And on the Other Side of the U.S. Tightening of Cuban Trade and Travel: Cuba Puts Up a Statistically Brave Face and U.S. Companies Continue to Invest in the Face of Revised State Deparment List of Restricted Entities

(Pix  ©Larry Catá Backer 2017)

Even as the new U.S. regulations touching on travel and trade were being announced (see, here), Cuban authorities were ensuring that their narrative was also much in evidence.  That narrative, that the Cubans continue to do just fine without American investment can be taken both as an indication that the U.S. Embargo continues to work as it always has and that the Cuban are prepared to live as they have become accustomed to since the 1990s.  “We have signed 30 agreements so far this year... There are another 80 negotiations in progress, of which 15 are nearly completed, and we may sign some before the end of the year,” Foreign Trade and Investment Minister Rodrigo Malmierca told an investment forum in Havana on Tuesday. (Marc Frank, Cuba reports record $2 bln in foreign investment deals, Reuters 31 Oct. 2017)

At the same time, U.S. enterprises continue to invest in Cuba and that may appear to work against the U.S. objectives (regime change). Another recent story suggested that U.S. companies are still willing to invest, perhaps assuming that the current state of affairs is temporary.  That is particularly relevant to the latest announcement by Caterpillar "the first U.S. company to locate in Cuba’s Mariel Special Economic Development Zone has paid off for a Caterpillar distributor. Cuba gave RIMCO, Caterpillar’s Puerto Rico-based dealer, the green light to set up a warehouse and distribution center." (Mimi Whitefield, "Caterpillar distributor is first U.S. company to get green light to set up shop in Cuba’s Mariel zone," Miami Herald, Nov. 3, 2017). And the company has been working hard to make investments in Cuba, including donations, that might enhance its position with Cuban State authorities. 

Last, it is worth remembering that to the extent that foreign investment is now channeled through the special economic zones--especially Mariel--that source of investment may now be closed off to U.S. investors without waivers and review. Among the restricted entities on the new State Department List are Dirección Integrada Proyecto Mariel (DIP)(GAESA), Zona Especial de Desarrollo Mariel (ZEDM), and Zona Especial de Desarrollo y Actividades Logísticas (ZEDAL). Recall as well that in the context of U.S. Cuba trade approvals from both the U.S. and Cuba are invariably necessary. Enterprise charitable contributions also might require extra care in the wake of the new regulations.

The news reporting from which these items were draw, plus the State Department "List of Restricted Entities and Subentities Associated With Cuba as of November 9, 2017," follow.

Cuba reports record $2 bln in foreign investment deals
Marc Frank

HAVANA, Oct 31 (Reuters) - Cuba said on Tuesday it had attracted $2 billion in investment agreements so far this year, a record pace and an indication that deteriorating relations with the United States have not significantly dented investor interest in the country.

Former U.S. President Barack Obama’s efforts at detente stimulated international interest in doing business with Cuba, while President Donald Trump has promised to once more tighten 50-year-old sanctions.

“We have signed 30 agreements so far this year... There are another 80 negotiations in progress, of which 15 are nearly completed, and we may sign some before the end of the year,” Foreign Trade and Investment Minister Rodrigo Malmierca told an investment forum in Havana on Tuesday.

The agreements signed included 16 ventures, 11 with 100 percent foreign ownership, and 14 administrative and production agreements, he said.

Malmierca gave no further details, but other functionaries have told the state-run media they are clustered mainly in the tourism and energy sectors.

The Cuban government says it needs a minimum $2 billion in foreign investment annually to significantly grow a stagnating economy as part of a series of reforms under President Raul Castro to update its Soviet-style system.

Direct foreign investment has averaged in the hundreds of millions for more than two decades, according to Cuban economist Omar Everleny.

Cuba passed a law in March 2014 offering investors steep tax cuts and promising a climate of investment security.

