From the December 1997 issue of Entrepreneur

For many U.S. entrepreneurs, forbidden fruit lies just within reach, 90 miles south of Florida. In recent years, the Republic of Cuba has attracted interest from myriad businesses worldwide--perhaps because of its highly qualified work force, near-perfect literacy rate, improving economy and strong desire for foreign products and services.

But for all intents and purposes, this island country is off-limits to businesses in the United States. Today, nearly 40 years after the United States ended diplomatic relations with Castro-controlled Cuba, the country is saturated with foreign investments and involved in commercial dealings with more than 100 countries. And although the United States is conspicuously absent, the U.S. Department of the Treasury's Office of Foreign Assets Control is standing its ground. "The basic goal of the sanctions is to isolate Cuba economically and deprive it of U.S. dollars," declares an official statement released by the department.

Despite stringent laws and numerous restrictions, however, some business opportunities with Cuba are authorized for U.S. individuals. American businesses can invest in foreign companies that conduct business in Cuba as long as they don't earn the majority of their revenue there and provided the U.S. investor only holds a minority stake. While permitted, exporting and importing informational materials such as publications, films, artwork and music is arduous. Lincoln Cushing and partner Dan Walsh learned that lesson the hard way: Their business, Berkeley, California-based Cuba Poster Project, which imports Cuban cultural and revolutionary images to create notecards, T-shirts and other items, encountered its share of obstacles when it started in 1986.

"[Although] it was considered legal to import these materials as far as the United States was concerned, it wasn't legal to travel there to make the arrangements," says Cushing, who was born in Cuba. So the partners sued the Treasury Department, citing unfair restriction of trade--and won. Today, they're two in a limited pool of U.S. residents who can legally enter Cuba. Not everyone goes to such great lengths: Of the 75,000 U.S. citizens who traveled to Cuba in 1996, 15,000 did so sans authorization.

"[Entrepreneurs] make up the vast majority of the unauthorized travelers to Cuba," says John Kavulich, president of the U.S.-Cuba Trade and Economic Council Inc., a nonprofit, nonpartisian business organization based in New York City. "Historically, entrepreneurs are always the first troops to go into any new market before the big companies go in."

Socialist Cuba, for its part, is undergoing a dynamic economic transformation, one that for two years has fostered the development of Cuban entrepreneurship. According to a recent study by Philip Peters of the Alexis de Tocqueville Institution, a public policy research organization in Arlington, Virginia, as of last December, Cuba's legally self-employed population totaled 180,000--compared to only 10,000 in 1993. Peters also estimates, however, that just as many entrepreneurs operate in the shadows.

Americans eyeing Cuba must tread carefully, especially since the United States has tightened the embargo in recent years. The Libertad Act, commonly known as Helms-Burton, was signed in March 1996 after Cuba illegally shot down two unarmed American civilian aircraft. The act, among other things, entitles U.S. nationals to sue foreign businesses that conduct business with Cuba on property seized from U.S. citizens. But the promise of Cuba's untapped market still tempts American entrepreneurs, whose mother country once claimed 85 percent of Cuba's pre-Revolution visitors as her own.

Contact Sources

Alexis de Tocqueville Institution, (703) 527-7235, peters@dgs.dgsys.com

Cuba Poster Project, (510) 845-7111, http://www.zpub.com/cpp

Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Ave. N.W., Washington, DC 20220

U.S.-Cuba Trade and Economic Council Inc., http://www.cubatrade.org