In November 2019, Oniel Díaz, co-founder of Auge, a strategic consultancy group for business in Cuba, arrived at the U.S. Congress. In the offices of Republican and Democratic congressmen, he presented the results of an investigation he conducted among Cuban entrepreneurs on the impact of the policies implemented by the Trump administration on Cuba’s private sector. The first conclusion of the survey was devastating: 80.2% of respondents considered that the line followed by Washington hurt their businesses.
After four years of Trump reversing all progress achieved between the two countries during the Obama Administration’s second term, a new president occupied the Oval Office in the White House. The arrival of Joe Biden has been seen with hope by those who believe that there can be a new thaw in relations between Washington and Havana. PanamericanWorld spoke again with Oniel Díaz to learn more about the impact of these measures for Cuban entrepreneurs and the prospects with Biden.
From Obama’s outstretched hand to Trump’s oblivion
It was no coincidence that, following his meeting with Raúl Castro during his historic visit to Havana in March 2016, President Barack Obama held a meeting with Cuban entrepreneurs and representatives of state-owned companies.
According to Obama, the Cuban economy was “starting to change” and recognized that the U.S. was “ready” to help Cuban entrepreneurs “succeed”. For President Obama, Cuba’s economic future depended on the growth of the private sector in parallel with government action, “no easy task” head admitted. “I’m here today to say that the United States wants to be your partner,” Obama concluded.
In that forum, Obama announced that he would invite Cuban entrepreneurs to the Global Entrepreneurship Summit for the first time. Three months later Obama greeted, in Spanish, the 11 Cubans who attended the event in Stanford. “They are ready to create new opportunities for the Cuban people,” Obama said.
Shortly after Donald Trump won the election in November 2016, a group of more than 100 Cuban entrepreneurs addressed a letter to the future president asking him to uphold the Cuban policy followed by the Obama Administration.
“Reforms by the U.S. government to enable increased travel, telecommunication services, and banking have helped substantially as we try to grow our businesses”, entrepreneurs said. In addition, they assured him that they hoped to “take advantage of all the opportunities that his administration would offer the Cuban private sector and the Cuban economy as a whole”. These requests were disregarded.
“Entrepreneurs in Cuba were one of the most affected economic stakeholders in the country due to the policy followed by the Trump Administration. Virtually all measures taken in the economic sphere during these four years affected private businesses, especially those directly connected to the flow of travellers from that country,” Oniel Díaz said.
In 2019, Auge conducted a 5-month investigation into the effects of Trump’s policies on the private sector. In total, they interviewed 126 Cuban entrepreneurs from 27 economic activity sectors.
“80.2% of respondents at the time clearly indicated that the Trump Administration’s policy toward Cuba affected their businesses. This shows the extent to which these policies were damaging”, said Oniel, who added that entrepreneurs reported sharp drops between 60 and 80% in their monthly income.
Among the concerns, the interviewees identified three main ones: decreased clientele, increased difficulties in importing products and materials for the operation of businesses, and interruption of ongoing investments.
The decline in total customers was much more noticeable in businesses handling leases, with more than 24,000 recorded for Airbnbs, food suppliers and carriers. These sectors depended on the arrival of American travelers, and Trump’s measures, such as the ban on cruise arrivals and extreme restrictions on travel between the two countries, had a direct impact on these and other areas.
“Ventures targeting the domestic market were also impacted because, even if their clients were Cuban, their income was directly or indirectly linked to the income resulting from tourism and travelers,” Oniel said.
The second area of concern identified in the Auge survey related to the importation of raw materials. “There is a chronic lack of resources and raw materials for everyday life, but also for business. The private sector in Cuba has always been very dependent on imports, either through personal means or through purchases, in connection with inputs or raw materials from third parties who travel or bring in products”, Oniel explained.
“One fact that is very telling about the importance of relying on the outside world to maintain business was that 60% of respondents had imported US products from a third-party to operate their businesses. The closing of consular services, the decrease in flights between the two countries and the elimination of 5-year visas affected the possibility of travelling to the US. and other nations that accepted such a visa. This harmed businesses when it came to stocking up on raw materials,” Oniel explained.
The third concern was that quite a few Cuban entrepreneurs dropped investments that were underway. In addition, they interrupted the expansion of their businesses or the opening of others, “because the market does not sustain private sector growth or the growth of businesses depending or focused on the North American market,” Oniel added.
“This data contradicts the U.S. government’s argument that the measures applied did not affect the private sector but were focused on the public sector. Economic stakeholders, even in Cuba, and especially with all the contradictions, limitations, and problems we face in our legal framework, are linked to each other. So, if you affect one, you affect the others accordingly”, Oniel acknowledged.
A new scenario for Cuban entrepreneurs with Biden?
Oniel Díaz acknowledged that it would be beneficial for Cuban entrepreneurs if the new administration returned to the point where ties were still strong in June 2017, “when Trump decided to leave the policies Obama had implemented without effect, especially those relating to the mobility of people between the two countries”, said the co-founder of Auge.
Among possible measures that would help Cuban entrepreneurs, Oniel indicated three: removing restrictions on the travel of U.S. citizens to Cuba across the different categories that still exist; the return of Cuba as a safe destination for cruise ships and the end of limitations on the dispatch of remittances. “This is important for our sector because remittances have constituted, during these years, a kind of seed capital for the opening of new ventures or the reformulation or reconstitution of existing ventures. Therefore, they are vital to the growth of our sector,” he said.
Another measure that Oniel considers key is the possibility for Cubans to travel to the United States. “Many entrepreneurs in our survey shared that this trip represented an experience that had a business value, in the sense that it allowed them to be exposed to another reality, to know different business models, different experiences and then import them to Cuba, much like a system of cultural remittances or exchanges. These ideas were adapted to the characteristics of our country and applied in the development of new businesses or in the creation of new products and services. All of that disappeared during the Trump administration,” Oniel concluded.