Docks at the container terminal of the Mariel Special Development Zone, designed to attract investments to Cuba, in spite of the restrictions imposed this month by the United States on businesses dealing with this development and logistics zone. Credit: Jorge Luis Baños / IPS

By Patricia Grogg
HAVANA, Nov 25 2017 (IPS)

“Maybe many of us thought that this project was a dream six years ago, but not anymore. The geography has completely changed, because of everything that has been built and the investments that have been approved,” said Nathaly Suárez, director of Construction Management at the Mariel Special Development Zone (ZEDM).

The container terminal already has operations with 14 major international shipping companies and progress has been made in infocommunications, an aqueduct, sewerage, power grids, public lighting, bridges and railway stations, among other works made available to investors.

The ZEDM was born with the support of Brazil, which financed the container terminal with more than 800 million dollars. So far the Zone has 29 km of roads, as well as a double track railway line and overpasses that speed up the transportation of goods.

Activities have not slowed down in this strategic economic centre located about 45 km west of Havana, a few days after it was included by Washington in a list of entities banned for any economic relationship with American companies and travelers.

Suárez, a 31-year-old civil engineer, does not understand why in the 21st century, instead of promoting relations between countries, U.S. President Donald Trump is trying to close the door to trade and investment in Cuba, “a country that is doing everything in favour of its development.”

The young woman belongs to the generations born under the U.S. economic embargo against Cuba. “I’ve lived my whole life under these prohibitions, which prevent my country from buying even medicines from the U.S.,” she told IPS shortly before participating in an exchange with Latin American trade unionists on Nov. 13.

Nathaly Suárez, Director of Construction Management at the Mariel Special Development Zone, in western Cuba. Credit: Jorge Luis Baños / IPS

The meeting was held at the Pelicano business centre, one of the facilities built by the Construction and Assembly Company of Mariel, where Suárez has under her charge over 100 professionals. With more than 4,500 workers, this firm is responsible for satisfying the demand for construction services in the area.

The ZEDM and its container terminal are among some 180 Cuban entities subject to the restrictions announced on Nov. 8 by Washington, imposed on the grounds that they are related to Cuba’s ministries of the Revolutionary Armed Forces and the Interior.

“It is early to say whether or not these regulations have an impact. Here we have not stopped working,” said Suarez.

“We have made progress (in the works of the ZEDM) and we will take the necessary measures to continue moving ahead. What are we going to do? We’re not going to say that publicly,” said engineer José Ignacio Galindo, director of Planning and Development of the ZEDM, referring to the strengthening of the US embargo.

Galindo said that the construction of the ZEDM is currently at a launch stage, focused on completing the basic infrastructure and ancillary facilities. “We are working in sector A, which covers some 42 kilometers, although we are also working on roads and other works outside that area. After this come the stages of consolidation and maturity,” he said.

“We know what we want to do. The conclusion of each phase depends on the possibilities and investments available,” he told IPS.

Meanwhile, progress is being made in attracting and accepting businesses, as well as in the investment process for them to begin producing.

During the Havana International Fair, held Oct. 30 to Nov. 3, Teresa Igarza, general director of the ZEDM office, reported that so far 31 businesses have been approved or are already operating in the Zone.

The railway line that transports containers from and to the Mariel Special Development Zone, in the western province of Artemisa, 45 km from the Cuban capital. Credit: Jorge Luis Baños / IPS

The investments have come from 14 countries, including Cuba, from Latin America and North America, Europe and Asia. Of the businesses, five are based on 100 percent Cuban capital, 15 are totally foreign, eight are mixed ventures and two are international economic associations. Among the new companies approved is one from the United States, the first from that country to set up shop in the ZEDM.

Rimco Caribe LLC (Puerto Rico) expects to begin operating in the Zone in 2018 as a distributor in Cuba of the US corporation Caterpillar, a manufacturer of construction machinery and mining equipment, diesel engines and industrial gas turbines.