Malmierca said that since 2014, projects valued at $4 billion had been approved, but it was not clear how much of the capital had actually been invested.

For example, deals for five golf resorts valued at close to $2.5 billion have been signed with British, Chinese and Spanish investors, but ground has yet to be broken on any of them, according to foreign businessmen and diplomats with knowledge of the projects.

Malmierca said the country was working to overcome numerous obstacles for investors, such as lengthy delays for project approval, lack of experience among Cuban negotiators and the dual monetary system with fixed exchange rates.

Raul Castro took over for his ailing and since-deceased brother Fidel in 2008 and is expected to step down in February.

Under Fidel Castro foreign investment was viewed as an unfortunate necessity in the Communist-run Caribbean island. Today it is viewed as an integral part of the country’s development plans.

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Caterpillar distributor is first U.S. company to get green light to set up shop in Cuba’s Mariel zone

By Mimi Whitefield
mwhitefield@miamiherald.com

November 03, 2017 7:30 AM


A slow, steady campaign to become the first U.S. company to locate in Cuba’s Mariel Special Economic Development Zone has paid off for a Caterpillar distributor. Cuba gave RIMCO, Caterpillar’s Puerto Rico-based dealer, the green light to set up a warehouse and distribution center.

Ana Teresa Igarza, managing director of the zone, said at a news conference during the Havana International Fair — Cuba’s largest commercial fair — that RIMCO hoped to open in the zone in 2018. The Cuban newspaper Juventud Rebelde also reported that a shipment of John Deere agricultural equipment was expected to arrive in Cuba in mid-November for testing with an eye toward possible sales by Illinois-based Deere & Co. to Cuba.

During a recent interview with the Miami Herald, Igarza said Cuba also was in advanced negotiations with another U.S. company in the biopharmaceutical field that was interested in locating at Mariel, which is 28 miles west of Havana.
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Cuba has high hopes for the 115,000-acre zone, which includes the Mariel container port, and wants it to become its hub for high-tech, advanced manufacturing and sustainable development. Although 31 companies — both Cuban and foreign — have been approved for the zone, construction on many facilities is just in the beginning stage. Investment in the ventures comes from 14 countries.

Currently nine companies are in operation in the four-year-old Mariel zone.


During the fair, which ends Friday, Cuba’s Ministry of Foreign Trade and Investment announced its new 2017-2018 investment opportunities portfolio. It includes 456 investment projects open to foreign investors that are worth more than $9.5 billion. Cuba is seeking $1.7 billion in investment for the Mariel special zone, $2 billion for agriculture projects and $898 million to build new hotels and other tourist facilities.

The RIMCO deal could be one of the last signed before the Trump administration tightens up on business dealings with Cuba. Under a Cuba policy that President Donald Trump outlined in June, direct transactions between companies under U.S. jurisdiction and enterprises related to the Cuban military, intelligence or security services will be prohibited.

The Mariel zone is controlled by Almacenes Universales, a company that operates under the umbrella of GAESA, a sprawling conglomerate run by Cuba’s military.

But U.S. companies that have signed deals in advance of the issuance of the new Trump administration rules will be grandfathered in. The regulations are still being written.

“Despite President Trump’s harsh rhetoric, Cuba is open for business. The question is, will President Trump and Congress allow U.S. companies to compete for these growing opportunities, or keep them on the sidelines as Cuba’s markets continue to grow?” said James Williams, president of Engage Cuba, a group that lobbies for normalization of relations between the United States and Cuba.

RIMCO is getting in under the wire.

“We are going to set up a warehouse and distribution center at Mariel and we will be distributing Caterpillar equipment,” Caroline McConnie, RIMCO vice president, said at a news conference during the fair. “We have a license from the Commerce Department and other agencies.”

Caterpillar, a heavy equipment manufacturer based in Peoria, Illinois, announced in February 2016 that it had named RIMCO, a private family business, to be its Cat dealer in Cuba in preparation for the day the embargo is lifted. But the Mariel deal advances that timetable. Caterpillar makes construction and mining equipment, power systems, and marine and industrial engines.

