Governor Terry McAuliffe is in the midst of a three-day trip to Cuba, hoping to drum up new business for Virginia, but as Sandy Hausman reports, his mission could benefit businesses nationwide.
Cuba is a land of beautiful music and beaches, good cigars and rum, but it’s home to just 11.3 million people, most of them poor, and the last three governors to visit left with no promise of new business. Terry McAuliffe himself came away empty handed when, as a private businessman, he tried to cut deals in 2009. Still, he’s committed three full nights to this trip, an extraordinary amount of time according to John Kavulich, head of the U.S.-Cuba Trade and Economic Council.
“He’s saying to the Cubans, ‘I’m all in. I’m using taxpayer money. I’m using the state plane. I’m bringing businesses of substance down here, but in order for me to maintain credibility, I have to come back with something. I just can’t come back to the citizens of the Commonwealth and sayI spent several hundred thousand dollars, and I smoked some cigars and a I had some rum.’ And I think the Cubans are aware of that," Kavulich says.
They also know that McAuliffe is a big player in Democratic party politics – someone who knows Barack Obama and is extremely close to the Clintons.
“What comes out of his mouth will likely have been a result of his discussions with the former president and with Mrs. Clinton, and the Cuban government is keenly aware that the clock is ticking on the Obama administration," Kavulich explains. "They know that they will never have a president that wants to get something done as much as he does, and if Mrs. Clinton is elected, she’s not going to have that focus.”
If McAuliffe wins new business for Virginia, it could signal a softening on Cuba’s part – the first trade domino to fall. Next, Cuba might allow U.S. companies to have offices in Havanna, hire Cuban nationals and sell American products directly to customers, something Kavulich says is not possible today.
“There are about 200 categories of independent business operators in Cuba – hairstylists to car repairs, but the Cuban government does not officially allow these people to import products directly. They have to buy it thru a Cuban government store.”
Cuba also has a list of things it wants from the U.S. – like credit: “Healthcare products, food and agriculture products must be paid for on a cash basis, and the Cubans generally don’t like it, because they have to make payment before the product gets to Cuba or when the product gets to Cuba.”
To pressure the U.S. on that point, Cuba has actually cut way back on what it buys from this country. In 2011, for example, it bought $65 million worth of goods – mostly agricultural products – from Virginia, but in 2015 that number fell to about $25 million.
Cuba is in an uncomfortable place right now. Its wealthiest ally, Venezuela, is in the midst of an economic crisis, and that could mean less cash for the island nation. On the other hand, Terry McAuliffe could be sitting pretty politically if several factors lead Cuba to make a deal. Again, John Kavulich with the U.S.-Cuba Trade and Economic Council.
“We will never know if he was the one that caused it or if the Cuban government said, ‘This is a good time to do it,’ but he’s going to get credit for it.”
And coming one week before the next legislative session, in which McAuliffe will no doubt be battling Republican opponents, a win on the global front could help to bolster his reputation and political clout at home.