Cuomo to Cuba

On a stormy afternoon in September of 1960, a plane carrying Fidel Castro touched down at New York City’s Idlewild Airport. The 34-year-old revolutionary, decked out in green fatigues, was subdued and unsmiling.

Tensions with American officials had been rising ever since he and a ragtag band of barbudos had toppled a U.S.-backed regime in Cuba the year before. Although Castro had yet to declare that his revolution was socialist, he had nationalized U.S. companies and farmland, consolidated political power and cultivated ties with the Soviet Union. President Dwight Eisenhower, who famously played a round of golf to avoid meeting Castro in 1959, had halted the purchase of Cuban sugar, oil and other goods. The CIA was already plotting Castro’s overthrow. Disillusioned Cubans had started moving to the U.S., many settling in Miami, just 90 miles north of the island. The day before the Cuban delegation landed in New York, the nation seized all U.S. banks within its borders.

Shortly after arriving in the city, the Cubans claimed that a Midtown hotel they booked had jacked up its rates, and threatened to camp out in Central Park instead. They eventually found lodging at the Theresa Hotel in Harlem, where Castro met with Malcolm X. As the new prime minister of Cuba, Castro also held meetings with world leaders streaming into the city for the United Nations General Assembly, including the Soviet Premier Nikita Khrushchev. In a marathon four-hour address to the U.N., Castro complained bitterly of America’s “aggression” and “imperialist” policies and dismissed John F. Kennedy, then a candidate for president, as “an illiterate and ignorant millionaire.” An official Cuban aircraft was confiscated at Idlewild by an advertising executive who sought to recoup an unpaid bill, prompting Castro to conclude his 10-day visit with a flight home in a Soviet plane provided by Khrushchev.

More than half a century after Castro’s visit to New York, the state’s top elected official is returning the favor. When President Barack Obama and Cuban President Raúl Castro announced a landmark framework in December to resume diplomatic relations, Gov. Andrew Cuomo scrambled to be the first governor to visit the island. On April 20, he will board a Havana-bound charter plane at John F. Kennedy International Airport—formerly Idlewild, now bearing the name of Fidel Castro’s old foe. Cuomo, who was barely a year old when Castro took power, will lead a very different kind of delegation. He will be accompanied by a contingent of state officials and business executives in suits and ties, and will stay at the Capri, one of Havana’s poshest hotels. His mission will be to spur trade, he says. Thorny political issues—such as Cuba’s jailing of dissidents and travel restrictions on its own citizens—will be off the table. Fidel Castro, now 88, remains the country’s symbolic leader, but his brother, Raúl, took over in 2008 and has taken steps toward liberalizing the economy. Instead of entrenched divisions between the neighboring countries, things are finally looking up.

However, despite the hopes for new ties, the U.S. trade embargo implemented in the early 1960s is unlikely to be lifted any time soon, especially with Republicans controlling both houses of Congress and a presidential race getting underway. The two countries have yet to reopen their embassies, and the U.S. has yet to remove Cuba from its list of state sponsors of terrorism. Apart from those hurdles, the biggest question may be how far and how fast Raúl Castro wants to go in allowing new competition, which could loosen his grip on power.

As for New York, one area of trade already permitted is food and agricultural products, but the state produces little that is in demand in Cuba. Sectors in which New York could be a major player, such as banking and financial services or telecommunications, may not open up for months or even years. Since Cuomo is often mentioned as a potential presidential candidate, some observers wonder whether his trade mission is more about establishing foreign policy credentials and generating good press than securing substantial business deals. When Cuomo comes back from his whirlwind trip, returning less than 48 hours after he departs, what will he have to show for it?

The capitol building in old Havana resembles the U.S. Capitol.

In his joint State of the State and budget address in January, Cuomo announced that he would visit Cuba in a matter of weeks. It will be the first of a string of international trade missions during his second term, to be followed by trips to Mexico, Canada, Italy, China and Israel. The governor, who developed a reputation for staying at home during his first term, changed course last year with excursions to Israel, Afghanistan, the Dominican Republic and Puerto Rico. His upcoming itinerary will inject an economic development component, building on a series of in-state initiatives to create jobs, particularly in upstate New York.

