How Europe muscled U.S. on Cuba trade

By JONATHAN MILLER

At the crack of the English country dawn last Monday morning, Bill Clinton and Tony Blair got up early to play a game of golf. President Clinton, it is fair to say, is a better golfer. But it was English Prime Minister Blair who walked away with the game.

Later that day, the deal was made official: In its trade dispute with Europe, which has defied unilateral American sanctions against Cuba and Iran, America was surrendering.

Clearly, Cuba was a major chip in this bigger game of trade and politics.

The view in Brussels, at the EU headquarters, is that the deal is an almost complete victory for Europe. It allows the French oil company Total go ahead with a huge Iranian pipeline deal, and allows Europe to continue expanding the growing trade relationship with Fidel Castro's regime in Havana.

Clinton did emerge with a concession: in the future, Europe has agreed to respect the rights of individuals whose property may have been illegally confiscated by the Cuban government. But as far as EU companies are concerned, there is now a clear green light for a stampede onto the Island.

What was behind the U.S. surrender?

The launch of the single currency area called Euroland and the subsequent rush of support for the new single currency, the euro, has added to European clout and made this EU-U.S. confrontation very different from past gatherings.

The Europeans suddenly have the confidence (and votes in the powerful group of eight industrial nations known as G-8) to throw their weight around. Europe holds half the G-8 seats (Germany, France, Italy and Britain) with a fifth newly held by Russia, with its own historic ties to Cuba, and a sixth by Canada, which had opposed the U.S. embargo from the beginning. That leaves only the U.S. and Japan.

Many Europeans find it incomprehensible that Cuba, the subject of an American embargo first imposed By President Kennedy, could be the issue that destabilizes the great trading relationship between the dollar land of NAFTA (North American Free Trade Agreement) and the newly minted single-currency Euroland. Yet this was precisely the threat put before President Clinton.

In Havana today, if you have the money (most still don't) you can shop at Italy's Benetton, eat paella frozen in Spain, and lick English ice cream. You can even bank at Spain's Banco Bilbao.

European telecommunications engineers are at work upgrading the telephone system, European record company executives are signing up Cuban acts, and the first European cars are starting to supplant the rusty fleet of 1960s-era American autos.

Business is good and looks now certain to get better. The Europeans do not say so openly, but neither Fidel Castro, who is 71, or his regime, will be around forever. When he's gone, the Europeans figure it will be time to cash in on the big bonanza, leaving the U.S. behind.

Europeans also make the argument that this dose of Euro-capitalism might be what nudges Cuba forward, finally freeing itself from communist misrule.

Such talk outrages dissidents on the island and exiles in Miami, and does not impress some European members of the exile community. In Madrid, Leopoldo Pujals, the Cuban-born founder of Spain's phenomenally successful TelePizza company, is bitter at what he sees others doing.

``In Cuba, you put in the money and they provide the slaves,'' he says. But Pujals is a rare voice.

In Madrid, at the center of one of Europe's most dynamic economies, the sentiment for Cuba is strong. At that city's international airport, the growing number of cargo flights to the island, and a rapid growth in passenger traffic, are testament to the Spanish desire to build a bridgehead into Cuba.

Spain is investing $100 million in Cuba this year, much of it in the tourist industry, which in turn is sparking a Cuban construction and employment boom. The Spanish Sol Melia lodging group now manages eight hotels on the island.

Italy and France are now each investing in Cuba on a scale almost as great as Spain, and Britain has more than doubled its investment in Cuba to more than $60 million.

But it was the 1996 Helms-Burton act, with its assumption for the United States of the role of global policeman, and its vow to punish European business executives personally, as well as their companies, that threatened to unsettle it all.

Canadians and Mexicans have already been prosecuted under the act, and official threats were made against directors of France's Pernod-Ricard drinks company.

In Birmingham, President Clinton was told to back off. And he did.

While the deal with Europe takes the pressure off Clinton for now, the big question remains unanswered: If European companies are allowed a free hand to operate in Castro's Cuba, how much longer will American companies be content to stay away?