Tag Archives: Cuba-Canada Relations

ACADEMICS FROM CARLETON UNIVERSITY HELPED “JUMP-START” WESTERN ECONOMICS IN CUBA AFTER THE COLLAPSE OF THE SOVIET UNION.

How Carleton profs brought Western economics to Cuba

zzzzzzzzzJustin Trudeau speaks to a University of Havana audience plus officials in the Aula Magna, Universidad de la Habana, November 16, 2016

Here’s how it happened: after the Soviets ended their “special relationship” with Cuba, the faculty of economics at the University of Havana wanted to introduce supply-demand micro and macroeconomics into its curriculum.

This was no small problem. Soviet economics had virtually disappeared, and Cuban economists were left orphaned. They didn’t even speak the language of Western economics, and they found it difficult to communicate with their counterparts in the rest of the world.

Carleton economist Archibald “Arch” Ritter, an expert in economic development, was at the first meeting in Havana in December 1993. The meeting brought together academics from Canada, Chile, Argentina and the University of Havana as well as officials from the International Development Research Centre (IDRC) to hammer out a plan.

The  group decided to organize a joint master’s program in economics, mainly for young faculty members from Cuban universities, to be offered at the University of Havana. Carleton’s then-president Robin Farquhar approved the agreement. The program was up and running six months later.

Financed for the first two years by the IDRC and in its final three years by the Canadian International Development Agency with support from the United Nations Economic Commission for Latin America, the program was later expanded to include biology, business, linguistics, women’s studies and public administration. Professors were recruited from Canada and Latin American countries.

 “It was neat to jump-start the introduction of Western economics to Cuba,” says Ritter, who taught in Havana part-time for five years. “And we did it on a shoestring budget.”

The project had broad support at the University of Havana, but it was far from unanimous, says Ritter. The students, however, “were all most congenial and very keen.”

In his blog, former student Luis Casaco, who now lives in Uruguay, recalls the day a stranger arrived in a classroom while he was making a presentation. She identified herself as a member of the communist party. The presentation continued, but there was a confrontation and the students defended their position that Cuba needed a radical transformation towards a market economy and a democratic system.

The woman angrily left the classroom. The next day, Casaco was called in for an urgent meeting.

“The woman started speaking in an irritating, slowly and softly way on the importance of the program, while emphasized the interest of some sectors in the university to dismantle it,” Casaco recalled. “She started to get angry, and said that the university belongs for the revolutionary people.”

Casaco’s professors came to his aid, including Ritter. “If they threaten you and intend to force you to stop free-speaking, I will shut down this program,” he recalls Ritter saying. “And then he added: ‘This is not a class of the communist Cuban party; this is a Carleton University class.’”

The program ran until 2001. Between 1991 and 1997, there was a shortage of food in Cuba after subsidies from the Soviet Union ended. “People were very thin,” said Ritter.

Many of the Cuban graduates went on to earn PhDs in economics both inside Cuba and at Carleton. Some left Cuba and built their lives elsewhere. According to Ritter’s count, 31 of the 76 graduates had left Cuba to go to Canada, the U.S. and countries in Latin America as of 2010.

“We contributed to a change in the climate of opinion, and changed the teaching of economics,” says Ritter.

zzzzzzzzzzzzzzzzzzzzzzzzCarleton University economics professor Arch Ritter, pictured in Cuba in 2015 in a 1955 Chevrolet, taught part-time for five years at the University of Havana.

Ritter is often called upon to answer questions about Cuba. So, what will happen in the wake of Fidel Castro’s death?

Ritter doesn’t think it will change much. Castro has been mostly out of the picture since he became ill about a decade ago. Castro’s brother Raúl, now 85, served under his brother for 46 years. He was officially made president in 2008, and instituted a major set of reforms in 2010-11, which have liberalized small businesses.

“I don’t see much of change in the short run,” says Ritter. “Raúl will pretty much pick his successor. The succession will follow Raúl’s line. Raúl is very cautious. It took him almost five years to decide on the reform package.”

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CANADA-CUBA ECONOMIC RELATIONS: AN UPDATE

By Arch Ritter                                                                                                  October 5, 2016

 Canada and Cuba have maintained a normal and mutually beneficial economic relationship from Colonial times to 2016.  With the beginning of Cuba’s “Special Period” in 1990 and its modest moves towards a mixed market economy in the 1990s, Canadian participants were optimistic about future economic relations.  In the 2000’s, this was replaced by some skepticism, but with the reforms of 2010-2012 and the beginning of the normalization of US Cuba relations, optimism has returned. This article provides an update on Cuban-Canadian economic relations, including trade, foreign investment, development assistance and migration and some speculation concerning the future of the relationship.

Canada-Cuba Trade Relations

Since the start of Cuba’s revolution, normal trade relations between Canada and Cuba have been maintained. However, trade has waxed and waned over the years as can be seen in Chart 1. The chief feature of the trade relationship in the 1980s was the large volume of Canadian exports which were mainly wheat. Trade expanded steadily in the 1990s with the ending of the special trade relationship with the Soviet Union, as Cuba’s economy began to recover and as it began to diversify its export markets and sources of imports.

q1After 2001, Cuba’s exports to Canada expanded and began to exceed Canada’s exports to Cuba due to high nickel volumes and prices. Canadian exports to Cuba have more or less stagnated since 2001 while other countries have increased their market shares.  By 2015, Canada was the fourth ranking exporter to Cuba following Venezuela, China, and Spain (Table 1.) In contrast, Canada was the second largest export market for Cuba after Venezuela in 2015, accounting for 11% of Cuba’s exports.

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Cuba’s exports to Canada have consisted almost totally of nickel concentrates, with cigars, rum, seafood and copper scrap (presumably a quirk in 2015) as very small foreign exchange earners (Table 2.).

By 2015, Canada’s exports to Cuba were reasonably diversified (Table 2.) Its agricultural exports remained significant, though overwhelmed by US agricultural exports. Minerals (sulfur for Cuba’s nickel industry, potash for fertilizer), metals (copper products for Cuba’s electrical system mainly) and machinery of various types have all been significant in the 2010s.

r2 Tourism

Cuba’s best and most faithful friend is the brutal Canadian Winter, which has driven millions of Canadians to warmer Caribbean climes during the December to April period. Canada has been the largest single national source of tourists consistently from 1990 to 2015 and accounted for almost 40% of all tourist arrivals in 2015.  But when US tourism opens up completely, there will likely be a deluge of US winter-escape tourism as well as curiosity tourism, convention tourism, medical tourism, March-break tourism and retirement relocation. The result will likely be that prices rise, and Canadian winter time tourism may well be squeezed out of Cuba into lower cost destinations.

q2Canadian Enterprises in Cuban Joint Ventures

In 1991, Cuba opened itself to foreign investment in joint venture arrangements with state firms. By the end of 1999, there were 72 joint ventures or “economic association” agreements between Canadian firms and Cuban state enterprises but few seem to have ever come to life.

Sherritt International has been by far the most successful Canadian-Cuban joint venture.  Its formula for success is one that cannot likely be replicated by any other enterprise.  In effect, it exchanged 50% of its ownership in the nickel refinery in Alberta Canada for 50% ownership of the Moa mine and concentrator in Cuba and shared in the ownership of the marketing enterprise.  This made Cuba a significant foreign investor in Canada!  The Sherritt experience was explored in the previous issue of this publication.

A number of mineral exploration companies established joint ventures in Cuba by 1994 in association with Geominera S.A. It was thought that Cuba was an ideal location for mineral exploration because much of the country had been covered by aero-magnetic and geological surveys in the Soviet era.  Among the enterprises involved in exploration projects in joint ventures with Geominera were Holmer Gold Mines, Joutel Resources, CaribGold Resources, Northern Orion, and MacDonald Mines. Unfortunately, the exploration undertaken from 1992 to 2007 yielded disappointing results and none of the exploration projects led to producing mines. This suggests that either the quality and/or magnitude of the deposits are lower than in other regions of the world. Alternatively, perhaps the investment conditions, the policy environment and/or the political risk situation were worse than elsewhere. It would be surprising if there were another mineral exploration rush in the medium term future, unless mineral prices were to rise to very high levels.

