An Information Service of the Cuba Transition Project Institute for Cuban and Cuban-American Studies University of Miami

 

Hans de Salas-del Valle*

 

 A recent exposé about a major French conglomerate that seeks to do billions of dollars of business simultaneously on both sides of the Florida Straits (1) revealed the extent to which some multinational companies have lost virtually all fear of U.S. sanctions against Cuba. Measures aimed at discouraging third-country (non-U.S.-based) foreign investors from commercially exploiting private properties confiscated by the Cuban government in the early years of the revolution, and today claimed by American citizens and corporations, are being ignored. In 1996 the U.S. Congress passed the Cuban Liberty and Democratic Solidarity (Libertad) Act, better known as the Helms-Burton Act, “to protect United States nationals against confiscatory takings and the wrongful trafficking in property confiscated by the Castro regime.” (2)

For more than a decade, Title III of Helms-Burton has, in theory, allowed victimized U.S. nationals to pursue financial compensation by filing claims in U.S. courts against the infringing foreign investors for the full value (at time of confiscation, plus interest) of their expropriated Cuban assets. In practice, however, both Democratic and Republican administrations have continuously availed themselves of a loophole in the law enabling “the President… [to] suspend the effective date…for additional periods of not more than six months each” if deemed “necessary to the national interests of the United States” and to “expedite a transition to democracy in Cuba.” (3) Due to this loophole, the theoretically fearsome Helms-Burton Act has degenerated into a parody of itself as it continues to be indefinitely postponed. (4)

The end result of the consecutive presidential waivers of Title III has been to negate the potential effectiveness of the law in deterring foreign capital from financing the continuation of the Castro regime. In fact, since 1996 not a single multinational company operating in Cuba has been faced with claims under Title III. Under separate penalties imposed by Title IV, the executives (and their families) of five firms have been barred at one time or another by the U.S. State Department from entering U.S. territory. Yet, at present only two of Cuba’s major foreign investors -- Canada’s Sherritt International Corp. and the Panama-based, Israeli-financed Grupo BM – are affected by Title IV sanctions, and none by Title III. (5)

Moreover, the relatively mild measures under Title IV have failed to drive the sanctioned firms from Cuba. Apparently secure after a more than a decade of non-enforcement of Title III, in June 2007 Sherritt’s Executive Chairman, Ian Delaney, committed an additional US$1.25 billion over the next two years to expand the Toronto-based company’s already strategic stakes in Cuba’s electricity (generation), mining (nickel and cobalt), and oil and gas (exploration and extraction) sectors. (6)

U.S.-based corporations have been restricted from conducting business with Cuba – be it trade, travel, investment, or finance – since the partial embargo on commerce with the island by the Eisenhower administration in October 1960 (subsequently expanded in 1963 to include prohibition on travel and financial transactions) in response to the revolutionary government’s gradual confiscation of U.S.-owned properties (banks, farmlands, oil refineries, utilities, etc.) without just compensation (7). And for nearly 47 years Washington has been fairly successful in restraining U.S. firms from venturing back into Cuba, albeit less so in keeping Havana from getting a hold of American products. (8)

In broadening the scope of U.S. sanctions against Cuba in the 1990s to include not only U.S. subsidiaries abroad but multinational corporations that generate revenues from both Cuba and the United States, Washington drew a line and communicated that it meant business. After all, implicit in the Helms-Burton Act, and especially in Title III’s language, is the message that multinational foreign investors cannot have their cake and eat it too, when it comes to profiting from Castro's Cuba. You can make money in the U.S. or in Cuba, but not both. And if you opt for the latter there will be a price to pay.

Increasingly, however, Cuba’s leading investors and business partners seem convinced that they can have it both ways.

Bouygues in Cuba

Perhaps the boldest challenge yet to the spirit as well as the letter of the Helms-Burton Act has been by France-based Bouygues SA (the Bouygues Group), one of Europe’s largest conglomerates (businesses ranging from construction and civil engineering to media and telecommunications) with revenues exceeding 26.4 billion euros (about US$35.3 billion) in 2006. (9) The Group’s oldest core unit is Bouygues Construction, which in turn is comprised of eight operating companies, or so-called “complementary entities.” (10)

One these entities, Bouygues Bâtiment International, has been “building several luxury hotels in Cuba, namely in Varadero,” and today partners with Cuban state-owned enterprises in “designing and building new upmarket tourist complexes in the east of the island.” (11) Since entering Cuba in 1999, Bouygues has become by far the leading contractor in the tourism sector with “relatively little local or foreign competition in the construction of high-end resorts.” (12)

Bouygues’ achievements in Cuba have been called “exemplary” by French trade officials, who cite the company’s ability to deliver turnkey projects on tight schedules and its “willingness to train Cuban technicians and workers” as the keys to its success. Indeed, Bouygues has thrived in an environment in which foreign firms “must imperatively be associated with Cuban partners.” (13)

Like many others foreign firms in Cuba, Bouygues’ subsidiary operates through ad hoc asociaciones económicas internacionales (project-specific partnerships) with state-run counterparts that are dissolved once the contract has been fulfilled. This strategy avoids both tying up and exposing assets which are more stable, but also more visible and vulnerable, joint venture corporations. For example, the company teamed with a Ministry of Construction (MICONS) firm, Grupo Empresarial de la Construcción de Varadero (GECV), when building new hotels on Varadero Beach. However, the development of new resorts on Cuba’s keys and in the eastern province of Holguín has been undertaken with Unión de Construcciones Militares, a military-run firm. Altogether, Bouygues has won an estimated US$800 million in contracts from the Cuban government to build and develop 11 tourism properties (adding a total of 8,000 four and five-star guest rooms). (14)