Economist Omar Everleny Pérez Villanueva told IPS that the new restrictions announced by the U.S. are blocking US companies from presenting investment projects in the ZEDM, but those initiatives already approved by Cuba before Jun. 16 would be exempt from penalties.

The new ban complements the memorandum signed by Trump that establishes a policy change towards Cuba, with exceptions to allow travel on commercial airlines and cruise ships, as well as commercial activity authorised up to that moment.

Since the approval of a new law on foreign investment in 2014, more foreign capital has been flowing into Cuba, both within and outside of the ZEDM, although authorities in the sector admit that the results achieved so far are still insufficient for the country’s development needs.

The Mariel Special Development Zone Pelicano Business Centre in western Cuba. Credit: Jorge Luis Baños / IPS

Authorities and experts agree that attracting investment flows to the country is a gradual process in which “modest” progress has been made. This is not only due to the U.S. embargo, but also because of delays in the process of negotiation and approval of investments.

“Foreign business people are concerned about safe ways for sending their capital to Cuba and then sending the dividends earned by the business to their country of origin, as a result of the embargo,” Deborah Rivas, general director of Foreign Investment of the Ministry of Foreign Trade and Foreign Investment, told local media.

However, during an investment forum held in early November, Minister of Foreign Trade and Foreign Investment Rodrigo Malmierca said that this year 30 new projects had been approved for a total of more than two billion dollars in investment.

When Law 118 on Foreign Investment was approved, Malmierca pointed out that the country needed an inflow of some 2.5 billion dollars a year of foreign capital to ensure the growth of the economy.

The new legislation and other official documents propose increasing and diversifying foreign investment as a source of development.

A portfolio of new investment opportunities presented in early November includes up to 50 projects, in sectors such as the pharmaceutical industry, biotechnology, logistics, agribusiness, construction, transport and real estate.

The container terminal administrative building in the port of the Mariel special economic development zone in Cuba. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Aug 22 2014 (IPS)

The Mariel special economic development zone, the biggest construction project undertaken in decades in Cuba, emerged thanks to financial support from Brazil, which was based on political goodwill, a strategy of integration, and business vision.

“Cuba would not have been able to undertake this project from a technical or economic point of view,” economist Esteban Morales told IPS. He added that the geographic setting makes the development zone strategic in terms of trade, industry and services in Latin America and the Caribbean.

Brazil financed the construction of the container terminal and the remodeling of the port of Mariel, which is equipped with state-of-the-art technology to handle cargo from Post-Panamax container ships that will begin to arrive when the expansion of the Panama Canal is completed in December 2015.

Post-Panamax refers to vessels that do not fit in the current Panama Canal, such as the supertankers and the largest modern container and passenger ships.

The port, 45 km west of Havana, is located along the route of the main maritime transport flows in the Western hemisphere, and experts say it will be the largest industrial port in the Caribbean in terms of both size and volume of activity.

Construction of the terminal, in the heart of the 465 sq km special economic development zone, has included highways connecting the Mariel port with the rest of the country, a railway network, and communication infrastructure, and the port will offer a variety of services.

In the special zone, currently under construction, there will be productive, trade, agricultural, port, logistical, training, recreational, tourist, real estate, and technological development and innovation activities, in installations that include merchandise distribution centres and industrial parks.

The special zone is divided into eight sectors, to be developed in stages. The first involves telecommunications and a modern technology park where pharmaceutical and biotechnology firms will operate – two sectors which will be given priority in Mariel, along with renewable energies, agriculture and food, among others.

The Cuban government is currently studying the approval of 23 projects from Europe, Asia and the Americas for Mariel, in the chemical, construction materials, logistics and equipment rental industries.

The terminal was inaugurated on Jan. 27, and during its first six months of operation it received 57 ships and some 15,000 containers – small numbers compared to the terminal’s warehouse capacity of 822,000 containers. Post-Panamax vessels can carry up to 12,600 containers, three times more than Panamax ships.

Another economist, Pedro Monreal, estimates that the cost per container will be cut in half.

The lower costs, he said, will improve the competitiveness of Brazil’s manufactured goods, to cite one example. Mariel, where a free trade zone will also operate, could become a platform for production and export by the companies, even for supplying Brazil’s domestic market.

