NEW YORK (MainStreet) -- Cuba, with its longtime trade embargo and travel restrictions, clearly has been the furthest thing from a hotbed of economic activity for decades. But investors hoping all that will change amid eased political relations with the U.S. should be cautious.
“I don’t mean to be flippant, but [Americans] should be leaving their money in their U.S. bank,” said John S. Kavulich, president of the U.S.-Cuba Trade and Economic Council, Inc. in New York.
Last week's flag-raising ceremony at the recently re-opened American embassy in Havana is garnering plenty of media coverage and anticipation, but Kavulich downplayed Cuba’s potential as a hub for commerce and conspicuous consumption.
“Cuba is not Dubai 93 miles southwest of Key West, Florida,” he said. “There are not 11 million people ready to buy a latte at Starbucks, buy a Big Mac or stay in the Marriott.”
That said, the buzz around the island could usher in expansive growth in specific sectors. Should the U.S. Department of the Treasury’s Office of Foreign Assets Control implement its expected changes, U.S. visitors to Cuba will triple, from 500,000 annually to 1.5 million. On a small island, that can generate a significant economic impact.
“Now is the time for discovery, due diligence, and imagination -- to locate projects and partners, to position oneself for the tremendous, once-in-a-lifetime investment opportunities that will open up shortly,” said Richard Feinberg, a nonresident senior fellow in the Latin American Initiative at Brookings and an international political economy professor at UC San Diego. “But it’s not a market for the timid and risk averse.”