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Tuesday, 21 April 2009 08:20

U.S. companies hope that Obama's olive branch to Cuba yields new business

By Doreen Hemlock |  South Florida Sun-Sentinel

President Barack Obama's newly unveiled plans to ease U.S. travel and telecom links with Cuba drew widespread attention, but how much that translates into real business remains a question.

A lot depends on how Cuba's communist government reacts to Obama's overtures and how much it opens to Cuban-American visitors and to U.S. travel and telecom companies, business leaders and analysts said.

Companies also want to see the fine print from U.S. agencies on how the new programs will be implemented, since red tape has snarled their Cuba plans before, analysts add. "Potentially, the news is important for business, but right now, it's abstract," said Jake Colvin, vice president at the National Foreign Trade Council in Washington, D.C., a pro-trade group. "U.S. companies are generally taking a wait-and-see approach."

Changes to rules for U.S. residents visiting family in Cuba illustrate the potential for business and the challenges.

While Obama's plan lets Cuban-Americans visit the island whenever they want and stay as long as they want, many still need to obtain Cuban visas to enter, a process that can take months or longer.

Also, flights to the island are limited, either to direct charters approved from several U.S. cities or commercial flights from other nations. American Airlines and other carriers can't start scheduled U.S-Cuba service without bilateral aviation agreements with the Cuban government -- a move not yet authorized, executives said.

"It is premature to comment on any future service opportunities to Cuba, given that there appear to be no changes to scheduled service rights at this time," Delta Air Lines said in a statement.

If Cuba eases visa approvals and if air service to Cuba increases, Tico Travel of Fort Lauderdale Is your Fort Lauderdale restaurant clean? - Click Here. figures it can "easily" expand its authorized U.S. business with Cuba from less than 3,000 clients a year to more than 30,000 yearly. But that requires lots of conditions be met, far beyond White House approval, said co-owner Rob Hodel.

"Just because you can do it, doesn't mean you can do it," Hodel said.

New telecom rules also may prove tough for U.S. business, requiring approvals from Cuban telecom authorities and agreements with Cuban telecom agencies, analysts said.

Cuba now restricts satellite TV and Internet services, so many hookups at homes are illegal and signals pirated. The country lags in cell-phone use, partly because of high charges, often more than 60 cents a minute for local calls.

Cuban authorities may want to expand some services with U.S. telecom companies to generate cash, but they also will also want to keep political control, limiting others and complicating business, said Enrique Lopez, head of AKL Group in Coral Gables.

In addition, many services may be out of the financial reach of Cubans, who earn salaries averaging less than $20 a month.

"Even if Cuban families could pay $30 a month for satellite TV, how would the government control what they have access to?" Lopez asked.

So many questions have U.S. telecom companies cautious about Obama's plan, which still leaves the 47-year-old U.S. embargo against Cuba in place.

"We will look at any change in U.S. policy very closely, and should a new market opportunity arise in Cuba, carefully consider our options," DirecTV said in a statement.

John Kavulich, an adviser with the U.S-Cuba Trade and Economic Council in New York, said Cuba doesn't need U.S. business to survive.

The Caribbean nation of 11.5 million people already does business with many other countries and receives financial help from Venezuela, China and other allies. When Washington connects travel, telecom and other business links to promoting "change" on the island or bypassing the Cuban government, Havana becomes circumspect, often wary of approvals for U.S. business, he said.

"Any change in U.S. policy toward Cuba," Kavulich said, "always results in far more questions than people want to admit.''

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