Canadian enterprises in real estate development have also had difficult experiences in Cuba. One project announced in October 1998 by an association between Cuba’s luxury hotel chain, Gran Caribe and Cuban Canadian Resorts International proposed U.S. $250 million set of four condominiums with hotel and resort facilities. It would have opened up an important new type of tourism for Cuba.  However, in May 2000, the Ministry of Foreign Investment and Cooperation announced a prohibition of foreign ownership of condominium units killing this and other such projects for the time being.

Another project was that of Leisure Canada for the construction of some 11 hotels and two golf courses, a marina. (Leisure Canada Incorporated, 2000). This project fizzled out. In 2011 Leisure Canada, having changed its name to 360 VOX Corporation, was bought out by Dundee Corporation in May 2014.  Any mention of this project has disappeared.

One successful venture was the construction of five airports in Cuba, including Varadero and Havana International Airports by Intelcan Technosystems of Ottawa. The CDN$ 52 million investment in the Havana Airport, was financed in part by Canada’s Export Development Corporation (33%) and 15% from Intelcan. Since 2000, the ultimate payment has come from international passengers who pay U.S. $25.00 (CUC 25.00) as an airport tax on departure.

Unfortunately brilliant successes for Canadian-Cuban joint ventures seem to be few and far between.  Indeed, a number of executives of Canadian trading enterprises and joint ventures, Cy Tokmakjian and Sarkis Yacoubian, were jailed and tried on corruption charges –a cooling factor in the foreign investment process. The moral of the story is that establishing a joint venture in Cuba can work, but it must be done with patience, intelligence, and scrupulous awareness of Cuban regulations and processes and with clear benefits for the Cuban partner enterprise and the Cuban people.

Canadian Development Assistance

The Canadian International Development Agency (CIDA) has provided some interesting development assistance to Cuba since 1994. A major proportion of this has been “economic” in character, aimed at the “modernization of the state.”  Some has been used to support the initiation of projects by Canadian enterprises with Cuban counterparts or to promote Canadian exports. Some of the economic programs were micro-enterprise tax administration, economic management, support for technical training and computer acquisition at the Central Bank, a program to help strengthen administration and professional economics at the Ministry of Economics and Planning and training/certification programs for tradesmen in some basic industrial areas. Various types of commodity assistance were provided as well. Much of the assistance provided by NGOs was aimed at community level activities.  A small amount of assistance was directed towards human rights and governance initiatives including a “Human Rights Fund Pilot Project” and “Dialogue Fund” with multiple Canadian and Cuban partners.

r3Canada’s active development assistance projects in Cuba as of mid-2016 are listed in Table 3. The annual expenditures of these multi-year projects for 2014-2015 was $CDN 2.42 million, a very

 International Migration

 An interesting dimension of Canadian-Cuban relations is migration. As indicated in Chart 3, Cuban migration to Canada has risen from levels in the hundreds in the 1980s to around 1,400 in 2014-2015. However, an unknown number of the Cuban immigrants to Canada move on to the United States, especially Florida, reflecting the attraction of the large Cuban-American population there and the weather.

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Detailed sociological information on Cuban migrants is not available. However, my impressions are that, generally speaking, they are relatively well-educated, industrious, self-activating and entrepreneurial. They also seem to be relatively young, for the most part, many having recently finished their education and just starting out on their careers. Many Cuban immigrants seem to have done reasonably well and have found work in their professional areas, something that is not easy in a new society, culture and language.  This migration represents a “brain drain” or a loss of human capital for Cuba and a corresponding gain for Canada.

 Prospective Canadian-Cuban Economic Relations

The future economic relationship between Canada and Cuba will be shaped mainly by three factors: the strength and durability of Cuba’s economic recovery; the nature of Cuba’s economic policies affecting trade, and foreign investment; and the character and timing of complete normalization of relations with the United States.

A sustained recovery of the Cuban economy would promote a deepened and broadened economic relationship with Canada. A growing Cuban economy would permit increases in imports from all trading partners, including Canada.  At the same time, economic recovery in Cuba also requires expansion of its exports of goods and services.

Is an enduring recuperation of the Cuban economy probable in the next decade or so? First, the driving force for the Cuban economy, namely export earnings, at this time depends mainly on tourism, medical services and nickel exports.  Nickel and tourism should continue to be strong, but the obscured subsidization from Venezuela is over. Cuba’s medical service exports will likely be transitory as other countries develop their own medical systems and increase medical personnel.  Pharmaceutical exports may hold promise in the longer term but have been somewhat disappointing relative to the high hopes once placed in their prospects. Little progress appears imminent regarding the expansion of other merchandise exports. New exports of manufactured products have not appeared on the scene in a significant way and are obstructed by some public policies.

Some continuing problems may prompt skepticism regarding Cuba’s economic prospects in the near future. Among the difficulties often cited are: a dual exchange rate system with negative consequences for export diversification and expansion; a blockage of people’s initiatives, energies and entrepreneurship due to the unwillingness to extend further the reform process especially for medium scale enterprise; and the deterioration of parts of the infrastructure, most notably housing.

The second set of factors that will shape Canada’s future economic relations with Cuba in is Cuba’s policies relating to trade, foreign investment and tourism. These policies are unlikely to undergo dramatic change under Raul Castro’s leadership. This implies that the basic Canadian-Cuban economic relationship should not be affected seriously by changed Cuban policies in the next few years. The state-trading that in part characterizes these relationships is not intrinsically beneficial for Canada.

Thirdly, the complete normalization of U.S. – Cuban relations especially regarding trade and US investment in Cuba, will have a major effect on the Canada-Cuba economic relationship. Complete normalization will permit expansion of Cuban exports, US foreign investment in Cuba, US tourism in Cuba, financial flows and the possibility of open and vigorous collaboration of Cuban-America and Cuban citizens in business activities.  Greater prosperity will be the result.

Normalization with the United States will lead to expanded exports of goods and services to Cuba from the U.S. and vice versa.  This is due to geographic and transport factors.  More frequent freighter connections, high speed hydrofoil passenger boat connections, a re-connection of U.S. and Cuban railway systems and a proliferation of airline connections will lead to a reintegration of the two economies. The diversified U.S. economy can provide a broad range of consumer and capital goods and services competitively with other countries and with low transport costs and quick delivery times.

Canadian exporters to Cuba therefore will face a challenge after US – Cuban normalization. The location and logistical advantages of U.S. exporters, plus the interest, activism and advantages of the Cuban-American business community will outweigh any lingering “goodwill effect” with Canada. Overnight or next-day delivery of products ordered from the U.S. makes continuation of some types of exports from Canada difficult, as delivery from Canada currently may take up to two weeks or more on ships leaving Canada every week or ten days on average.

On the other hand, some of Canada’s current exports to Cuba are competitive with U.S. products and should increase in a post-embargo Cuban economic recovery. This might include fertilizers (potash), cereals, animal feed stocks, lumber, wood and paper products and fabricated non-ferrous metals products. Canada also is competitive in certain types of capital equipment such as minerals machinery and equipment, some paper making equipment, Bombardier aircraft, railway rolling stock and equipment, urban transit vehicles, communications equipment, electrical generation and distribution equipment, and some specialized vehicles. However, some Canadian exports may be threatened by U.S. competition.

In summary, the recovery of the Cuban economy and the increase in foreign exchange receipts that U.S.-Cuban normalization in time should bring about will be of benefit for some Canadian exporters while others may be replaced by U.S. suppliers.  Will the “expansionary effect” outweigh the costs of the “displacement effect” for Canadian exporters?  Perhaps, but this is not assured.

Normalization will also induce U.S. enterprises to invest in Cuba. With no further changes to the foreign investment law and within the current policy environment, one can imagine some but not many U.S. firms entering joint ventures.  But with policy liberalization in a post-Raul Castro situation, one can imagine large numbers of U.S. enterprises investing in Cuba. Cuban-Americans would also enter Cuba to set up small businesses or to finance business ventures with their Cuban relatives or counterparts.  The “geo-economic” gravitational pull of the U.S. will be strong. After U.S.-Cuba rapprochement Canadian trade and investment as a proportion of total trade and investment will likely diminish even though both might increase in absolute terms.