RIMCO serves as the exclusive Caterpillar dealer for Puerto Rico, the U.S. Virgin Islands, the British Virgin Islands, Barbados, and other Eastern Caribbean islands. It also distributes other equipment brands but has had a more than 35-year relationship with Caterpillar.

Caterpillar officials said current embargo law would not permit the manufacture of Caterpillar equipment on the island. But since 1998, Caterpillar has been among the corporate leaders in pushing for lifting of the embargo.

Caterpillar and the Caterpillar Foundation also have donated $500,000 to The Finca Vigía Foundation, which works to restore and preserve the Cuban home of the late Ernest Hemingway. Last year Caterpillar also donated a skid-steer loader to be used in the construction of the Taller building, an archival storage and conservation facility on the grounds of the Hemingway home in San Francisco de Paula, Cuba.

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State Department "List of Restricted Entities and Subentities Associated With Cuba as of November 9, 2017"

Bureau of Economic and Business Affairs

November 8, 2017

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Below is the U.S. Department of State’s list of entities and subentities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba. For information regarding the prohibition on direct financial transactions with these entities, please see the Department of the Treasury’s Office of Foreign Assets Control website and the Department of Commerce’s Bureau of Industry and Security website.
*** Entities or subentities owned or controlled by another entity or subentity on this list are not treated as restricted unless also specified by name on the list. ***

Ministries

MINFAR — Ministerio de las Fuerzas Armadas Revolucionarias
MININT — Ministerio del Interior

Holding Companies

CIMEX — Corporación CIMEX S.A.
Companía Turística Habaguanex S.A.
GAESA — Grupo de Administración Empresarial S.A.
Gaviota — Grupo de Turismo Gaviota
UIM — Unión de Industria Militar

Hotels in Havana and Old Havana

Aparthotel Montehabana (Habaguanex)
Gran Hotel Manzana Kempinski (Gaviota)
H10 Habana Panorama (Gaviota)
Hostal Valencia (Habaguanex)
Hotel Ambos Mundos (Habaguanex)
Hotel Armadores de Santander (Habaguanex)
Hotel Beltrán de Santa Cruz (Habaguanex)
Hotel Conde de Villanueva (Habaguanex)
Hotel del Tejadillo (Habaguanex)
Hotel el Bosque (Habaguanex)
Hotel el Comendador (Habaguanex)
Hotel el Mesón de la Flota (Habaguanex)
Hotel Florida (Habaguanex)
Hotel Habana 612 (Habaguanex)
Hotel Kohly (Habaguanex)
Hotel Los Frailes (Habaguanex)
Hotel Marqués de Prado Ameno (Habaguanex)
Hotel Palacio del Marqués de San Felipe y
Hotel Palacio O'Farrill (Habaguanex)
Hotel Park View (Habaguanex)
Hotel Raquel (Habaguanex)
Hotel San Miguel (Habaguanex)
Hotel Telégrafo (Habaguanex)
Hotel Terral (Habaguanex)
Memories Miramar Havana (Gaviota)
Memories Miramar Montehabana (Gaviota)
Santiago de Bejucal (Habaguanex)

Hotels in Santiago de Cuba

Villa Gaviota Santiago (Gaviota)

Hotels in Varadero

Blau Marina Varadero Resort (Gaviota)
Grand Memories Varadero (Gaviota)
Iberostar Laguna Azul (Gaviota)
Iberostar Playa Alameda (Gaviota)
Meliá Marina Varadero (Gaviota)
Meliá Peninsula Varadero (Gaviota)
Memories Varadero (Gaviota)
Naviti Varadero (Gaviota)
Ocean Varadero El Patriarca (Gaviota)
Ocean Vista Azul (Gaviota)
Paradisus Princesa del Mar (Gaviota)
Paradisus Varadero (Gaviota)
Sol Sirenas Coral (Gaviota)

