Investors sticking it out in crisis-prone Cuba

Investors sticking it out in crisis-prone Cuba
Thu Dec 17, 2009 12:55pm EST

* Investment projects number 258, similar to 2008
* Cuban ventures abroad increase
* Experts point to diversification
By Marc Frank

HAVANA, Dec 17 (Reuters) - The number of joint ventures and other
investment projects in Cuba remained stable this year despite a
liquidity and payments crisis, according to testimony before a
parliamentary commission published on Thursday.

Foreign Trade and Investment Minister Rodrigo Malmierca reported there
were 258 joint venture and other investment projects operating in the
country and 46 abroad, according to the Communist Party newspaper Granma.

In July 2008, the last time figures were released, the government said
there were 246 joint ventures and other investment projects in the
country, but gave no figures for Cuban projects outside its borders.

Cuba has pharmaceutical ventures in Iran, India, China, Brazil and other
countries, works construction in Angola and Vietnam, operates a hotel in
China, and has numerous ventures in Venezuela.

U.S. law forbids companies from investing in Cuba, though they may hold
a minority stake in foreign firms with less than 50 percent of their
operations in Cuba.

"The presence of American investors in foreign firms that trade with or
invest in Cuba is of growing importance," said Paolo Spadoni, a Cuba
expert at Tulane University's Center for Inter-American Policy and
Research and author of a soon-to-be-published book on U.S. money flows
to Cuba.

Some joint ventures have had difficulty transferring funds and profits
abroad from state banks this year despite contractual guarantees.

"FUNDS BLOCKED"

Hurricanes, the international financial crisis, U.S. sanctions and a
sluggish state-dominated economy left Cuba short billions of dollars
this year, officials reported, and banks unable to back funds deposited
in a local foreign exchange equivalent.

"We are hanging in here hoping the situation will improve in 2010," the
foreign manager of one venture said, asking that his name not be used.
"We are trying to use local products to keep going because we can not
keep importing with funds blocked in the bank."

Malmierca said most ventures abroad were with allies Venezuela, China
and Angola, while inside the country investors from Spain, Venezuela,
Canada and Italy held the greatest presence in sectors such as tourism,
oil exploration, communications and mining.

"This shows that the Cubans have learned at least one major lesson from
their last major economic crisis in the 1990s, which is the importance
of diversification," said Dan Erikson, a Cuba analyst with the
Inter-American Dialogue in Washington.

"Although 2009 has been a grueling year for the Cuban economy, the
island is now engaged with a spectrum of international partners across a
range of industries, which has provided a much needed economic cushion,"
he added.

The official media reported Cuba signed two hotel ventures with Qatar, a
fishing venture and four oil exploration contracts with Russia, numerous
deals with Venezuela, an electronics assembly venture with China, and a
paper venture with a Spanish firm in 2009.

The Spanish venture was the first reported with a European company in a
number of years as Havana increasingly focuses on strategic allies
Venezuela and China, Russia and energy rich developing countries such as
Algeria, Angola, Vietnam and Qatar. (Editing by Leslie Adler)

Investors sticking it out in crisis-prone Cuba | Reuters (17 December 2009)
http://www.reuters.com/article/idUSN1716144820091217