Ian Delaney on what the changes in...Cuba may mean for business.
......................................................................
The Obama administration's move to ease some Cuban travel andinvestment restrictions is being hailed as the first step towardeventually lifting a trade embargo against the island country, but IanDelaney isn't celebrating just yet.
The head of Sherritt International Corp.,Cuba's largest foreign investor, said the move would not mean anyimmediate change to the way the Toronto-based company conducts businessthere, although shareholders were certainly buoyed, driving the stockup 24 per cent.
Mr. Delaney, whose company produces nickel and oil in Cuba, saidWashington's decision to allow Cuban-born citizens to travel freely totheir homeland and send money back to relatives bodes well for thecountry. But "we've never made an investment predicated on a change ingovernment in Cuba. From a humanitarian point of view, these areterrific changes. From the way we are going to conduct our business,probably not a lot," he said.
Jorge Pinon, an energy fellow at the University of Miami's Center forHemispheric Policy and an expert on U.S.-Cuba relations, said the Obamapolicy initiatives, which will also allow U.S. telecom, television andradio companies to apply for licences to operate in Cuba, are aharbinger of major changes to come.
"What you will see in the next 12 to 18 months is the lifting of somemore of the trade restrictions in the embargo that will send a messageto Havana that this administration is ready to begin a new era," Mr.Pinon said in an interview.
The decades-old U.S. trade embargo, an attempt to wrest power from thegovernment of Fidel Castro, has prohibited American companies frominvesting in the Caribbean nation.
Lifting the embargo would see millions of dollars of foreign investmentpour into Cuba, Mr. Pinon believes, not only from American sources butfrom other regions.
"There are a lot of European companies wanting to do business in Cubabut they are waiting on the sidelines because they don't want to upsetrelationships or business interests. So the potential is huge," he said.
One of the reasons some Canadian firms have shied away from operatingin Cuba is the belief that once the embargo is lifted, the companieswould quickly lose their competitive advantage to an influx of Americanrivals.
Mr. Pinon, however, expects that Canadian companies will have a "special" role to play in Cuba as trade restrictions ease.
"I believe many Canadian companies have the experience of how to dobusiness in Cuba, which would be very valuable to an American company,"he said.
Few have more experience than Sherritt, which first began operatingin Cuba nearly two decades ago. Its 50-per-cent-owned Moa joint venturewith the Cuban government produced 32,000 tonnes of nickel and 3,400tonnes of cobalt last year.
But the company has always suffered a so-called "Cuba discount." U.S.citizens are prohibited from directly owning Sherritt stock and Mr.Delaney and other senior Sherritt executives are barred from enteringthe United States. U.S. corporations are also restricted from doingbusiness with the Canadian company.
That won't change with the Obama administration's new policies. But iftrade restrictions ease further, as expected, Sherritt's operatingcosts and the value of its Cuban assets are sure to improve.
"I'm sure it's a good thing if they get rid of the embargo. I'm sure itwill be a good thing for a lot of the people in Cuba that the embargorather unfairly prejudices. It imposes a hardship, which in today'sworld is hardly necessary. We'll just watch and see," Mr. Delaney said.
© The Globe and Mail