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    The quiet man who controls Cuba’s big money

    The quiet man who controls Cuba’s big money
    BY MICHAEL SMITH, OCTOBER 05 2015, 05:59

    HAVANA’s redevelopment is in progress. Near El Floridita, where Ernest
    Hemingway once knocked back daiquiris, the hulking Manzana de Gómez
    building is being transformed into a five-star hotel.

    Stylish boutiques sell perfume and stereos. Inside an old warehouse is a
    microbrewery teeming with people drinking lager made in huge steel tanks
    imported from Austria.

    What isn’t immediately apparent is that all of this — and anything else
    that stands to make money in Cuba — is run by a man little known outside
    the opaque circles of Cuba’s authoritarian regime.

    He is chairman of the largest business empire in Cuba, a conglomerate
    that comprises at least 57 companies owned by the Revolutionary Armed
    Forces and operated under a rigid set of financial benchmarks developed
    over decades. It’s a decidedly capitalist element deeply embedded within
    socialist Cuba.

    This is Luis Alberto Rodriguez. For the better part of three decades,
    Rodriguez has worked directly for now Cuban President Raúl Castro. He’s
    the gatekeeper for most foreign investors, requiring them to do business
    with his organisation if they wish to set up shop on the island.

    IF AND when the US removes its half-century embargo on Cuba, it will be
    this man who decides which investors get the best deals.

    Rodriguez doesn’t just count Castro as a longtime boss. He’s family.
    More than 20 years ago, Rodriguez, a stocky, square-jawed son of a
    general, married Deborah Castro, Raúl’s daughter.

    Rodriguez’s life is veiled in secrecy. He’s rarely been photographed or
    quoted in the media. He and the other Cuban officials in this story
    declined multiple requests for comment.

    In a country where capitalism was treated as a subversive enemy force
    for a half-century, Castro has been cautiously opening the island to
    private enterprise since he effectively succeeded his brother Fidel
    Castro as president of the country in 2006.

    There are now 201 permitted types of private businesses (restaurants and
    bed and breakfasts are the biggest categories), employing a million
    people, or a fifth of the Cuban workforce, according to Omar Pérez, a
    professor at the University of Havana and a researcher at the
    influential Centre for the Study of the Cuban Economy.

    Castro has legalised the sale of homes and cars, scrapped travel
    restrictions, and allowed private farming and co-operative businesses.
    It’s now legal for Cubans to stay in hotels, and 2.6-million people own
    cellphones, up from close to zero a decade ago.

    But Castro has kept the big-money industries in the hands of the state,
    and much of it is managed by his son-in-law.

    Rodriguez’s Grupo de Administración Empresarial (Gaesa) runs firms that
    account for about half the business revenue in Cuba, says Peréz. Other
    economists say it may be closer to 80%.

    Gaesa owns almost all of the retail chains in Cuba and 57 of the mainly
    foreign-run hotels from Havana to the country’s finest Caribbean
    beaches. It has restaurant and petrol station chains, rental car fleets
    and companies that import everything from cooking oil to telephone

    Rodriguez is also in charge of Cuba’s most important base for global
    trade and foreign investment: a new container ship terminal and 465km²
    foreign trade zone in Mariel.

    Cubans talk constantly about the changes they’ve seen. But for a
    majority of people, Castro’s reforms haven’t delivered that most basic
    thing: a living wage.

    Monthly salaries average just 584 pesos, or about $24, government
    figures show. That’s what it costs to buy 2kg of chicken breasts, a
    couple of bags of rice and beans, and four rolls of toilet paper in one
    of Gaesa’s Panamericana supermarkets.

    Families still receive food rations: 250g of chicken, 10 eggs, one pack
    of spaghetti, 500g of black beans and 250ml of cooking oil per person
    per month.

    Since December 17, when Castro and US President Barack Obama announced
    plans to normalise US-Cuban relations, the country has been abuzz with
    talk of money.

    Alcibiades Hidalgo, 70, who spent decades working in Cuban state media
    and government posts, is part of a network of Cuban defectors and
    self-described exiles in Miami engaged in a cottage industry of sorts —
    that of forecasting Castro’s next move.

    In April 1981, Castro called Hidalgo into his sprawling office on the
    fourth floor of the headquarters of the Revolutionary Armed Forces. He
    directed Hidalgo to join a handful of powerful advisers who, among other
    things, were going to overhaul the economy.

    One of the most powerful advisers was Julio Casas, an accountant who
    fought under Castro’s command during the revolution. Castro put Casas to
    work building what would become Gaesa.

    Casas’s top aide was Rodriguez, who would sit quietly in meetings with
    Castro, talking only when addressed, Hidalgo recalls.

