Politico & Politico Pro
3 January 2017
CUBA COUNCIL CHIEF: PRE-TRUMP CUBA FOCUS COULD YIELD SPATE OF DEALS: U.S. companies have been racing to finalize deals before the president-elect takes office on Jan. 20, and about seven or eight “meaningful” announcements could be made before Inauguration Day, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council. Kavulich told Morning Trade that the business community would be hardest hit if Donald Trump moves quickly after Inauguration Day to reverse President Barack Obama’s push to normalize relations with Cuba, an initiative that is vulnerable because Obama furthered it mainly through executive actions.
“The council and others have been pushing the administration since the ninth of November to issue every license for which there’s been an application as fast as possible — because licenses that are issued are less likely to be rescinded; because generally they're good for one to three years; and, more importantly, a license that has been implemented is even more so likely to be renewed,” Kavulich said during a recent interview at POLITICO’s Rosslyn, Va., headquarters.
But the bigger question is whether the Trump administration will actually undo any of Obama’s executive actions or whether Trump would leave them in place but not move further toward rapprochement, Kavulich said. With travel to the island, for example, “I think they’re prepared to not necessarily dig deeply, but by simply digging at all, the perception is going to help create the narrative that they want,” he said, referring to the incoming administration. “Which will be that there’s more enforcement, so therefore less encouragement of somebody to want to visit Cuba, so therefore Cuba earns less money.” Read the full Q&A with Kavulich here.
POLITICO Pro Q&A: John Kavulich, president of the U.S.-Cuba Trade and Economic Council
By Megan Cassella
As President-elect Donald Trump prepares to enter the White House, business groups and advocates in favor of normalizing relations and strengthening commercial ties with Cuba are racing to finalize deals they fear the president-elect will seek to tear up.
Trump has come down on both sides of the issue: As a presidential candidate, he said rapprochement was "fine" and that "50 years is enough" for an economic embargo, but he pledged in a tweet late last month to "terminate" ties with Cuba if it does not agree to a "better deal" than what it committed to in the talks that preceded the diplomatic opening.
With questions swirling as to which way Trump will go on Cuba once he enters the White House, POLITICO sat down in our Rosslyn, Va., headquarters with John Kavulich, 23-year president of the U.S.-Cuba Trade and Economic Council, a private nonprofit that provides commercial and economic information on Cuba to the U.S. business community, to discuss Trump's possible steps and what could happen to Obama's diplomatic legacy once he leaves public office.
This interview has been edited for length and clarity.
What contact have you had with the Trump team so far, and what’s your take on where things stand now in regards to Cuba?
The council was contacted during the campaign by individuals associated with the campaign to provide information and analysis, which we did, and then has continued to be contacted post-election for analysis and data, and so we provided that. They've asked for what we've done, and then [for] background in terms of why we think some decisions might have not been made by the Obama administration, why some were, what Trump administration might do. ...
But I think that they're focusing on a lot of issues, and Cuba isn't top of the list — nor should it be. ... It does have significance to some members of Congress, transition team members, landing team members and individuals, advocates, but from a macro standpoint, I think few taxpayers want the Trump administration to put Cuba in their 100-day portfolio.
What do you see as the state of play in terms of the U.S. stance toward Cuba policy right now? How much do you think the Obama administration has accomplished, how much is set in stone, and where do you see the Trump administration taking things from here?
Nothing is set in stone, because there are no statutes, there are no statutory foundations to anything the president has done during the last 24 months nor, for that matter, anything he's done since Jan. 20, 2009. People often forget this occupant of the White House had a House and Senate majority for two years and did nothing relating to Cuban statutes when he could have, and likely may have changed some Cuban statutes but didn't choose to do so. He chose the regulatory path, which was always fraught with potential peril.
The challenge is that neither the Obama administration nor the government of Cuba prepared for an outcome whose last name wasn't Clinton. And in the business world, we prepare for unexpected outcomes. It's what you do, especially when we risk money.
Where do you see the Trump administration, once it's settled in, taking things from here?
Generally, they'll be reactive as opposed to proactive. If Cuba does something to warrant a column in POLITICO, The Hill, Roll Call, The Washington Post, The New York Post (because the president reads that), The New York Times, MSNBC, if Joe Scarborough starts talking about it, they're going to react, unless they change, and unless the president-elect changes the way he has behaved during the last two years of the campaign. So I think that they will be reactive.
There are individuals in the landing teams, the various departments and agencies, at the transition team within 725 Fifth Ave. in New York, and individuals within the purview of the campaign who want to be aggressive, who believe that primarily the travel-related initiatives of the Obama administration are the ones that need to be constrained. Some of them believe that they should be constrained because they violate the letter and the spirit of [Trade Sanctions Reform and Export Enhancement Act]. And they sincerely believe that the president has gone too far in terms of how he has defined who can go and under what conditions they can go.