Heavy machinery prepares the terrain for a railway that will form part of the new infrastructure linked to the special development zone in the port of Mariel – the biggest project undertaken in Cuba in decades: Credit: Jorge Luis Baños/IPS

Although Decree Law 313, which created the special economic development zone, was passed in September 2013, the remodeling of Mariel began three years ago, led by a joint venture formed in February 2010 by the Compañía de Obras e Infraestructura, a subsidiary of the private Brazilian construction firm Odebrecht, and Quality Cuba SA.

The container terminal is run by Global Ports Management Limited of Singapore, one of the world’s biggest container terminal operators, which has been working with the Cuban firm Almacenes Universales S.A, which is the owner and user of the terminal, and responsible for oversight of its efficient use.

The relationship between Cuba and Brazil is a longstanding one. Former Brazilian president Luiz Inácio Lula da Silva (2003-2010) did not hide his sympathies for the Cuban revolution, and has visited this country a number of times, first as a trade unionist and political party leader, and then as a president and former president.

Two packages of agreements signed in 2008 and 2010 between Lula and Cuban President Raúl Castro marked their interest in strengthening bilateral ties, an effort continued by current Brazilian President Dilma Rousseff.

When she attended the inauguration of the terminal, Rousseff said the project would take 802 million dollars in the first stage, plus 290 million for the second stage. The first of Brazil’s loans was initially to go towards construction of the road, but the local government decided to start with the port.

The credit was granted by Brazil’s National Bank of Economic and Social Development (BNDES). Havana provided 15 percent of the investment needed for the work.

“Cuba is a priority for our government, and Brazil is important to Havana,” the director general of the Brazilian Agency for the Promotion of Exports and Investments (APEX-Brazil), Hipólito Rocha, told IPS.

APEX-Brazil was created by Lula and Castro to promote joint business ventures with Cuba, the rest of the Caribbean and Central America.

Odebrecht is the most important company involved in Mariel, but diplomatic sources told IPS that a total of around 400 Brazilian companies are taking part in the project. “Between our countries there is affinity, political will, an interest in integration, but business matters are also important,” Rocha said.

He added that Cuba strictly lives up to its financial commitments with Brazil, and said bilateral relations “are solid, sustainable and bring benefits to our country as well.”

Analyst Arturo López-Levy said Brazil’s involvement in the Mariel project was decisive not only because of the investment. The political scientist, who lives in the United States, says the Brazilian government is sending a message to Washington and the European Union and other emerging powers that it backs the transformations underway in Cuba.

The presidents of China, Xi Jinping, and Russia, Vladimir Putin, also sent out signals when they visited Cuba in July, indicating their interest in expanding cooperation with Havana.

The two presidents stopped over in Cuba when they travelled to the sixth summit of the BRICS group (Brazil, Russia, India, China and South Africa), held Jul. 14-16 in Brazil.

The strengthening of ties promises greater access to the Chinese and Russian markets, attraction of investment in areas of common interest like the pharmaceutical and energy industries, and cooperation for the modernisation of strategic areas in defence, ports and telecommunications, López-Levy told IPS.

With respect to the possible interest of U.S. businesses in getting a foothold in the special economic development zone, and to an increase in pressure for the lifting of the five-decade U.S. embargo, the analyst said “the Cuban market awakens very limited interest in the United States.”

However, he said it was “clear” that U.S. investors are becoming more interested, especially Cuban-Americans.

“In order for this motivation to turn into political pressure against the embargo, the Cuban economy has to give out clear signs of recovery and of the government’s willingness, in key areas, to adopt a mixed economy with transparent guarantees for investors and export capacity,” he said.

Rocha has a somewhat different opinion.

“The embargo is going to collapse under its own weight,” he said. “Business will knock it down.”

It was seen as symbolic that the first ship that docked in the Mariel port after it began to operate brought food for Cuba from the United States – cash-only imports, which were authorised by the U.S. Congress in 2000.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes