In a speech showing no regard to Cuban’s historical sensitivities, Trump announced from Miami that he was “canceling the last administration’s completely one-sided deal with Cuba.” By that he meant reversing from Obama’s policy of engagement with Cuba to the old sanctions-based approach. The decision has been extensively criticized, from both the left and the right of the political spectrum, in Austrian-economics outlets and on Cuba’s socialist state media. Even some Republican members of Congress opposed and distanced themselves from this policy, and The American Conservative said Trump was reversing to a “failed,” “brain dead” policy which “will end up strengthening [Castro].”
The stated goal of the policy is to enforce compliance with the Embargo and the tourism ban, take a tougher stand on human rights abuses in the island, and to contribute to the economic, political empowerment of the Cuban people. Despite all the Cold War-style rhetoric in his speech, Trump is not actually “canceling” the whole deal with Cuba. According to the White House policy fact sheet, the embassies will remain open, maintaining diplomatic relations between the two countries, and Cuban-Americans’ travel and remittances are not impacted by the policy. As American University professor William LeoGrande recently put it, the plan is a “compromise between Cuban-American hard-liners’ demands that he reverse every aspect of Obama’s opening, and the pleas of U.S. businesses that he not shut them out of the Cuban market.”
However, the new policy approach will not exactly economically empower the Cuban people, since Cuban private sector entrepreneurs will be hit the hardest by a key policy change—the enhancement of the travel ban for American citizens. While Americans can still travel to the island in groups through a licensed tour company, prohibiting travel under the individual people-to-people license is likely to reduce the number of American visitors—the same citizens that Paul Ryan once praised as “our best ambassadors” of democratic values—which will result in the opposite of the intended policy goal.
Cuban Entrepreneurs Will Take The Hit
The more immediate effects of Trump’s measures will hit Cuban private businesses in the tourism industry. A recent survey found American travelers are directly supporting Cuban entrepreneurs economically. According to the survey, 76 percent of American visitors stayed at casas particulares (privately-owned houses), 99 percent ate at privately-owned restaurants, 85 percent traveled in private taxis, and 86 percent bought art, crafts, or music from independent artists. As a result of a lower number of American visitors, we can expect Cuban Airbnb hosts—Cuba is Airbnb’s “fastest-growing country…with over 22,000 listings,” bar and restaurant owners and their employees, taxi drivers, etc. to see their incomes reduced. This hurts the very same people the policy claims to “empower.”
In the first half of 2017, Cuba received some 285,000 American visitors, an increase of 145 percent with respect to the same period in 2016. As a result of the enforcement of travel restrictions, the number of American visitors and the economic support they provide to the private sector could be greatly reduced. Cuban economist Pedro Monreal estimates direct losses to the Cuban private sector on the range of $14.7 to $20.8 million, in the second half of 2017 alone—and not including the spillover or multiplier effect that the private sector’s incomes may have in Cuba.
Additionally, the language in the regulations expands the definition of Cuban government officials ineligible to receive remittance payments from the U.S, which could potentially exclude a million Cubans from receiving remittances. These private transfers—typically to family members—are the lifeblood of the Cuban private sector economy, both as one of the main sources of funds for entrepreneurs to invest in their businesses and of income for national consumers. Thus, restricting these transfers will affect the standard of living of remittance recipients and also severely obstruct the development of a vibrant private sector on the island.
Cuba’s External Debt Commitments
Cuba has made efforts to renegotiate its outstanding external debt—on which the government defaulted in the 1980s—and to resume servicing its obligations in order to regain access to international finance. President Castro has already taken steps to improve the country’s creditworthiness by promising to honor the commitments resulting from agreements reached during the renegotiation of debt owed to other governments and private sector creditors. The most important agreement was with the Paris Club and its Group of Creditors of Cuba, in December 2015. The Group derogated the accumulated interests and brought down the total stock of debt from $11.1 billion to $2.6 billion—the original principal, to be paid over a period of 18 years. The first installment was already paid in October 2016, amounting to some $40 million. However, by depriving the Cuban government of foreign-currency income from the tourism industry, Trump might also be damaging the ability of the government to repay a debt owed to a number of U.S. ally countries. Moreover, damaging Cuba’s creditworthiness also affects the possibility of extending Cuba credits for the purchase of U.S. agricultural commodities, which is key to make U.S. exports more competitive vis-à-vis other foreign suppliers, and would provide the “greatest” boost to agricultural exports to Cuba.
