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Cuba and FDI

The thawing of US relations in the last 18 months has opened up new potential for investment in Cuba. But the outcome of the US election now leaves an uncertain future

Cuba and the US had no diplomatic relations for more than 50 years. Efforts to bring change were first seen in July 2015, and then through 2016, such that a range of US commercial and financial restrictions are being removed on Cuba. One symbolic signal of that change has been the restoration of scheduled commercial flights between the two countries, and this strengthening of economic ties may be a sign of things to come.

Certainly, with a population of more than 11 million and a distance of just 100 miles between the two countries, the potential for rapid economic development in Cuba through investment and trade is obvious.

Irreversible, maybe

But then we had the US election, where President-elect Trump has threatened to reverse these changes. While President Obama believes that the progress towards normalization of relations is now irreversible, the unpredictability of Trump does change the dynamic.

To add to the uncertainty was of course the death of Fidel Castro. While he handed power to his brother in 2008, his death is nevertheless a polarizing moment for political relations. The diverse statements of Obama and Trump (and Canadian Prime Minister Trudeau) are evidence of what is still a fragile relationship between Cuba and some parts of the world.  For Cuba to achieve rapid economic development, attraction of investment from North America and Europe is likely to be a key component. If US relations do normalize, then other major investing countries are likely to foster deeper Cuban relations of their own.

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