To conclude, there are future uncertainties and challenges regarding the Canadian-Cuban economic relationship.  The character and intensity of future economic performance in Cuba, Cuba’s policy environment and the timing of the complete normalization of relations with the United States are still ambiguous and uncertain. These factors will have mixed effects, but effects that on balance should be positive for Canada and Cuba.

Bibliography

Citizenship and Immigration Canada.  http://www.cic.gc.ca/english/resources/statistics/facts2014/permanent/10.aspAccessed October 23, 2016

Cuban Club Resorts. 2000. Web site: www.cubanclubresorts.com

Global Affairs Canada, Cuba – International Development Projects, http://www.acdi-cida.gc.ca/cidaweb/cpo.nsf/fWebCSAZEn?ReadForm&idx=00&CC=CU.  Accessed 3 October 2016

Industry Canada, Trade Data Online (TDO), Trade by Product (HS Codes) http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/Home

Leisure Canada Incorporated. (2000, August, 17). Press Release. Reproduced in   www.cubanet.org

Nolen, Stephanie. 2015. In tourist-deluged Cuba, Canadian firms are noticeably absent. The Globe and Mail December 13.

Oficina Nacional de Estadisticas, Cuba.  Anuario Estadistico de Cuba. (Various issues) http://www.one.cu/ . Accessed various times and October 4 2016.

Sequin Rob. 2013. Leisure Canada now a defunct Cuba real estate development brand.  Havana Journal September 25,

 

 

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CUBA’S EMERGING STARTUP SCENE GIVEN A CANADIAN TECH BOOST

Jacob Serebrin

Special to The Globe and Mail, Monday, Feb. 01, 2016 5:00AM EST

Few countries are as technologically isolated as Cuba. Home Internet is rare, data plans are non-existent and, in a country where doctors make the equivalent of around $70 a month, paying almost $3 an hour for government-run WiFi is too steep for many.

Yet, even here, tech startups are beginning to emerge and they’re getting some help from Canada. Montreal technology hub Notman House has launched a program to give Cuba’s nascent startup scene a boost.  The idea of Develop Cuba is to create a seed fund and a way to support and educate the community on how to build an ecosystem,” says Noah Redler, the campus director at Notman House and the initiator of the Develop Cuba project. “The major obstacle they have isn’t around talent, it isn’t around want or desire, it’s literally just that basic seed capital.”

In Cuba, a little money can go a long way. So far, Develop Cuba has raised a few thousand dollars to rent space for startup groups to meet in Havana and bought a projector – a rare piece of equipment in a country where even basic supplies can be hard to find.

The next step will be to send a group of mentors from Montreal to visit Havana and work with local startups. If that goes well, Mr. Redler wants to help open Cuba’s first co-working space. The goal is to build capacity for Cuban startups, he says. While Canadians may be helping to get the project off the ground, it will be led by local people.

Internet usage has grown rapidly since the Cuban government lifted an almost total ban on Web access in 2008. By 2014, the country had more than three million Internet users, a little more than one-quarter of the population, according to Cuba’s national statistics agency. By now, that number is almost certainly higher.

On a Thursday afternoon in mid-January, about a dozen people are gathered in a public square in downtown Havana, looking at their phones. A couple more sit on nearby benches with laptops. It’s a scene that would be unremarkable in Canada, but was extremely rare in Cuba until just a few months ago.

In June, Etecsa, Cuba’s state-owned telecommunications monopoly, cut the price of Internet access in half and opened dozens of new WiFi access points in parks and public squares across the country. More have opened since then. Before that, getting online usually required waiting to use a computer at an Etecsa outlet or a post office; WiFi was rarely found outside of hotel lobbies. Free WiFi is still almost unheard of, and Cubans have to prepay and show ID to get online.

For startups, “the most difficult part is accessing the Internet,” says Martin Proenza, the founder of YoTeLlevo, a website for booking taxis. While his business is generating revenue, it’s not profitable enough for Mr. Proenza to afford home Internet. Instead, he relies on his day job at a government-owned software company for Internet access.

The lack of mobile data means that Cuban apps are generally built to work offline. AlaMesa, an app for finding restaurants, is fully functional without an Internet connection. Its restaurant directory and map are downloaded onto a user’s phone. If a user opens the app when they do have an Internet connection, the database is updated. “Considering the insufficient connectivity infrastructure and cost of Internet access in the country, an offline solution was mandatory,” says Alfonso Ali, AlaMesa’s lead programmer.

But they also face a uniquely Cuban challenge. “Due to U.S. blockade restrictions, we are unable to use PayPal or Stripe,” Mr. Ali says. “So standard operations like online booking, coupons, etc., are very difficult and costly to implement.”

The Cuban government appears to have taken little notice of the country’s growing startup community, but there are fears about what will happen if they do. While economic reforms that began in 2008 have opened the door to an increasing number of private businesses, there are no provisions for tech startups, making them illegal.

“You have to keep yourself under the radar,” Mr. Proenza says. “But is it a big concern? No. Really, the state is not running after people for creating online businesses.”  He does think the government will allow startups to operate legally in the future, and says that’s a view shared by others in the startup community.

In Montreal, Mr. Redler says he sees some hopeful signs – accommodation-rental site Airbnb was allowed to enter the Cuban market earlier this year; there are now over 2,000 listings. But he says he doesn’t expect change to come rapidly.

Despite the challenges, Cuban business owners say they’re optimistic about the future. “The Cuba education system is very good, so it’s very easy to find talented people to work on any field of innovation,” Mr. Ali says.  “We used to say ‘need is the mother of invention,’ so people in Cuba have good talent, skills and the mindset to find solutions to almost any problem.”

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THE LEADING CANADIAN EXPERT ON CUBA, MARK ENTWISTLE, FORMER AMBASSADOR TO CUBA, ON LATE-NIGHT CHATS WITH FIDEL, THE HARPER YEARS OF DIPLOMACY AND HOW TO DO BUSINESS IN HAVANA

RICHARD BLACKWELL

 The Globe and Mail Last updated: Friday, Jan. 29, 2016 2:52PM

Original: How to Do Business in Havana

When Mark Entwistle was Canada’s ambassador to Cuba in the mid-1990s, a knock on the door of his Havana residence might mean Fidel Castro was dropping by for a chat.

“He had a house that was maybe half a kilometre up from the official residence of the Canadian ambassador,” Mr. Entwistle said. “He used to stop by all the time. By himself. There would be a knock. It would be this big hulking figure, and he would ask if he could come in and say hi and have a gin and tonic. We’d talk in the backyard, we would talk in the living room. It was a quite remarkable thing. I kept pinching myself because … love him or hate him, he is one of the historic figures of our lifetime.”

Mr. Entwistle has parlayed his deep connections into a consultancy practice that helps Canadian and American companies prepare to do business in a Cuba increasingly open to foreign corporate involvement. His work with American firms has exploded since Dec. 17, 2014, the day U.S. President Barack Obama and Cuban President Raul Castro announced an unprecedented thaw in relations after more than five decades of distrust and detachment.

Mr. Entwistle is in a unique position to understand the subtleties of the change in U.S.-Cuban diplomatic relations. He spent years in Canada’s foreign service, with postings in Israel and the Soviet Union. He then served as spokesman for the department of external affairs and press secretary to prime minister Brian Mulroney, before being sent to Cuba as Canada’s ambassador from 1993 to 1997.

After 15 years running his own consulting firm, he teamed up in 2012 with former Onex Corp. executive Tony Melman, and former politician and Magna International Inc. executive Belinda Stronach, joining their merchant bank Acasta Capital. There, he runs the Cuban advisory arm – a division called Acasta Cuba Capital.

Mr. Mulroney describes Mr. Entwistle as “the leading Canadian expert on Cuba” whose combination of diplomatic and business skills gives him a unique perspective. As ambassador, he was a “sure pair of hands” with a “problem-solver bent,” the former prime minister told me in a brief phone chat. While Cuba is still somewhat archaic with a Byzantine political structure, “Mark is the kind of guy who can guide Canadian and American companies through these different layers of difficulty,” Mr. Mulroney said.

Indeed, Mr. Entwistle has a sophisticated and nuanced take on Cuba and its moves to open up relations with the United States. But I have to admit that his personal anecdotes are what grab my attention most during our three-hour lunch at Sassafraz in Toronto’s Yorkville area. I’m so captivated that by the time I finish my Arctic char and he polishes off his nine-spice roast chicken breast (him much later, as he is doing most of the talking), the restaurant – which had been packed and noisy – is completely empty.

