After Fidel

Following Fidel Castro's coup in 1959, Olga Ramudo fled from Cuba to Miami with her family. Ramudo, now 56, hopes one day to return to Havana to open another branch of Express Travel, her 32-employee, $20 million Miami-based travel agency. That time may soon arrive. The Cuban dictator has been largely absent from the political stage since summer, 2006, following an illness described by Cuba's government as intestinal bleeding, but which some sources have reported is cancer or diverticulitis. Cuba watchers say the 80-year-old Castro's death is imminent, likely leading to the rise of Castro's brother, Raul, the 75-year-old defense minister. That could bring big opportunities for U.S.-based entrepreneurs.

Ramudo, like thousands of other Cuban American entrepreneurs, is hoping for a new economic openness following Castro's death. Although Ra?l Castro has so far shown himself to be a doctrinaire Communist, experts such as Daniel Greenberg, director of the Latin American Studies program at New York's Pace University, suspect he would show a more pragmatic side as President. In that case, says Greenberg, Cuba may wind up with a transitional economy similar to China's: Communism with open markets.

Ramudo says: "I expect traffic will be there for vacations, for family reunification, and certainly for business." She's polling airlines, hotels, and cruise companies about their plans to eventually offer services in Cuba, all to help her clients travel to Cuba should U.S. economic sanctions be lifted.

Those sanctions take two forms. The Foreign Assistance Act of 1961 imposes an economic embargo on Cuba, prohibiting trade and most travel there. Additionally, the Helms-Burton Act of 1996 prevents recognition of a Cuban government led by either Castro, and extends the 1961 embargo to prevent foreign companies from doing business with any Cuban enterprise whose assets were owned by a U.S. business prior to 1959.


Most experts expect the embargoes to be lifted in phases after Fidel dies. Within a year of his death, Cubans and Cuban Americans will likely be allowed to travel between the U.S. and the island freely, predicts Jorge Pinon, senior research fellow at the Institute for Cuban and Cuban American Studies at the University of Miami. That could be enough to spark demand for more open markets within Cuba, he adds. "The biggest catalyst for change in the economic transition is going to be the small and medium-sized businesses," he says, adding that those likely to move in first are small businesses such as Miami-based contractors who can get to Cuba easily, invest small sums of money, and hire relatives. Large businesses, he says, aren't likely to make significant investments until the infrastructure, which has decayed badly since the Soviet Union collapsed, is partially rebuilt.

Still, many estimates say the Cuban economy has grown at a good clip: The CIA's World Factbook puts annual growth at 8%, thanks partly to two million foreign visitors annually. What's more, the island, which has the third-largest supply of nickel in the world, has gotten a big boost from soaring global demand for the metal. Plus, China and Venezuela have strengthened ties with Cuba, the former providing cheap credit and the latter oil, says Philip Peters, vice-president of the Lexington Institute, an Arlington (Va.) think tank.

A 2004 poll by the Institute for Opinion Research and Florida International University found that nearly 20% of Cuban Americans own their own businesses, but many, particularly older entrepreneurs, virulently oppose trade with a Communist Cuba. "There will not be any possibility to work with Raul, and we will not go back to Cuba until there is another government," says Eduardo Carranza, executive vice-president of Sunshine Cordage, a $2 million, 34-employee rope manufacturer in Miami. He says Castro's regime confiscated his family's previous rope factory and its sisal plantations before the family emigrated to Miami in 1960.

Younger Cuban Americans see things differently. About 55% of those who arrived in the U.S. after 1980 favor lifting the embargo, compared with 30% of those who arrived earlier, according to a 2006 survey conducted by Miami-based researchers Bendixen & Associates. "Our entrepreneurs are positioning themselves and identifying the opportunities and looking around," says Frank Nero, president and CEO of Miami-Dade's Beacon Council, a local economic development organization that works with many Cuban American entrepreneurs. Ramudo has faith: "Cuba needs everything, so every type of business will open there, and there will be an opportunity for us."

By Jeremy Quittner

The Good Business Issue
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