Cuban Businesses Hope for Reforms After Month of Change

If you’re a Cuban business owner, a lot has changed over the past month or so. The United States elected Donald Trump to the presidency in dramatic fashion, potentially opening the door to fresh protectionist policies. At home, long-time revolutionary leader Fidel Castro passed away.

Suddenly, the future doesn’t look so certain. For Cuban businesses, reforms may be the only solution to survive potential friction with the US President-elect.

The administration of Barrack Obama made history earlier this year by charting a new course on US-Cuba relations. This included lifting restrictions on Cuban rum and cigars in an effort to boost trade and travel with the tiny island nation. Under the new regulations, the US departments of Commerce and Treasury will make it easier for US businesses to import Cuban pharmaceuticals and for US agricultural companies to sell their products to the Communist country.[1]

Cuba’s reform process actually began six years prior when Raul Castro took over as President from his ailing brother, Fidel Castro. It was Raul who eased restrictions on local businesses, leading to a major boost in the country’s restaurant scene.

Unlike his now deceased Cold War communist brother, Raul Castro appears more willing to open up the economy. This is positive news for Cuba’s entrepreneurs, who are hoping the President can accelerate the reform process. Giving new life to the country’s entrepreneurial class could help Raul redefine his nation after decades of revolutionary rule.

Others are weary about an escalating conflict between Cuba and its northern neighbour now that Trump is ready to enter the White House. The President-elect has vowed to get tough on trade and protect American interests at all costs. This includes scrapping long-standing trade deals with Mexico, Canada, China and others. Trump has also threatened to scrap Obama’s rapprochement with Cuba. Those threats have triggered a surge in US visitors to island nation.[2]

Cuba experts differ on how Raul Castro may go about reforming the economy, if at all. While the death of his brother will remove obstacles, many within the Communist ranks are mistrustful of the United States. To date, the reformation process has been slow, with Cuba resisting opening wholesale markets for local businesses. The government has also backtracked on previous pledges because they led to greater inequality. Before Castro’s death, the Communist Party amended its 2010 reform plan from not only prohibiting the accumulation of “property,” but also “wealth.”[3] Clearly, Cuba still has a long way to go before it is deemed market friendly.

Risk warning: Forward Rate Agreements, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. Our group of companies through its subsidiaries is licensed by the Cyprus Securities & Exchange Commission (Easy Forex Trading Ltd- CySEC, License Number 079/07), which has been passported in the European Union through the MiFID Directive and in Australia by ASIC (Easy Markets Pty Ltd -AFS license No. 246566).

[1] Alan Gomez (October 14, 2016). “Obama lifts restrictions on Cuban rum, cigars.” USA Today.

[2] Simon Gardner and Sara Marsh (November 29, 2016). “Fidel gone and Trump looming, Cuban businesses count on more reforms.” Reuters.

[3] Simon Gardner and Sara Marsh (November 29, 2016). “Fidel gone and Trump looming, Cuban businesses count on more reforms.” Reuters.