Article

Outside In

By Johannes Werner November 30, 2010

Looking South

I’m taking you on a three-stop tour. Let’s begin with Brazil, which has turned into an economic powerhouse lately. The debt ratings agencies recently propelled Brazilian debt to investment-grade level, never mind the union leader and his leftist labor party that have been running the country for eight years. Now, Moody’s and Standard & Poors are learning to cope with what will likely be the first female president of Brazil—Dilma Roussef, a former Communist and urban guerrilla. What matters here is the 8 percent-plus GDP growth, the fact that extreme poverty is on its way out, the millions of new jobs, the 100 million new checking accounts Brazilian banks expect to open over the next decade, the $70 billion IPO of Petrobras (the largest ever in history), the upcoming Olympic Games and soccer World Cup in Brazil, and the infrastructure construction boom that will come with these mega-events.

Considering this hot market, you would expect one of the crisis-stricken construction companies or custom homebuilders here in Sarasota-Bradenton to be among the first to join that fray in São Paulo or Rio de Janeiro. Not so. The only local builder/developer I could find in Brazil is David Ferdinand, and he has his eyes set on Ilha das Couves, an uninhabited, tiny island off the coast of São Paulo. Even though it’s close to the country’s largest port and not far from the biggest offshore oil areas, thanks to its natural preserve status only limited construction can be done there. Seeing his project as part of a larger effort to preserve the Mata Atlântica, the subtropical Atlantic forest threatened by Brazil’s fast growth, Ferdinand is trying to start small-scale eco-tourism on the island before it gets overrun. Good for him and good for Brazil.

Next stop: Cuba. The long-expected Big Reform in the country’s state-dominated economy has started, kicked off by an official announcement in September that a half-million state workers will be laid off by the end of March. And hundreds of thousands of the newly unemployed had better be trying to make a living in the country’s fledgling private sector, the government suggests.

Now, whether 20 percent of working-age Cubans selling pizza, pest control services and precision haircuts to each other will make the Cuban economy more sustainable and functional is anyone’s guess. Skeptical post-bubble Sarasotans may have doubts.

One thing is sure: Having seen how Cuba’s 100,000 new private farmers are struggling to get access to basic implements such as seeds, wire and fertilizer, it’s clear that if these budding businesses rely solely on the state as lender and supplier, they’re in for hard times.

It seems that the governments of Brazil, Spain and Norway, as well as the European Union and the United Nations, are riding to the rescue. However, their microloan programs are minuscule compared to the billions of dollars Cubans living abroad have been sending to their relatives on the island, year after year.

Here’s what’s going to play out in Sarasota-Bradenton: The more than 3,000 Cubans living here will be cast in the role of micro lenders for the new businesses of their relatives and friends on the island. Their remittances will now go towards buying a commercial-size microwave oven for a cousin’s Paladar restaurant or funding the import of a milking machine for an uncle’s fast-growing dairy farm. Unfortunately, our sanctions against Cuba put the Cubans here in legal limbo, since our government still keeps a tight lid on interaction—particularly the financial kind.

Unless you want Cuba’s nascent private businesses to fail, it’s really, really time to get over inertia in Washington. A pending bill to lift the travel ban and ease financial transactions—HR 4645—has probably the best chance of any such bill ever to succeed. So far, Vern Buchanan isn’t sponsoring the bill. Tell him what you think about that.

Just to give you an impression of what’s at stake for the local construction industry: In January, the Cuban government begins negotiations with foreign investor groups over construction of 16 golf course and marina projects with up to 7,000 condo units. British, Spanish and Canadian investors are game. Heck, even a private developer from Vietnam is at the table. Enough said.

Last stop: Haiti. The billion-dollar reconstruction of the earthquake-devastated nation is inching ahead. One Sarasota-based nonprofit, the U.S. affiliate of U.K.-based ShelterBox, played a role in the immediate relief effort by providing temporary shelter to hundreds of thousands of displaced Haitians. After sending 27,000 of their nifty boxes that include a tent and all the necessary gear, the organization was planning to wind down their operations in Haiti by the end of September. Thanks to a mix of social networking on the Web and old-time media publicity, ShelterBox USA emerged as the leading fund-raising arm of the worldwide organization, gaining new corporate donors such as designer label Donna Karan, which paid for 250 boxes. This is a good sign of the efficiency and reach of U.S. corporations.

Meanwhile, the international reconstruction project is forging unusual cooperation. On Sept. 20, Secretary of State Hillary Clinton signed two agreements related to Haiti. One was for the construction and operation of a garment-industry park there by South Korea’s Sae-A Trading Co.; the other provided $25 million for the reconstruction of Haiti’s largest hospital. The former raised the ire of leftist critics, because it implies U.S. taxpayer funding for a for-profit venture by a Korean company, in an industry that unions and others deem exploitative.

The latter has the potential of angering right-wing critics, because the U.S. funding goes to the Cuba-led $600 million program for the reconstruction of Haiti’s healthcare system.

I love this. It’s about subordinating ideological concerns to a bigger goal. I am still waiting for one construction or healthcare company in my hometown, though, that could seek out the opportunities emerging from these unusual projects.

 

Johannes Werner is editor of Cuba Trade & Investment News and of CubaStandard.com. His column has won four first-place Charlie awards from The Florida Magazine Association. He can be reached at [email protected]

   

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