President Obama touched down in Cuba last week, making him the first sitting president to visit the nation in eighty-eight years. As the President and the First Family toured the historic center of Havana, they likely witnessed the stunning old city filled with the vintage cars and delicious cuisine that make Cuba unique. As a result of the embargo, Cuba sometimes seems like a land forgotten by time. However, the Cuba that the Obamas are witnessing this week  is very different than the Cuba the average tourist may experience in the next ten years.  As more opportunities for investment and travel open up in Cuba, foreign investors are making moves–especially within the hospitality sector. Consider that Marriott CEO Arne Sorenson is accompanying President Obama on his visit to Cuba–Marriott may be interested in investing on the island. Read on to see which companies are investing in Cuba and why.

Hotels and Hospitality

Starwood Hotels, the company which owns Westin, Sheraton, and W Hotels (just to name a few), made headlines by announcing that it will open three hotels in Cuba.  At the moment, all Cuban hotels are state-owned but Starwood has the financial and organizational power to build hotels that meet the state’s standards. The location of the third hotel has not been made public but the company has stated that the Hotel Inglaterra, which is owned by a Cuban state tourism company, will become one of Starwood’s Luxury Collection hotels and the Quinta Avenida, which is run by a Cuban military-run tourism group, will become a Four Points by Sheraton hotel.

The potential Starwood-Marriott merger that is currently on the table could have a major impact on how these new hotels will be built and run.  On the heels of the Starwood commitment, AirBnB has announced it will open listings on the island by April 2. AirBnB has in fact been planning for the opening of the country for some time now–last year, the company claimed the right to represent all private residences in Cuba. AirBnB’s chief executive Brian Chesky referred to Cuba as the fastest-growing country that AirBnB has ever launched in. Physical accommodation is not the only segment of the tourism sector that is expanding into Cuba: online booking website Priceline, Western Union, and Carnival cruises have all thrown their hats into the ring (Carnival will begin sailing cruises to the island in May). Multiple U.S. airlines have filed for permission to fly commercial flights into Cuba. At the moment, American citizens cannot travel to Cuba on a tourist visa but visas falling under the following twelve categories have been opened:

Family visits, official business of the U.S. government, foreign governments, and certain intergovernmental organizations, journalism, professional research, educational activities, religious activities, public performances, clinics, workshops, athletic and other competitions, and exhibition, support for the Cuban people, humanitarian project, activities of private foundations or research or educational institutes, exportation, importation, or transmission of information or information materials and certain export transactions that may be considered for authorization under existing regulations and guidelines.

Travelers must provide itineraries that justify their visa, but they no longer have to apply for a formal travel license from the government. Ease of travel is drawing a steadily increasing number of Americans to the island. According to  Jose Luis Perello Cabrera, an economist at the University of Havana, there was a 36 percent increase in the number of Americans visiting Cuba between January and May of 2015 alone.

American investors for the most part are flocking to the hospitality industry but there are a handful of cases of more specific investments. Consider Alabama-based Cleber LLC, a tractor company which was the first company to receive joint approval from the Cuban government and the U.S. Department of the Treasury. Cleber LLC is looking to produce tractors in the newly built port of Mariel just outside of Havana, claiming that these tractors will deliver both a financial profit and an ethical good–improving the quality of life of Cuban farmers. Tractors are just one element of machinery that Cuban farms and factories are clamoring for and as the market continues to open, an increasing number of small businesses like Cleber LLC will be given the opportunity to sell their specialized products on the island.

Chinese Investment in Cuba

American companies are not the only investors chomping at the bit to launch projects in Cuba. Venezuela has historically been Cuba’s largest trade partner but in recent years, China has been vying for that position. Cuba has long been reliant on Venezuela for oil but the regime has now turned to China for its technology and infrastructure needs.

American companies such as AT&T have projects in Cuba waiting in their pipelines but Cuban authorities have resisted American telecommunications investment. Instead, they have turned to Chinese operators such as Huawei Technology Co. Ltd., which was tasked with installing fiber-optic connections in Old Havana. Professor William M. LeoGrande of American University has said that “partly that’s a result of the fact that historically we’ve tried to use telecommunications as an avenue to undermine their government, and so consequently they really don’t trust our hardware.”  Silicon Valley tech companies are getting left behind as Huawei installs dozens of Wi-Fi hot spots around the island. Huawei has also partnered with the Cuban telecom company Etecsa to distribute smartphones, further anchoring its brand with the Cuban public.

