2007-06-14. Cuba on Focus, An Information Service of the Cuba Transition
Project, Institute for Cuban and Cuban-American Studies, University of
Miami, Issue 86, June 2007
Hans de Salas-del Valle*
A recent exposé about a major French conglomerate that seeks to do
billions of dollars of business simultaneously on both sides of the
Florida Straits (1) revealed the extent to which multinational companies
have lost virtually all fear of U.S. sanctions against Cuba.
Measures aimed at discouraging third-country (non-U.S.-based) foreign
investors from commercially exploiting private properties confiscated by
the Cuban government in the early years of the revolution, and today
claimed by American citizens and corporations, are being ignored. In
1996 the U.S. Congress passed the Cuban Liberty and Democratic
Solidarity (Libertad) Act, better known as the Helms-Burton Act, "to
protect United States nationals against confiscatory takings and the
wrongful trafficking in property confiscated by the Castro regime." (2)
For more than a decade, Title III of Helms-Burton has, in theory,
allowed victimized U.S. nationals to pursue financial compensation by
filing claims in U.S. courts against the infringing foreign investors
for the full value (at time of confiscation, plus interest) of their
expropriated Cuban assets. In practice, however, both Democratic and
Republican administrations have continuously availed themselves of a
loophole in the law enabling "the President… [to] suspend the effective
date…for additional periods of not more than six months each" if deemed
"necessary to the national interests of the United States" and to
"expedite a transition to democracy in Cuba." (3) Due to this loophole,
the theoretically fearsome Helms-Burton Act has degenerated into a
parody of itself as it continues to be indefinitely postponed. (4)
The end result of the consecutive presidential waivers of Title III has
been to negate the potential effectiveness of the law in deterring
foreign capital from financing the continuation of the Castro regime. In
fact, since 1996 not a single multinational company operating in Cuba
has been faced with claims under Title III.
Under separate penalties imposed by Title IV, the executives (and their
families) of five firms have been barred at one time or another by the
U.S. State Department from entering U.S. territory. Yet, at present only
two of Cuba's major foreign investors -- Canada's Sherritt International
Corp. and the Panama-based, Israeli-financed Grupo BM – are affected by
Title IV sanctions, and none by Title III. (5)
Moreover, the relatively mild measures under Title IV have failed to
drive the sanctioned firms from Cuba. Apparently secure after a more
than a decade of non-enforcement of Title III, in June 2007 Sherritt's
Executive Chairman, Ian Delaney, committed an additional US$1.25 billion
over the next two years to expand the Toronto-based company's already
strategic stakes in Cuba's electricity (generation), mining (nickel and
cobalt), and oil and gas (exploration and extraction) sectors. (6)
U.S.-based corporations have been restricted from conducting business
with Cuba – be it trade, travel, investment, or finance – since the
partial embargo on commerce with the island by the Eisenhower
administration in October 1960 (subsequently expanded in 1963 to include
prohibition on travel and financial transactions) in response to the
revolutionary government's gradual confiscation of U.S.-owned properties
(banks, farmlands, oil refineries, utilities, etc.) without just
compensation (7). And for nearly 47 years Washington has been fairly
successful in restraining U.S. firms from venturing back into Cuba,
albeit less so in keeping Havana from getting a hold of American
products. (8)
In broadening the scope of U.S. sanctions against Cuba in the 1990s to
include not only U.S. subsidiaries abroad but multinational corporations
that generate revenues from both Cuba and the United States, Washington
drew a line and communicated that it meant business. After all, implicit
in the Helms-Burton Act, and especially in Title III's language, is the
message that multinational foreign investors cannot have their cake and
it eat, too, when it comes to profiting from Castro's Cuba. You can make
money in the U.S. or in Cuba, but not both. And if you opt for the
latter there will be a price to pay.
Increasingly, however, Cuba's leading investors and business partners
seemed convinced that they can have it both ways.
Bouygues in Cuba
Perhaps the boldest challenge yet to the spirit as well as the letter of
the Helms-Burton Act has been by France-based Bouygues SA (the Bouygues
Group), one of Europe's largest conglomerates (businesses ranging from
construction and civil engineering to media and telecommunications) with
revenues exceeding 26.4 billion euros (about US$35.3 billion) in 2006.
(9) The Group's oldest core unit is Bouygues Construction, which in turn
is comprised of eight operating companies, or so-called "complementary
entities." (10)
One these entities, Bouygues Bâtiment International, has been "building
several luxury hotels in Cuba, namely in Varadero," and today partners
with Cuban state-owned enterprises in "designing and building new
upmarket tourist complexes in the east of the island." (11) Since
entering Cuba in 1999, Bouygues has become by far the leading contractor
in the tourism sector with "relatively little local or foreign
competition in the construction of high-end resorts." (12)
Bouygues' achievements in Cuba have been called "exemplary" by French
trade officials, who cite the company's ability to deliver turnkey
projects on tight schedules and its "willingness to train Cuban
technicians and workers" as the keys to its success. Indeed, Bouygues
has thrived in an environment in which foreign firms "must imperatively
be associated with Cuban partners." (13)
Like many others foreign firms in Cuba, Bouygues' subsidiary operates
through ad hoc asociaciones económicas internacionales (project-specific
partnerships) with state-run counterparts that are dissolved once the
contract has been fulfilled. This strategy avoids both tying up and
exposing assets in more stable, but also more visible and vulnerable,
joint venture corporations.
