SA/CUBA RELATIONS & IMPLICATIONS OF USA/CUBA

DEVELOPMENTS

Presentation to :

Portfolio Committee on International Relations & Cooperation

17 June 2015

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South Africa / Cuba Relations• The strategic relationship shared between South Africa and Cuba dates back to the

fight against Apartheid and Cuba’s commitment to help overthrow colonialism in Africa. Acknowledgement of the selfless role played by Cuba in the liberation of SA.

• Ties of culture, history, shared struggles and common aspirations join Cuba to South Africa and the Continent of Africa.

• In 2014 Cuba and South Africa celebrated 20 years of diplomatic relations.

• More than 30 signed bilateral Agreements between us covering areas such as Arts & Culture, Defence, Education, Science & Technology, Health, Housing as well as Home Affairs.

• Structured bilateral mechanism to enhance bilateral relations conducted through the Joint Consultative Mechanism (chaired by the Deputy Minister of International Relations & Cooperation, Hon L Landers) meets annually in the respective capitals.

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• Bilateral Relations at very strategic level. SA continues to co-sponsor and/or support efforts in the United Nations and all other forums calling for the immediate and full lifting of the illegal and unilateral Embargo on Cuba since 1961.

• Regular exchange of high level visits at level of Head of State, Deputy President and Minister/Deputy Minister. Deputy President Salvador Valdes Mesa is in South Africa to attend the African Union Summit. A bilateral meeting was held with Deputy President Ramaphosa and senior members of the Alliance.

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IMPEDIMENTS TO IMPROVED ECONOMIC RELATIONS

• Most significantly, the total Economic Blockade of Cuba by the USA.

• Extra-territorial application of the Helms-Burton Act.

• Geographic distance

• Export credit facilities

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US – Cuba Relations• The US – Cuba relationship has been frosty since the period of the Cold War and

the imposition of the embargo in the 1960’s.

• Various attempts over the years by the international community to normalise the relationship through diplomatic pressure.

• The current Pope who is of Latin origin and the Canadians began secretive talks in 2013 on normalising US – Cuba relations.

• 18 months since the start of the talks, the Cubans released Alan Gross, an American contractor arrested in Cuba for spying and “other political prisoners” The USA released the last 3 of the Cuban 5 as reciprocal signs of goodwill.

• The announcements made in Cuba and the USA by Presidents Castro and Obama respectively in Dec. 2014, marked a new political juncture in the relationship between the two countries and sparked a re-establishment of diplomatic relations after more than five decades of unilateral sanctions on Cuba.

• A further important step was to remove Cuba as a “State Sponsor of Terrorism”.

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• The Embargo has been maintained through various Acts of Congress, viz:

• Foreign Assistance Act of 1961• Cuban Assets Control Registration of 1963• Cuban Democracy Act of 1992• Helms-Burton Act of 1996• Trade Sanctions Reform and Export Enhancement Act of 2000

• It should be noted that it will take time to lift the Embargo which can only be done through Congress as Pres. Obama does not have the Executive Authority to repeal an Act of Congress.

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Implications flowing from the announcements:• Re-establishment of diplomatic relations and embassies – (Article 11 of the US

Constitution gives Pres. Obama power to re-establish full diplomatic relations with Cuba).

• Re-establishment of limited economic ties in:

- financial institutions - telecoms - agriculture

- increase in remittances from US$500 to US$2000 per quarter

- aviation links (provided the Appropriations Bill receives financial support)

- allowance of certain categories of travel and an increase in the amount of products (US$400 in goods and $100 in tobacco products) that US visitors are allowed to bring back into the US from Cuba.

• Possible developmental assistance from the USA and other international

financial institutions (IMF, World Bank, etc.)

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Domestic/Regional/Global Dynamics • Human rights in Cuba continue to be a concern for U.S. policymakers, hence change of

tact, open up Cuban society and use NGO’s, civil society organizations to effect change! Commonly referred to as the “Colour Revolutions”.

• Obama administration believes that restoration of bilateral ties will boost civil society groups and cultivate a broader Cuban middle-class.

• The Cuban-American community in southern Florida traditionally influenced U.S. policy toward Cuba, through strong Republican support.

• Positive change in public sentiment in the US evidenced by, for instance, a recent PEW Research poll that found 63% of Americans support resuming diplomatic relations, and 66% of Americans would like an end to the US-Cuba trade embargo.

