With 80-year-old dictator Fidel Castro's health in question, interest within the United States has grown over what many see as Cuba's inevitable change in government even if just to see his brother Raul permanently assume power.
And outside of this nation's sizeable Cuban expatriate community, few want to know more than U.S. businesses eager to tap into the 11 million consumers located just 90 miles off of Florida's coast.
Mr. Castro maintains that when it comes to Uncle Sam, it will be business as usual or rather very little business as usual in Havana during his illness. But the U.S. State Department believes he has given up day-to-day management of the island-state and his fade out creates a time "fraught with possibility" for both nations.
Florida East Coast Industries whose CEO is Havana-born Adolfo Henriques is in a unique position to pounce if ties can be resumed. One of its businesses, the Florida East Coast Railway, is a regional freight railroad that operates 351 miles of mainline track from Jacksonville to Miami.
Miami-based investment manager Thomas J. Herzfeld says that the railroad is anticipating a significant increase in the amount of freight going through Florida once the embargo is lifted, and foresees a rail barge operating to and from Cuba since the railways are compatible there.
Other big American companies eyeing a re-opened Cuba are in the metals, sugar, and tobacco industries, although there's certain to be a spurt of investment and entrepreneurship from expatriates eager to do business in their motherland.
One big obstacle will be the United States' insistence on compensation for U.S. assets confiscated by the Cuban government when Mr. Castro took over. That potential bill is estimated by University of Miami's Cuban Transition Project to now range between $6 billion and $20 billion.
In just one example of how sticky that situation can be, one Cuban exile family has lobbied the U.S. government to punish a Spanish hotel chain, Grupo Sol Meliα, which built inns on property the family had lost to the communist government. Interestingly, family members were not American citizens at the time of their loss. The claim by the Sanchez-Hill family of South Florida already is an irritant in United States-European Union relations, and suggests the Pandora's box that will inevitably spring open once Cuban-American relations start to normalize.
EARLY BIRDS
Money manager Mr. Herzfeld has been planning for an open Cuba since the early 1990s, Castro or no. Barron's Online described him as "early to the party very early." His firm's Herzfeld Caribbean Basin Fund (NASDAQ: CUBA) operates with a built-in contingency plan should trade agreements open Cuba to his investors.
Mr. Herzfeld saw Cuba and the Caribbean as emerging markets that would allow him and his investors to gain pole position when the race to Havana begins.
"Since we didn't know when the embargo would be lifted, we decided to make it Caribbean," Mr. Herzfeld says. "We saw it as an opportunity to be in position to be the first fund to invest in free Cuba.
"Our strategy 13 years ago was that there is no way to predict the embargo lifting, and we didn't just want to sit on the money."
Managed by his Thomas J. Herzfeld Advisors, Inc. firm, the closed-end fund has been successful thus far its original investors are ahead at least 100 percent, according to Mr. Herzfeld, although it's capitalization is still a tiny $13 million. (A closed-end fund is like a mutual fund that trades on a stock exchange.)
