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In the Rush to Invest in Cuba, Principles Matter

Meanwhile, American businesses are eager to pounce on what they see as an untapped market. In just the last few weeks, airlines have bid for direct flights, hotel chains have announced new deals, and technology giants are promising to break down the state’s censorship and isolation.

Article by Lindsay Lloyd March 29, 2016 //   5 minute read

President Barack Obama’s recent visit to Cuba, while promoted as ushering in a new era in U.S –Cuban relations, showed the same fault lines in American attitudes toward Cuba that have existed since 1959. 

Some criticized the President for giving short shrift to human rights.  Some paid lip service to human rights while playing up the purported successes of the Castros’ Cuba.  Meanwhile American businesses are jockeying to stake their claims on what they hope will be a gold rush.  Public opinion polling, including among Cuban-Americans, shows support for the administration’s rapprochement with Havana.  America’s attitudes towards Cuba are evolving.

It remains to be seen if the administration’s decision to engage with Havana will indeed produce improvements in Cuba’s dismal human rights record.  Dissidents and independent journalists continue to be routinely rounded up for daring to challenge the regime’s authority.  The most recent Human Rights Report from the State Department and the Freedom in the World report from independent watchdog Freedom House continue to brand Cuba as a repressive dictatorship.  Human Rights Watch and other groups say that human rights abuses have worsened in recent years.

Meanwhile, American businesses are eager to pounce on what they see as an untapped market.  In just the last few weeks, airlines have bid for direct flights, hotel chains have announced new deals, and technology giants are promising to break down the state’s censorship and isolation.  Even conservatives like Texas Gov. Greg Abbott have been leading trade missions to Cuba since the thaw began.

The Cuban government has encouraged foreign investment for years.  European and Canadian businesses, among others, have made substantial investments, especially in the vital tourism sector.  But Cuba accepts foreign investment only on its own terms.  Businesses must hire candidates vetted by the state.  Ordinary Cubans are barred access to some facilities, such as hotels.  Wages are paid not to the employee, but rather to a state agency, which then in turn pays the employee a fraction of his nominal salary.

International business can and should be a force for good.  They can improve the quality of life for their employees and for consumers.  But how do we ensure that their interest in Cuba pays off for the people of Cuba and doesn’t prolong a decrepit regime’s grip on power?

One answer is to look back at the case of South Africa in the late 1970s.   At that time, South Africa had large investments from multinational corporations, despite its apartheid policies that segregated and discriminated against the non-white population.

In 1977, Rev. Leon Sullivan, an African-American minister from Philadelphia, drafted a set of guidelines for foreign companies doing business in South Africa.  The Sullivan Principles were widely adopted by multinationals operating in the country, and committed them to provide fair employment and equal treatment for all, regardless of race.

Those principles included calling upon companies to commit to offer equal pay for equal work, more training for black workers, and moving blacks into supervisory roles. He also wanted to improve the quality of life outside the workplace. The Sullivan Principles asked companies to promote policies that would lead to greater political and social justice.

His approach was seen as too slow-moving for some, but his principles were seen as a way to promote democracy and economic empowerment. At the time of his death, Brigalia Bam, a former activist with the World Council of Churches, explained that “We South Africans owe a lot to him.”

Later, the Sullivan Principles helped inspire Cuban dissident Gustavo Arcos Bergnes to develop a similar set of guidelines for foreign investment in Cuba in 1994.  The Arcos Principles outline a set of standards to promote human rights and fair labor practices.  These standards promote the rule of law, demand equal access for all Cubans, equal and independent hiring practices, and the establishment of free trade unions.

U.S. businesses can help improve the sad economic reality of most Cubans.  But as they examine opportunities for trade and investment in Cuba, they should also seek to improve the human rights situation. 

No matter the charms of investment in Cuba, the reality is that Cuba needs foreign investment far more than foreign investors need access to a poor society.  Corporations, especially American firms that are eager to do well in Cuba should also ensure that they are doing good.

 

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