The economic exchange between the countries has also led to Cuban efforts to break into Asian trade: Cuba’s Havana Club rum has launched major marketing campaigns targeting the Chinese market, hoping that it will be a gateway to Asia as a whole. In 2015, airlines began operating direct flights between Beijing and Havana as both Chinese investment and tourism in Cuba soared. Although Chinese investors have not paid as much attention to the hospitality sector as American companies, China’s Suntine International-Economic Trading Company has partnered with Cuba’s Cubanacan hotel group to launch a new “Hemingway Hotel”–a luxury hotel with a price tag of at least $150 million. If the Hemingway Hotel project succeeds, then Chinese corporations may commit to more hospitality projects–putting them in direct competition with companies like Starwood and AirBnB.

Conclusion

Although foreign investment appears to open up new opportunities for the Cuban people, it has been argued that foreign companies will only further entrench the power of Raul Castro rather than aiding the general Cuban populace. American (and other foreign) companies hiring Cuban workers will not necessarily be allowed to hire employees directly. Instead, they may only be permitted to hire people through state agencies, effectively blacklisting anybody the regime has deemed unacceptable. Foreign investors will pour their money into the regime itself rather than into the individual bank accounts of Cubans who they hire at their enterprises. Cuba is a nation with a rich cultural heritage that travelers have been drawn to for centuries but many Americans are unfamiliar with the island’s government and its approach towards controlling the population. As diplomatic relations between the U.S. and Cuba expand, American investors are trickling into the country, hoping to prepare it for a potential flood of tourists in the coming years.

While Americans seem to have gained the upper hand regarding early investment in hospitality services, Chinese and Venezuelan companies have been positioning themselves to win the contracts on Cuba’s largest infrastructure projects. Tech investment could be a battleground, as Cisco has already committed to a training institute and Google is interested in working on Cuban connectivity but Chinese investment in Cuba’s internet has already put them at a significant advantage. The swell of foreign investment in Cuba may not provide the stability and equality that optimists hope for, but it should not be dismissed outright. Allowing open commerce and investment in Cuba will allow the nation to engage in the global economy in a way that it has never before–but it is, at least at the moment, unclear who will truly benefit from this expansion.

Resources

VOX: Airbnb and American Hotels Aren’t Wasting Any Time Ppening up in Cuba

USA Today: Starwood: 1st U.S. Company to Run Cuba Hotels in Decades

New York Times: American Firm, Starwood, Signs Deal to Manage Hotels in Cuba

CNBC: Marriott, Starwood Team up to Take on Airbnb in New Merger

New York Magazine: Discovering Cuba, One Airbnb at a Time

Financial Times: No Flood of Investment Despite US-Cuba Thaw

ATTN: 12 Ways You Can Legally Visit Cuba

NPR: U.S.-Cuba Ties Are Restored, But Most American Tourists Will Have To Wait

AP News: Stunning 36 Percent Rise in US Visits to Cuba since January

Worker’s World: U.S. Investment in Cuba: How a Little Red Tractor Jumped to Front of the Line

American Enterprise Institute: Why US Investment Won’t Bring Change to Cuba

Wall Street Journal: U.S. Competes With China for Influence in Cuba

Jillian Sequeira

Jillian Sequeira was a member of the College of William and Mary Class of 2016, with a double major in Government and Italian. When she’s not blogging, she’s photographing graffiti around the world and worshiping at the altar of Elon Musk and all things Tesla. Contact Jillian at Staff@LawStreetMedia.com

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Hillary Clinton might have some explaining to do before she can claim the top spot in the Democratic primary. Any pro-Hillary voters who prioritize moral plans for American foreign policy should probably look into the candidate’s past in Haiti. The Pulitzer Center hosted journalist Jonathan M. Katz on Monday night for a discussion about the Clintons’ influence and rather infamous legacy in Haiti and I was fortunate enough to be able to attend. It’s surprising how little the failures and destruction of Bill and Hillary Clinton’s presence in Haiti have been brought up so far. Hopefully by 2016 this topic will be making headlines.

First, some background on the topic: on January 12, 2010, the deadliest natural disaster ever recorded in the hemisphere, a magnitude-7.0 earthquake, devastated Haiti’s southern peninsula and killed 100,000 to 316,000 people. Former President Bill Clinton and Secretary of State Hillary Clinton led the Haitian reconstruction effort and vowed to help the country “build back better,” so that if another disaster struck, Haiti would be able to respond more quickly and with more efficiency. Hillary described their efforts as a “road test” that would reveal “new approaches to development that could be applied more broadly around the world.”