Mr. Entwistle’s close relationship with Fidel, and the degree of access he had to the Cuban government when he was ambassador, was mainly a result of Canada’s unwavering support during the depths of the U.S. chill. “We were players in many ways,” he said. “That is not the case now. There are so many competitors, and now that the Americans have arrived it is sucking up all the oxygen.”

But during Mr. Entwistle’s time as ambassador it was not unusual to get a call in the middle of the night and be summoned to Fidel’s office. “He would ask questions … he was very interested in Canadian politics … what it was like living beside the United States.” Sometimes Fidel would come to the Canadian ambassador’s residence for formal dinners, especially if Pierre Trudeau – then long retired – was in town. Mr. Trudeau was “one of the very few people that I ever saw Fidel sit and listen to, in true listening mode, not interrupting [or] formulating what he was going to say next,” Mr. Entwistle said. “It was not a mentor role, because Fidel Castro would never have a mentor. It was as an inadvertent confident. It was personally very important to Fidel.”

As a former diplomat, Mr. Entwistle is hesitant to use harsh words, but he is unequivocal about Canada’s weak efforts to take advantage of our long-standing warm relationship with Cuba. “I think it has been squandered,” he said, although “it is not gone. It is still there. The Cubans, in a way, are waiting for us to come back.”

Aside from mass tourism, and the operations of Toronto-based mining giant Sherritt International Corp., “there is effectively no major Canadian [business] play in Cuba. Against the backdrop of history, of what we used to share together, the Cubans find it odd.”

Some, but not all of the blame, can be placed on the Stephen Harper government, which was leery of appearing to be too close to a communist regime, Mr. Entwistle said. The relationship “has never been hostile, even in the glacial period of the Harper years. It was just benign neglect. The relationship is in sort of an auto-pilot mode, with the exception of all our tourists, who drink the mojitos.”

With a new government in Ottawa, and the Americans ready to descend on Cuba, it is time for us to refresh the relationship and take advantage of an economy poised for takeoff, Mr. Entwistle said. “Canada has been gifted an asset, which is years of unbroken diplomatic relations. It is to this day recognized in Cuba. We get given space that we probably don’t deserve. We are given a hearing … But the goodwill has a half life [and] it has been ticking away for a long time.”

It may not be too late to take advantage of the relationship, but if Mr. Entwistle’s business in the United States is any indication, we need to get moving, and soon.

American business sees Cuba as a potential gold mine since the re-establishment of diplomatic relations and the lifting of some sanctions, he said. Havana is “humming and buzzing” with Americans ready to take advantage of the new relationship – but the U.S. trade embargo is still in place and it is unclear how the complex web of restrictions can be lifted without support in Congress.

Some potential U.S. investors are trying what Mr. Entwistle calls “crazy stuff” such as attempting to buy up beachfront property – even though it is owned by the state. But many others are making more cautious overtures.

The real game changer, he said, would be a further climb-down in travel restrictions, to allow general tourism from the U.S. – letting average Americans see the place for themselves. Some estimates suggest four million Americans would go in the first year after the ban is lifted – a tsunami of visitors Cuba could not handle at the moment.

Despite the U.S. business curiosity, Cubans are intent that a renewed domination of their economy by Americans will not occur, Mr. Entwistle said, and they are not prepared to revamp their political structures at the behest of the United States. Cubans are, psychologically, much more independent than they were before the revolution, he said. “They have discovered the value of their own assets, which they didn’t truly understand before.”

There will likely be some further political reforms after Raul Castro steps down as president in 2018, Mr. Entwistle said, including a move to a more representative government. But that will happen on Cuba’s own terms, and not in response to U.S. pressure. Indeed, he said, awkward U.S. efforts to use intelligence programs in Cuba to push for regime change – such as a recent attempt to get Cuban hip-hop artists to put anti-government content in their lyrics – is counterproductive.

In the meantime, Americans – or Canadians – who listen carefully to what the Cubans want in terms of economic development, and are patient in nurturing relationships on the island, could do very well there, he added.

Many Americans Mr. Entwistle takes to Cuba for the first time are “bug eyed” about what they see. “They have big saucer eyes, and they are usually quite nervous going in because they have been brought up believing it to be a prison camp,” he said. “Then they say ‘This a normal county. There are no tanks on the street.’ ”

Eventually, the American entrepreneurial instinct kicks in, Mr. Entwistle says. “The business guys’ antennas start bouncing like crazy. They say: ‘Oh my God … the opportunities here!’”

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Gary McMahon (IDRC), Ambassador Mark Entwisle, Francisco Leon, UN CEPAL) and Lourdes Tabares U de La Habana). at the inauguration of the Carleton University – University of Havana Masters Program in Economics, Havana, November 1993

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CAN CANADA FULLY LEVERAGE ITS UNIQUE TRADE RELATIONSHIP WITH CUBA?

Canadian Sailings: December 3, 2015 @ 8:32 am

Original Source:        http://www.canadiansailings.ca/?p=10739

By Alan M. Field

zzzzzzzzzzStarved for new markets to conquer, American exporters and investors are avidly awaiting the imminent end of the fifty-five year-old U.S. trade embargo of Cuba. Given the current abundance of Cuba-focused business conferences, seminars and traveling delegations to the island-nation, Canadians might well be wondering whether the mania for all things Cuban in the U.S. will also provide a golden opportunity for Canadians to leverage their unique ties with Cuba. Or will it, on the contrary, signal the end to that special relationship at precisely the time when the rest of the world has discovered Cuba?

Trade relations between Canada and Cuba originated during the era when vessels from the Atlantic provinces of Canada traded codfish and beer in Cuba for that country’s rum and sugar. “Canada has been a major trading partner with Cuba dating back to the 1800s,” notes Arch Ritter, an economist at Carleton University, who has written extensively about Cuba’s economic history. “Our ties have been longstanding, and we have never cut trade ties with Cuba.”

Over the past few decades, trade ties between the two countries have grown significantly, but remain modest compared with the volumes that could follow the end of the U.S. trade embargo, and the re-opening of U.S. foreign investment in Cuba. In August 2015, bilateral trade between Canada and Cuba amounted to $100.7 million [Canadian dollars], compared with just $58.4 million in August 2000, and only $33 million in August 1990. From 2000 to 2008, the value of Canadian exports to Canada grew at an annual rate of 11 per cent, while imports from Cuba grew at a rate of 10 per cent. Ontario is the largest provincial exporter to Cuba, followed by Quebec. Manitoba and British Columbia have been the fastest-growing provincial exporters in recent years, according to a report by the Library of Parliament in Ottawa.

Mark Entwistle, a former Canadian ambassador to Cuba (1993-1997) and a founding partner of Acasta Capital, a Toronto-based investment firm, recalls the long decades when Canadian diplomats were the only representatives of any Western democracy at Havana cocktail parties, “Among Western democracies, Canada is the only one that never broke relations with Cuba even once,” Entwistle added.

Canadians imported Cuban sugar, rum and cigars, while exporting a lot of machinery and equipment that “Cuba could no longer get from the United States,” explained Ritter. During the 1990s, when the Soviet Union stopped subsidizing Cuba, the island’s economy “really deteriorated,” added Ritter, “and ties with Canada really intensified. Cuba decided it needed tourism, so it promoted that sector. We became the big tourist country for Cuba, and people said, ‘Cuba’s best friend is the Canadian winter.’” Nowadays, Cuba ranks as the third-most popular overseas destination for Canadians – after only the United States and Mexico – while Canada is Cuba’s largest source of foreign tourists; over one million Canadians visit each year, or more than 40 per cent of all foreign visitors to Cuba.

Burned by Cuba’s ups and downs

During the 1990s, Cuba opened up its economy “a little bit” to foreign enterprises, added Ritter. The mining sector became the focal point of great activity as “a lot of Canadian companies went down there to see if they could prove any commercially viable mineral resources. They all came back empty-handed after a few years, but they were really optimistic because Russia had done the surveying. The Canadian companies thought they just needed to do the work on the ground,” Ritter went on. It turned out that things weren’t so simple.

