Heeding Foreign Businessmen's Advice: Reasons Not to Invest in Cuba

Friday, May 16, 2014
In the 1990's, Spanish businessman Jose Fernandez Gonzalez, wrote the following piece (below) in Spain's ABC newspaper.

It's fascinating how Fernandez Gonzalez's experience is identical to the recent fate of Britain's Stephen Purvis, France's Michel Villand, Canada's Cy Tokmakjian and countless other foreign businessmen who have made millions for Castro prior to being expropriated.

Yet, we keep hearing about so-called "reforms."

Please read below, then click and read the stories of Purvis, Villand and Tokmakjian.

Ask yourself -- what has changed? 

(Other than CUBALSE being dismantled in 2009 and folded into the Cuban military's holding company GAESA -- further consolidating all business within the Castro family.)

If Purvis, Villand and Tokmakjian had heeded Fernandez Gonzalez's advice, they would have avoided much suffering, loss and profit for Castro's regime.

Today, Castro's lobbyists work diligently to seduce U.S. businesses to do the same.

They should heed all of these foreign businessmen's advice.

Here's Fernandez Gonzalez's experience (courtesy of Carlos Alberto Montaner's blog and our translation):

A few years ago, I created in the Hemingway Marina, a tourist zone near Havana, a bar/restaurant, which quickly became the gathering place for people with hard currency.  In other words, for tourists, members of the nomenclature and for Cubans who enjoy the paradoxical privilege of having exiled relatives. It was called La Tasca EspaƱola and its success was my loss.

One of the "bosses" of the Cuban economy, Mr. Abraham Maciques, became obsessed with taking it from me, and via a simple resolution from the Ministry of Foreign Commerce -- a farce that would not hold water in any Western judicial system -- my business was taken from me and I became "an enemy of the people." Today, I remain deprived, without recourse, of the property that I steadfastly and honorably worked to create for many years. The point of this text is very simple: I don't want other foreign investors, who travel to Cuba under the siren song of a revolution whose outer facade has nothing to do with the real and profound sordidness of the system, to suffer the same fate as I did.

Thus, here are the reasons for which I recommend, I beg, that you don't contribute with your money and knowledge to shore-up Cuba's dictatorship:

First: Because there is not the slightest judicial guarantee. There is no Rule of Law that protects investors, nor anyone else.  You are always at the mercy of a high-ranking official, who can decide to forcibly expropriate your property and there's no human way to dispute it in the tribunals.  In Cuba, what prevails are not rights, but the will and whim of those who govern.  The same thing that happened to business owners at the beginning of the revolution can happen, and does happen, to today's investors and businessmen.

Second: Because transactions and businesses in Cuba are not done withing an atmosphere of real entrepreneurs, but in a dark universe of police and spies.  Practically all of the of the officials who work with foreign investors are members of the Ministry of the Interior and form part of the political police, which is the organ that controls every single dollar that enters or exits the country.  In Cuba, one does not deal with economists, accountants and marketing experts: one deals with colonels, lieutenant colonels or generals.

Third: This police atmosphere leads to the creation of a state of terror from which foreign investors cannot separate themselves, even if they want to. First, they are compromised as victims, for the secretary or driver assigned to them are always political police informants who control all of their movements. Then, the investors and businessmen end up becoming accomplices themselves.  They are asked for information about other businessmen and other foreigners, they are asked to spy for the benefit of the Cuban government.  I myself had to do so on various occasions, if I wanted to stay in Cuba and if I didn't want the revolution to distrust me.

Fourth: Also, for moral reasons that for many years have bothered me, it's unjustifiable to make money in Cuba by participating in a slave labor regime that is absolutely inhumane.  Let me explain: as a businessman, you don't hire Cubans directly, but through an office of the Ministry of the Interior called CUBALSE, which is paid in U.S. dollars for every worker that is provided, while the "corporation" (as it's referred to in Cuba) pays the worker in the worthless and devalued national currency.  I would pay CUBALSE  $330 for each worker and CUBALSE would pay the worker 200 Cuban pesos. The value of the U.S. dollar in the black market, which is the only place Cubans can acquire basic necessities to survive, is 120x1. Thus, my employee was really making less than $2 a month, while the "corporation" that rented him to me like a slave, received 300 times that.

Fifth: This violation, of which no foreign businessman can get around, explains the profound hatred that many Cuban workers feel for us.  They know that the businessman is not at fault for this unjust rule, but they can't help but seeing us as part of a system of absolute, arbitrary and cruel exploitation.

Sixth: This same attitude exists, in general, towards all foreigners in Cuba, who simply because they have dollars, can access everything that Cubans cannot buy with their hard work: food, clinics that don't lack medicines, good clothing, gasoline or the electricity that hotels enjoy.

There are many reasons for not going to Cuba.  I appeal, first of all, to the pockets of my compatriots: don't go, because you are going to lose it all and will not be able to do anything to regain it. My case is not unique. Also, I have to appeal to ethical and moral reasons: those who believe in freedom, democracy and simple decency should not become accomplices of a sinister dictatorship that requires all sorts of dark collaborations.