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For Puerto Rico, free Cuba may be both blessing and curse
CubaNews / June 2003

By Larry Luxner

In a once-fashionable Havana suburb today known for leafy banyan trees and decaying mansions, a handful of independentistas struggles to maintain the closest thing Puerto Rico has to an embassy in Cuba.

Here, along Calle 22, right off Miramar’s stately Quinta Avenida, is the permanent mission of the Nuevo Movimiento Independentista Puertorriqueño, formerly the Puerto Rican Socialist Party. A Puerto Rican flag out front and a bronze plaque nailed to the freshly painted house attest to that fact.

Inside, a cook peels potatoes for lunch, while in the living room — decorated with memorabilia from the time of Pedro Albizu Campos — Edwin González Vázquez discusses Puerto Rico’s relationship with Cuba.

“This mission is recognized by the Cuban government. It was founded 37 years ago to work for Puerto Rican independence and against the U.S. blockade,” González told CubaNews. “Things cost three times as much as they should here, and the blockade has everything to do with it.”

About five miles to the west, also just off Quinta Avenida, is the spacious Pabexpo convention center, where last September the executives of nearly a dozen Puerto Rican companies showed off their products at the U.S. Food & Agribusiness Exhibition.

Unlike González, these puertorriqueños could hardly be called Castro sympathizers. Yet their presence in Havana is proof that the Puerto Rico business community eagerly awaits the day when it can trade legally with Cuba — and not just in food.

“I see the key for the future of Cuban-Puerto Rican relations in communications and information technology,” says Ramón Barquín III, executive director of the Instituto de Formación in Guaynabo, a suburb of San Juan. “Unlike Cuba, Puerto Rico doesn’t have cheap labor, but we do have management skills and 50 years of technology.”

Barquín, a Cuban exile whose organization is linked to the Washington-based Association for the Study of the Cuban Economy, says pharmaceuticals also represent a potential growth industry for Cuba, which already has a highly developed biotechnology sector.

“Some 94% of the pharmaceuticals consumed in the U.S. are made in Puerto Rico, and it’s the only industry that’s still expanding here. Those American drug companies see Puerto Rico as a safe haven. That’s why they invest in R&D here. Likewise, Cuba will also develop very quickly. You’ll see a large influx of money coming in, once Fidel Castro is gone or a better government is in place.”

In fact, some Puerto Ricans aren’t willing to wait until Castro is gone.

At least one local legislator said he wants to establish official trade links between Puerto Rico and Cuba as soon as possible.

Sen. José A. Ortíz Daliot of the governing Popular Democratic Party has asked three Senate commissions to study how Puerto Rico, a U.S. commonwealth of 3.9 million people, can take advantage of regulations that already allow U.S. food sales to Cuba on a cash-only basis.

“We need to determine how Puerto Rico can benefit to the maximum from the restoration of trade links with Cuba, because our active participation in the Cuban market would be positive for our economy,” said Ortíz, president of the Senate’s Federal and International Affairs Commission.

The other two commissions to investigate links with Cuba are the Infrastructure, Technology and Commerce Commission and the Tourism, Recreation and Sports Commission, he said.

But Barquín says such efforts are probably doomed to fail.

“The Ortíz initiative to do business with Cuba will not prosper,” he said. “The current Puerto Rican government is very friendly to-wards the idea of doing business with Cuba. But the Federal Relations Act prohibits it.”

On the other hand, he says, “many U.S. companies see their Puerto Rico subsidiaries as the division that might run things in Cuba when it opens up. To that effect, I see the Cuban community in Puerto Rico as a bridge.”

In the meantime, a group of about 30 Puerto Rican companies headed by local entrepreneur Salvador Vassallo has formed a Concilio de Exportaciones, which seeks to boost exports permitted under the Trade Sanctions and Reform Act of 2000. That allows U.S. food products to be sold to the Cuban government on a cash-only basis.

Puerto Rico and Cuba are often referred to as “dos alas del mismo pajaro” — two wings of the same bird — because of their shared history under Spanish colonial rule.

Yet economically and politically, the two islands could hardly be different. Poor by U.S. standards, Puerto Rico nonetheless enjoys full democracy and a per-capita income of nearly $10,000; more than 1.5 million vehicles choke its streets and highways.

Following the 1959 revolution, Puerto Rico’s relative prosperity and Spanish-speaking culture attracted many Cuban exiles. At least 20,000 of them now live in Puerto Rico, where they have dominated certain sectors of the local economy — most notably in advertising, radio stations and newspapers.

“You have a well-off elite, but they’re mode-rates in the sense that you don’t see the Cuban exile community in your face here,” Barquín said. “It’s a well-educated exile community, people who left Cuba for political rather than economic reasons.”

For years, Puerto Rico’s economy was based on Section 936 of the Internal Revenue Code, which exempted U.S. firms from paying federal income taxes on profits earned by their Puerto Rico manufacturing subsidiaries.

As a result, more than 2,000 factories were set up to produce everything from canned tuna to uniforms for the U.S. military.

With Cuba off-limits to U.S. visitors, Puerto Rico’s tourism industry also took off — although that could be the first to suffer if and when the travel ban against Cuba is lifted.

While Section 936 is now history, many of the plants have remained — especially in capital-intensive industries like pharmaceuticals.

Marta Acevedo, an executive at Pricewater-houseCoopers in San Juan, says “it’s only to the advantage of Puerto Rico” to trade with Cuba, though she conceded that “it can be a very delicate issue for some people” who may not want to see the embargo lifted.

“Puerto Rico had 936, but now we don’t,” Acevedo told CubaNews. “It’s dwindling away, so Puerto Rico is looking at new options within its territorial constraints. I think there are definite opportunities to utilize the companies that are already set up in Puerto Rico to also have branches in Cuba. I see a distinct possibility of doing some sort of joint venturing. It’s either that, or we’ll be competing with a market that’s 10 times as large as ours.”

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