How have recent macro-economics changed Cuba’s trajectory?


Blog #4 – 16 March 2017

How have recent macro-economics changed Cuba’s trajectory?

Writing anything about Cuba in the past three months would have been a hard task. The death of Fidel Castro was thought to raise complex questions about continuity.   The election of Donald Trump – candidly an alarming event – meant that a tide of speculation erupted about every word he uttered.

Still, perhaps we can take stock.  I doubted the death of even so large a figure of the 20th century as Fidel Castro would prove destabilising. The outward turn to the wider world had already happened. Raul Castro and Vice President and Minister for Foreign Trade and Investment, Ricardo Cabrisas Ruize had substantially re-written investment law and encouraged trade delegations to seek opportunities for inward investors. They acted decisively to remove the overhang of Paris Club debt.

Of course, on its own this doesn’t alter a nation’s trajectory. Both leaders have said candidly there is work to do to overcome the stray anchor of bureaucracy.  They are striving to do business with firms which don’t yet have a clear idea of structuring business securities in Cuba and cannot operate normally without, for example, fast and reliable access to indispensable infrastructure – the web.

Yet, I can say from first hand discussion and an extensive programme of work that these missing ingredients are being introduced.  The need for a strong financial institution which is both Cuban and a repository of London-driven expertise in investment banking, debt and capital markets, and a proven advisory record is both understood and in demand.

Cuba needs so many things after the blockade year and their remaining barriers. The paradox is that the country is rich in opportunities, educated people, and pride in its resilience, and equally there are external partners with capital and appetite, but the need for a sophisticated intermediary keeps the primary elements from a truly viable encounter.

I feel very determined to overcome this. Four years of work will be put to good use as soon as the Cuban administration chooses to fire the starting gun.

Someone is bound to say ‘surely, this isn’t the only remaining blockage’.  As I write, just after President Trump’s inauguration, it is easy to see the reasons to assess any new risk. Candidate Trump said a few unhelpful things in Florida on the campaign trail.  There is no doubt he was advised this wasn’t any longer the way to win the swing state. Clinical research at Florida’s University showed two thirds of Cuban Americans wanted normalisation of relations and ease in family links. One third were noisily hostile but elections are not won by shouting in the voting booth.  Researchers also found New York retirees in any case outnumbered the Cuban American community.

Trump won Florida for essentially the same reason he won Wisconsin. Too many jobs had gone without replacement and the well of discontent was deep.

No one knows how he will go on this but if we review his long-term concerns (30 years of evidence) rather than the flip-flops on the campaign trail (30 seconds of evidence) we will see a wholly transactional man without much interest in deep value systems.  And a man who believes his ideological preferences follow in vigorous trade.

Neither characteristic may be attractive in Havana but we can at least figure out how to chart a path in macro-economic forms. This is what we should do. The UK and its agile businesses must become reliable partners with Cuba’s businesses.  The alignment is clear. The priorities for Cuba are the self-same areas in which our contribution of financial and technical knowledge coincide. Over time we will identify more of these areas.

No doubt we will adjust to one another in a broader sense so our relationships deepen. None of it will happen in a zero sum game. The goal should obviously be ‘win-win’ and it is achievable.

This article is part of our March 2017 Private Office Newsletter.

To read the PDF version online, click here, or to read another article online, please follow one of these links:
Breaking through on social housing: Achieving a holistic impact by Lord David Triesman, Executive Director
The many disciplines of a Family Office by Martin Bellamy, CEO and Chairman
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