Hotels in Pinar del Rio

Hotel Villa Cabo de San Antonio (Gaviota)
Hotel Villa Maria La Gorda y Centro Internacional de Buceo (Gaviota)

Hotels in Baracoa

Hostal 1511 (Gaviota)
Hostal La Habanera (Gaviota)
Hostal La Rusa (Gaviota)
Hostal Rio Miel (Gaviota)
Hotel El Castillo (Gaviota)
Hotel Porto Santo (Gaviota)
Villa Maguana (Gaviota)

Hotels in Cayos de Villa Clara

Dhawa Cayo Santa María (Gaviota)
Hotel Cayo Santa María (Gaviota)
Hotel Playa Cayo Santa María (Gaviota)
Iberostar Ensenachos (Gaviota)
Meliá Buenavista (Gaviota)
Meliá Cayo Santa María (Gaviota)
Meliá Las Dunas (Gaviota)
Memories Azul (Gaviota)
Memories Flamenco (Gaviota)
Memories Paraíso (Gaviota)
Ocean Casa del Mar (Gaviota)
Royalton Cayo Santa María (Gaviota)
Sol Cayo Santa María (Gaviota)
Villa Las Brujas (Gaviota)
Warwick Cayo Santa María (Gaviota)

Hotels in Holguín

Blau Costa Verde Beach & Resort (Gaviota)
Hotel Playa Costa Verde (Gaviota)
Hotel Playa Pesquero (Gaviota)
Memories Holguín (Gaviota)
Paradisus Río de Oro Resort & Spa (Gaviota)
Playa Costa Verde (Gaviota)
Playa Pesquero Premium Service (Gaviota)
Sol Rio de Luna y Mares (Gaviota)
Villa Cayo Naranjo (Gaviota)
Villa Cayo Saetia (Gaviota)
Villa Pinares de Mayari (Gaviota)

Hotels in Jardines del Rey

Hotel Playa Coco Plus (Gaviota)
Iberostar Playa Pilar (Gaviota)
Meliá Jardines del Rey (Gaviota)
Memories Caribe (Gaviota)
Pestana Cayo Coco (Gaviota)

Hotels in Topes de Collantes

Hostal Los Helechos (Gaviota)
Los Helechos (Gaviota)
Villa Caburni (Gaviota)

Tourist Agencies

Crucero del Sol
Gaviota Tours

Marinas

Marina Gaviota Cabo de San Antonio (Pinar del Rio)
Marina Gaviota Cayo Coco (Jardines del Rey)
Marina Gaviota Las Brujas (Cayos de Villa Clara)
Marina Gaviota Puerto Vita (Holguín)
Marina Gaviota Varadero (Varadero)

Stores in Old Havana

Casa del Abanico (Habaguanex)
Colección Habana (Habaguanex)
Florería Jardín Wagner (Habaguanex)
Joyería Coral Negro (CIMEX) – Additional locations throughout Cuba
La Casa del Regalo (Habaguanex)
San Ignacio 415 (Habaguanex)
Soldadito de Plomo (Habaguanex)
Tienda El Navegante (Habaguanex)
Tienda Munecos de Leyenda (Habaguanex)
Tienda Museo El Reloj Cuervo y Sobrinos (Habaguanex)

