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COLD WAR CUBA: AMERICAN BUSINESS EMBRACES BATISTA

June 4, 2013 by Lisa Reynolds Wolfe

American Business Embraces Batista

Batista’s focus was on the economy, and the US–anxious to protect its business investments in Cuba–quickly proffered its support to the new regime.

Batista “pledged order, stability, and labor tranquility” to the Cuban business community and respect for foreign capital to the United States.  Not surprisingly, American and Cuban capitalists responded favorably.

Between 1954 and 1956, new foreign investment quadrupled, flowing into almost every strategic sector of the Cuban economy: petroleum, public utilities, petrochemicals, mining, non-sugar manufacturing, tourism, and construction.

By 1957, new direct US private investment since the military coup totaled in excess of $350 million.

The most important ‘growth’ sector in the economy under Batista was the largely American-financed expansion of the tourist industry.

A wide array of government concessions and supports resulted in the construction of 28 new hotels and motels at an overall investment cost of more than $60 million.

Each new building received substantial tax exemptions and, in the cases of the luxury Havana Hilton and Havana Riviera hotels in the Vedado section of the city, direct government financial assistance during the process of construction. This type of investment remained highly profitable in comparison with equivalent investments in the United States, even beyond the ten year period of tax exemption.

In actuality, US capital operations in Cuba were not only granted specific tax exemptions but, for all practical purposes, were excluded from any significant tax burden whatsoever.  American multinationals were able to profitably exploit the island’s existing tax laws for their own benefit, and there were relatively few obstacles to the repatriation of profits to the metropolitan center.

In September 1958, Batista issued a decree that transformed Cuba into a foreign tax base country:

Under this decree US corporations may control from a central office in Cuba all transactions originating or consummated outside of Cuba without being subject to Cuban taxes.

As a result, major quantities of new US investment capital flowed into the Cuban economy for almost the duration of the Batista dictatorship.

By the end of 1958, the total book value of US enterprise in Cuba was, with the exception of Venezuela, the highest in Latin America; the lack of controls on capital remittances between 1952 and 1958 had enabled American capitalists to channel some $378 million in corporate profits back into the US.

The advantages of locating in Batista’s Cuba were substantial and compared more than favorably with most other countries in the region.

US companies that encountered specific problems always had immediate formal and/or informal access to the relevant government agencies and officials.  As one American businessman noted:

I would have to say that under Batista there was more cooperation from the government than under any other government.  If there were problems with different government departments, or if legislation was unfair, there was apt to be more cooperation.  Batista was an easier man to get to.Few US multinationals had, or required, public relations offices in Havana because all you needed was to find a way to get a phone call to Batista and he could fix it.

The accessibility of regime officials was facilitated by the activities of the American Embassy which functioned, in part, as a ‘service’ organization for US investors.

Photograph by Lisa Reynolds Wolfe

Filed Under: Cuba

About Lisa Reynolds Wolfe

Widely published, Lisa holds a Ph.D. in Politics from New York University and a Master of Science in Policy Analysis and Public Management from the State University of New York at Stony Brook. Areas of particular interest and expertise include Cold War Studies, sustainable development, heritage, and the environment.

Comments

  1. Antonio batista says

    February 12, 2014 at 9:58 am

    Maybe we can talk about my family ,batista history in America ,the new era

  2. Lisa Reynolds Wolfe says

    February 12, 2014 at 11:04 am

    I’m just not able to speak with everyone who wants to speak with me one on one Antonio. But I’d love to hear your thoughts if you want to e-mail me. I’m at lisa@coldwarstudies.com.

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