U.S. embargo on Cuba boosts Europe, Canada firms

Thu Mar 20, 2008 3:13pm EDT
 
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By Anthony Boadle

HAVANA (Reuters) - When ailing Fidel Castro resigned last month, stock prices of U.S. companies that stand to benefit from more business with Cuba rallied.

Six days later, those shares retreated as his brother Raul Castro, Cuba's first new leader in 49 years, was installed and picked old-guard revolutionaries to help him govern.

That dashed forecasts of a rapid transition from communism to capitalism and the end to the embargo the United States has kept against Cuba since 1962, which bars American investment and travel to the island.

"Anyone who thinks there will be a 'for sale' sign up by a bankrupt Cuban government is wrong," said the manager of a Canadian company, who spoke on condition of anonymity because of the sensitivity of doing business in Cuba.

As Raul Castro moves to raise living standards, welcomes new foreign investment in mining, oil, tourism, possibly agriculture and even ethanol, opportunities will open up, said the executive, but only for non-U.S. companies.

European, Latin American, Israeli and Arab investors already have a foot in the door in Cuba in the cigar, rum, citrus and hotel industries. With no American competition to worry about, they are looking at a windfall when U.S. sanctions are eventually lifted.

That day is still far off, even if a Democrat wins the presidential elections in November, say Cuba watchers, who see no action by the U.S. Congress until Havana releases jailed dissidents and reforms its one-party state.

Raul Castro has vowed to maintain Cuba's socialist system and there are no signs that he intends to follow the free-market path of China and Vietnam.   Continued...

 
<p>The Cuban flag stands outside a hotel of the Spanish Melia hotel chain in Havana March 17, 2008. REUTERS/Claudia Daut</p>