Houston Courts Cuba, But Challenges Remain

Leah Binkovitz | November 1, 2016Houston is eager to position itself as a gateway for Cuban trade and travel following the resumption of diplomatic relations with the U.S. But experts warn that won't be easy.

The sky reflecting off a street puddle

Houston is eager to position itself as a gateway for Cuban trade and travel following the resumption of diplomatic relations with the U.S. But experts warn that won't be easy.

Photo by Flickr user jordi.martorell. Photo by Flickr user jordi.martorell.

For the first time ever, Houston’s mayor traveled to Cuba this fall, almost two years after President Obama and Cuban President Raul Castro announced plans to thaw the more than 50-year blockade between the two countries. Joined by more than two dozen business and civic leaders from the Houston area, the mayor said in a statement before the trip that he wanted “to begin the delicate process of drawing Houston and Cuba together.”

In recent years, Texas has seen the bulk of Cuban immigration to the country, and Houston hopes to position itself as the gateway for trade and travel in the future. Mayor Sylvester Turner is not the only local politician to travel to Cuba looking to foster new relationships. Stephanie Rawlings-Blake of Baltimore, Mick Cornett of Oklahoma City and Mitch Landrieu of New Orleans have also visited Cuba and Texas Governor Greg Abbott made the trip in December.

Despite the reopening of the embassies and the flood of interest, experts warn that normalization may be a long and difficult process with several significant roadblocks along the way -- not least of which is the patchwork of legislation forming the embargo itself, which is still very much in place.

“Even though things have improved tremendously,” said Cristina Escobar Domínguez, a journalist with the Cuban Institute of Radio and Television, “there is still a lot to do in in terms of how do we build a new trust.”

Domínguez joined politicians, lawyers and businesspeople for a conference at Rice University’s Baker Institute on the future of U.S.-Cuba relations and the investment potential for Houston. There, several members of Houston's delegation to Cuba reflected on their experience there.

“We have to get an understanding of what they want,” said Houston City Council Member, Jerry Davis, at the conference. “We cannot impose our views on them,” said Davis, who joined the mayor in the September trip to Cuba. “I made that mistake,” he said, “I thought we were going in to say, ‘Hey, let’s get it done.’”

He still sees Houston, with its busy port, industries and bounty of Texas agricultural products, as a gateway for trade and business with Cuba and described Houston's trade mission as a "diplomatic handshake." But, said Davis, it's going to take time. "While they embraced us," he said, "they still were not comfortable."

For now, investment has only been authorized in Cuba’s telecommunications sector, despite the country’s energy, agriculture and pharmaceutical needs. The federal government authorized the use of U.S. dollars in transactions with Cuba -- previously banned -- back in March, but so far not a single deal has been done this way. Banks are reluctant to do any business with Cuba and often delay transactions involving the country.

“So far in Cuba, there have been a lot of lawyers and no banks,” said Juan Triana, a professor at the University of Havana, at the conference.

Though travel restrictions were largely lifted, people traveling to Cuba from the United States still have to do so for one of 12 approved reasons, including family visits, education and humanitarian projects. Tourism is not one of the reasons.

And there’s the issue of the embargo, which is still very much in place. Though bills have been filed in Congress to dismantle key components, like the travel ban, it will take a vote to see any change. And without that, the potential for business engagement is unclear.

But that hasn’t stopped a growing interest in trade and business partnerships, as well as travel between the two countries.

For Houston, which will see its first non-stop flight to Cuba start in late November, the interests go beyond travel. “Houston is uniquely positioned geographically and culturally and through many shared industries,” said Bob Pertierra, senior vice president and chief economic development officer for the Greater Houston Partnership, speaking at the conference about the mayor’s trade mission to Cuba.

In recent years, Texas’ border has seen the majority of immigration from Cuba, according to the Pew Research Center. Because many Cubans fear they may lose the special preference given to immigrants entering the United States if relations with Cuba are fully normalized, there has been a surge of people entering the United States trying to take advantage of those privileges and two-thirds of them entered the United States in Laredo. The Houston area’s Cuban-born population was roughly 13,700 in 2014, according to the most recent census estimates, representing roughly 1.5 percent of the area’s population that was born in Latin America.

With a large Spanish-speaking and foreign-born population, Houston is a natural partner for Cuba, said Pertierra. And Houston’s business interests, from oil and energy to healthcare and construction align with Cuba’s needs, which is a critical component for any potential partnership, he said. “You’ve got to ask three questions: is the government interested in this product or service, is it allowed to be sold or transacted and how does the state-owned enterprise propose to pay,” said Pertierra.

Cuba recognizes foreign investment as critical to its future and there are even two American-operated hotels in Cuba, following an agreement between the company and the government. But Cuba has infrastructure and energy needs as well. With the collapse of Venezuela and peace talks in Colombia, its alliances have shifted. The country has seen sluggish GDP growth in recent years. “Cuba is going through hard times,” said Triana. At the same time, there have been gradual movements toward a looser system, including an increase in private entrepreneurship and Castro’s promise to recognize term limits and step down in 2018.

Still, Triana cautioned, Cuba will engage in partnerships that benefit Cuba. In other words, he said, “We don’t need hot dogs in Cuba.”

And, Triana said, businesses from Houston and elsewhere will have to come with humility and patience in order to get work done in a system that can take one year or more for a foreign business to get licensed and operational.



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