Foreign business partners are being squeezed out of Cuba, which is turning to countries such as Venezuela and China.
by MARC FRANK
It has been more than a decade since Cuba, suffering from a post-Soviet economic collapse and jitters about the United States, opened its door to foreign businesses.
Now many investors -- mainly European -- who took the plunge are being asked to leave.
Only half the homes rented to expatriates by the state's real-estate monopoly are now occupied, and at the Havana International School enrollment is down about a third from two years ago and falling.
On average, one joint venture and two smaller cooperative production ventures have closed each week since 2002, when there were 700 in the country.
Joint ventures are with state partners, who usually hold 50 percent or more of shares. Cooperative production agreements involve a foreign investor who supplies machinery, credits and supplies in exchange for a share of profit or a product, mainly in labor-intensive sectors such as light industry, the mechanical industry and food processing.
''I would not be surprised if in the end there are only around 50 joint ventures in the country and just a handful of cooperative production agreements,'' said an employee at the Foreign Investment and Economic Cooperation Ministry.
Relations with the European Union and other Western nations remain tense because of President Fidel Castro's repression of dissent, and Cuba is increasingly turning toward countries like such as China and Venezuela, which it sees as being less influenced by the United States.
Yet the purge appears to be related less to these factors than to recentralizing finance and trade and eliminating the partial autonomy that state concerns were granted in the 1990s.
'Changes over the last two years are introducing significant corrections in the Cuban economy, considerably limiting the action of market mechanisms,'' José Luis Rodríguez, economy and planning minister, told local economists last month.
Cuba is now interested in partnering only with well-known companies in strategic sectors of the economy, said Marta Lomas, foreign investment and economic cooperation minister.
Big concerns, at times operating through subsidiaries, are holding their own and include Nestle (bottled water and other consumer goods), the Spanish-French tobacco company Altaldis (cigars), Pernod Ricard (rum) and Bouygues (construction), both of France , Telecom Italia (telecommunications), NV Interbrew of Belgium (beer), Sherritt International of Canada (nickel, oil, gas and power), British-American Tobacco (cigarettes) and Sol Meliá of Spain (tourism).
European investors whose joint ventures are liquidating complain of endless haggling with state companies and ministry officials over how and when their share of investments will be paid, and the often millions of dollars they are owed for financing operating costs.
'If they want me to leave, OK, I'm a guest in their house. But what I can't accept is simply being booted out of here with no solid guarantee I will ever get my money back,'' said a Spanish businessman operating in Cuba since the early 1990s who is negotiating what he calls ``the best possible bad bargain.''
Another company representative in a similar situation terms his Cuban partners' behavior ``outrageous.''
'I have gone through endless meetings for more than a year with no result in terms of recovering our investment. They are trying to wear me down,'' he said, asking like others to remain anonymous for fear of making matters worse.
European diplomats say the Cubans are usually within their rights in ending business relationships but often do so with little explanation and with only the dubious promise that they will some day pay money owed foreign partners.
'What you have here is renationalization without compensation,'' one European commercial representative said.
Some companies are fighting in domestic courts, while others are considering international arbitration.
They are pessimistic, however, about being paid if they win.
Cuban officials did not respond to requests for interviews.
Castro has criticized investors several times this year for arranging exclusive supply contracts for their own ventures. He has also said foreign traders enjoy profit margins of up to 40 percent.
One joint venture established a decade ago is being liquidated in spite of a 20-year contract.
It has always had a loss in its main business operations but managed to scrape out a profit by charging fees for labor, utilities and other services, the foreign investor in the company said.
'I do not understand their problem. The Cubans seem not to fathom win-win situations. For them it is a zero-sum game. They think anything you make should be theirs,' the investor said.
The companies have little choice but to take a loss in equipment, warehoused products, personnel training and other costs built up over the years. Cuban law states they must sell what they have back to the government, which pays little, or to other foreigners, of whom there are fewer and fewer, or take what they have with them.