More than the dollar figure alone, Fidel Castro’s recognition of Bouygues in a January 2003 speech at the grand opening of the Playa Pesquero resort (on confiscated land claimed by a Cuban-American family) in Holguín, underscores the contributions of the French company to the tourism economy and the extraordinary trust that it enjoys from the regime. As Castro noted, “this hotel inaugurated today belongs to [Gaviota, the Cuban military’s tourism corporation], although a major international firm, Bouygues…engaged in the construction.” (15)

Bouygues in Miami

In May 2007, the State of Florida Department of Transportation tentatively awarded “one of the most expensive public works projects in Florida history” to a consortium led by Bouygues Travaux Publics, another of the eight business units of the same Bouygues Construction building hotels for the Cuban military, to finance, design, and undertake the construction of a tunnel at the Port of Miami. (16) The contract is worth at least US$1 billion and entails a 35-year concession for Bouygues and its partners to run and maintain the tunnel in exchange for service fees. Despite the high-profile nature of the project and the long-term contractual obligations, Bouygues passed through the months-long selection process without raising a single eyebrow about its presence in Cuba. As if to add insult to injury, granting the contract to Bouygues and its associates not only allows a major “trafficker” in expropriated assets to profit with impunity in the U.S. but, moreover, to do so at the direct expense of American taxpayers.

Furthermore, Bouygues is no stranger to Florida. With a minimum of due diligence, state and county officials could have discovered that Americaribe Inc., a subsidiary of Bouygues Bâtiment International – the specific Bouygues unit that operates in Cuba – has an office in the heart of Miami at One Biscayne Tower. (17) And yet another of the Bouygues Group’s holdings, Colas, “is one of North America’s biggest road-building companies” with U.S. taxpayer-funded interstate highway projects underway in Kentucky, Pennsylvania, and Wyoming. (18)

Apparently, policymakers in Miami, Tallahassee, and Washington alike no longer seem to care about such contradictions.

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*Hans de Salas del Valle is a Research Associate for the Cuba Transition Project at the Institute for Cuban and Cuban-American Studies, at the University of Miami.

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Notes

1. Larry Lebowitz, “Company’s links to Cuba could dig port tunnels’ grave,” The Miami Herald, May 11, 2007; Larry Lebowitz and Matthew I. Pinzur, “County officials may overlook Cuban links,” The Miami Herald, May 12, 2007.

2. Cf. Helm-Burton Act, Sec. 3 Purposes, paragraph 6, http://usinfo.state.gov/regional/ar/us-cuba/libertad.htm.

3. Cf. Helms-Burton Act, Title III, Section 306.

4. President George W. Bush, Letter to Congress suspending Helms-Burton for a further six months beyond February 1, 2007, dated January 17, 2007, http://www.whitehouse.gov/news/releases/2007/01/20070117-4.html.

5. See Shoshana Perl, Whither Helms-Burton? A Retrospective on the 10th Anniversary (Coral Gables, FL: Miami European Union Center, Univ. of Miami, February 2006), http://www6.miami.edu/eucenter/.

6. Ian Delaney, “Mi empresa es una participante orgullosa en el desarrollo de Cuba,” Granma, 7 June 2007, http://www.granma.cubaweb.cu/2007/06/07/nacional/artic06.html.

7. On the historical development of the U.S. trade embargo against Cuba, see Susan Kaufman Purcell, "Cuba," in Richard N. Haass, ed., Economic Sanctions and American Diplomacy (New York: Council on Foreign Relations, 1998), Chapter 2.

8. Cf. Kerry Sanders, “The Cuban embargo?” NBC News, Havana, June 5, 2007, http://worldblog.msnbc.msn.com/archive/2007/06/05/213639.aspx.

9. For an overview and financials, see the Bouygues corporate website: http://www.bouygues.com/us/index.asp.

10. See under "Entities," Bouygues Construction website,http://www.bouygues-construction.com/en/entites/index.shtml (accessed June 2007).

11. Bouygues Construction, “Bouygues Throughout the World: Central-South America,” updated February 2007, http://www.bouygues.com/us/groupe/amc_ams.asp(accessed June 2007).

12. France, Embassy in Havana, Economic Mission, "Le Secteur BTP à Cuba," February 2007, p. 3.

13. Ibid., pp. 3-4.

14. Ibid., p. 4.

15. Cf. Fidel Castro, “Speech at the Inauguration of Playa Pesquero Five-Star Hotel,” Holguin, January 23, 2003, http://www.cuba.cu/gobierno/discursos/2003/ing/f210103i.html

16. Larry Lebowitz, "Port tunnel builder is selected," The Miami Herald, May 3, 2007.

17. See Bouygues Construction, under “Locations,” http://www.bouygues-construction.com/en/international/implantation/index.aspx.(accessed June 2007).

18. See Bouygues Group website, "Bouygues Throughout the World: North American," updated February 2007, http://www.bouygues.com/us/groupe/amerique_nord.asp(accessed June 2007).