At the Manhattan headquarters of the Council on Foreign Relations, a half-dozen titans of U.S. industry joined Cuban President Fidel Castro at a formal supper on Oct. 21. That afternoon, demonstrators had clashed near the U.N. over the centerpiece of U.S. policy toward Cuba, the 35-year trade embargo. But the corporate chieftains weren't fazed. "The embargo has been a total failure," declared Archer Daniels Midland Co. Chairman Dwayne O. Andreas. "It ought to be ended."

In his five-day visit to New York, Castro, often sporting business suits instead of his customary fatigues, met with more than 200 U.S. business executives. It was a remarkable whirlwind courtship, and not just for the sheer volume of capitalist brass. For decades, U.S. companies, leery of boycotts and denunciations by hard-liners, have left Cuba policy to politicians and Cuban exile lobbies. Now, some U.S. chieftains are making known their displeasure with U.S. policy--and they're starting to be heard.

On Oct. 19, the Senate passed a bill sponsored by Representative Dan Burton (R-Ind.) and Senator Jesse Helms (R.-N.C.) to tighten the embargo. Missing in the legislation, though, was a key provision that would have allowed Cuban-American owners of property expropriated by Castro in 1960 to pursue claims in U.S. courts against foreigners buying stakes in their Cuban property. U.S. businesses had lobbied against the provision, which would have diluted their more than $5 billion in claims.

The gutting of the Senate bill also heartens execs opposed to the embargo, which has kept U.S. companies on the sidelines as foreign rivals carve out shares of the Cuban market. "The defeat of the main provision in the Helms bill is so stunning that this may give us some courage," says Peter Blyth, president of Radisson Hospitality International, who favors easing the embargo and is eyeing tourism opportunities.

TELECOM DEAL. Indeed, there is a growing conviction among some executives that current U.S. policy is counterproductive. "I don't believe isolating Castro has worked for 35 years," says Stephen J. Green, chairman of Samsonite parent Astrum International Corp. Howard M. Dean, head of Dean Foods Co., says the U.S. should allow food shipments even before settling issues like compensation for expropriated property and human rights--and is "really ready" to begin sending milk from his Miami plant.

The flow of foreign business investment into Cuba fuels U.S. executives' frustration. Foreign companies have invested close to $2 billion since 1989 in tourism, mining, and other industries. While four U.S. telecom companies carry long-distance calls to Cuba, for instance, they are shut out of bigger local deals. Instead, Mexico's Grupo Domos and Italy's Stet International have a monopoly on domestic phone service, in partnership with Cuba's phone company.

Meanwhile, there are signs that the island's economic slide, a one-third decline in GDP touched off by the 1989 cutoff of Soviet support, has bottomed out. The Cuban peso, which sold on the black market at 150 to the dollar in April, 1994, has climbed to 25. Farmers markets have made food more widely available. If Cuba's economy improves, it's likely to attract still more non-U.S. investors. "It's too late already" to recoup some of the business lost to Canadians, Mexicans, and Europeans, says Andreas. But better late, he adds, than never.


ARCHER DANIELS MIDLAND Chairman Dwayne Andreas, who met with Castro in New York on Oct. 21, strongly opposes the embargo, which he derides as "a total failure." He predicts it will be eased early in the next U.S. Presidential term.

CABLE NEWS NETWORK President Tom Johnson says Cuba is willing to let CNN and the Associated Press set up news bureaus in the country. The Clinton Administration is holding out for wide access for U.S. news organizations.

TANDY CEO John Roach thinks that as long as Castro is in control, a thaw in U.S.-Cuba relations is unlikely. "Castro has made it very clear that he does not plan to change his ideology and that he plans to remain in office," Roach says.

RADISSON President Peter Blyth and other tourism executives favor easing travel restrictions as a first step to better relations. He sees opportunities operating hotels, travel services, and cruise ships in Cuba.


Before it's here, it's on the Bloomberg Terminal. LEARN MORE