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Cuba — A growing threat to the Caribbean?

By Anton E Edmunds

Monday, February 17, 2014    

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Outputs from the recent Community of Latin American and Caribbean States (CELAC) Summit in Cuba included calls for equality, the creation of a zone of peace, and for the US embargo on Cuba to be lifted. This call by one Caribbean leader after another masks a serious issue for a Caribbean too often focused on statements of regional solidarity versus implementing policy that would exemplify such statements -- Cuba is a growing threat to the region.

To be clear, Cuba is no longer the cold war proxy, challenging socio-political stability, but rather the country has emerged as a growing threat as a location for foreign direct investment and development inputs from the outside world. The unveiling of a mega-port in Mariel -- that famous hub for the export of Cubans to the United States -- should serve notice to Jamaica, The Bahamas and the Dominican Republic that in their midst is a trans-shipment hub that may one day soon directly compete with them for one of the few industries in which they have an advantage, which is the movement of goods to and from the US.

For Jamaica, Cuba's Mariel may make it that much more difficult to find the financing and shipping partners necessary for that country to position itself as a major hub, though Panama Canal delays may be helpful in buying time to address environmental issues and funding needs for the locations currently under consideration.

More critically, however, is the interest by entities such as the European Union (EU) and others in determining ways to work with Cuba. The fact that the EU now seeks to deepen relations with Cuba on trade and investment should be worrying to Caribbean governments and organisations. This, especially considering the increasingly fractious relationship that exists between many countries and the EU.

A relationship that brings new capital and technical assistance to Cuba should not be ignored, as Cuba's efforts at free market reform offer the EU and others an opportunity to position their companies for future market openings while the wider Caribbean region continues to stagnate and lose ground as a place to do business. As it relates to the improving of EU relations with Cuba, the lifting of sanctions in 2008, visits by various EU government officials, and a push to recalibrate the relationship with the country all highlight an EU interest in expanding its role as Cuba's biggest foreign investor. A large market in need of infrastructure and private sector investment, Cuba remains largely untapped and it is opportunities for investment rather than trade that drives the EU agenda. Much like with the rest of the Caribbean, Cuba exports little to the EU.

For the Caribbean, there is the perception that the region is weak in executing initiatives and, further, that it is a space seen as increasingly leaning towards mendicancy. Efforts by some countries to sue for reparations do little to position the region as friendly to an EU which, in its own evolution, now includes countries with no shared history with the region, and who are increasingly likely to view the Caribbean as hostile. Sadly, all of the above can only serve to allow EU policymakers to see Cuba as an easier partner to deal with -- even with its human rights issues -- than, in particular, the English-speaking Caribbean countries that make up Caricom.

A lack of responsiveness to outreach by the United States Government on issues like trade and energy, a weakness in security vis-à-vis the supply chain, and dalliances with economic structures proposed by Venezuela can further position the region as a difficult neighbour and friend. Turning a blind eye to the jailing of dissidents in Cuba and the weakening of institutions that may allow the development of de facto leaders for life in the wider Latin America region are also challenges that Caribbean countries have to face -- all while they claim to be a bastion of political fairness. The inability of Caricom countries to negotiate with Canada, a trade agreement that largely mirrors what was negotiated with the EU, is also not positive.

The harsh reality for the wider Caribbean is that any improved relationship between Cuba and the US would mean an increased focus by US agencies and the Congress to direct funding towards that country's development. Fundamentally, this means the appropriation of resources to support infrastructure and agriculture development, capacity building and energy, all areas where Caribbean countries need support to meet their own stated regional goals.

From a private sector standpoint, a Caribbean region still fragmented despite its best efforts at integration will see investment flow to a market that is new and larger, and one that would operate under one framework, however underdeveloped. While a private sector rush to Cuba may not be immediate, the reality is that foreign direct investment in the Caribbean has slowed, and in some instances the region has lost ground as a place where it is easy to do business. Any shift of interest to Cuba would hurt.

With the EU poised to seek out ways to partner with Cuba, and with Canada, Brazil, and China already geared up to move in, there should be an awareness by Caribbean leaders that there is probably a back room plan being developed in the US to do the same. The writing on the wall is clear: Cuba is a threat for development support as well as investment from many who were once bullish on the Caribbean's development and integration agenda.

The times for speeches on solidarity need to be replaced with actionable items and tangible efforts that the external community can commit to supporting before it is too late.

Anton Edmunds is the head of The Edmunds Group, a business and government advisory service firm that focuses on emerging markets. Anton is also a senior associate at the Centre for Strategic & International Studies (CSIS). Comments: www.cisis.org; www.onthecaribbean.com; @theedmundsgroup; anton@theedmundsgroup.com.

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