HAVANA When ailing Fidel Castro resigned last month, stock prices of U.S. companies that stand to benefit from more business with Cuba rallied.
Six days later, those shares retreated as his brother Raul Castro, Cuba's first new leader in 49 years, was installed and picked old-guard revolutionaries to help him govern.
That dashed forecasts of a rapid transition from communism to capitalism and the end to the embargo the United States has kept against Cuba since 1962, which bars American investment and travel to the island.
"Anyone who thinks there will be a 'for sale' sign up by a bankrupt Cuban government is wrong," said the manager of a Canadian company, who spoke on condition of anonymity because of the sensitivity of doing business in Cuba.
As Raul Castro moves to raise living standards, welcomes new foreign investment in mining, oil, tourism, possibly agriculture and even ethanol, opportunities will open up, said the executive, but only for non-U.S. companies.
European, Latin American, Israeli and Arab investors already have a foot in the door in Cuba in the cigar, rum, citrus and hotel industries. With no American competition to worry about, they are looking at a windfall when U.S. sanctions are eventually lifted.
That day is still far off, even if a Democrat wins the presidential elections in November, say Cuba watchers, who see no action by the U.S. Congress until Havana releases jailed dissidents and reforms its one-party state.
Raul Castro has vowed to maintain Cuba's socialist system and there are no signs that he intends to follow the free-market path of China and Vietnam.
However, he has already taken some small steps. Within weeks of formally taking office, his government has moved to allow Cubans to buy consumer goods that were banned until now, such as computers and DVD players.
The increased consumption longed for by Cubans will benefit European companies already producing goods in Cuba, such as ice cream and soft drinks by Nestle, beer by the world's second largest brewer InBev, soap and shampoo by Anglo-Dutch giant Unilever, and cigarettes by Brazil's Souza Cruz, a subsidiary of the British American Tobacco group.
Allowing Cubans to buy mobile phones and have more access to Internet would boost sales for the state telecom company ETECSA, where Telecom Italia has a 27 percent stake.
Even Austria's Red Bull GmbH has set up in Cuba, selling its energy drink to young Cubans who can afford the silver cans.
MOJITOS, U.S. PENALTIES
Foreign businessmen have spent years struggling to make money in Cuba's inefficient state-run economy since it opened up to foreign investment and tourism after the 1991 collapse of the Soviet Union.
Many lost their shirts trying to do business with the communist bureaucracy and were squeezed out or failed to collect payments. Others had equipment stolen in joint-ventures that folded. Some small ventures were just a pretext for businessmen to enjoy a life of mojito cocktails and women in the tropics.
Foreign firms have had to endure sanctions by Washington for doing business in Cuba. A dozen directors of Canada's Sherritt International are still banned from entering the United States under the 1996 Helms-Burton law.
That did not stop Sherritt investing $1.5 billion in Cuba's nickel industry and in coastal oil and gas production.
Another successful venture penalized by the United States was BM Group, Cuba's biggest citrus exporter, co-founded by former Israeli intelligence operations chief Rafi Eitan, who has divested since becoming Israel's minister for pensioners' affairs.
The BM Group became Cuba's biggest commercial real estate developer with the building of Havana's main business center, the Miramar Trade Center, which is now owned by Ceiba Finance, a $100 million growth fund registered in the Channel Islands.
Companies making Cuba's most famous exports, cigars and rum, are banking on gaining access to the U.S. market one day.
French spirits giant Pernod-Ricard last year built a distillery for its Havana Club joint venture to make dark rum that is partly aimed at future sales to the world's largest rum market, the United States. Havana Club managers are confident that by that time they will have won a U.S. trademark dispute with their giant rival Bacardi.
Cigar maker Habanos, half owned by Britain's Imperial Tobacco since it took over Franco-Spanish cigarette manufacturer Altadis, is expected to double sales the day American smokers can buy its premium hand-rolled cigars.
Lifting the travel ban could send millions of Americans to Cuba, reviving its stagnant tourist trade and filling beach resort hotels run by foreign firms such as Spanish hotel chain Sol Melia, which manages 24 of them.
The Qatari Diar Real Estate Investment Company last year began building a $75 million 200-room 5-star hotel on Cayo Largo del Sur, Cuba's most beautiful key.
State-owned Dubai Ports World, which relinquished control over six U.S. ports in a political firestorm in 2006, has agreed to study the building of a $250 million container terminal in the Cuban port of Mariel by 2012. Proximity to the United States could make the port a hub for shipping cargo to the United States, which has limited dock capacity.
Meanwhile, U.S. interests have to wait until the embargo is lifted, said Thomas Herzfeld, who runs a fund that invests in companies likely to gain from the opening up of U.S. trade with Cuba, such as cruise line companies based in Miami.
Shares of his closed-end Herzfeld Caribbean Basin Fund soared 28 percent to an intraday high of $9.50 on February 19, the day Fidel Castro announced his retirement, but then fell back when it became clear that reforms would be gradual under his brother.
Herzfeld is optimistic the U.S. embargo will go some day soon and said the U.S. Congress could start easing sanctions if Raul Castro frees Cuba's political prisoners.
"Or it could be like the Berlin Wall at the end of communism. Sometimes these things happen much more quickly than people think."
(Reporting by Anthony Boadle; Editing by Eddie Evans)