Entities Directly Serving the Defense and Security Sectors

ACERPROT — Agencia de Certificación y Consultoría de Seguridad y Protección
AGROMIN — Grupo Empresarial Agropecuario del Ministerio del Interior
APCI — Agencia de Protección Contra Incendios
CAHOMA — Empresa Militar Industrial Comandante Ernesto Che Guevara
CASEG — Empresa Militar Industrial Transporte Occidente
CID NAV — Centro de Investigación y Desarrollo Naval
CIDAI — Centro de Investigación y Desarrollo de Armamento de Infantería
CIDAO — Centro de Investigación y Desarrollo del Armamento de Artillería e Instrumentos Ópticos y Ópticos Electrónicos
CORCEL — Empresa Militar Industrial Emilio Barcenas Pier
CUBAGRO — Empresa Comercializadora y Exportadora de Productos Agropecuarios y Agroindustriales
DATYS — Empresa Para El Desarrollo De Aplicaciones, Tecnologías Y Sistemas
DCM TRANS — Centro de Investigación y Desarrollo del Transporte
DEGOR — Empresa Militar Industrial Desembarco Del Granma
DSE — Departamento de Seguridad del Estado
EMIAT — Empresa Importadora Exportadora de Abastecimientos Técnicos
Empresa Militar Industrial Astilleros Astimar
Empresa Militar Industrial Astilleros Centro
Empresa Militar Industrial Yuri Gagarin
ETASE — Empresa de Transporte y Aseguramiento
Ferretería TRASVAL
GELCOM — Centro de Investigación y Desarrollo Grito de Baire
Impresos de Seguridad
MECATRONICS — Centro de Investigación y Desarrollo de Electrónica y Mecánica
NAZCA — Empresa Militar Industrial Granma
OIBS — Organización Integración para el Bienestar Social
PLAMEC — Empresa Militar Industrial Ignacio Agramonte
PNR — Policía Nacional Revolucionaria
PROVARI — Empresa de Producciones Varias
SEPSA — Servicios Especializados de Protección
SIMPRO — Centro de Investigación y Desarrollo de Simuladores
TECAL — Empresa de Tecnologías Alternativas
TECNOPRO — Empresa Militar Industrial "G.B. Francisco Cruz Bourzac"
TECNOTEX — Empresa Cubana Exportadora e Importadora de Servicios, Artículos y Productos Técnicos Especializados
TGF — Tropas de Guardafronteras
UAM — Unión Agropecuaria Militar
ULAEX — Unión Latinoamericana de Explosivos
XETID — Empresa de Tecnologías de la Información Para La Defensa
YABO — Empresa Militar Industrial Coronel Francisco Aguiar Rodríguez

Additional Subentities of CIMEX

ADESA/ASAT — Agencia Servicios Aduanales (Customs Services)
Cachito (Beverage Manufacturer)
Contex (Fashion)
Datacimex
ECUSE — Empresa Cubana de Servicios
Inmobiliaria CIMEX (Real Estate)
Inversiones CIMEX
Jupina (Beverage Manufacturer)
La Maisón (Fashion)
Najita (Beverage Manufacturer)
Publicitaria Imagen (Advertising)
Ron Caney (Rum Production)
Ron Varadero (Rum Production)
Telecable (Satellite Television)
Tropicola (Beverage Manufacturer)
Zona Especializada de Logística y Comercio (ZELCOM)

Additional Subentities of GAESA

Almacenes Universales (AUSA)
ANTEX — Corporación Antillana Exportadora
Dirección Integrada Proyecto Mariel (DIP)
Empresa Inmobiliaria Almest (Real Estate)
GRAFOS (Advertising)
RAFIN S.A. (Financial Services)
Sociedad Mercantin Inmobiliaria Caribe (Real Estate)
TECNOIMPORT
Terminal de Contenedores de la Habana (TCH)
Terminal de Contenedores de Mariel, S.A.
UCM — Unión de Construcciones Militares
Zona Especial de Desarrollo Mariel (ZEDM)
Zona Especial de Desarrollo y Actividades Logísticas (ZEDAL)

Additional Subentities of Gaviota

AT Comercial
Manzana de Gomez (Shopping Mall)
PhotoService
Producciones TRIMAGEN S.A. (Tiendas Trimagen)

Additional Subentities of Habaguanex

Sociedad Mercantil Cubana Inmobiliaria Fenix S.A. (Real Estate)

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