There are others who are looking at it from an ideological standpoint, and they simply are feeling as long as there is a Castro breathing that the goal should be not to reward, enrich or sustain, it should be to deny, constrain and kill — kill the species that is the commercial, economic and political system led by Fidel and now Raul.
So you have one group that is based on firm belief in statute and presidential prerogative and the other is based on ideology. You put those two together — which is what the Trump administration is going to have — and it can be toxic. Meaning the result can be unpredictable. But, overall, the individuals surrounding the president-elect, they want to do something, and it’s almost certainly going to be travel-related. And they will do so with the foundation that they're simply upholding U.S. law where President [Barack] Obama violated U.S. law.
What are the biggest questions in your mind in regards to Cuba when you think about the incoming administration?
Will they be proactive or reactive? That would have to be ... everyone’s first focus. Second is how deep they want to penetrate into being proactive or reactive. Do they simply want to not permit any more, or do they want to remove some of what exists? I think with travel, they’re prepared to not necessarily dig deeply, but by simply digging at all, the perception is going to help create the narrative that they want, which will be that there’s more enforcement, so therefore less encouragement of somebody to want to visit Cuba, so therefore Cuba earns less money.
You mentioned at the start that nothing is set in stone. How much do you think feasibly or realistically Trump can or will undo Obama's executive actions?
All he needs is ink in the pen.
But what about these commercial ties and the seemingly widespread popular opinion that voters are in favor of normalization?
The polls really don't mean much. They generally will be seen as meaningful when they’re supporting the president’s position, and will be dismissed as not important when they’re not. And for President Obama, [Deputy National Security Adviser] Ben Rhodes would often quote them as a reason for the initiatives. But while the numbers are probably accurate, they’re wide but they’re not deep. Very few people truly care about Cuba. It’s just that if you ask somebody a question, depending on how you frame it, you're going to get an answer that generally is: "Yes, I don't see why we're still doing [the embargo], and now Fidel’s dead."
But how much passion is there behind it? There isn’t. And my basis for that statement … is, what action has there been in 16 years in the United States Congress relating to Cuba? What law has changed ... in 16-plus years? None. So, for those that say that the will of the American people wants there to be change with Cuba, that may be true, but the only passion are some advocates that thus far have failed at their one stated purpose, which is to change U.S. law. So what have you got?
I know that it may sound dispassionate and surgical and medical-like to be saying this, but if you’re an accountant, you have sales, you have expenses, you have net profit. With legislation, you have how many [lawmakers] for it, how many you have against it, what’s the outcome? Well they’ve had 16 years. Then they had two years where the president’s party controlled the Congress with substantial majorities. Then they had the last 24 months where the president has made it a legacy issue, they didn't do anything on any of it. So that’s the reality that’s going to confront these people.
So if President Trump tries to claw back at the commercial, the argument is going to be, "Don’t harm U.S. business opportunities." Their [the administration's] argument is going to be, "Please list the business opportunities. What have they done? Who’s done what? ..."
I don't think that, based on what I’ve heard, there’s not a lot of appetite to reverse any of the commercial engagement. But there is appetite to focus more on what is being permitted and how it's being permitted. For example, Nespresso, the coffee — when State issued the guidelines of how, under what conditions, coffee would be permitted to be imported to the United States, it was rather specific on the conditions that would need to be in place. But when Nespresso made its announcement, it talked about what it was going to be doing rather than what was in place. So you may see the Trump administration say, "If this stuff’s going to happen, we want to see that what needs to be there is there as opposed to it being aspirational."
Before Inauguration Day on Jan. 20th, companies are racing to get things finalized. What’s in the pipeline?
There are probably seven or eight announcements that could take place that are meaningful. The council and others have been pushing the administration since the 9th of November to issue every license for which there’s been an application as fast as possible. Because licenses that are issued are less likely to be rescinded, because generally they're good for one to three years. And more importantly, a license that has been implemented is even more so likely to be renewed.
The problem, again, for the administration, is they never expected Hillary Clinton to lose. So no one thought to say to the Cuban government, "Hey gang, remember... ." On Dec. 17, 2014, President Obama should have said to President Castro: "There’s a timeline here. It ends on the 8th of November of 2016. It doesn’t end on the 20th of January 2017, because we don’t know what's going to happen. So therefore, we ... need to plan for the unexpected."
That conversation never took place. So the Cubans are as guilty of not planning as the Obama administration. And the business community is the one that suffered for that.
What are some of your boldest predictions for what you actually see happening in 2017?
The narrative of 2017 is going to be written by Cuba, and the Trump administration is going to be responding to that narrative because the clock will begin ticking for the transition from Raul Castro in succession to Miguel Diaz-Canel 13 months after Trump is sworn in. And that’s going to become the media narrative, that’s what everybody’s going to start focusing on: What will the U.S. government do either to incentivize the Canel administration or to reward the Canel administration? So incentivize meaning lay out in advance, 'This is what we want to see you do, and then we’re going to do this.' Or reward, meaning, "You do this, we’re going to do this." So it’s sort of transactional.