Congress considers ban on U.S. military contracts for companies doing business in Cuba

Congress considers ban on U.S. military contracts for companies doing
business in Cuba
By Doreen Hemlock, Sun Sentinel
9:11 a.m. EDT, July 11, 2012

South Florida companies active in Cuba are worried about a measure in
Congress that would ban them from U.S. Defense Department contracts if
they keep up business with the island.

Anti-communist hard-liner Rep. David Rivera, R-Miami, inserted that tiny
provision into a massive defense spending bill that passed the House in
May. The ban would apply to anyone doing business with countries that
Washington deems state sponsors of terrorism, which includes Syria,
Sudan and Iran.

A Senate version of the bill does not contain the provision, but Rivera
said he's talking with several senators to convince them to add it as "a
question of national security." It is unclear whether the measure could
pass the Senate or survive a conference committee.

Businesses active in Cuba — foreign firms and U.S. companies licensed by
U.S. Treasury to sell food and medicine or offer travel services — worry
that if the measure becomes law, they'll be forced to choose among their
customers at a time of slow growth in the global economy.
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Because many big companies do more business with theU.S. militarythan
they do to Cuba, the measure could effectively end their budding sales
to the Caribbean's largest island nation — unless defense officials
offer a waiver, according to lawyers and consultants specializing in
Cuba business.

Those affected could include U.S. companies licensed to sell in Cuba
such as food giants ADM, Cargill, Perdue and Tyson; U.S. shipper
Crowley; plus foreign giants including Brazil'sconstruction leader
Odebrecht. Crowley operates shipping routes to Cuba from Port Everglades
in Fort Lauderdale. Odebrecht is building the $360 million Metrorail
project to Miami airport.
Hard-liners in Florida recently pushed a similar law banning state and
local contracts of $1 million or more to companies dealing with Cuba.
But that law recently was blocked by a federal judge, who said U.S.
foreign policy was the domain of the federal government, not the realm
of a state.

Rivera said his U.S. measure would largely affect foreign firms
seekingU.S. militarycontracts such as Odebrecht, now building an $800
million expansion of Cuba's Mariel port, and Spain's Repsol, which
recently drilled for oil off Cuban shores.

Small U.S. businesses that sell food to Cuba or take Cuban-Americans to
visit relatives on the island won't be hurt, if they don't seek Defense
work, he said.

"The practical impact would be that we'd create more opportunities for
American companies and American jobs, because companies like Odebrecht
and Repsol could not do business with the Department of Defense," if
they do business with state sponsors of terrorism, said Rivera.

Odebrecht, which challenged the Florida law, said it is monitoring the
provision in Congress.

Lawyers and consultants raised concerns: Where would the Defense
Department get the resources to check if proposed contractors did
business with Cuba, Iran or others? Does the measure clash with federal
law authorizing U.S. companies to sell food and medicine to Cuba for
humanitarian reasons? If U.S. companies pull out of Cuba, would that cut
food and medicine for the Cuban people?

"The implications could be serious: misallocation of resources and
penalization of U.S. farmers" and others licensed to do business with
Cuba under an exemption to the 50-year-old U.S. embargo against the
island, said Robert Muse, an attorney inWashington, D.C.active for
decades on Cuba matters.

Some also wondered how broadly Defense officials might interpret a
future law. For example, would an airline that leases planes for a Cuba
charter be banned from Defense contracts if it pays a fee in Havana?,
asked John Kavulich of the US-Cuba Trade and Economic Council, a
nonprofit group in New York.

Licensed charter flights to Cuba operate from Fort Lauderdale, Miami,
Tampa and other U.S. cities.

Some analysts linked Rivera's move to election-year politics to court
Cuban hard-liners. "As a taxpayer, I'd be more appreciative of Mr.
Rivera's efforts to engage in budget matters," said Kavulich.

dhemlock@tribune.com or 305-810-5009

http://www.sun-sentinel.com/business/fl-cuba-business-lockout-20120710,0,6679028.story