http://havanajournal.com/business/entry/louisiana_governor_kathleen_blanco_explores_business_ties_with_cuba/

HavanaJournal.com: Cuba Business

Louisiana Governor Kathleen Blanco explores business ties with Cuba

Posted March 06, 2005 by publisher in Cuba Business.
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By James Varney | Times Picayune Louisiana

On Tuesday, as she steps off a flight to Havana, Gov. Kathleen Blanco will become Louisiana’s first chief executive to visit Cuba, an official journey that she says is focused on economic issues but which inevitably is wreathed in political tension.

Opponents of the regime of President Fidel Castro, 78, one of the last redoubts of communism in the post-Soviet era, fault Blanco for dignifying a dictatorship while ignoring lucrative opportunities in democratic Latin American countries. Proponents of more normalized contact with Cuba see wisdom in her positioning Louisiana to take advantage of business opportunities, immediately and even more so after Castro’s eventual demise.

Blanco has declined interview requests repeatedly over two weeks and has not answered questions that an aide in late February asked for in writing. But Cuba watchers said the reasons for her visit aren’t hard to discern.

“She’s looking for trade opportunities and sees some Midwestern states have partnered with Cuba with great success,” said Anna Lopez, director of Tulane University’s Cuban and Caribbean Studies Institute. “Poor Louisiana could use all the help it can get, and this is all perfectly legal, so why not do it?”

Some Baton Rouge officials involved in planning the trip have steered conversation away from the political issues raised by foes of the Castro regime. The anti-Castro elements in the United States are outspoken and politically active, and support for a trade embargo remains firm in the Bush administration. But although aides say Blanco is aware of the politics surrounding trade with Cuba, her goals are economic, not ideological.

“Everybody involved in this is going strictly to do business and not to do something politically,” said one. “We’re going to sell our stuff.”

Regardless of intent, Blanco and her entourage—including business leaders as well as other state officials—will encounter an impoverished nation that has made grudging concessions to free markets while trying to maintain state control of the overall economy, according to recent reports by the U.S. State Department and the CIA.


Suffering economy


The population of about 11 million, spread out on an island slightly smaller than Pennsylvania, boasts high literacy and low AIDS rates, reflecting an aggressive campaign to quarantine the infected. In addition to abundant sugar and tobacco crops, Cuba has natural resources of cobalt, nickel and arable land, as well as oil reserves that have been a source of recent speculation. Tourism has become the cornerstone of an economy desperate for hard currencies, with Europeans and Canadians making up the largest percentage of visitors.

Cuba’s labor force of almost 5 million produced a 2.6 percent increase in gross domestic product in 2003, according to U.S. calculations, or almost double that according to Havana’s official statistics. But that same year, the country’s national debt topped $30 billion, and Cuba ran a $273 million annual deficit. Economically, Cuba still has not recovered from the loss of the gargantuan aid packages from Moscow that kept the island afloat during the Soviet era.

The potential customers for Louisiana exports have felt that pinch.

“The average Cuban’s standard of living remains at a lower level than before the depression of the 1990s,” the CIA says.

The regime’s human rights record is equally abysmal. In a Feb. 28 report, the State Department said Cuba routinely continues “to harass, threaten, arbitrarily arrest, detain, imprison and defame human rights advocates and members of independent professional associations, including journalists, economists, doctors and lawyers.” On the bright side, the State Department said, there were no reports of summary executions or extrajudicial killings by authorities in 2004, unlike previous years.

Reaching out

Although it will surely take a while for Cuba to begin to realize its economic potential, Louisiana has a vested interest in it. Though other states have whittled away at the state’s commanding dominance of maritime traffic, Louisiana remains the departure point for goods sold to Cuba under the embargo relaxations approved by Congress in 2000, according to figures tracked by the U.S.-Cuba Trade and Economic Council, a nongovernmental agency that tracks economic issues from New York.

