Foreign Investors Get the Boot as Cuba Recentralizes Its Economy
HAVANA — It has been more than a decade since Cuba, suffering from a post-Soviet economic collapse and worries about the U.S., opened its door to foreign businesses.
Now many investors -- mainly Europeans who took the plunge -- are being asked to leave.
Only half the homes rented to expatriates by the state's real estate monopoly are now occupied, and at the Havana International School, matriculation is down about a third from two years ago.
On average, one joint venture and two smaller cooperative production ventures have closed each week since 2002, when there were 700 in the country.
Joint ventures are done with government partners, which usually hold 50% or more of the shares. Cooperative production agreements involve a foreign investor that supplies machinery, credits and supplies in exchange for a share of profit or product, mainly in labor-intensive sectors such as light industry and food processing.
"I would not be surprised if in the end there are only around 50 joint ventures in the country and just a handful of cooperative production agreements," said an employee at the Foreign Investment and Economic Cooperation Ministry.
Relations with the European Union and other Western nations remain tense because of President Fidel Castro's repression of dissent, and Cuba is increasingly turning toward countries such as China and Venezuela, which it sees as being less influenced by the U.S.
Yet the purge appears to be related less to these factors than to the recentralizing of finance and trade and the elimination of the partial autonomy that state companies were granted in the 1990s. "Changes over the last two years are introducing significant corrections in the Cuban economy, considerably limiting the action of market mechanisms," Jose Luis Rodriguez, economy and planning minister, told local economists last month.
Cuba is now interested in partnering only with well-known companies in strategic sectors of the economy, says Marta Lomas, foreign investment and economic cooperation minister.
Big companies, some operating through subsidiaries, are holding their own. They include Swiss giant Nestle (bottled water and other consumer goods), Pernod Ricard of France (rum), Telecom Italia (telecommunications), Sherritt International of Canada (nickel, oil, gas and power) and British American Tobacco (cigarettes) and Sol Melia of Spain (tourism).
