A new course

Business in Cuba



A new course

A tale of politics, corruption and golf

May 25th 2013 | HAVANA



AFTER the 1959 revolution Fidel Castro declared that golf was a

"bourgeois" hobby, unsuitable for communists. Most of the island's

courses were built on, and no new ones have been developed since. But

the government has just given the go-ahead to a new golf resort, in what

it claims is "the start of a whole new policy to increase the presence

of golf in Cuba". In the same week it pressed ahead with the

prosecutions of several foreign businessmen for corruption. The

developments, which seem to be linked, show how Cuba is changing its

attitude to business.



The $350m Carbonera Club, near the beach resort of Varadero, is to be

developed by Esencia, a British company. A few days before the project

was approved, Esencia had staged a golf tournament which was won by Mr

Castro's son Antonio. The development will include residential

properties available for purchase by foreigners. Other big tourism

projects are under way. The government has given the go-ahead to the

construction of a 1,300 berth marina, also in Varadero, which would be

the largest in the Caribbean. The island's airports are to be upgraded

too, with help from Brazil's development bank.

In this section



Raúl Castro, Fidel's brother, has slowly begun to open Cuba's economy

since becoming president in 2008. Cubans may now buy homes and cars, and

small businesses such as restaurants and bars have proliferated. But

Raúl has been at pains to stress that his intention is to "update"

Cuba's socialist model, rather than reintroduce full-blown capitalism.

Perhaps to make that clear, foreign businessmen on the island have had a

particularly hard time under his watch. Several have been held without

charge for almost two years, ostensibly for corrupt practices. Now, in a

move which could be a precursor to their release, they are about to go

on trial.



Sarkis Yacoubian, a Canadian of Armenian origin who ran a transport and

trading company, will probably be first in court. In July 2011 state

security officers raided his office and took him to Havana's notorious

detention centre, Villa Marista, where he apparently admitted paying

bribes to state employees (all of whom, from labourers to managers, earn

about $20 a month). Some officials were slipped a few ten-dollar notes,

or a dinner. At least one was given $50,000.



Mr Yacoubian's confession soon triggered further arrests. In September

2011 authorities detained his business partner turned rival, Cy

Tokmakjian, a fellow Canadian-Armenian. His company, Tokmakjian, had the

lucrative sole concession to import Hyundai vehicles to Cuba, and also

supplied heavy machinery to the nickel industry.



A month later Amado Fahkre, a managing partner of Coral Capital, a

British fund with property and art investments on the island, was

arrested. The following year Coral's chief operating officer, Stephen

Purvis, was taken into custody, too. Many other foreign investors fled

following the crackdown. Those who stayed complained that it had become

much harder to meet Cuban officials.



By announcing the new golf investments at the same time as ending the

legal limbo of the jailed foreigners, Raúl may be signalling that once

again the island is open for business. The trials and the more relaxed

attitude to investment are part of the same process, says one Western

diplomat: "After two years of indecision, something is happening."



Something has to. Cuba's economy has long been propped up by Venezuela,

which provides most of Cuba's oil in return for tens of thousands of

Cuban doctors and security advisers. Nicolás Maduro, Venezuela's new

president, has pledged loyalty to Cuba. But his narrow, disputed

election victory last month, and Venezuela's nosediving economy, mean

that Cuba needs other options. Much as Fidel may disapprove, it seems

that the sport of stockbrokers is part of the plan.



http://www.economist.com/news/americas/21578439-tale-politics-corruption-and-golf-new-course