FOREIGN investors still face an obstacle course in Cuba despite the passage of a new, more liberal law aimed at attracting capital from outside the communist-ruled island.

Cuba’s National Assembly unanimously approved the law on Saturday, offering tax and other incentives to foreign investors, who are seen as crucial to reviving the country’s stagnant economy.

But even as he pitched the new law, Foreign Trade and Investment Minister Rodrigo Malmierca acknowledged to lawmakers many impediments to foreign investment remain.

He ticked them off in a speech to the assembly: “The economic, commercial and financial blockade imposed by the American government, the foreign debt situation, the past errors in terms of investment and the restrictions imposed by the lack of foreign currency.”

The US embargo, in place since 1962 and denounced daily by Havana and annually by an immense majority of the UN General Assembly, is solidly embedded in US law.

It prohibits Americans and Cuban residents of the United States from investing in Cuba and threatens sanctions against companies that do business in Cuba, whether they are US subsidiaries or foreign companies that also operate in the United States.

Nevertheless, US President Barack Obama “holds out the possibility of creating licenses to allow particularly Cuban-Americans to invest in and promote the nascent Cuban private sector”, says Arturo Lopez-Levy, a Cuban academic at the University of Denver.

There are some exemptions to the embargo, obtained notably by the powerful American agro-business lobby, and some Cuban exiles have expressed interest in investing in sugar production in Cuba.

“The American government should seriously think about it, because Cuba is a market that some Americans greatly wish to reconquer,” said Esteban Morales, of the University of Havana.

Inertia and bottlenecks

The high cost of servicing Cuba’s foreign debt is another problem limiting the island’s capacity to borrow and adding to its need for direct foreign investment.

The last official figure put Cuba’s foreign debt at $13.6 billion in 2010.

Since then, Cuba has managed to cancel part of its foreign debt with Russia, Japan and Mexico.

While Malmierca did not explain what he meant by “the errors of the past,” Lopez-Levy said that the new law faces many of the same pitfalls as the 1995 foreign investment law it replaced.