* EU offers talks to Cuba on trade, investment accord
* Human rights could be obstacle to better ties
* Castro pursues pragmatic economic transition
By Robin Emmott
BRUSSELS, Feb 20 Eleven months before Barack
Obama's historic handshake with Raul Castro, Europe staged its
own show of friendliness with Cuba. While little noticed, this
gesture may end up doing far more to end the communist island's
It all happened one hot January day last year at an EU-Latin
America summit in Chile. Castro cheerily waved alongside
European Commission President Jose Manuel Barroso for the
official group picture and then, as the photo gathering broke
up, German Chancellor Angela Merkel shook his hand.
This was low key compared with when the U.S. and Cuban
presidents greeted each other on Dec. 10 after half a century of
hostility. But all this warmth at Nelson Mandela's memorial
service in South Africa has brought no radical change and the
U.S. trade embargo on Cuba, imposed in 1962, remains.
By contrast, the European Union decided last week to seek
negotiations with Havana on increasing trade, investment and
dialogue. This will mark their closest contacts after years of
tension about Cuba's human rights record, over which the EU
imposed its own sanctions until 2008.
While any accord will be modest, Havana said it would
consider the EU invitation to talks constructively. Castro needs
trading partners as he tries to ensure the survival of the Cuban
revolution, which his brother Fidel led, through a transition
from hardline communism to a more pragmatic model.
The gesture from Merkel, who grew up in the now defunct East
Germany, was all the more notable as her country - along with
fellow EU members Poland and the Czech Republic - has been
reluctant to deal closely with Cuba, partly out of a lingering
distaste for its own communist past.
Gianni Pittella, vice president of the European Parliament
who attended the Santiago summit, said the decision to seek
negotiations with Cuba had been a long process that gathered
pace in Chile. Europe's strategy is to encourage change.
"Besides trade and investment, I hope it will be possible to
begin a structured dialogue with Cuban civil society and with
those who support a peaceful transition on the island," said
Pittella, who also awarded the EU's human rights prize to Cuban
dissident Guillermo Farinas last year.
The proposed accord, said EU officials, would give Brussels
a bigger role in Havana's market-oriented reforms, position EU
companies for Cuba's transition to a more open economy and allow
Europe to press for political freedoms on the island.
The EU is already Cuba's top foreign investor but divisions
after the summit nearly ended the overtures before they had
After the EU's foreign policy chief Catherine Ashton
returned from Chile, the draft accord with Havana languished in
the European Council's red marble building in Brussels for
months, unable to gain the support of all 28 EU members.
Apart from the governments in Berlin, Warsaw and Prague,
Sweden also had misgivings about what they regard as Havana's
repression of political dissent.
"Four countries felt it was not yet the time," said one EU
official who declined to be named. "In the end, the majority was
able to convince them that negotiating with Cuba would be a more
effective way of bringing change."
What helped to change minds was Cuba's progress in
implementing its five-year plan since 2011 which has relaxed the
state's grip on the economy. This has been accompanied by a
relaxation of curbs on foreign travel and Internet use, as well
as a fall in numbers of political prisoners.
An accord with Cuba, which could be agreed by late next
year, had been the EU's goal since 1996, although what Brussels
is offering is modest for now and is only a starting point.
The launching of an EU-Cuba dialogue is being closely
watched in the United States where relations between the Obama
administration and Cuba have also grown more pragmatic lately.
But Washington remains wary of closer engagement for the
time being, and first wants Cuba to release an American
contractor, Alan Gross, jailed on charges of subversion.
The EU believes Cuba has the potential to become a dynamic
economy like the Dominican Republic, another Caribbean island
nation which once depended on sugar exports. It has diversified
into manufacturing via free-trade zones that attract investors.
Cuba's problem is that aside from nickel, cigars and rum, it
sells little to the outside world. Exports to the EU were worth
just 739 million euros ($1 billion) in 2012, barely up from a
Still, there are niches to be exploited. Seafood exports
have doubled over the past decade and Cuba is trying to attract
global shippers to its deep-water Mariel port near Havana.
While it is too early for the EU and Cuba to discuss trade
liberalisation, a similar accord with Central American states a
decade ago led to a deal giving them duty-free access to the
EU's 500 million consumers.
Human rights remain the biggest stumbling block. Ties with
Cuba were strained when Europe imposed the sanctions in 2003 in
response to the arrest of 75 dissidents. All were released into
exile later but the Human Rights Watch group says Cuba still
punishes dissent with beatings and threats of long-term
Diplomats say any serious violation of human rights during
negotiations would interrupt the talks.
Poland, the Czech Republic and Germany have insisted the
proposed accord set out steps that Cuba - the Western
hemisphere's only one-party state - must take to encourage
democracy. One EU diplomat said the document contained "our
strongest human rights language yet" in EU affairs.
EU negotiators still want to be pragmatic because progress
could unravel if pressure on Havana provokes a backlash,
especially in a country where sovereignty is fiercely defended
as a tenet of the 1959 revolution. Nevertheless, the issue
cannot be swept under the carpet.
"There will be some mention of human rights (in the proposed
accord). The Cubans are not going to get away from that," said
Paul Hare, a former British ambassador to Cuba.
If the European Union is being pragmatic, so is Castro.
EU officials read Havana's openness to an accord as
recognition by Castro - who replaced his ailing brother in 2008
- that Cuba cannot survive forever on its ideological ties with
leftist governments in Venezuela, Bolivia and Ecuador.
Cubans make a similar point. "Cuba is becoming more and more
realistic in searching for economic partners," said Carlos
Alzugaray, a former ambassador to the EU. "Policy will be
nuanced by this more pragmatic and realist approach."
Fidel learnt a harsh lesson about relying on a single ally
and donor when the Soviet Union's collapse in 1991 plunged the
Cuban economy into crisis.
Today, Venezuela is Cuba's biggest trading partner and
benefactor but serious economic and political problems there
mean Havana worries about losing its economic lifeline.
Ties with China are weak, even though both are run by
communist parties. Bilateral trade was just $1.8 billion in
2013, no more than China's trade with the Dominican Republic -
with which Beijing does not even have diplomatic relations.
"The feeling in Cuba is that they have to diversify their
allies," said another EU official. "After what happened with the
Soviets, the Cubans don't want to be let down again."