Other Canadian enterprises went there, but few were successful, noted Ritter. “There were Canadian hotels that pulled out. There was interest in time-share condominiums, and the Cubans changed their mind on that, so that did not go forward. More recently, in the late 2000s, a number of Canadian enterprises made arrangements to invest fairly massive amounts of money in golf courses and related resorts. But those have been put back on the shelf; nothing has happened. I think the Cubans changed their minds [about that],” lamented Ritter. Overall, “The rules have been so fuzzy that every decision is sort of a customized ad hoc decision. The rules of the game come down to case by case decisions by Cubans.”

The only major Canadian firm to enjoy enduring success was Toronto-based Sherritt International, a resource company with interests in nickel and cobalt mining, oil and gas exploration and production, and electricity generation. Ritter said that Sherritt has been “wildly successful for Cuba and for Sherritt.” However, Sherritt’s huge success has not been repeated by other Canadian firms in the Cuban energy sector. In 2009, Pebercan, Inc., a Montreal-based oil producer, was notified by the Cuban government that it would scrap its production-sharing contract with the Canadian firm. That contract, signed by Pebercan and the Cuban government in 1993, had been scheduled to expire in 2018. Neither party to the contract ever announced any reason for the government’s decision to cancel it.

Goodwill is like an isotope that is trickling down

George Petrolekas, a former Marketing Director of a Canadian telecom, who has traveled on business in Cuba, said that former Prime Minister Stephen Harper’s conservative government “has been less receptive to links with Cuba than previous governments, which were Liberal.” During the late 1990s, “The most receptive Canadian governments were probably those of Pierre Elliott Trudeau, and Jean Chretien, to a lesser extent.” Petrolekas said that Harper has been “far harder on Cuba” than other Prime Ministers, such as Brian Mulroney.

Entwistle argues that even under left-leaning Canadian Prime Ministers, Canada has not taken full advantage of existing opportunities to promote Canadian corporate exporters and investors. “Truth be told, no Canadian government of any political stripe has exercised the full weight of instruments available to it for things like trade promotion.” Entwistle believes that Export Development Canada (EDC), which provides Canadian exporters with financing, has “never been overly active in Cuba, in terms of supporting Canadian business. Canadian business has done its own thing in Cuba, regardless of the government.”

Nor have there been a sufficient number of high-level visitors from Ottawa, waving the Canadian flag to drum up new business. Entwistle said, “There have been some political visits; Pierre Trudeau came in 1976; he was the first NATO-member state leader to do so. [Jean] Chretien also went—partly because Trudeau went.” Would it help if the next Canadian Prime Minister paid such a visit? “Hypothetically, if you had a Liberal government, there would be some explosion of activity on the part of the government of Canada in pursuing its relationship; but I think it will probably be business as usual. No government does tremendous damage to the relationship because it does tend to have its own rhythm, and you have this huge number of Canadians who go as tourists; well over a million a year.”

The sluggishness of the relationship defies the rosy expectations of earlier generations of Canadian business leaders. “At least one generation of Canadians in public life always believed that Canada had a special relationship with Cuba,” Entwistle continued. There was an assumption that “this relationship would translate into some sort of privileged access; an ability to leverage the relationship; to acquire things or positions – decisions from the government of Cuba that we want to see. The whole Canadian foreign policy establishment believed that for a long time.”

This presumption of privileged access has turned out to be false, said Entwistle. “While Cubans are very respectful of Canada and they value the relationship very much, we don’t have any special access or privileges in Cuba. We’re in competition with everyone else; you have to earn your keep; earn your way.” Ritter agreed that “Canadians had said for so long that we had built up a lot of goodwill in Cuba – and that it would pay off in the future.” Not true. And yet as early as 2002, when President George W. Bush enabled U.S. exports of pharmaceuticals and foodstuffs to Cuba, Canadians were disappointed with the reaction of their Cuban customers. As soon as lower-priced food became available from the United States, the Cubans switched to it, despite the ongoing U.S. trade embargo in other product sectors. Canada’s business activity in Cuba has been further hampered by the Helms-Burton Act of 1996, which penalizes all foreign companies that do business in Cuba by preventing them from doing business legally in the United States.

Reviving the special relationship

Overall, argued Entwistle, “Canada has an asset that has been created by the 70 years of unbroken ties, but it is being squandered. The goodwill of the relationship on which Canada dined out for a long time is like an isotope with a half-life. It is trickling down and has not been replenished sufficiently. ”

What measures would Entwistle take with respect to Cuba if he were Prime Minister of Canada? First of all, “I would increase the number of political visits at the ministerial level. In a country like Cuba, those kinds of visits, led by [cabinet level] ministers have real value. They signify the importance of the relationship; they provide entrée and access to senior decision makers in the Cuban government. [Canada’s] global competitors have been very active in this. “

In the wake of the normalization of U.S. diplomatic ties with Cuba, senior ministers from several major trading nations have descended on Havana in recent months, accompanied by senior executives from major corporations headquartered in those countries. For example, the President of France brought some 70 French companies; the Spanish prime minister, almost the same number; and likewise from Mexico and elsewhere. Meanwhile, Canadian leadership have undertaken no such large-scale missions in Cuba, of late, perhaps out of a sense that such missions are not necessary, given the decades of mutual goodwill. Despite Canada’s world-famous expertise in telecommunications, Orange S.A., the French telecom company, signed a deal to assist in the development of Cuba’s (government monopoly) telephone network in July 2014. “It’s the kind of deal we could have done, but we just didn’t bother to go there and do it,” Entwistle said.

What role can Canadians play in the Cuba of the future?

The Cuban government has outlined the important role to be played by foreign investment flows in the sustainable development of the country. In 2014, Cuba’s minister for foreign trade and investment said on state TV that the country needs a sufficient volume of foreign capital in order to achieve its economic growth target of 7 per cent a year. Its goal is attract $2 billion to $2.5 billion in foreign direct investments each year, notes Philip Peters, President of the Cuba Research Center. Peters says that target is “pretty ambitious,” given the fact during the entire 1990s, Cuba managed to attract a total of only $4 billion to $5 billion in inward foreign investment.

What will that expansion mean for Canadians? Economist Ritter believes that there are two ways of looking at the ultimate impact of the arrival of so many Americans on Cuban soil. One of those ways is positive; the other is negative. “There will be two kinds of effect. One will be a squeezing out effect in some areas. But there isn’t that much to be squeezed out, so I don’t think we lose so much,” added Ritter, in terms of current Canadian market share in Cuba; given the limited range of Canadian success stories in the world of industry.

When it comes to the tourism sector, there is a divergence of views. Ritter said that “a second squeezing-out effect will take place in the tourism industry, as the tsunami of tourists arrives from the United States. They could squeeze out a lot of Canadians,” given the fact that the typical Canadian tourist in Cuba has a more modest budget than his or her counterpart from the United States. Other analysts, including Entwistle, believe that there will be plenty of room in Cuba – the largest island in the Caribbean – for tourists traveling on all kinds of budgets, from modest cottages suitable for hippies to jet-set plutocrats. The key is to build the infrastructure that supports that expansion for all segments of the market. That’s an area where Canada can fill the gap with additional capital.

A range of enticing new opportunities may open for Canadians to export to Cuba and invest in that country, in partnership with Americans and other newcomers to the island. If the newly pragmatic Cuban government is as transparent as optimists say it will be, Canadians will be making more money in Cuba even if they wind up owning a smaller share of a much larger Cuban pie. Some Canadian companies could play a key role as intermediaries; consultants who advise and partner with U.S. companies that don’t already know Cuba the way a handful of Canadians know it. Apart from their greater familiarity with Cuba, argues Petrolekas, Canadians have this advantage: “There is not a sense that we [Canadians] are there to exploit Cubans. They like us from that standpoint. There are enough companies that operate cross-border between the U.S. and Canada, and we can certainly assist in that.”

How Canadians can improve their chances of success in Cuba

What steps can Canadians take to improve their chances of success? Entwistle notes that “the trick to improving your chances in Cuba is to align [your initiatives] with the Cuban government’s priorities, which have more to do with the real, basic economy than with the bells and whistles of advanced high-technology [economies]. The Cubans are remarkably smart. They have a home-grown leadership that is very serious, very earnest, analytical and methodical.”