In December, Michael Olivier, Blanco’s secretary of economic development, led a smaller delegation to Havana, and the Port of Lake Charles wound up signing a “memorandum of understanding” with Cuba acknowledging mutual trade interests. The memorandum took effect immediately, but some Lake Charles officials involved caution against making too much of it.

“To be honest, it’s really just a ceremonial thing,” said Nathan Sukiennik, who leads the marketing arm of the Port of Lake Charles and who inked the agreement in Havana. “They said they will look at Lake Charles as a favorable port, and we said we would look at establishing business with Cuba.

Sukiennik noted that all the port’s business would be with U.S. exporters, not Cuban agencies, and that there are no specified dollar amounts or tonnages anticipated. In other words, any money that might eventually flow from the arrangement affirmed in the memorandum of understanding will not prop up Castro’s regime, a common complaint of people opposed to business activity between Cuba and the United States.

“There weren’t any political ramifications,” Sukiennik said.

Since the embargo was relaxed to allow shipments of agricultural and medical products to Cuba, Lake Charles has emerged as a port with a foothold in the island market. Last year, about 80,000 tons of agricultural goods, mostly peas that originated in the Pacific Northwest, departed Lake Charles for Cuba. Prior to Castro’s revolution and the subsequent embargo, however, shipments of rice alone from Lake Charles to Cuba totaled more than 300,000 tons a year.


Tied to politics?


But Sukiennik’s assumption that the deal is politically neutral is naive, according to John Kavulich, who is president of the U.S.-Cuba Trade and Economic Council. Kavulich warned Louisiana officials that the type of understanding the Port of Lake Charles struck with Alimport, the government agency that controls agriculture in Cuba, is “a corruption of the commercial process.” The memorandums usually include language that asks the U.S. side to lobby for additional relaxations in the embargo, according to Kavulich and the State Department.

Kavulich labeled the agreement “about as quid pro quo as it gets” and said that the ceremonial value is dear to Cuba because its leaders use the deals as levers to push for further relaxations of the embargo. But Kavulich acknowledged that the trade in agricultural and medical goods is entirely legal, provided the Cubans pay cash in advance for the shipments.

And Lake Charles is not alone in its ambition to regain standing as a gateway to Cuba. The Port of New Orleans is aggressively pursuing business with Havana, which, before Castro took charge, was its single biggest trading partner. The tonnages shipped to Havana have risen steadily during the past three years, making New Orleans No. 1 last year among U.S. ports doing business with Cuba. Gary LaGrange, chief executive of the Port of New Orleans, and four other port officials will accompany Blanco. LaGrange, who has made other trips to Cuba, did not respond to several requests for an interview.

“Port facilities in the state of Louisiana exported 49 percent of all food products and agricultural products to the republic of Cuba in 2004,” according to the trade council’s Feb. 13 study, “Economic Eye on Cuba.” Almost $194 million worth of goods shipped to the nation came from Louisiana ports, topping the figures from Alabama, Texas and Florida.


Competition emerges


Since December 2001, when the first shipment to Cuba under the relaxed embargo departed from New Orleans in recognition of its trading history with the island, Louisiana has handled almost 56 percent of all U.S. exports to Cuba, the trade council said. Since then, the yearly gross has rocketed from $2.3 million to just shy of $200 million.

But Louisiana ports already face competition in their trade with Cuba. Last month, the executive director of the port at Gulfport, Miss., traveled to Havana and renewed an agreement that Gulfport hopes will make it the premier facility for container cargo bound for Cuba.

“Competition among ports in the United States is very, very aggressive right now, so when free trade with Cuba becomes a reality, it is going to be equally aggressive,” Gulfport’s Donald Alle said.

Olivier, who worked in economic development on the Mississippi coast before the Blanco administration hired him to lead the charge for Louisiana, said the group traveling to Cuba has designs beyond ports. The delegation includes 16 private business executives looking for a deal.

“We plan to leave with a memorandum of understanding that Cuba will buy a certain amount, somewhere between $4 (million) and $5 million, of Louisiana products,” he said. “If not specific contracts, at least leave with an indication that a contract will be forthcoming.”