The destination getting the most buzz has been Cuba, which the Cuomo administration says will bring new business to the state’s “real estate developers, construction companies, manufacturers of building materials and technology providers.” The administration claims that the state’s “great agricultural bounty” offers additional opportunities, while Cuba’s vibrant biotechnology industry could be ripe for partnerships.

“We would like to be one of the first states to Cuba, just from a competitive point of view, economically,” Cuomo said in his January address. “Let us be the first one there, let us develop the relationship, let us open the markets, and let us get opportunities for New York companies.” José Ramón Cabañas, the chief of the Cuban Interests Section in Washington, D.C., echoed Cuomo’s line in February, calling the upcoming trade mission “historic” and applauding him for being the first governor “to lead an official state trade mission to our beautiful island.”

Yet New York long ago missed the opportunity to be the first state to get its foot in the door. At least 10 governors have gone to Cuba to promote trade, several from farm belt states taking advantage of a humanitarian exception to the embargo for agricultural goods. Gov. George Ryan of Illinois was the first, in 1999, followed by roughly one new governor every year through 2010. Another Republican, Gov. Dave Heineman of Nebraska, made several trips to Cuba in 2005 and 2007, and secured contracts worth tens of millions of dollars for wheat, corn, beans and livestock. Even George Pataki, the former Republican governor of New York, oversaw a short-lived initiative to boost trade with Cuba, although he never actually ventured there, according to Assemblyman José Rivera.

New York tried to ship apples to Cuba under Pataki, “who used to be a farm boy, a farmer until he got a better job and elected like I did to the New York State Assembly,” said Rivera, a Bronx Democrat originally from Puerto Rico who has visited Cuba and supports lifting the embargo. “Under his administration, we did for a brief moment ship apples to Cuba, but the farmers came back to us and said, we can no longer do this. We have to ship to the ports of Houston and the ports of the Everglades—we cannot afford that and the Cuban people cannot afford to pay for the costs.”

Just last month, a delegation headed by Missouri’s first lady and the state’s agriculture director traveled to the island and met with Cuban officials and the U.S. ambassador. Missouri Gov. Jay Nixon dropped out at the last minute when the state auditor died, paving the way for Cuomo to stake his claim to being the first governor to visit since Obama announced the bilateral effort to normalize relations. New York may disagree, but Missouri is still calling itself “the first U.S. state trade delegation to visit since the announcement that the U.S. was working to normalize diplomatic relations with Cuba.”

It’s also an open question what New York can offer that Cuba or its citizens would like—or be able—to buy. Despite the embargo, the United States is actually a major trade partner with its island neighbor, trailing only Venezuela, China, Spain and Brazil in exports to Cuba. Branded food products and commodities make up the bulk of the U.S. exports, but last year’s $291 million in such sales was well below a peak of $710 million in 2008, thanks to Cuba’s trade deals with friendlier countries like Venezuela and Vietnam. Last year Cuba’s top import from the U.S. was, by far, frozen chickens, followed by soybeans and soybean products, corn and animal feed. Another exception to the trade embargo allows the export of medicine and medical supplies from the U.S., although that accounted for less than $1 million in sales last year.

New York’s top exports, meanwhile, are diamonds, gold, jewelry, civilian aircraft and artwork. Agricultural commodities and food products don’t even crack the state’s top 20. “Generally, from New York State, there isn’t a lot,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, who has arranged trips for several governors. “The majority of the governors who have visited thus far have been from those states that are shipping agricultural commodities, because that’s the majority of what Cuba’s purchasing.”

Nonetheless, the New York Farm Bureau is optimistically pitching the state’s apples and dairy products like cheese and yogurt—even maple syrup—as products that might somehow catch on in Cuba. Others have suggested the state’s wineries as promising potential exporters. “We are hoping that agriculture remains a focus of his trip and the potential that it offers for our farmers in New York to sell their goods and products in Cuba,” Steve Ammerman, a New York Farm Bureau spokesman, said of Cuomo.

One obstacle, according to Ammerman and others, is that New York is unable to ship goods directly to the island nation. Currently, in-state producers would have to send products by rail or truck to the Gulf of Mexico before shipping them out from ports in Florida or Texas. After confronting the issue during the Pataki years, Rivera has been urging state officials to authorize the export of goods to Cuba through the Port Authority of New York and New Jersey. In fact, some suggest that how aggressively Cuomo tackles the issue could signal how serious he is about spurring trade with the Caribbean nation.