Entwistle advises Canadians to study the priorities outlined in the 2014 foreign investment law, which target agricultural development; basic manufacturing, including such substitutes for imports as glass bottles and aluminum cans; and renewable energy, including wind power. In the past, Cuba has benefitted from low-priced, subsidized energy imports from Venezuela, but that country has been suffering economic and political disarray. That makes it riskier than ever for Cuba to depend on Venezuela for low-priced energy imports in the future, industry analysts agree. Another Cuban priority is biotechnology: Close to a dozen biotech institutes have been built in Cuba; meanwhile, Novartis and AstraZeneca – two European pharma companies – have a significant presence in the country.

Tourism remains particularly enticing. Cuba is looking for foreign partners to expand its hotel sector infrastructure quickly, in preparation for the huge flood of American tourists. Canadians may also be able to leverage growing demand for ‘medical tourism,’ which could develop into a huge source of revenue for the island, and for joint-venture partners from capitalist countries. World-famous for its quality, the Cuban medical system is offering medical services for Canadians via Health Services International (Servimed), an agency officially recognized by Cuba’s national medical system. Demand for such services is expected to grow, as well, in the United States, once full trade relations are normalized.

In conclusion, cautions Entwistle, “Cuba is not an economy that is for profiteering in any way; or for get-rich schemes, or getting in and out. This is a long-haul, strategic, patient market that is evolving in front of our eyes; at a very Cuban pace. You need a longer term vision. The companies that have been successful in Cuba have that long term vision, which allows them to ride the fluctuations of the daily ups and downs of doing the actual business. My advice is do less pitching and more listening. And if your business is in areas that are Cuba’s priorities, then you have a real good chance.” If he’s right, Canadians’ cultural aversion to flashy, get-rich-quick salesmanship could work out to their advanta

 

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CANADIAN CEO RETURNS HOME AFTER IMPRISONMENT IN CUBA

DANIEL TROTTA

HAVANA — Reuters; , Feb. 21 2015, 2:00 PM EST

Original here: http://www.theglobeandmail.com/news/national/canadian-ceo-returns-home-after-imprisonment-in-cuba/article23139650/

 Cuba has freed Canadian businessman Cy Tokmakjian after more than three years in jail, his company said on Saturday, resolving a case that had strained Cuban-Canadian relations and alarmed foreign investors.

Tokmakjian, founder of the Ontario-based company, was convicted of bribery and other charges and sentenced to 15 years in September in what the transportation company had called a “show trial” and a “travesty of justice.”

Cuban prosecutors had outlined a pattern in which Tokmakjian wooed Cuban officials and their families with a series of gifts, helping the Tokmakjian Group do business estimated at $80 million annually with Cuba until the company was shuttered and its founder arrested in September 2011.

Tokmakjian “was welcomed home by his family, friends, and thousands of employees,” said the company statement, which also thanked the Canadian government. A spokesman said the 74-year-old was released early Saturday.

The statement made no mention of two Canadian aides from the Tokmakjian Group, Claudio Vetere and Marco Puche, who were also convicted and sentenced to 12 and 8 years. They had been under house arrest pending trial and while their convictions were being appealed.

Fourteen Cubans including the former deputy sugar minister and the former director of the state nickel company were also convicted and sentenced to terms ranging from 6 to 20 years.

Foreign companies and diplomats had raised concerns that Tokmakjian’s case could scare off investors while Cuba was actively seeking foreign capital. It also annoyed Canada, a major trading partner.

“His ordeal is a cautionary tale to any investor who thinks the Cuban playing field is level,” said Peter Kent, Tokmakjian’s member of parliament.

Cuba seized about $100 million worth of company assets including bank accounts, inventory and office supplies, a ruling the company was challenging in international arbitration.

No immediate reason was given for the sudden release of Tokmakjian, whom Cuba had previously hailed as a model business partner over 20 years for supplying crucial transportation equipment during a severe economic crisis after the collapse of the Soviet Union.

The company was later caught up in an investigation of Cuba’s international trading sector, part of a crackdown on corruption.

cy7Cy Tokmakjian

Throughout the time Tokmakjian was tried in June and sentenced in September, the Canadian government was helping the United States and Cuba by serving as host to secret talks on restoring diplomatic ties.

It was unknown whether Canada’s role had any influence on Tokmakjian’s release.

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CANADIANS SUDDENLY RACING NOT TO SQUANDER HEAD START IN CUBA

Peter Kuitenbrouwer | January 30, 2015, Financial Post

Original here: Canadians Suddenly Racing

Mark Entwistle could not resist a smile at lunch time Tuesday as he gazed out over a packed room at Gowlings’ head office in Toronto’s First Canadian Place office tower. He had not seen some of these lawyers and business leaders in many years.

“In the mid 1990s, after the fall of the Soviet Union, Cuba was the new frontier,” Mr. Entwisle, Canada’s ambassador to Cuba from 1993 to 1997, recalls in a later interview. “We had almost an invasion of junior Canadian mining companies. We were doing all kinds of deals. Then Cuba stopped experimenting as much with foreign investment. Bre-X happened on the mining side, and all the juniors left because the money dried up.” The U.S. Helms Burton Act of 1996, which penalized foreign (such as Canadian) companies trading with Cuba, also scared companies off.

The world shifted again Dec. 17, when Raúl Castro, president of Cuba, and Barack Obama, president of the United States, restored diplomatic relations after 55 years. On Bay Street, Cuba is sexy again.

“You can tell Cuba’s kind of moved its way up the food chain,” Mr. Entwistle joked to the assembled at the Gowlings lunch, “The new Cuba equation: the Cuban economy, Canada’s opportunity and America’s new place,” organized by the Canadian Council for the Americas. A think tank with a 40-year history, the council holds events to discuss politics and business in the Western Hemisphere.

On the surface this interest in Cuba seems paradoxical. Canada never broke diplomatic relations with Cuba after its revolution in 1959, and Canadians have longstanding and deep connections with Cuba, as tourists and as investors. Why show interest in Cuba now that the U.S. is thawing relations? To some extent, with the exception of Sherritt International Corp. — which generates about 75% of its income from nickel it mines in Cuba — Canada has squandered its opportunity to solidify its place as the premier business partner with Cuba during the many years when U.S. policy froze out American companies. But that is just half the story.

Cuba has been reluctant to let anyone invest very much in its economy; foreign direct investment in Cuba is less than a tenth of 1% of gross domestic product. That policy of going it alone has kept out many Canadians, too. U.S. laws have also frightened off Canadians. Now, with Cuba and the U.S. playing footsie, investors sense that Cuba may be opening up more generally, offering renewed opportunities for Canadians, who already know Cuba well, to make some money.

“The interest is rising again, getting back on the radar screens where it had been off,” Mr. Entwistle says, sipping an espresso macchiato in Nespresso, a grand coffee shop near his office that feels more like a Mercedes dealership. He arrived home from Havana on the very day of the US-Cuba deal. “I got off the plane on Dec. 17, my BlackBerry was exploding with stuff,” he says.

 TORONTO, ONTARIO: JANUARY 29, 2015--FOREIGN--Former Canadian ambassador to Cuba Mark Entwistle spoke with Financial Post reporter Peter Kuitenbrouwer at Toronto's Nespresso Cafe, Thursday January 29, 2015. Entwistle is now active in advising Canadian companies who may wish to invest in Cuba. [Peter J. Thompson/National Post]    [For Financial Post story by Peter Kuitenbrouwer/Financial Post]  //NATIONAL POST STAFF PHOTO fp013115-pes-cuba

Mark Entwistle

Mr. Entwistle has teamed up with Belinda Stronach, the former MP and Magna International Inc. executive, and Anthony Melman, a former managing director at Onex Corp., among others, to form a boutique merchant bank, Acasta Capital. One investment that interests the firm: Cuba. In the past month Americans have started calling him, seeking his advice on investing in Cuba, he says.

At the Cuba lunch, Mr. Entwistle warned Canadians not to be smug about their connection to that country.

“There is this mythology that we have a special influence with the Cuban government. That does not give Canada a free ride in Cuba. Cuba is already a bustling, crowded place. Canadians will have to compete head-on.” Despite Canada’s world-class expertise in telecom, he noted, Orange SA, the French telecom company active across Europe and Africa, recently signed a deal to help Cuba’s telephone system. “It’s the kind of deal we could have done,” he says. “We just didn’t bother to go there and do it.”