But for Kavulich and for foes of enhanced U.S. relations with Cuba, business considerations are less important than the politics. Kavulich said he will be watching to see whether Blanco acknowledges that she is trafficking with a dictatorship.

“Is she going to have a meeting with the U.S. interests section? Is she going to meet with any dissidents?” Kavulich asked, noting that three Republican governors who preceded her to Cuba—Jesse Ventura of Minnesota, George Ryan of Illinois and John Hoeven of North Dakota—did just that on trips between 1999 and 2002, signalling their awareness that life in Cuba is no bed of roses.

Drawing criticism

It is unclear how a meeting with the Bush administration’s top official in Havana, James Cason, would play with the dictatorship. Cason, a hard-liner, has rankled his Cuban hosts with outspoken criticism of Castro’s rule. In December, Cason had a large “75” put up in Christmas lights around the interests section building, a twinkly reminder of the number of librarians, journalists and other dissidents Castro jailed in a 2003 crackdown.

Last year, Cuban authorities released 13 of those 75 dissidents. The government said the releases were for health reasons, but pressure from the European Union, which over the past few years has pursued a policy of deepening trade and cultural relations with Cuba, also played a role, according to a variety of U.S. and European newspapers.

Whether or not Blanco will come to face to face with The Bearded One, as Castro is sometimes called, remains an open question. Kavulich said that, historically, Castro has been a master at exploiting the propaganda potential of visits by elected officials as high-ranking as Blanco, and he said it is a near certainty that Castro will seek a meeting. State Department officials in Washington also expressed concerns the delegation’s hosts may steer them into events designed purely for political, rather than economic, purposes. Louisiana officials acknowledged they are aware of how Castro might want to play Blanco’s official trip, but said they hope the visit can remain politically neutral in appearance as well as spirit.

“What Castro wants to happen, happens, and it could be he will want to meet formally or arrange something so that he bumps into the governor,” one official said, requesting anonymity. “I’m not saying we’re trying to discourage that or that we’ve put out word we don’t want that to happen, but I want to be very clear that we’re not actively seeking such a meeting, and we haven’t talked to anyone about trying to set it up.”

Some members of Louisiana’s congressional delegation said the issues surrounding Cuba make the state’s effort tricky. Rep. Bobby Jindal, R-Kenner, said he would stick to his pledge to not critique decisions made by the woman who beat him in the gubernatorial race, but he noted there are both federal and local issues at stake.

“America is fighting a war against terror, so we need to be careful any time we engage a country that is a state sponsor of terrorism,” he said. “We don’t want to lose any ground to Houston or Miami, but while Cuba is a dictatorship and a state sponsor of terrorism, we need to tread carefully.”

In New Orleans, the Cuban community opposed to Castro’s rule has been less circumspect. At a news conference Friday, local representatives of the fiercely anti-Castro Cuban-American National Foundation blasted the trip. It was follow-up to an open letter to Blanco signed by 150 local Cubans decrying the impending visit. Neither the economy nor the government of Cuba make it an attractive trading partner, the letter said.

“To visit Castro is to empower and legitimize him. He only deserves our contempt,” it said. “No doubt you will sign some propagandistic agreement that will bring nothing long-term to Louisiana but shame and ridicule. Go to Latin America and establish links with financially viable countries who are not our terrorist enemies.”

Member Comments

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On March 06, 2005, publisher wrote:

To the Govenor:

Do what is right for the people and economy of your state and don’t listen to the wacky CANF. No one else (except President Bush) does.

What is more important in the future?

a. Your relationship with a micro minority of Cubans called CANF

b. The millions of dollars in legal foreign trade for the economy of Louisiana?

If you have never been to Cuba before, you will be planning your next trip back on your way home.

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On March 07, 2005, jesusp wrote:

You’ve got a seller and you’ve got a buyer willing to pay cash, only an obtuse ideologue would turn down that deal. Cheers for Gov. Blanco.