Cuba and the EU: Wary partners

Date: 15/03/03

Trade and the single party

THE countries of the European Union account for some 40% of Cuba's trade, as well as much of its foreign investment and many tourists. The EU provides the island's communist government with €15m ($16.5m) a year in development aid. The euro is legal tender at the island's main tourist resorts. To set the seal on what seems like a flourishing relationship, this week the EU opened new offices in a beautiful mansion in Miramar, Havana's least shabby neighbourhood.

But all is not sweetness between Cuba and Europe. Cuba wants to join the Cotonou Agreement, a preferential trade and aid pact with 78 former European colonies. The European Commission and the Cotonou countries have endorsed its application. But the EU's members are divided, because the agreement aspires to close political co-operation among its members, and Cuba remains a one-party state.

Since 1996, the EU has ruled out closer ties with Cuba until Fidel Castro's communist government takes steps towards democracy and repect for human rights. This has not happened. So Cuba is the only Latin American country with which the EU has no formal agreement for economic co-operation. The EU's new office in Havana will deal only with trade matters.

All of this angers Mr Castro. He says it is interference in Cuba's internal affairs, and dovetails with America's trade embargo against the island. In 2000, he broke off political talks with the EU and cancelled an earlier application to join Cotonou.

But over the past 18 months, contacts have been renewed. That is partly because Cuba's economy is again in trouble. A slump in tourism and the high price of imported oil have left Cuba short of foreign exchange. Last year, it defaulted on many short-term loans. Meanwhile, Europeans have watched as leaks spring up in the United States' trade embargo against the island. American companies now export food to Cuba, and are paid in cash. Some Europeans reckon closer co-operation might stave off American competition.

But only a unanimous EU vote can get Cuba into Cotonou. Proponents, such as Spain and France, argue that inclusion would increase the EU's political leverage with Mr Castro. Opponents, including Britain and Sweden, doubt this. A decision may not come until next year. As on so many things, the EU may find it hard to make up its mind.