And there was one consensus in the room: Cuba is poised for takeoff. Juan Triana Cordoví, an economist at the University of Havana, spelled out the potential of his country. Cuba’s health care system is among the best in the Americas; its infant mortality rate is below that of the United States. Of its 10.5 million people, 11% have a university education. Cuba has 14 universities. At the same time, he did not seem overly optimistic about the possibility of more foreign investment. Mr. Triana also noted the impressive bond between Cuba and Canada: 1.2 million Canadians visited Cuba in 2014, compared with just 90,000 Americans.

 “That was one of the best things about Cuba,” a lawyer at the lunch in Toronto remarked ruefully. “No Americans.”

Now the Yanks are coming. By one estimate, with the Obama administration relaxing rules on travel, a half-million Americans will visit Cuba this year. “Too many Americans in Cuba,” one Cuban remarked at the lunch.

The Canadian Council for the Americas brought the same panel to a Wednesday event at the Borden, Ladner Gervais law firm in Ottawa. Diplomats from Switzerland, Indonesia, Korea and the Dominican Republic attended. Ken Frankel, who runs the Canadian Council for the Americas out of Washington, D.C., says Canadians’ current interest in Cuba is partly motivated by fear. “Does this mean that U.S. business is going to flood into Cuba and push out the Canadians?” he asks.

Americans are certainly keenly interested. Devry Boughner Vorwerk, vice-president of legal affairs at Cargill, Inc., the agricultural giant, heads the U.S. Agricultural Coalition for Cuba, and spoke to the Toronto lunch from Washington via Skype.

Agriculture in Cuba has a lot of upside potential, thanks to rich soil and an educated workforce, experts agree. “You throw seeds in the ground and things grow,” says Mr. Entwistle. “You have a professional agronomist class.” However, historically Cuba has focused on growing sugar, and the country has little farm equipment. “Conceivably Cuba could become a major exporter of fruits and vegetables to the U.S.,” he suggests. “There is a perfect storm of untapped ingredients for agriculture.” Brazil has already begun to invest in agriculture in the island nation.

“I am working with people in agriculture,” Mr. Entwistle said, declining to name them. “I think it’s a big strategic sector for Canadian interests.”

Ricardo Alcolado Perez, who grew up in Cuba, runs his own law practice in Toronto and helps Canadian companies invest in Cuba. But many investors are gun shy. Historically, Cuba defaulted on some of its debts to Canadians, he says. U.S. laws pose another obstacle. It may seem odd, given the flood of Canadian tourists, that Canadians have not invested in hotels in Cuba, as the Spanish have. “The Four Seasons are not going to go to Cuba, over fear of losing business with the U.S. They also face the risk of being incarcerated,” he notes.

“I am working on a few projects,” Mr. Alcolado Perez adds. “One is a Canadian company who would like to raise funds in B.C. to build a hotel in Cuba.” He also has U.S. clients who do business in Cuba through Canadian firms. Information technology also offers opportunity, he adds.

“In the last 10 years Cuba has invested in training high-tech specialists. There are a lot of young guys who are very skilled,” says Mr. Alcolado Perez. “Already companies in Canada outsource software development to Cuba.”

In the last 10 years Cuba has invested in training high-tech specialists. There are a lot of young guys who are very skilled

Tom Timmins, a partner at Gowlings, heads the firm’s global renewable energy law practise. Like many Caribbean countries, Cuba produces electricity with generators powered by imported bunker oil, he says — even though wind energy costs 6.7¢ per kilowatt-hour, compared with up to 35¢ for diesel. Mr. Timmins is working with Carbon War Room, a charity founded by Richard Branson of the Virgin Group, to help Caribbean islands generate power from wind, solar and biomass.

“Cuba has a goal of 40% renewables and I think they will exceed that,” he says. “Because of [Ontario’s] feed-in tariff program, we’ve gotten really good at renewable energy and integrating it into the grid. A lot of the solar panels and wind turbines will be coming from China, but we can supply Canadian project developers, Canadian equity and Canadian debt.”

Cuba also has reserves in gold, silver, copper, other metals, as well as oil and gas.

Not much will change overnight, though. Polls show Americans favour lifting the U.S. embargo on trade with Cuba, but Mr. Obama, a Democrat, will face challenges getting a bill through the Republican-controlled Congress. And Cuba, concerned about social cohesion, will move cautiously to expand its small private sector.

Even so, the stars are aligning for major change in Cuba, and Canada will be there, says Mr. Entwistle.

“This not a hermit kingdom,” he says. “It is not an isolated place, but it’s one of the few markets around with a sense of untapped potential. There are a lot of ingredients for an economic takeoff in Cuba.”

Cuba Mar 2014 011 Cuba Mar 2014 042 Cuba Mar 2014 066

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CANADA’S INFLUENCE IN CUBA COULD WANE

by Dr. Peter McKenna

The Ottawa Citizen; Published on January 2, 2015

Original here: “Influence”

fidel castro3

It’s not surprising that Canadians were at the centre of trying to foster some sort of rapprochement between Washington and Havana. In fact, we’ve been trying to play the role of intermediary between the U.S. and Cuban governments for over 50 years.

Let’s remember that Canada has been viewed as a useful interlocutor because of our amicable relations with both Cuba and the United States. In short, we’ve had the crucial ingredient of trust in the eyes of the two governments.

According to some U.S. officials, Canada’s involvement in the most recent secret talks was nothing short of “indispensable.” We were undoubtedly the bridge that was needed to bring the two sides together.

As we look ahead, though, what will a U.S.-Cuba reconciliation mean for the future of Canada-Cuba relations? Will it weaken or strengthen the historical linkages between the two countries? Will we be able to use our uninterrupted relations with Cuba to gain special dispensation or favours from Havana going forward?

For the Cubans, Canada was one of only two countries in the Americas (the other being Mexico) not to sever diplomatic relations with Revolutionary Cuba in 1962. Since 1959, Canada has embraced a Cuba policy of dialogue, commercial exchange and principled engagement — which was highlighted by Prime Minister Pierre Trudeau’s 1976 visit to the country and Jean Chrétien’s difficult meetings in Havana with Fidel Castro in April of 1998.

Though relations between Canada and Cuba have not always been smooth or cordial (witness Ottawa’s refusal to invite Cuba to the Quebec City Summit of the Americas in 2001), neither side has deemed it necessary to shut down the channels of diplomatic communication. And the Cubans understand full well that the Canadians — who have been long-standing critics of the U.S. embargo against Cuba since the early 1960s — were not going to stab them in the back.

Canada, unlike the U.S., has been careful over the decades not to allow human rights considerations to impede bilateral relations with the Cubans. Official Ottawa has known for some time that hostility toward, and isolation of, Cuba has exhibited few tangible results.

castro_and_michelFidel with Margaret and Michel Trudeau, Michel not impressed!

For our American friends, we had “street cred” because Canadian officials in Cuba have been sharing with them intelligence on the country for over 50 years. They also knew that the Canadians have wanted the same things in Cuba as them since 1959 — political liberalization, respect for basic human rights and an open economy — while differing sharply on the means of securing those policy objectives.

It’s worth mentioning, though, that the normalization of U.S.-Cuban relations could have both positive and negative implications for Canada. We may very well benefit from seeing greater demand in Cuba for additional infrastructure projects (trading on our good name as long-time friends), investment opportunities in certain specialized sectors (like oil and mineral development along with financial and banking services) and from sharing Canadian expertise on tourism management.

But these recent developments could negatively impact Canada in terms of its own commercial relationship with Cuba (which exceeds $1 billion annually in two-way trade). While Canadian companies are highly regarded on the island, they could easily get squeezed out by their American competitors. As a result, we could eventually see a sharp decline in trade and investment dollars between Canada and Cuba.

In addition, a good part of Canada’s influence in Cuba is tied to Havana’s completely dysfunctional relationship with Washington. But as U.S.-Cuban relations take on greater importance, Canada’s leverage is likely to wane.

