Salinas' Sweet Deal With Castro Is A Bitter Pill For The U.S.

In the sun-dappled garden of the Mexican ambassador's residence in Havana, a smiling Fidel Castro gently chided Mexican President Carlos Salinas de Gortari for the brevity of his first-ever visit to Cuba--only six hours. "The Mexican president's ability to do things quickly is amazing," Castro told a gathering of Mexicans and Cubans. "This is the quickest official visit we've ever had. But it has been very fruitful."

That's for sure. Virtually overnight, Mexico has become Cuba's most important foreign investor. During Salinas' whirlwind visit on June 13, he and Castro clinched an eye-popping deal to sell 49% of Cuba's antiquated phone system to a Monterrey-based Mexican conglomerate, Grupo Domos Internacional, for $1.4 billion. That's nearly the estimated value of Cuba's 1993 exports. The deal hands over to the company Cuba's future telecom market. "What they're buying is a population of 11 million people who can't communicate [by phone]," says Tom Will, president of Intercom Corp., a Coral Gables (Fla.) consultant.

SIDESTEP. It's a lot more than a business deal. Salinas' personal appearance on the socialist island sent a strong message back home and to Washington: Mexico is still independent of the U.S. when it comes to foreign policy. With the North American Free Trade Agreement safely behind him, Salinas can reassert Mexico's political and economic ambitions in Latin America. And in effect, he is putting his considerable clout behind Cuba's campaign to sidestep the U.S. embargo. "We Mexicans believe the blockade doesn't resolve anything. It should be lifted," says Salinas.

While the U.S. is officially mum about the telephone deal, State Dept. biggies are annoyed. "All of these openings the Mexicans and others have made haven't generated a single improvement inside Cuba," insists one official. Representative Robert G. Torricelli (D-N.J.) wants the U.S. to "use all the pressure we can to dissuade" the Mexicans from doing business with Castro. "It's an almost shocking economic decision."

Mexico's up-and-coming moguls don't see it that way. For them, Cuba is a wide-open field for expanding their business empires. The Mexican government may even take a financial stake in Cuba's future: Mexpetrol, a joint venture with Pemex and other Mexican companies, may spend $100 million to resurrect Cuba's Cienfuegos oil refinery, the island's largest.

HARDSHIP. Some see the sweet phone deal as Cuba's way of thanking Mexico for its 34 years of unwavering diplomatic support. Only when Mexico embraced free-market policies in the mid-1980s did relations cool off. So eager was Salinas to clinch NAFTA that he even met in 1992 with Jorge Mas Canosa, leader of the anti-Castro Cuban American National Foundation, to dissuade him from campaigning against the free-trade pact.

Just how difficult times are in Cuba was clear the day of Salinas' visit, when a dozen people rammed a garbage truck through the gate of the German embassy in Havana seeking asylum. Others have camped out at the Belgian embassy for weeks. Recognizing the economic hardship that led to such actions, Mexican legislators recently voted to donate a day's pay to buy oil for energy-poor Cuba.

It was a symbolic gesture at best. But symbolism has paid off for Salinas as well as for Castro. When Fidel gave Carlos an abrazo, it was clear that the former champion of Latin American revolutionaries was more than ready to deal with Mexico's chief free-marketer. That message surely hit home in Mexico, where the Zapatista rebels just rejected a government peace proposal. For Salinas and Castro, it was a win-win day. For the U.S., it was a shutout.

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