‘Godfather II’ Explains Why Dominicans Worry Over U.S.-Cuba
* The Caribbean’s biggest economy stands to lose the most from competition with Havana for American business and tourism
Why is the Dominican Republic worried about improving ties between the U.S. and Cuba? Just watch the movie “Godfather II.”
The scenes of Mafia don Michael Corleone driving through the streets of Havana on the eve of the Cuban revolution were shot in the Dominican capital, Santo Domingo. The cigars that made the Caribbean country the world’s top exporter often carry a label saying they were grown from “Cuban seed.”
With President Obama easing a five-decade-old embargo on Cuba, no nation in the Caribbean has more at risk than the Dominican Republic, the region’s biggest economy. Every U.S. tourist that visits a Cuban beach undermines the country’s position as the region’s top destination. Each time a Major League Baseball franchise holds out to sign a Cuban prospect means less cash for Dominican players, the largest single contingent of foreign-born players in the big leagues.
“The Cubans produce the same things that we produce,” said Arturo Martinez Moya, a former economist at the central bank who authored “Dominican Economic Growth: 1844-1950.” “Their development will be based on the same sectors as ours because we live on two identical islands.”
The island of Hispaniola, home to both the Dominican Republic and Haiti, is just 50 miles off the east coast of Cuba, separated by the Windward Passage. The former Spanish colonies both have populations of about 11 million people and a topography marked by mountain ranges, fertile lowlands and white-sand beaches.
With only the U.S. restricting travel, 3 million foreigners arrived in Cuba last year, according to the government. That made it the second-most-visited island in the Caribbean after the Dominican Republic, which attracted more than 5 million visitors.
That record helped the $61 billion Dominican economy expand 7.1 percent last year, the best performance in Latin America. Cuba’s economy was poised to expand 0.8 percent last year, Moody’s Investors Service said.
The opening of Cuba will probably take a bite out of the Dominican Republic’s domination as Americans flock to Cuba to see a country made famous by its 1950s-era automobiles and historic downtown, recalling a Caribbean of a bygone era.
“It’s a destination that people have heard about but still carries some mystery,” said Jorge Salazar-Carrillo, a professor of economics who studies Cuba at Florida International University in Miami.
Since the “Godfather II” days, Santo Domingo has been a reliable stand-in for Havana. Director Sydney Pollack’s 1990 film “Havana” and the 2005 film “The Lost City,” starring Andy Garcia, featured the streets of Santo Domingo in lieu of the Cuban capital.
When contacted by Bloomberg, officials at the Dominican Tourism Ministry cited comments by Minister Francisco Javier García in December, when he said that competition from Cuba is “nothing new” since the country has competed against its neighbor for tourists from Europe and Canada for decades.
Bond investors have also shrugged off the détente. Dominican dollar bonds have returned 13 percent since the Obama-Castro announcement Dec. 17, compared to a 6 percent gain for emerging markets, according to JPMorgan Chase & Co.’s EMBIG index.
The biggest threat from better U.S.-Cuba ties may be to Dominican cigars, a $500 million export industry. Cuban cigars have long been a valued commodity among aficionados. Before he signed legislation authorizing the embargo, President John F. Kennedy asked press secretary Pierre Salinger to buy as many Cuban cigars as possible. He received 1,200 Petit Upmanns on Feb. 6, 1962, Salinger recounted.
Today, the Dominican Republic is the world’s No. 1 producer of cigars, according to the country’s Export and Investment Center.
“We are going to see more competition for things like our cigars,” said Pavel Isa-Contreras, an economics researcher at the Technological Institute of Santo Domingo. “We could lose market share because the United States is the biggest importer of our cigars.”
Officials at the Association of Dominican Cigar Manufacturers didn’t respond to messages left by Bloomberg News.
To be sure, the embargo isn’t going away yet. As part of improving ties between the countries, Obama and Cuban President Raul Castro last month said they would work first to restore diplomatic relations. No breakthrough occurred when Assistant Secretary of State Roberta Jacobson visited the island.
February 2, 2015
Category: DR News |