    Casas built Gaesa around wringing revenue from the military’s properties
    and assets. Soldiers planted crops at bases. Work brigades built tourist
    hotels. Military planes were refitted for domestic passenger flights for
    Gaesa’s ad hoc civilian airline, Aerogaviota.

    As Casas started new businesses, he put Rodriguez in as manager.

    “Luis Alberto was not very sophisticated,” says Hidalgo, who rose to
    become Castro’s chief of staff. “But he was an efficient manager who was
    cold and calculated in his pursuit of power.”

    In 2002, Hidalgo fled Cuba at night in a speedboat after being sidelined
    and then blacklisted for almost a decade in one of the regime’s
    political purges.

    WITH the collapse of the Soviet Union in 1991, Cuba lost its economic
    patron, and the country was plunged into a crushing four-year
    contraction known as the Special Period.

    Cubans endured shortages of food and medicine. Jobs disappeared. The
    sugar industry, which had long supplied the Soviets at inflated prices,
    fell apart. In 1993, Cuba’s gross domestic product shrank 14.9%,
    according to the World Bank.

    Fidel Castro responded with schemes to lure foreign money into Cuba. He
    legalised the possession of hard currency. He allowed people to start
    private businesses, including family restaurants.

    Big change came to Gaesa as well. Its tourism arm, Grupo de Turismo
    Gaviota, cut deals with international chains, most notably Spain’s Meliá
    Hotels International and Iberostar Hotels & Resorts, to build and run
    hotels in Varadero, a 20km stretch of white, sandy beach two hours east
    of Havana by car.

    By the late 1990s, the Castros had found their saviour in Hugo Chávez,
    who was elected president of Venezuela on promises to emulate
    Cuban-style socialism. He flooded Cuba with free oil — up to 115,000
    barrels a day.

    Cuba also cut lucrative deals with other leftist leaders, including
    Brazil’s Luiz Inácio Lula da Silva, to send tens of thousands of medical
    doctors to work abroad. Under the terms of those deals, many of which
    are still in place, the Cuban government kept up to 90% of the doctors’

    After Chávez died of cancer in March 2013, Venezuela slid into an
    economic crisis. The country slashed oil shipments to Cuba — some
    estimates say by a third or more. Cuba once again needed cash.

    “Raúl Castro has to open Cuba up to the world, to the capitalist,
    free-market world. He has no choice,” says Emilio Morales, a former
    marketing executive at Cimex, a big conglomerate later folded into
    Gaesa. Morales, too, now lives in Miami, where he runs the Havana
    Consulting Group.

    According to his research, people made 650,000 trips to Cuba from the US
    last year, taking advantage of Obama’s and Castro’s relaxed travel

    “They brought $3.5bn of goods with them in their suitcases,” he says.
    And Cuban-Americans sent $3.1bn to relatives in Cuba. “It’s a huge impact.”

    CUBA is a place both frozen in time and moving swiftly towards a future
    in which private enterprise will be a bigger part of life. Vast areas of
    Havana are little changed from 1959, when Fidel Castro’s bearded
    guerrilla fighters marched into town.

    As for the fast-arriving future, there are Afro-Cuban jazz clubs, swanky
    private restaurants, and boutique hotels.

    In April 2011, the Cuban Communist Party’s Sixth Congress approved 313
    economic and social policy guidelines of the party and the revolution.
    By then, Castro had already moved Cuba’s most profitable state companies
    under Gaesa and Rodriguez.

    More recently, Rodriguez was given the green light to take over
    Habaguanex, the state company that owns the best commercial properties
    in Old Havana, including 37 restaurants and 21 hotels.

    Rodriguez rarely deals with clients, apparently preferring to delegate
    to the managers who run Gaesa’s collection of companies.

    He seemed to be more hands-on in Mariel, where he was entrusted with
    building the $1bn megaport and surrounding free-trade zone. He regularly
    assembled his engineers for progress reports.

    On January 27 last year, the port was ready, and dignitaries took their
    seats under a brilliant sun for the formal opening.

    On the stage was Castro, Venezuelan leader Nicolás Maduro, and Brazilian
    President Dilma Rousseff. The port, a collection of more than a dozen
    big cranes, a 700m-long pier designed to handle the world’s biggest
    container ships, a highway and a rail line to Havana, had been built by
    Brazilian construction company Odebrecht. It was financed at subsidised
    rates by Brazil’s state development bank.

    Rousseff, smiling, walked up to the podium and started her speech with
    the customary naming of dignitaries in the crowd.

    She thanked Castro and unnamed Cuban ministers, foreign executives and

    And just before she leaned into her short address, she thanked one more
    person by name: Gaesa chairman Luis Alberto Rodriguez.

    Source: The quiet man who controls Cuba’s big money | Americas | BDlive