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Flap with Europe
In mid-February the European Union opened its headquarters in Havana.
Larry Luxner
War of words has little impact on economics.
While few people raise an eyebrow at the insults and accusations that fly between the Cuban and US governments, deteriorating relations between Havana and the 15-member European Union over recent months are taking many by surprise.
It began on June 5, when European Union (EU) nations announced a review of relations with Cuba following 75 dissidents being sentenced to long prison terms and the execution by firing squad of three men who hijacked a ferry (LP, April 23, 2002).
The EU also slashed high-level bilateral visits and participation in Cuban cultural events and, in a change of long-standing policy, offered Cuban dissidents invitations to embassy celebrations for EU member states’ national days.
In response, Cuban President Fidel Castro and his brother Raúl, head of the country’s armed forces, led hundreds of thousands of demonstrators past the Spanish and Italian embassies in separate, well-choreographed protest marches. On national TV, Castro called the Spanish Prime Minister José María Aznar "a little Führer" and likened Italian Premier Silvio Berlusconi to hated fascist dictator Benito Mussolini.
Two days later, the Cuban government took control of Spain’s cultural center in Old Havana, gave its personnel 90 days to vacate the elegant mansion and erected a huge "Anti-Fascist" billboard at the main entrance.
Despite diplomatic tension, there is little evidence the transatlantic war of words has scared away European investment from Cuba. "I don’t think there’ll be economic consequences, because the EU has issued no economic sanctions...so we don’t think anything will change for now." said Pierre Sella, economic attaché at the French Embassy in Havana.
John Kavulich, president of the New York-based US-Cuba Trade and Economic Council added, "It’s too early to tell if the stated common EU position will survive individual EU member country interests. Traditionally, the EU has made pronouncements relating to Cuba which have generally not been implemented by individual countries."
In mid-February, the EU inaugurated its headquarters in Havana, amid signs that Cuba would be welcomed into the Cotonou Agreement, a preferential trade accord that benefits 78 former European colonies in Africa, the Caribbean and the Pacific.
Then came the dissident crackdown, the jail sentences and executions — and the possibility of participating in Cotonou came to an abrupt halt.
"Cotonou is now completely out the window," said Philip Peters, vice president of the Lexington Institute, a Washington think tank. "It wouldn’t have opened a spigot of hundreds of millions of dollars in aid, but it could have meant some increased aid and trade preferences for Cuba."
While some EU leaders may be fuming at Castro’s government, it does not seem to have kept a single Spaniard, Italian, German or Belgian from vacationing on the island’s famed beaches and it does not seem to have had any impact on investment in the tourist industry.
In the first four months of the year, tourist arrivals in Cuba increased by 20 percent over the same period in 2002. Cuba received approximately 800,000 tourists in the first quarter and authorities expect to top the 2 million mark by the year’s end. Over the next three years, another 10,000 rooms in four- and five-star hotels are expected to be added to the existing 40,000-room offering.
According to the World Tourism Organization, Cuba occupies the fifth spot among the 10 most exotic-idyllic destinations currently in vogue with tourists, following Hawaii, the Seychelles, Mauritius and the Maldives in the Indian Ocean.
"Politics is one thing, tourism is another," explained Eric Peyre, Cuba sales manager for France’s Accor Group. "The average French citizen doesn’t even know what’s going on in Cuba. They think most of the tourists in Cuba are Americans. Maybe only 2 percent of the population of Europe is even aware of the political situation."
Peyre, who worked for Spain’s Sol Meliá hotel conglomerate before joining Accor, said that as long as the island remains competitive on price, it would continue to attract tourists, regardless of political tensions.
"Companies like Accor and Meliá look only at the bottom line, and as long as the bottom line looks good, there is no problem," Peyre said, noting that Meliá now manages 9,000 rooms in 21 hotels across the island, making it by far Cuba’s top foreign hotel operator.
Two other Spanish companies, Occidental and Pinero, are also making modest investments in Cuba. A few months ago, Occidental took over management of the 472-room Novotel Miramar, while Pinero now manages the former Club Med in Varadero and has invested at least US$2 million to upgrade the property.
"If business was so bad and they were so nervous, they would never sign contracts or invest money in Cuba," said Peyre.
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