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Cuba opens the port of Mariel to the world

More than 30 years after 125,000 Cubans left their country for the United States in the so-called Mariel Boatlift, the communist island’s authorities are hoping to attract foreign investment precisely through that same port. The revamping of this harbour located about 45 kilometres west of Havana is regarded as one of the most important public works in Cuba in recent years.

In its effort to attract foreign companies and their capital to revitalise the Cuban economy, the government of Cuban President Raul Castro is offering fiscal benefits in this special economic zone and stresses that the property of firms involved in its activities “cannot be expropriated.” And yet many experts and potential investors remain sceptical about a huge project that has already attracted a strong Brazilian presence.

There will be “full protection and security on national territory” for the companies that opt to invest there, Foreign Trade and Investment Minister Rodrigo Malmierca told several foreign business people and diplomats Tuesday in Havana. “Foreign investment cannot be subjected to expropriation,” he said during the Havana International Fair (FIHAV 2013).

Malmierca referred to the Mariel special economic zone as “the key to the Gulf of Mexico.” The so-called Special Development Zone of Mariel (ZDEM), similar to the free zones that boosted economic development in China in the late 1970s, officially opened its gates to foreign investment on November 1. The planned industrial park is set to have 465 square kilometres.

Under Raul Castro, 82, the younger brother of historic Cuban leader Fidel Castro, the island has implemented in recent years a series of economic reform measures, after decades of state monopoly of economic activity. Following the triumph of his revolution in 1959, Fidel Castro first expropriated the large estates of US companies and individuals, and then to put the whole economy in the hands of the state. Now, however, Cuban authorities are offering fiscal waivers.

Mariel, a port that made global headlines over the mass exodus of migrants, is one of the new economic projects of the so-called “Raulismo” – Castroism according to Raul Castro. During a six-month period in 1980, Fidel Castro lifted the ban on emigration and allowed some 125,000 so-called “marielitos” to leave for the United States, in one of the worst immigration crises between Washington and Havana. The emigrants included exiles released from prison and mental institutions, prompting Washington to rethink its open door policy.

At the port on Tuesday, there was a celebratory mood. “This is the most important work Cuba has tackled in recent years,” Ana Teresa Igarza, director of the bureau that has been especially created to regulate and streamline the arrival of foreign capital in Mariel, said of the port’s new status. Investors’ doubts focus on the ability to hire their own employees. Local personnel will be hired through an agency of the Cuban state, which is the usual practice since Cuba opened its doors to foreign capital in the 1990s.

“This raises again the issue of compensation for that manpower, which will benefit above all the government and not the average worker,” Jorge Duany, director of the Cuban Research Institute at Florida International University, told dpa. Igarza tried to address such doubts and justify the state employment agency. “For us in Cuba it is very important to ensure the labour issue and the protection of workers,” Igarza said.

In Mariel, she said, employment agencies will no longer be “lucrative” but will almost mainly only cover their operational costs. “Workers can get better wages,” Igarza said. Further doubts center on the pending monetary reform on the island, where two currencies have co-existed since the 1990s. The Castro government recently announced plans to gradually unify the convertible peso (CUC), which is equivalent to the US dollar and with which foreign companies operate in Cuba, and the Cuban peso (CUP), in which state wages are paid. Concrete dates, however, are yet to be announced for such a currency reform.

In Miami, Emilio Morales, who heads the Havana Consulting Group, said the pending currency reform turns the interim into a “stand-by period.” “When it goes into effect, these firms’ profits will fall. (The issue) has not been solved, it is yet to be solved,” he said of the huge Mariel project.

Isaac Risco and Daniel Garcia Marco, "Cuba opens the port of Mariel to the world," Business recorder. 2013-11-08.
Keywords: Economics , foreign companies , Economy-Cuba , National territory , Foreign investment , Companies-US , Trade , Immigration , Havana , Washington , Cuba , ZDEM , FIHAV