For Eduardo Carranza, the thought of doing business in Cuba has been total anathema his entire life. But he may now be disappointed.
Carranza's family fled Cuba under Fidel Castro, losing a sisal plantation in Mariel and a rope factory in Havana, before founding Sunshine Cordage in Miami, Florida in 1964. The company makes rope products and nets, which it sells throughout the Caribbean and the U.S. Nevertheless, Carranza sold the business less than six months ago.
And the new owners, at least, are very excited by prospects now presenting themselves as the result of an executive order announced by President Obama on Wednesday that intends to normalize relations between the U.S. and Cuba.
"We have been waiting for this day," says Joel Ellison, the new owner, who is not Cuban-American. "It opens up a new market, and one that's relatively untapped."
While observers say the order actually changes little regarding our decades old trade embargo and economic sanctions against the small island country, the gesture is enormous.
"This is a recognition that the policy is wrong at the core, and it recognizes that it isolated the U.S., and didn't produce changes in Cuba," says Philip Peters, president of the Cuba Research Center, in Alexandria, Virginia. "And it sets the stage for more changes to come."
The executive action will reestablish diplomatic relations between the U.S. and Cuba, including setting up an embassy in Havana. It will also ease travel restrictions to and from Cuba, although leisure travel will continue to be embargoed. The order will also ease some export and import restrictions, as well as increase limits on money remittances to and from the country. U.S. institutions will be able to set up correspondent accounts in Cuban financial institutions, and travelers will now be able to use credit and debit cards in that country, among other things.
For companies hoping to do business in Cuba right away, however, don't hold your breath, as these and other changes will be anything but swift, says Seth Kaplowitz, a lecturer in finance and management, and a specialist in international business law at San Diego State University.
"Businesses will probably have the same issues that they do with China and other Asian countries," Kaplowitz says. "This is really about the future for business, not the present."
Perhaps the biggest issue, Kaplowitz says, is how U.S. businesses will actually operate in Cuba. It may be the sort of scenario where domestic companies must set up a wholly owned foreign enterprise, as they do now in China. WOFEs are limited liability corporations that allow foreign companies to operate in mainland China, although along narrow and proscribed lines. Such concerns are, however, expensive to set up and Cuba doesn't currently have a developed infrastructure for them, Kaplowitz says.
Other concerns are Cuba's pronounced governmental centralization, says Peters. Current trading partners from Canada, Europe and Latin America, for example, can only invest in projects chosen by the government, with workers similarly selected by Cuban administrators. Adding further complications for businesses, Cuba has two currencies, a convertible peso and the old peso.
"Cuba is a complicated place to do business, and it is not a market economy," Peters says.
A Long History
For the younger generation of business owners who may not even know about the U.S.'s fifty-decade old economic blockade of Cuba, the sanctions take two primary forms, and they've been added to over the years.
The U.S. began its trade embargo with Cuba following a communist overthrow of the Fulgencio Batista regime in 1959, led by Fidel Castro. In 1961, the U.S. passed the Foreign Assistance Act, which formalized an economic embargo on Cuba. The Helms-Burton Act of 1996 extended those sanctions, essentially forbidding foreign companies that do business in Cuba with formerly U.S.-owned companies seized during the regime change, from operating in the U.S.
Over the years, however, a sea change of opinion regarding Cuba has made the sanctions seem outdated to many within the U.S., particularly for those with ties to that country. Eighty percent of Cuban Americans who have arrived here since 1995 support reestablishing diplomatic relations, according to Florida International University's Cuba Poll for 2014, produced by its Cuban Research Institute.
Of U.S. companies that have established limited relations with Cuba to sell food products and medicine, 57 percent favor expanding operations. The same percentage of registered Cuban American voters said they would support a candidate who favored replacing the embargo with increased support for independent business owners in Cuba.
For entrepreneurs like Osvaldo Vento, the president and chief executive of Everglades Lumber, a 100-employee concern that supplies building contractors in southern Florida, he's eying recent developments warily.
Vento's parents left Cuba in 1963, three months before he was born. And opposition to the Castro regime still runs deep in the family, even at a generation's distance.
"This is for Obama to do, but he must also demand elections in Cuba, and to have a stake in this without a move to bring democracy to the island--I'm against it," Vento says.