• Regionally, the US was isolated on the Cuba issue and the Latin American countries were positioning themselves not to attend the next Summit of the Americas in Panama if Cuba was still excluded.

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• Globally, over the years there was almost a universal denunciation of the unilateral embargo on Cuba, with the exception of the USA, Israel and a few very small island states.

• Cuba is of the view that the linking of the end of the Blockade to “greater freedoms” in Cuba infringes on its national sovereignty.

• Cuba wants the US to return Guantanamo Bay.

• The issue of compensation for Cuban exiles who lost property is a sensitive and political challenge for the lifting of the Embargo.

• Socio-economic challenges: Cuba is facing an aging population, heavy foreign debt and economic hardship following the global economic meltdown.

• Drop in the oil price affects Venezuela’s ability to continue supporting Cuba, which has implications for the Cuban economy.

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Implications for South Africa • Momentum going forward will not be reversed vis-à-vis the lifting of

sanctions. It is inevitable that it will happen, question is just when.

• As long as the Helms-Burton Act remains in place, South African businesses and banks runs the risk of USA penalties. But should this stop us? Most certainly not.

• According to some in the USA, the embargo on Cuba should not be suspended or terminated until either a transition or democratic government is in power in Cuba.

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• Huge capital inflows required to improve infrastructure.

• Cuba now imports almost 80% of its food requirements implying small industrial base. Will have to create jobs on a massive scale. Cuba’s 2013 imports over USD 13 billion.

• Role of Cuban State all pervasive in the economy. New Cuban Investment Law adopted in February 2015 to attract FDI.

• Regulatory environment in Cuba would need to be improved, e.g. investment protection laws.

• US-based companies have an edge ito investments: proximity, cultural affinity and strong brand reputation, esp. amongst the youth.

• SA needs to identify products with competitive advantage vis-a-vis US products, esp. in agriculture.

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• Trilateral Cooperation Agreements signed between South Africa, Cuba and host of African countries to improve access to primary health care.

• Since 2012, SA unable to implement much needed R 350 million Economic Assistance Package to Cuba. Action initiated to unlock implementation. Delay as a result of USA sanctions threat!

• BU and DTI jointly hosting a Cuban Sensitization Seminar in July 2015. A 15 member high level delegation from Cuba will participate. Key SA sectors to be invited, inter alia, business, academia, banking industry, government and Portfolio Committee on Trade & Industry.

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Priority Areas for Economic Partnerships• Oil and gas exploration

• Renewable energy including wind, biomass, photovoltaic, hydropower and biogas

• Mining of iron, nickel, gold, silver, zinc, lead, cobalt and other

minerals

• Tourism: real estate development, golf courses and hotel management

• Biotechnology: building plants for the production of medicines

• Agribusiness: commercialisation of pork and beef, soy, sugar and others

• A range of industrial and manufacturing opportunities

• Transport and construction including marina and port construction, railways and urban transport.

• Greater role for SA parastatals in Cuban projects

• Improved air connectivity to facilitate trade and tourism

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Towards An Enhanced Bilateral Partnership

• Bilateral Relations at very strategic level. Acknowledgement of the selfless role played by Cuba in the liberation of SA.

• Review of SA – Cuba strategy to position SA in relation to new economic relations between Cuba and US.

• SA to continue pushing for total lifting of the embargo.

• Over 3000 SA students studying medicine in Cuba

• Over 300 Cuban medical staff, engineers and maths and science teachers working in SA, mostly in rural areas.

• Bilateral Trade: Exports: R 3 973 354 Imports: R 45 231 853 (Very low base – huge room for improvement. BU has made detailed analysis on indicative trade potential.

• A full analysis of the indicative trade potential between SA & Cuba has been done

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• High level SA leading business delegation to participate in Cuba’s biggest annual Trade Fair, Fihav to be held in November 2015.

• Consider Opening Trade Office in Miami on a non-residential basis or appoint Honorary Consul to promote trade and investment. Home to the former Cuban elite and the industrialist/ merchant class that will play significant role in Cuba’s economic revival.

• Opening of Cuban market could serve as a springboard for broader and stronger trade links with the Caribbean.

• More focussed outgoing visits to Cuba - not every sphere of Government and every Government Department visiting. Capacity of Embassy inadequate. Requires review of Organogram/ Establishment. Chancery building also too small.

• SA Embassy in Washington DC to provide assistance to Cuban Embassy in DC in the areas of tourism promotion, cultural and trade and investment events.  

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THANK YOU

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