In funding Cuba port project, Brazil set to gain key foothold

In funding Cuba port project, Brazil set to gain key foothold
By TRACY WILKINSON AND VINCENT BEVINS
February 17, 2015

- In helping fund Cuba port project, Brazil has its sights set on
becoming the island's No. 1 partner
- Cuba seeks to turn port of Mariel into main entry and transshipment point

Heavy trucks groan through the muddy hills, laden with cement mixers,
earthmovers and tractors. Gigantic cranes loom just beyond piers and
shipping containers in Cuba's Caribbean waters. Stern guards keep watch.

A billboard proclaims: "The economic battle is today our principal task."

Thirty-five years ago, this port on Cuba's northwestern coast rose to
international prominence when, in a matter of days, tens of thousands of
mostly poor Cubans boarded rickety boats and crossed the sea to Florida,
in a hostile maneuver by Fidel Castro to overwhelm U.S. shores.

Today, it is bustling with anticipation as the Cuban government, with
international assistance, tries to reinvent Mariel as a crossroads of
global trade and commerce.

If business and goods pour into Cuba as relations improve and
restrictions are relaxed with the U.S., this will be a main entry and
transshipment point.

Brazil, with its own geopolitical aims in mind, is footing much of the
$1-billion bill to modernize a massive deepwater port that could become
the largest in the Caribbean, and build a 180-square-mile "special
development" zone for industrial and energy production. The idea is
partly patterned after China's special economic zones, such as the city
of Shenzhen, which, beginning in 1978, was given breaks from regulations
and taxes and allowed to become an incubator for the country's explosive
economic growth.

"They are challenging nature," a worker was overheard saying as rain
carved rivulets in piles of gravel. Authorities would not let
journalists from The Times enter the port, saying permission was needed
from an office that didn't answer the telephone. The reporters' driver
was interrogated for about half an hour.

Still, it was clear that work was well underway. Dredging will deepen
the port to nearly 70 feet, allowing the entry of gigantic ships in the
region after completion of the Panama Canal expansion, as well as the
potential addition of a canal in Nicaragua, a controversial project that
would be built with Chinese financing.

"This will open a huge opportunity," said Omar Everleny Perez, an expert
with the University of Havana. He said Mariel could become a way station
for sea traffic from the Americas to Europe and beyond.

The project is focused at Mariel, about 30 miles from Havana, because
the capital's bay is more shallow and increasingly has become a tourist
attraction, not an industrial operation.

Brazil is not alone: China, Singapore and other countries are planning
to get in on the action. Among about 100 proposals for industrial
projects, China would like to build an automotive factory, Brazil wants
to produce pharmaceuticals, and several companies are planning solar,
wind and other energy enterprises, Perez said.

Already, Argentina sends frozen meat to Mariel for transshipment to
Europe, which is quicker than shipping it directly.

For Brazil, the port funding is an investment in the nation's quest to
be Cuba's No. 1 partner, as a former foreign minister put it, and to
establish itself as an alternative to Venezuela, which has cultivated a
special relationship with Cuba.

With the center-left Workers' Party in power since 2003, Brazil has also
long sought to secure its position as a dominant economic power in the
Western Hemisphere.

But picking up nearly $700 million of the nearly $1-billion tab stirred
opposition in Brazil, especially during President Dilma Rousseff's
reelection campaign last year. It is unclear whether Brazil could have
predicted President Obama's decision in December to restore U.S. ties
with Cuba after half a century, but Rousseff clearly felt vindicated.

"It was extremely criticized during the election campaign, but the
Mariel port has shown today just how important it is for the whole
region and for Brazil," Rousseff said after the announcement was made.
"It's strategic due to its closeness to the United States."

Cuba has used the Brazilian money also to build a railway and highway to
Mariel to make it easier to bring in supplies and merchandise.

In return for the port financing — provided by Brazil's development
bank, BNDES, via Brazilian companies that participated in the project —
it was agreed that at least $800 million would be spent on Brazilian
goods or services, and Brazilian companies will have a special place in
a future special economic zone.

"The BNDES financing for Mariel had two important impacts for the
Brazilian economy," the bank said in a statement. "It contributed to
Brazil's trade surplus by creating the conditions for high-value
technological exports … and supported the growth of Brazilian industry."

Although Brazil may be hoping for better access to the U.S. market, Cuba
and numerous U.S. businesses, especially in the agricultural sector,
also are counting on increased commerce between their countries.

But many experts caution: Not so fast.

First, the U.S. embargo imposed on Cuba in the early 1960s remains
largely intact, limiting American business dealings with Cuba. Obama has
loosened some of the restrictions, but only an act of Congress can lift it.

And, despite some openings in the Cuban economy, President Raul Castro
has insisted that the basic socialist tenets of his country will remain
intact. American businesses that hope to invest will face a slew of
obstacles.

For example, in the Mariel port, companies must hire local workers
through the government; the companies will pay the government top dollar
for the workers, who in turn receive only a minimum salary that can be
as low as $20 a month.


"You can still operate much more cheaply in Central America," said Gary
Maybarduk, a former U.S. diplomat in Cuba and member of the Assn. for
the Study of the Cuban Economy. Mariel "is a good location, but it's not
really better than Mexico. Maybe better for the [U.S.] East Coast. But
it's not cheap working in Cuba."

In Mariel, once a sleepy port town that became famous, or infamous,
during the 1980 boatlift, there is also anticipation.

Yolexeis Abat Duanes, 34, has been busy working with construction crews
at the port. "Before, all I was doing was building houses," he said.
"This is much bigger."

Francisco Clavel, a 60-year-old math teacher in Mariel and enthusiastic
backer of the 1959 revolution that brought the Castro dynasty and the
Communist Party to power, said Cuba will finally be able to get a bigger
piece of the Caribbean trade pie.

"We grew up believing in the revolution. I could study thanks to the
revolution. It did a lot for us," said Clavel, the son of a farmer. "I'm
confident in Cuba's future now more than ever."


Abel Gonzalez was running the cash register at a 24-hour store-and-bar
in the center of Mariel, selling boxes of rum and liters of whiskey. He
said he was optimistic about the future but less enthusiastically so.
"Like the rain," Gonzalez said, "the future is in the hands of others,
not us."

Times staff writer Wilkinson reported from Mariel and special
correspondent Bevins from Sao Paulo, Brazil.

Source: In funding Cuba port project, Brazil set to gain key foothold -
LA Times -
http://www.latimes.com/world/brazil/la-fg-ff-cuba-mariel-20150217-story.html#page=1