For example, the company teamed with a Ministry of Construction (MICONS)
firm, Grupo Empresarial de la Construcción de Varadero (GECV), when
building new hotels on Varadero Beach. However, the development of new
resorts on Cuba's keys and in the eastern province of Holguín has been
undertaken with Unión de Construcciones Militares, a military-run firm.
Altogether, Bouygues has won an estimated US$800 million in contracts
from the Cuban government to build and develop 11 tourism properties
(adding a total of 8,000 four and five-star guest rooms). (14)
More than the dollar figure alone, Fidel Castro's recognition of
Bouygues in a January 2003 speech at the grand opening of the Playa
Pesquero resort (on confiscated land claimed by a Cuban-American family)
in Holguín, underscores the contributions of the French company to the
tourism economy and the extraordinary trust that it enjoys from the
regime. As Castro noted, "this hotel inaugurated today belongs to
[Gaviota, the Cuban military's tourism corporation], although a major
international firm, Bouygues…engaged in the construction." (15)
Bouygues in Miami
In May 2007, the State of Florida Department of Transportation
tentatively awarded "one of the most expensive public works projects in
Florida history" to a consortium led by Bouygues Travaux Publics,
another of the eight business units of the same Bouygues Construction
building hotels for the Cuban military, to finance, design, and
undertake the construction of a tunnel at the Port of Miami. (16)
The contract is worth at least US$1 billion and entails a 35-year
concession for Bouygues and its partners to run and maintain the tunnel
in exchange for service fees. Despite the high-profile nature of the
project and the long-term contractual obligations, Bouygues passed
through the months-long selection process without raising a single
eyebrow about its presence in Cuba. As if to add insult to injury,
granting the contract to Bouygues and its associates not only allows a
major "trafficker" in expropriated assets to profit with impunity in the
U.S. but, moreover, to do so at the direct expense of American taxpayers.
Furthermore, Bouygues is no stranger to Florida. With a minimum of due
diligence, state and county officials could have discovered that
Americaribe Inc., a subsidiary of Bouygues Bâtiment International – the
specific Bouygues unit that operates in Cuba – has an office in the
heart of Miami at One Biscayne Tower. (17) And yet another of the
Bouygues Group's holdings, Colas, "is one of North America's biggest
road-building companies" with U.S. taxpayer-funded interstate highway
projects underway in Kentucky, Pennsylvania, and Wyoming. (18)
Apparently, policymakers in Miami, Tallahassee, and Washington alike no
longer seem to care about such contradictions.
***************
*Hans de Salas del Valle is a Research Associate for the Cuba Transition
Project at the Institute for Cuban and Cuban-American Studies, at the
University of Miami.
Notes:
1. Larry Lebowitz, "Company's links to Cuba could dig port tunnels'
grave," The Miami Herald, May 11, 2007; Larry Lebowitz and Matthew I.
Pinzur, "County officials may overlook Cuban links," The Miami Herald,
May 12, 2007.
2. Cf. Helm-Burton Act, Sec. 3 Purposes, paragraph 6,
http://usinfo.state.gov/regional/ar/us-cuba/libertad.htm.
3. Cf. Helms-Burton Act, Title III, Section 306.
4. President George W. Bush, Letter to Congress suspending Helms-Burton
for a further six months beyond February 1, 2007, dated January 17,
2007, http://www.whitehouse.gov/news/releases/2007/01/20070117-4.html.
5. See Shoshana Perl, Whither Helms-Burton? A Retrospective on the 10th
Anniversary (Coral Gables, FL: Miami European Union Center, Univ. of
Miami, February 2006), http://www6.miami.edu/eucenter/.
6. Ian Delaney, "Mi empresa es una participante orgullosa en el
desarrollo de Cuba," Granma, 7 June 2007,
http://www.granma.cubaweb.cu/2007/06/07/nacional/artic06.html.
7. On the historical development of the U.S. trade embargo against Cuba,
see Susan Kaufman Purcell, "Cuba," in Richard N. Haass, ed., Economic
Sanctions and American Diplomacy (New York: Council on Foreign
Relations, 1998), Chapter 2.
8. Cf. Kerry Sanders, "The Cuban embargo?" NBC News, Havana, June 5,
2007, http://worldblog.msnbc.msn.com/archive/2007/06/05/213639.aspx.
9. For an overview and financials, see the Bouygues corporate website:
http://www.bouygues.com/us/index.asp.
10. See under "Entities," Bouygues Construction website,
http://www.bouygues-construction.com/en/entites/index.shtml (accessed
June 2007).
11. Bouygues Construction, "Bouygues Throughout the World: Central-South
America," updated February 2007,
http://www.bouygues.com/us/groupe/amc_ams.asp (accessed June 2007).
12. France, Embassy in Havana, Economic Mission, "Le Secteur BTP à
Cuba," February 2007, p. 3.
13. Ibid., pp. 3-4.
14. Ibid., p. 4.
15. Cf. Fidel Castro, "Speech at the Inauguration of Playa Pesquero
Five-Star Hotel," Holguin, January 23, 2003,
http://www.cuba.cu/gobierno/discursos/2003/ing/f210103i.html
16. Larry Lebowitz, "Port tunnel builder is selected," The Miami Herald,
May 3, 2007.
17. See Bouygues Construction, under "Locations,"
http://www.bouygues-construction.com/en/international/implantation/index.aspx.
(accessed June 2007).
18. See Bouygues Group website, "Bouygues Throughout the World: North
American," updated February 2007,
http://www.bouygues.com/us/groupe/amerique_nord.asp (accessed June 2007).
http://www.miscelaneasdecuba.net/web/article.asp?artID=10477
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