Credit: eib.org /   The Luxembourg-based European Investment Bank (EIB) is the world’s largest international public bank

By Gary Raynaldo        DIPLOMATIC  TIMES

A Mandate by the European Investment Bank to finance investments in Cuba would be the “angel” the socialist nation needs to spark true economic reform, according to Herman Portocarero,  former European Union ambassador in Havana. Portocarero  served as the European Union’s first full-fledged ambassador to Cuba from  2012-2017  overseeing a diverse portfolio of activities in the political, trade and investment, and development cooperation fields. The former ambassador shared his rich diplomatic  experiences in Havana at the Cuba Program Institute of Latin American Studies of Columbia University CUBA AND BEYOND SERIES recently.  The EIB is the long-term lending institution of the EU and is owned by EU member states.  The EIB is the world’s largest international public bank, supporting development and economic activity in the Caribbean with loans and equity worth nearly EUR 2 Billion over the years.  The EIB requires a  lending Mandate approved by EU authorities in order to finance investments outside Europe such as in Cuba.  Despite meetings between EIB officials and Cuba over the past few years,  EU authorities have failed to green light the required Mandate.  Ambassador Portocarero blamed ‘scare tactics’ by the U.S. and the recently activated  Title III Helms-Burton Act of 1996. Helms-Burton allows lawsuits against companies from third countries that operate with goods nationalized by the revolution.  Hundreds of European companies, most notably  are some 200 Spanish businesses―including major  tourism enterprises such as Iberostar, Meliá and NH―could be targets of the lawsuits.

“It is very difficult to convince a EU bank or private company to  take a risk and invest in Cuba because most of them have business interest in the United States. Especially with banks, we came to the conclusion that Helms-Burton is a problem.  But the other problem is compliance departments in (EU) banks . They are afraid of their own shadow. And they over-comply. They have to stand up.”

Herman Portocarero,  former European Union ambassador to Cuba.

Credit: Gary Raynaldo   / Herman Portocarero,  former European Union ambassador to Cuba, speaks on future of the socialist nation at Columbia University political forum Nov. 12, 2019.

Portocarero explained that prior to his leaving as the EU ambassador to Cuba in 2017, he tried to get Cuba included in the Mandate of the EIB without success to his frustration. 

“The EIB is a purely public institution.  All of the member states are shareholders.  So theoretically, they should not be afraid.  Nevertheless , when I talked to the EIB,  they came with an exploratory mission, and we had the Cubans ready to sign  a framework agreement. But the EIB  in the end got scared.  Why?  Because they need access to financial capital markets in New York.  And they were afraid if they include Cuba in their lending mandate,  they would get into trouble on Wall Street. It is one of the examples where US policy is really stopping the EU from getting involved because access to soft loans is vital for Cuba. They are not in the World Bank, they are not in the IMF, and they are not in the Caribbean Development Bank. So the EIB would have been the angel they were expecting to give them affordable loans. And we could not do it because of scare tactics in the US financial world. Its the real world…we have to live with it.   I hope my successors can break through that because I could not do it.”

-Herman Portocarero,  former European Union ambassador to Cuba.

Portocarero said Cuba has had to shop around the world to get vital credit lines loans. “One year Cuba goes with France,  another year it is Lithuania. This is not a way to live. You need finance to run a country,  to feed people. Cuba needs to be part of the international financial system.”

Tax System  Needed In Cuba To Generate Fiscal Income:   Portocarero

While serving in Cuba on behalf of the EU,  Portocarero helped set up a tax system for the socialist nation that is ready to be put in place. However, Cuban officials have not activated it yet.

“We set up the tax system so that it would be ready for the time to go to activate it. We brought in Spanish specialists to explain things.  We set up regional offices with central authority with computers.  The other part of my message was you should not overtax the foreign investors to prepare for a different system.  Also explain,  what ever little the average person can contribute.. but educate people, say (to them) you pay your taxes because you have free health and your kids go to school. That’s the philosophy. But it is a slow process.  Actually, we even printed school books for primary schools explaining what taxes were and that you be a good citizen and you pay your taxes, and you can stay in school and your grandmother can go to the hospital. But this message does not get through. But it’s a slow process. And the Cubans (political establishment) of course are not ready  for it. They don’t want Cubans to be financially independent because you can’t control them politically. I tried to explain to them that the private sector can do it better, and it will give you cash flow to keep your social system in operation. But that message is not working. And that has been my frustration.  It’s very simple logic,  but they don’t want to take that step because it  is giving up control, can’t control people.”

As US Isolates Cuba, EU Dramatically Increases Investments in the Caribbean Nation

Credit:  europeanunion /  Cuba’s Foreign Minister, Bruno Rodríguez meets EU’s foreign policy chief Federica Mogherin in Brussels  May 24, 2019

While the U.S. under President Trump is rapidly breaking all political  and  economic ties with Cuba that his predecessor Barack Obama established, the EU has substantially increased investments in the socialist nation over the past two years.  However, it  has yet to authorize an EU Mandate for EIB financing in Cuba.   The EU bloc imported some €470 million worth of Cuban goods in 2017 and exported more than two billion euros’ worth. The Trump administration announced last month it is allowing former owners of commercial property expropriated by Cuba to sue companies and the Cuban government for using or “trafficking” in those confiscated holdings.  In March,  the U.S. Department of State  eliminated the highly sought after 5-year travel visa for Cuban citizens visiting America. The EU has sharply criticized the US for activating,  effective May 2,  Title III of the 1996 Cuban Liberty and Democratic Solidarity (LIBERTAD).  Lawsuits will now  be allowed in American courts against Cuban companies using property seized during the 1959 revolution.