Caribbean & Central America - November 2011 (ISSN 1741-4458)

The government is examining a legal and operating framework for the creation of so-called ‘special development zones’ (zonas especiales de desarollo), or industrial and service export-oriented enclaves funded with foreign capital (and technology). In layman’s terms, that doesn’t sound far off the US-facing maquila (basic assembly) sector common to many Caribbean and Central American countries.

Mexico, one of the maquila pioneers thanks to its geographical proximity to the US and the 1994 North American Free Trade Agreement, has latterly sought to move up the value chain, seeking to establish high tech industrial clusters, centred on the automotive and electronic sectors, rather than low value-added assembly plants. Cuba set up some ‘free zones’, also using foreign capital, during its limited experiment with economic opening in the early1990s (upon the fall of the Soviet Union). These were basically storage hubs for merchandise, with some light manufacturing. However, they never really got off the ground and gradually closed as Fidel Castro put an end to the liberalization experiment. Cuba’s foreign trade and investment minister Rodrigo Malmierca stresses that “the idea is to encourage special enclaves in line with the economic development interests of the country”.  He didn’t specify what sort of sectors the Cuban government is hoping to attract.

Corruption: In addition to putting in place a transparent legal framework for foreign investors and exporters, the Castro regime is also cracking down on corruption. According to recent reports in the Miami press, the latest case involves a British investment fund, Coral Capital Group that claims to have projects in Cuba worth more than US$1.0bn, with plans for a major hotel and gold resort on Cayo Coco, a sandy key off Cuba’s northern coast. Cuban authorities reportedly raided the Havana offices of Coral Capital in early October and detained its chief executive, Amado Fakhre, a British citizen. The deputy sugar minister, Nelson Labrada, was also reportedly detained.  Two other firms, Tokmakjian and Tri-Star, are also implicated in the case via Nelson Labrada.