“If you’re coming from a northern state, you obviously have an extra cost, and so that puts you at a price disadvantage,” said Antonio Martinez, a consultant who has coordinated business and government trips to Cuba. “This is why it’s important that the infrastructure is in place. I want Governor Cuomo to succeed and I want him to come back with contracts, and I want him to really open up the space, but the infrastructure is the critical piece here, so this isn’t a one-shot deal.”

A more obvious area of expansion into Cuba for New York is banking and financial services, a sector long dominated by big Wall Street players. Among the steps that Obama took in December was relaxing rules that barred U.S. banks from doing business in Cuba, including allowing Americans to use credit and debit cards there. American Express and MasterCard have already announced that their cards will be accepted on the island.

At a summit meeting of Latin American leaders over the weekend, Obama was widely expected to announce the removal for Cuba from the U.S. list of state sponsors of terrorism, although he is holding off for now. Doing so could pave the way for banking between the two countries by removing the risk of major penalties. For example, last year the French bank BNP Paribas was hit with a $8.9 billion fine for carrying out and covering up transactions with Cuba, among other countries. New York’s banking regulator secured $2.24 billion for the state. At the time, Cuomo said that the “enforcement action should serve as a warning to any company that provides financial support to global terrorism and enables human rights atrocities.”

Congress could still try to block the change in Cuba’s status, however. “Right now being on the sanctions list, financial institutions, even though President Obama’s initiatives have included some meaningful opportunities for them, none of them want to touch Cuba until it’s off the sanctions list,” Kavulich said.

Other segments of the New York economy that could capitalize on the historic thaw are real estate, construction and building materials and the tech sector, according to the Cuomo administration. Yet little will open up in the immediate future, experts say. Even Cubans need government permission to buy or sell property. Spain has invested in the hotel and resort business in Cuba, but only through joint partnerships with state-run companies. The Obama administration in December lifted restrictions on sales of building supplies to Cuba’s emerging private sector, but since the Cuban government still controls imports, the rule change hasn’t had an impact.

“The other challenge we have is while we are allowed to do more with the Cuban private sector, it’s still not possible yet for the Cuban private sector to have direct importation,” Martinez said. “They have to go through the government, and that’s, I think, something that’s going to evolve.”

In the meantime, some state lawmakers say that Cuomo should focus instead on expanding trade with existing partners instead of rushing into an uncertain situation. Of the five other countries on Cuomo’s second-term itinerary, four are in the top 10 in terms of buying New York goods. The fifth, Italy, is No. 17, while Cuba is not even in the top 25. Asked in January why he would visit a country with a relatively insignificant economy—ranked 68th in the world in gross domestic product—Cuomo reminded reporters that he would be travelling to the state’s top trade partners as well. But why Cuba? “We could be first,” he said.

Ted Henken, a Baruch College professor who has studied the Cuban economy, defended the governor’s decision to visit, even if the diplomatic kinks are still being worked out. “Adding Cuba to the portfolio is smart, but I would also say that we shouldn’t necessarily hold our breath or expect the farm any time soon,” Henken said. “Cuba’s going to open up, I think undeniably, but it’s going to be slow, partly because there’s a lot of restrictions in the embargo that are still firmly in place that make any kind of deal difficult or impossible.”

The hoped-for flurry of economic activity could also end up flowing primarily in the other direction. If U.S. travel restrictions are eventually lifted, thousands of New Yorkers could be jetting off to Cuba and spending hefty sums at beachside resorts and bringing back cigars and rum. Republican Assemblyman Michael Fitzpatrick suggested that the only thing to come out of Cuomo’s trade mission would be “a lucrative contract to stock future upstate casinos with Cuban cigars.”

A few days before the state budget was finalized, Assemblyman Rivera stood before his colleagues to rally support for a resolution commending Cuomo on his upcoming trade mission. “I hope that when he comes back, he doesn’t come back empty-handed,” he said. “I believe this is good, not only for the state of New York, but for America and for the people in Cuba—the people in Cuba, nobody else—who are hungry and looking forward to a renewed relationship with this great country.”