Still, this role of facilitator is precisely the kind of niche diplomacy that Canada should be conducting around the world — and thus Prime Minister Stephen Harper and Foreign Minister John Baird deserve a pat on the back. But we need to be vigilant here about making sure that both Havana and Washington don’t allow the enemies of normalization, and there are many, to undermine our outstanding efforts to date.

Peter McKenna is professor and chair of political science at the University of Prince Edward Island and the co-author of Canada-Cuba Relations: The Other Good Neighbor Policy.

UN-MILLENNIUM SUMMIT-CANADA/CUBA Fidel, perhaps listening?

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CANADIAN EXPAT TELLS OF CUBA’S EUPHORIA AFTER U.S. ‘GAME CHANGER’

TAVIA GRANT

The Globe and Mail, Friday, Dec. 19 2014, 8:03 PM EST

Original article: EUPHORIA

This week is not one Gregory Biniowsky will ever forget. The Canadian lawyer has lived in Havana for 23 years, a place where hope has regularly ebbed and flowed on expectations the United States would restore relations with the Caribbean island.

Change was always just around the corner. But it never materialized. Until Wednesday.

It was an “enormous” surprise when President Barack Obama announced the United States would normalize relations with Cuba, Mr. Biniowsky said.

Outside his home in Old Havana, church bells rang out and people cheered as Cuban President Raul Castro made his own simultaneous live broadcast confirming that three of the famed Cuban Five prisoners were released and that the two countries will renew diplomatic relations after 53 years of hostility.

Friends celebrated, some wept. Mr. Biniowsky described the mood in Cuba as euphoric.

The significance of the dramatic announcement go beyond relations between the U.S. and its much smaller next-door neighbour. Smoothing ties with Cuba will improve U.S. ties with Latin America as a whole, a region that long urged the U.S. to end its trade embargo. And it will have ripple effects on Canada’s long-standing relationship with the island, opening up both business opportunities and more competition, along with big changes in a favoured Canadian holiday destination.

“Across the political spectrum, from stalwart supporters of the Cuban revolution to intelligent opponents of the system, everybody is very happy,” Mr. Biniowsky said in a phone interview. “It’s not difficult to pick up on the extreme significance of it.”

The prospect of a lifting of the U.S. embargo on Cuba, he added, is a “game changer.”

Most poignant of all for him was hearing that Canada played a role in the fence-mending by hosting most of the secret talks over the past 18 months.

“Our government, regardless of who’s in power, has maintained a really honourable, constructive, intelligent policy towards Cuba. And the Cubans know that,” said Mr. Biniowsky, an international consultant who has advised the Canadian embassy and the United Nations in areas such as business, investment and social-impact projects.

The news made him “proud to be a Canadian,” he says, for “staying true to the tradition of being an honest broker.”

 cuba-main19nw2

U.S. and Cuban flags hang from a balcony in Old Havana yesterday. ‘Everybody is very happy,’ said Canadian expat Gregory Biniowsky.

While it will take congressional approval to end the trade embargo, Mr. Obama is pulling all the levers at his disposal to free aspects of trade and travel, including – in a key confidence-building move for foreign investors – plans to take Cuba off the U.S. list of state sponsors of terrorism.

International visitors, many of them Canadian, certainly love cheap vacations and the charm of a place where time seems to have stood still, a country free of malls and McDonald’s, where 1950s cars still cruise and Internet access is sparse and roads are still potholed.

But the reality is that Cuba’s economy is stuck. It’s hard to aspire to a better life in a country with little access to credit, convertible currencies and foreign investment. Foreign investors have shied away from the communist-run nation, not just because of its red tape, one-side legal dispute system and state-heavy approach but also for fear of U.S. reprisals. This has made it difficult to, for example, expand ports and roads or improve obsolete industrial plants or telecommunications services.

“It creates a condition of a country that can’t grow, because everything grows on credit and investment,” said Julia Sagebien, associate professor at Dalhousie University who was born in Cuba and has studied the island’s economy since 1994. She said she is “extraordinarily happy” over the changes. On her last trip in May, after four years of advising Cuba on economic reform and areas such as social enterprises and Canadian co-operative models, she was set to throw in the towel. The economy was “starting to freeze again,” she said, and only the lifting of the embargo could really get it going. Now “the patient in the coma has finally woken up,” she said. “The real rehabilitation comes now.”

Cuba is an attractive market. It’s the biggest island in the Caribbean with the largest population, at 11.2 million people. It has fertile land, a growing bio-pharma industry, thousands of new micro-enterprises and miles of beaches. And Cubans are justifiably proud of the country’s achievements with a well-educated population, long life expectancy and low crime rates. The huge income disparities visible through much of Latin America are absent in Cuba, though that has started to change with shifts in the economy, meagre public-sector wages and the growth of private businesses such as hair salons and cellphone repair shops.

Prof. Sagebien sees opportunities for Canadians – particularly in the next year before U.S. investors move in – in sectors such as infrastructure, agricultural inputs like fertilizer, equipment and parts, paper pulp, energy, mining, commercial banking and tourism. (Most U.S. citizens will still be prohibited from visiting Cuba, unless they have Cuban relatives or fit other categories including education and humanitarian workers.)

Canada and Cuba have long and colourful history. Relations date to the 1700s, when Atlantic schooners traded salt cod and potatoes for rum and sugar. Cuba was the first country in the Caribbean where Canada established a diplomatic mission and official relations began in 1945, according to the federal government’s website. Canada and Mexico were the only two countries in the hemisphere that never broke trade relations with the island. Former prime minister Pierre Trudeau struck a friendship with Fidel Castro and visited the nation in 1976. Cuba’s annual Terry Fox Run has become the world’s largest outside of Canada. The two countries retain close academic ties. And Cuba is among the top three destinations for Canadian tourists. Canada is, by far, Cuba’s largest source of tourists with more than a million visitors a year.

Mr. Biniowsky figures the U.S. will lift the travel ban ahead of the trade embargo, which could in turn double the number of tourists to the island to about six million people. That will juice the economy. And, he added, “who is going to be doing all the airport expansions, marinas, hotels and infrastructure? Well, Canadians, Europeans, Latin Americans, everyone else except for the United States. So we’ll have an interesting situation where the Cuban economy will begin to really heat up before the embargo is lifted because the travel ban will have been lifted.”

The Canadian tourism industry already sees a pick up in business in year ahead. Cuba Cruise, a new Canadian company that runs cruises that circle the island, and aim to give visitors a sense of the “Real Cuba,” said it expects increased bookings in the short term from international travellers. “eager to explore a country that is virtually free of American commercialization and chock full with charm before it might change.”

Once big U.S. cruise companies and tour operators jockey their way into the island, the picture is less clear, according to Dugald Wells, president and chief executive of Cuba Cruise. “What the competitive landscape is going to look like a year from now, that’s up to the politicians,” he said, adding that it’s with a bit of trepidation that we go forward.”

“There’s change in the air,” said Mr. Biniowsky. He cautioned that Cuba is not the easiest place to do business, but that it holds much promise. Canadians “need to get in now, position ourselves, create relations with the Cubans now, because the clock is really beginning to tick.”

He is optimistic about the future – even though it may mean growing throngs outside his house. “It will be a bit too touristy for me, and Cuba will lose a bit of its charm, because part of its charm is the lack of massive amounts of tourists. I don’t think Cubans are ready because of their infrastructure … so it’s going to be maybe a bit of a rough transition. But it’s good for the country, it’s hard currency for them.

“Let’s see how the Cubans manage – hopeful there won’t be a McDonald’s in old Havana, but we’ll see.”

grec

Gregory Biniowsky

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Sagebien & Spadoni: TWO ARTICLES ON THE IMPACTS OF US-CUBA NORMALIZATION ON CANADAIAN BUSINESS WITH CUBA

Below are links to two articles by Julia Sagebien and Paulo Spadoni on the impacts of US-Cuba normalization on Canadian business relations with Cuba.

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O CANADA, WILL CUBA STAND ON GUARD FOR THEE? PREPARING FOR THE END OF THE US EMBARGO ON CUBA       

       Attachment Here: SagebienSpadoni TIBR

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WILL THEY STILL LOVE US TOMORROW? CANADA-CUBA BUSINESS RELATIONS AND THE END OF THE CUBAN EMBARGO

Attachment here: SagebienSpadoni CanadaCuba Ivey

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