EDITORIAL – Cuban tourism’s biggest threat: Big government

Southwest Airlines’ announcement that it is scaling back service from the U.S. to Cuba prompted the usual hand-wringing about U.S. President Donald Trump’s policies and their effects around the globe.

In reality, President Trump’s minor changes to the previous U.S. administration’s travel rules have little to do with American travelers’ lack of enthusiasm for visiting our northern neighbor. Cuba’s ponderous government bureaucracy bears the lion’s share of blame for the lack of resources and substandard infrastructure that has dulled American travelers’ interest – offering a cautionary tale that the Cayman Islands should heed.

Cartoon: Jake Fuller

Southwest is dropping service to the Cuban cities of Varadero and Santa Clara, while keeping its twice-daily flights to Havana from Fort Lauderdale-Hollywood and Tampa airports. (The airline is seeking permission to add an additional daily run between Havana and Fort Lauderdale.)

In a statement, Steve Goldberg, senior vice president of ground operations, said a company performance analysis “confirmed that there is not a clear path to sustainably serving these markets, particularly with the continuing prohibition in U.S. law on tourism to Cuba for American citizens.”

There may be some truth to the idea that more Americans would travel to Cuba if they were legally allowed to just relax on the beach with a mojito in hand (under Mr. Trump’s new rules, as it was under the previous Obama administration, the U.S. allows only “purposeful travel” to Cuba – educational trips, visits to family, humanitarian missions, etc. – not tourism).

But the larger issue is that many Americans don’t want to go to Cuba, anyway. At least one recent survey found U.S. travelers’ interest in Cuba already was waning just a year after travel restrictions were eased.

In 2017, 76 percent of Americans reported being unlikely to plan a trip to Cuba – a 6 percent increase over the previous year, according to the survey published by travel insurance provider Allianz Global Assistance in May.

Among the concerns reported by survey respondents were: safety; lack of information about Cuba’s travel experiences; poor travel infrastructure; and subpar internet/mobile connectivity.

Cuba has been able to attract only meager foreign investment since the government began encouraging private enterprise in 2011. Even after foreign investment rules were further “relaxed” by the Cuban government in 2014, it has been preposterously difficult for foreign investors – from any country – to gain traction in the country’s rich market. Simply put, Cuban government regulations and cumbersome processes have sandbagged efforts to boost trade and support private investment.

Most Cubans, long reliant on small government subsidies and remittances from relatives overseas, don’t have the collateral to make the large investments necessary to bring the country’s travel infrastructure up to a standard that international tourists expect. The clearest path for progress is for heavy-handed government bureaucrats to get out of the way – jettisoning price controls and other unnecessary regulation – to allow private enterprise (both domestic and international) to thrive.

To anyone wishing to convince the ruling Communist Party of Cuba of that economic reality, the best we can say is, “Buena suerte.”

In a global economy, businesses can operate wherever they want in the world – including in Cayman (or Cuba), but they lean toward places that are, not surprisingly, business-friendly. Nothing kills free enterprise faster than bureaucratic red tape – Cuba’s No. 1 national resource.

Ultimately, Cuba will make its own decisions. But there’s a lesson for us at home: Cayman must be careful not to go down the same road by allowing bloated bureaucracy and proliferation of regulations to bog down the creative essence of entrepreneurship and investment.

Cayman cannot afford to jeopardize our country’s hard-earned reputation for being safe, stable and business-friendly. Nor can we afford to pay lip service to the ideal of free markets while implementing rules, regulations and policies that make it more difficult for business to thrive (such as a bottlenecked system for work permits, or fooling around with foreign workers’ pensions).

Executives, investors and workers are human beings, after all, and if any government makes it too difficult to operate there, they won’t put up with it. They’ll go where they are wanted, appreciated and more likely to be rewarded for their efforts.

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1 COMMENT

  1. Allianz Global Assistance contacted 1514 respondants to get that 76% figure – in a population of over 320million that’s hardly a significant sample. In contrast a quick check round about a dozen of my friends in the USA earlier this year showed that every single one of them was really keen to see Cuba.

    As for, “Cuba has been able to attract only meager foreign investment since the government began encouraging private enterprise in 2011.” Guess whoever wrote that hasn’t been to Cuba for a while because it’s bunk. The joint venture development of one multi-hotel resort there is quoted at $3billion. The Mariel container port and FTZ cost $900million and Unilever are building a $35million factory in the FTZ. That all makes recent headline investments in the Cayman Islands look like pocket change.

    This editorial reads like the typical DoT ‘head in the sand’ dumbed down dream of a Cuba that will never open up and kill the tourism industry in destinations like the Cayman Islands stone dead.

    The reality – four million tourists pumped nearly $2billion into the Cuban economy last year. True, the majority of them came from the UK and Europe, areas the Cayman Islands seem to have lost interest in, but an increasing percentage come from Canada, which was a key Cayman Islands market.

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