Assemblywoman Nicole Malliotakis, a Republican whose mother is Cuban, stood up and denounced the resolution as “nonsense.” She recounted the shortages and deprivations she saw firsthand on the island in 2009 while visiting relatives, who needed basic items like aspirin, razor blades and shampoo. Lifting the embargo without any strings attached would help the Castro regime at the expense of the average Cuban, Malliotakis argued, since revenue from expanded trade would flow to the government. She urged her fellow Assembly members to instead pass resolutions calling for better pay and unrestricted travel for Cubans and “for freedom of speech without fear of being beat, jailed or murdered.”

Cuomo told reporters in January that the goal of the trip would be to “stimulate business” and added, when pressed, that he would not “advocate for human rights,” a matter he would leave to Obama. Picking up where Malliotakis left off, other Assembly Republicans criticized Cuomo for planning a visit to a “brutal dictatorship which has shown no inclination to give its people the freedom that we enjoy here” and for supporting “a totalitarian regime.” A few days later, state Republican Party Chairman Ed Cox branded Cuomo a hypocrite for banning state travel to Indiana, which had passed a religious freedom bill widely criticized as anti-gay, while a Cuba trip was in the works.

“Now that Andrew Cuomo has banned travel to Indiana, he can cancel his upcoming trip to Cuba, where gay marriage is illegal, political dissidents are imprisoned and tortured, and the Castro regime is on the U.S. State Sponsors of Terrorism list,” Cox said. “Or he can admit that both moves are political stunts meant to bolster his national profile with no grounding in reality or substance.”

Republican attacks aside, Cuomo’s trip will likely be popular with the public—even if the investment of taxpayer dollars doesn’t garner a strong return. (Business representatives and journalists joining the governor will pay their own way.) A Washington Post poll in December found that nearly two-thirds of Americans support renewed diplomatic ties with Cuba, with even stronger support for ending the embargo and eliminating restrictions on U.S. travel. For decades Cuban Americans have driven U.S. policy and kept the embargo in place, but polling has also shown a marked generational shift, with younger Cuban Americans far more supportive of lifting the embargo.

“Politicians know that going to Cuba today, they will generally receive positive media coverage,” Kavulich said. “There isn’t a tremendous amount of risk going to Cuba today. However, if you’re going as the chief marketing officer of the state, and the local media narrative supports that, as it would for a governor of a Midwest state that’s shipping corn, soy, poultry, etc., it becomes potentially more complicated.”

The image of Che Guevara is seen all over Cuba.

When Cuomo’s charter flight arrives in Cuba, it will land at Havana’s José Martí International Airport. Martí, one of the country’s founding fathers, spent time living and writing in New York City, one example of the many longstanding ties between the state and the island nation. Unlike much of Latin America, Cuba’s No. 1 sport is baseball, and one apocryphal tale claims a young Fidel Castro was offered a tryout with the New York Yankees before he took to condemning yanquis. Castro honeymooned in New York City in 1948, and New York City’s current mayor, Bill de Blasio, honeymooned in Cuba years later. Countless singers, performers and artists from Cuba have moved to New York City or performed there. New York Reps. Charles Rangel, Gregory Meeks, Nita Lowey, Eliot Engel, Nydia Velázquez and Steve Israel have all traveled to Cuba.

But the U.S.-Cuba storyline has been dominated for decades by division and discord. Cuban dictators were propped up by American presidents, and democratically elected leftist leaders throughout Latin America were ousted or even assassinated with the help of the CIA. Castro, who was also targeted, proved to be the exception. On his way out of office, Eisenhower imposed much of the Cuba trade embargo and cut off diplomatic relations. Kennedy, in one of his first moves as president, authorized the Bay of Pigs invasion, a failed effort to depose Castro. The following year brought the Cuban Missile Crisis, a standoff over Soviet nuclear arms being shipped to Cuba that brought the world to the brink of nuclear war.

When the Soviet Union collapsed in the early 1990s, the U.S. ban on Cuban trade or travel remained as a vestige of the Cold War. The island remains frozen in time, with 1950s Fords, Chevrolets and Buicks still rumbling along its streets, and crumbling edifices serving as reminders of the city’s former glory. Even for those who receive remittances from American relatives—which makes up a growing segment of the economy—there is not much to buy. Large stores that appear to have changed little in decades have a limited assortment of products and lots of empty shelves. Locals line up to get their rations of eggs and other staples. The state provides universal health care and education, but Cubans say that their paltry wages—only $20 a month for many workers—still make it hard to get by.