The Clinton Foundation alone has directed $36 million to Haiti since 2010. Another $55 million has been spent through the Clinton-Bush Haiti Fund, and an additional $500 million has been made in commitments through the Clinton Global Initiative’s Haiti Action Network. But what does Haiti have to show for all of these investments? Not much, according to Katz. “Haiti and its people are not in a better position now from when the earthquake struck,” he said. The hundreds of millions of dollars and the years of reconstruction efforts have yielded negligible results. For a project so expansive, Hillary has kept relatively quiet about Haiti thus far in her campaign. Her spokesman declined to comment on how Haiti has shaped her foreign policy, saying Hillary would address that “when the time comes to do so.”

Hillary’s big plan for how she would “rebuild” Haiti in the wake of desolation was characteristically American: through business. With big corporate plans on the horizon, Bill and Hillary became exceedingly familiar faces in Haiti leading up to the 2011 presidential elections. It’s not surprising that the candidate who vowed to make Haiti “open for business” was ultimately the victor. Former Haitian pop star Michel Martelly eventually won the race, after Hillary salvaged his candidacy when he was eliminated as the number 3 candidate by convincing the parties to accept him back into the race. Katz said that this vote was fraudulent. Martelly, a businessman and strong proponent of foreign investment in Haiti, was “attractive” to the State Department, Katz noted. He very much had a “Clinton view of Haiti and a Clinton view of the world.”

That’s how Caracol Industrial Park, a 600-acre garment factory geared toward making clothes for export to the U.S., was born in 2012. Bill lobbied the U.S. Congress to eliminate tariffs on textiles sewn in Haiti, and the couple pledged that through Caracol Park, Haitian-based producers would have comparative advantages that would balance the country’s low productivity, provide the U.S. with cheap textiles, and put money in Haitians’ pockets. The State Department promised that the park would create 60,000 jobs within five years of its opening, and Bill declared that 100,000 jobs would be created “in short order.” But Caracol currently employs just 5,479 people full time. “The entire concept of building the Haitian economy through these low-wage jobs is kind of faulty,” Katz stated on Monday. Furthermore, working conditions in the park are decent, but far from what should be considered acceptable.

Not only did Caracol miss the mark on job creation, but it also took jobs away from indigenous farmers. Caracol was built on fertile farmland, which Haiti doesn’t have much of to begin with. According to Katz, Haitian farmers feel that they have been taken advantage of, their land taken away from them, and that they have not been compensated fairly. Hundreds of families have been forced off the land to make room for Caracol. The Clintons led the aggressive push to make garment factories to better Haiti’s economy, but what it really created was wealth for foreign companies. This trend was echoed when the Clintons helped launch a Marriott hotel in the capital, which has really only benefited wealthy foreigners and the Haitian elite.

Mark D’Sa, Senior Advisor for Industrial Development in Haiti at the U.S. Department of State, said that many of the Clintons’ promises remain unfulfilled and many more projects are “half-baked.” Haiti remains the most economically depressed country on the continent. If Hillary wins in 2016, U.S. policy geared toward Haiti will undoubtedly expand, meaning even more money will be funneled to the Caribbean nation to fund the Clintons’ projects, for better or for worse. According to Katz, the truth is that we don’t actually know how much money has been thrown into the Caribbean country to “rebuild” it, and that with economic growth stalling and the country’s politics heading for a shutdown, internal strife seems imminent.

The introduction of accountability for the foreign aid industry is the most important change that can be made, according to Katz. Humanitarian aid does nothing positive or productive if there are not institutions in place, managed by individuals who actually live in these countries, to oversee that aid is serving rather than hurting the people it is supposed to “help.” Hillary Clinton’s efforts in Haiti have fueled political corruption, destroyed arable farmland, and have forced hundreds of families to leave their homes and their jobs to make room for a factory that has not given even a fraction of the amount to Haiti as it has taken. If the introduction of accountability is the way to go, then we first need to start talking. So Hillary, what do you have to say about Haiti?

Emily Dalgo

Emily Dalgo is a member of the American University Class of 2017 and a Law Street Media Fellow during the Summer of 2015. Contact Emily at staff@LawStreetMedia.com.

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