba withdrew its candidacy because several members of the European Union bloc had voted in favor of a resolution before the United Nations Commission on Human Rights in Geneva condemning Havana for alleged human rights abuses. EU–Cuban diplomatic relations are said to be at an all-time low as a result.
The latest EU declaration on Cuba dates back to June 25, 1999, when the Community condemned the Cuban authorities’ more frequent use of the death penalty. It is believed that at least seven Cuban prisoners a month had been secretly executed since the start of the year, according to the European Union. Unlike the United State’s stance on Cuba, the EU approach to Cuba has been one based on the island’s human rights violations, not on its takeover of confiscated land and property during the revolution of 1960. As a Portuguese representative in Geneva explained it, the European Union does not believe in bringing about change through “coercive methods” which bring about the suffering of the Cuban people. The current EU position, called the “common position,” allows for flexibility should the island show progress on human rights and democracy.
Through the Institute for European–Latin American Relations in Madrid (IRELA), I was privy to the most recently published documents and briefings by Cuban experts living in Europe. Written in a very objective manner, these documents verified many of the conclusions I had come to during the course of my stay in Cuba and cemented many of the observations I had arrived at but was not sure were legitimate. For example, the police presence in Havana is very palpable. In the old section of the city, a policeman or paramilitary guard is posted on almost every street corner. I had been told that when the U.S. dollar became the official currency two years ago along with the Cuban peso, crimes against tourists had risen as the citizens became more desperate to get their hands on dollars. I was also told that an Italian tourist had been killed by a bomb in the city and the result was a major police crackdown, as well as the removal of all public trashcans in Havana. The atmosphere in the old section of Havana seemed quiet, but tense, and I could not put my finger on what it was.
Then I read in one of the IRELA publications how crime in Cuba has been recognized as a serious problem—for the first time in forty years. The report goes on to say that eighty percent of all crimes in Cuba are committed in Havana and that a new police unit had been set up to operate in the capital in order to eradicate, or at least to reduce, the threat to tourists. The report states that the new police unit is known as the brigadas especializadas (the special brigades) and that they are better paid and equipped than other police units on the island. Their main purpose is to combat prostitution, robbery, and drug trafficking.
Another aspect that the IRELA publications helped me understand is the role that tourism is playing in the growth of Cuba. While new hotels are being built in the city and all around the island, it struck me that high-rise hotel I stayed at for my first three nights was practically empty. The staff outnumbered the guests and the “tower” part of the hotel was closed for lack of clientele; only the bungalows were open. It made me wonder if Havana is truly receiving the number of tourists it boasts to the world about.
Yet, the numbers seem to be legitimate and I had read them before in other non-Cuban government sources. The 1.4 million tourists who visited Cuba in 1998 generated revenue of $1.8 billion, 13 percent more than in 1997. About 1.7 million tourists visited in 1999, up 21 percent from the previous year. Tourism accounts for a staggering 90 percent of Spanish foreign direct investment in Cuba. Mr. Gabriel Canaves, the director of the biggest Spanish hotel chain in Cuba, Sol Melia, is quoted as saying that Cuba has everything that a tourist wants: hospitable people, beautiful natural surroundings and a desirable geographic position (the Caribbean). His company plans to build four more luxury hotels over the next two years and will probably keep building more down the road since Cuba is the fastest growing tourist destination in the Caribbean.
What Mr. Canaves does not mention is what I observed on the island and what one of the IRELA reports discusses: Cuba’s double standard. When one is a visitor to Cuba, one is profoundly aware of the things a tourist can do and a Cuban cannot—from renting a car and buying medicine at a pharmacy to even stepping foot on certain “tourist” islands. Taking this to its logical conclusion, one has to ask oneself: Doesn’t it bother the Cubans that they cannot be a part of their country’s new alleged prosperity? Signs of deprivation are everywhere. Dozens of people stopped me on the street and asked for soap. Moreover, prostitution, perceived as a by-product of the tourist trade, is prevalent and is proving to be a social problem the Cuban government has been incapable of dealing with effectively. Also, as the IRELA report states, “the exclusion of Cubans from tourist resorts, a situation which some term ‘apartheid’, could also foster social discontent and hostility towards the state and foreigners who visit the island.
Only time will tell how Cuba and Cubans will fare as tourism continues to grow and the political future of the island continues to be a question mark. The EU policy on human rights violations in Cuba and U.S. policy on the confiscation of land from U.S. citizens as well as the evolution of the Helms–Burton Law will no doubt play a key role in the future direction of the island-nation.
References
“Accord UE/ACP: Retrait de la Candidature de Cuba a la Signature,” http://ww.cc.cec.telex/docs/2000/04/28/1/01.html
Belin, Hughes. “Politics-EU/ACP: Co-operation with Cuba at a Crossroads,” Terraviva, 2 (18 May 2000).
Business Tips on Cuba, 7 (May 2000).
“Cuba Update,” Press and Culture Office, USINT–Havana, January 2000.
“The EU–ACP Partnership Agreement: From Reliance to Reciprocity in European–Caribbean Relations,” Institute for Europe–Latin American Relations IRELA Briefing, 22 June 2000.
Forty Years of Revolution in Cuba: Transition to Where? Institute for Europe–Latin American Relations, Dossier 68, May 1999.
Guia de Negocios: Cuba, Instituto Espanol de Comercio Exterior, May 1999.
La Lettre de la Havane, Monthly bulletin published by the French Embassy in Cuba, May 2000.
Revision of European Policy on Cuba? Perceptions and Interests of EU Member States, Institute for Europe–Latin American Relations (IRELA) Special Report, 18 April 2000.

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