In Havana’s Parque Central, a young self-employed Cuban named Roberto complained about the sluggish economy and the lack of food, clothing and other products in his country. “The Cuban people need the change,” he said. “In Cuba, it is not possible to get anything, unlike in other parts of the world. In Cuba, the people only eat chicken and pork. Every shop has nothing. The people work and work, and they get nothing.”

Now, the question is how Cuba will respond. The U.S. is taking major steps to resume diplomatic ties, while critics say Raúl Castro has benefitted while having to do very little. Without significant reforms in Cuba, many companies may continue to find investment opportunities too limited or too risky, given the country’s history of defaulting on payments and seizing assets. “Businesses here are going to be skeptical of trading with Cuba,” Malliotakis said, “because they are going to be reluctant to send shipments without the assumption that they are getting paid, which has happened in many other transactions.”

Cuba also has a long history of doing all it can to avoid making real changes, scuttling past efforts to improve relations with the U.S. and backing away from promised economic liberalization measures. Under Raúl Castro, the country authorized a nascent private sector, drawing international praise for encouraging entrepreneurship in a wide range of professions, from restaurateurs and hoteliers to auto mechanics and manual laborers. But the government has kept the country’s cuentapropistas under tight control. “I call it Raúl’s economic mambo,” Henken said. “He takes two steps forward and one step back. He’s moving forward but very cautiously, and even though he is a ray of sunlight compared to his brother, he’s still a Communist and wants the state to be in charge of the fundamentals of the economy.”

After his Assembly showdown with Malliotakis, Assemblyman Rivera left Albany and returned to New York City to address a small crowd about Cuba trade opportunities. The gathering, hosted by Gotham Government Relations & Communications at an Upper West Side steakhouse, was attended by business executives, lobbyists, a Cuban diplomat and several Cuomo administration officials.

Rivera opened the event with a joke. As ties between Cuba and the U.S. were rapidly deteriorating in the early 1960s, Rivera said, one of Fidel Castro’s closest confidantes, Che Guevara, asked whether the rift would ever be mended. “I don’t think Fidel knew what to say to Che in that very sad moment,” Rivera said. “He turned to Che and said, ‘Che, that day will come when the United States has a black president and the pope is an Argentinian like you.’ ”

Kay Sarlin Wright, an executive vice president at Empire State Development, spoke next, offering few details except to say that “New York State is the state of opportunity, and boy, is there an opportunity with Cuba and with this upcoming trade mission.” Rivera interjected that a meeting he had with Cuomo on Cuba had gone well, and that the governor had his guayabera ready for the trip.

Ariel Hernández, the first secretary of the Cuban mission to the U.N., said that the renewed diplomatic activity had him feeling optimistic. “My country is an amazing country, and the Cuban people are a smart and amazing people, too,” he said. “If you have your will to approach Cuba, we only ask your respect to Cuba, so that’s why we are open—we are waiting for you, we are waiting for your intention, your will, your business, your friendship, so that’s why we are here today.”

Antonio Martinez, the consultant on Cuba trade opportunities, gave the feature presentation. He said that Cubans remain wary of the U.S., given its history of exploitation and meddling in the affairs of Latin American countries. The country now has a flood of potential investors to pick from, Martinez added, and will assess who is “committed to a long-term approach or a one-shot deal.”

“You have to think incrementally,” Martinez cautioned. “It’s not going to happen where you’re going to go there and make a presentation and you’re going to close this huge transaction—probably not likely. Everything is going to be done step by step, and in a confidence-building approach. The Cubans will do things in baby steps. It’s just the nature of it. It’s also because the relationship is still not totally restored or reconciled completely.”

After the event, several of the attendees said they were thrilled about the opening of Cuba, even if the going will be slow. Henry Goodfriend, the president of Goodfriend Global Group, an international commercial real estate firm, said he hopes to set up shop on the island quickly to beat the rush.

“You’ve got to start somewhere,” Goodfriend said. “It’s going to happen. If opportunity knocks, you’ve got to at least open the door.”