HAVANA (AP) — The Obama administration has approved the first U.S. factory in Cuba in more than half a century, allowing a two-man company from Alabama to build a plant assembling as many as 1,000 small tractors a year for sale to private farmers in Cuba.
The Treasury Department last week notified partners Horace Clemmons and Saul Berenthal they can legally build tractors and other heavy equipment in a special economic zone started by the Cuban government to attract foreign investment.
Cuban officials already have publicly and enthusiastically endorsed the project. The partners said they expect to be building tractors in Cuba by the first quarter of 2017.
“Everybody wants to go to Cuba to sell something and that’s not what we’re trying to do. We’re looking at the problem and how do we help Cuba solve the problems that they consider are the most important problems for them to solve,” Clemmons said. “It’s our belief that in the long run we both win if we do things that are beneficial to both countries.”
The $5 million to $10 million plant would be the first significant U.S. business investment on Cuban soil since Fidel Castro took power in 1959 and nationalized billions of dollars of U.S. corporate and private property. That confiscation provoked a U.S. embargo on Cuba that prohibited virtually all forms of commerce and fined non-U.S. companies millions of dollars for doing business with the island.
Letting an American tractor company operate inside a Cuban government facility would have been unimaginable before Presidents Barack Obama and Raul Castro declared on Dec. 17, 2014, they would restore diplomatic relations and move to normalize trade, travel and other aspects of the long-broken bilateral relationship.
Since then, Obama has been carving exceptions into the embargo through a series of executive actions, and his administration now says they allow U.S. manufacturing at the Mariel port and special economic zone about 30 miles west of Havana. One exception allows U.S. companies to export products that benefit private and cooperative farmers in Cuba. Berenthal and Clemmons say they will sell only to the private sector.
The Obama administration says it is eager to make the opening with Cuba irreversible by any future administration. Since the start of the year, U.S. and Cuba have made a series of announcements that appear designed partly to create a sense of unstoppable momentum in their new relationship.
Cuba announced late last month it would more than double the number of public Wi-Fi access spots to more than 100 across the country this year and bring broadband Internet to a small number of Cuban homes, where it is currently illegal. Obama said in 2014 that Castro had promised to increase Cubans’ access to the Internet as part of detente.
On Saturday, Cuba announced it had returned a U.S. Hellfire missile it said was mistakenly shipped to Havana from Paris in 2014. On Tuesday, Cuba’s Transport Minister and the U.S. Secretary of Transportation will sign a deal authorizing the first regularly scheduled commercial flights between the U.S. and Cuba since shortly after the 1959 revolution.
The Oggun tractor plant, named after a god in Cuba’s syncretic Santeria religion, will assemble commercially available components into a durable and easy-to-maintain 25-horsepower tractor selling for less than $10,000, Clemmons and Berenthal said. The men believe they can sell hundreds of the tractors a year to Cuban farmers with financing from relatives outside the country and to nongovernment organizations seeking to help improve Cuban agriculture, which suffers from low productivity due mostly to excessive control of both basic supplies and prices by an inefficient, centrally planned state bureaucracy.
“I have two countries that for 60 years have been in the worst of terms, anything I can do to bring to the two countries and the two people together is tremendously satisfying,” said Berenthal, a Cuban-born semi-retired software engineer who left the country at age 16.