Back to Cold War Politics amid Recession and Economic Reforms
The Cuban government had been implementing austerity for the past six years as part of a process to “update” Cuba’s economic system by reducing the role and size of the state in the economy. This process included tight controls over fiscal expenditures and massive layoffs from the state economy. For example, Cuban official statistics show that from 2010 to 2015, government employment was reduced at a rate of 117,000 jobs a year; removing around 585,600 jobs from the economy in that period. The assumption was that those workers would be absorbed by an expansion of the private and cooperative sectors—which indeed increased their ranks by 461,000 jobs, around 79 percent of the reduction in government employment. Thus, Trump’s measures will be affecting the most dynamic job-creator sector of the Cuban economy.
This comes at a time when Cuba is trying to shake off an economic recession from last year—when GDP contracted 0.9 percent—and is beginning to make payments to its international creditors for the first time in more than two decades. Thus, Trump’s measures do not only jeopardize the expansion and profitability of the private sector, it also threatens the economic and social development of the nation, in general, and, in particular, the ability of the leadership to successfully restructure and revitalize the economy so that it works for the many—while at the same time escaping a looming recessionary episode and fulfilling external debt commitments. All of which, again, will have a disproportionately negative effect on the Cuban people.
Cuba: Caught-up Between “Trumpian” Politics?
The decision to roll back the policy of engagement with Cuba once again shows Trump’s frequent inconsistencies. This policy is not about putting America first, as it hurts American companies doing business with Cuba and restricts the right of U.S. citizens to travel freely. It is not about human rights, as Trump deals with a number of countries with abysmal human rights records—e.g. Saudi Arabia, Turkey, Philippines. And, it is not about economically empowering the Cuban people, as they will be the first to feel the effects of a worsening economic environment, standing to lose some $21 million this year. Instead, this foreign policy seems to be all about American internal politics. About the vote Trump needed from Miami’s Rep. Mario Díaz-Balart for the healthcare bill to pass Congress. About renting Marco Rubio’s loyalty during the Senate Intelligence Committee’s hearing of former FBI Director Comey. And, it is about Trump’s crusade to destroy all of President Obama’s signature policies—whether it is climate change, health care, labor laws, or Cuba.
I love the Minskys but this is a phenomenally short-sighted and naive article. 99% of the money invested into Cuba goes directly into the regime’s pocket, which it then uses to fuel oppression. There are no “small businesses” in Cuba, to think otherwise is hilarious naive. It is interesting that every anti-embargo argument talks numbers, but doesn’t address the fact that during Obama’s era human rights abuses sky-rocketed.
In 2014, former President Obama announced that the US government would unthaw diplomatic relations, ease restrictions on travel and commerce with the communist regime. In exchange for these monumental concessions, the Cuban government released 53 political prisoners (they imprisoned hundreds more almost immediately after), allowed visits to the island by the International Committee of the Red Cross and other NGOs, while promising to oppress its people less. The deal has been a sham perpetrated on the Cuban people.
In 2013, the Cuban Commission for Human Rights and National Reconciliation — an independent human rights group — reported more than 3,600 cases of arbitrary detention. In 2014, the CCDHRN documented more than 7,188 cases of arbitrary detention. In 2015, the CCDHRN reported more than 6,200 cases of arbitrary detention. However, in the same year on August 9th, just days before former US Secretary of State John Kerry was to attend the opening ceremony of the US Embassy in Havana, at least 90 people were arrested and detained. Among them were 50 Ladies in White, dissedents who protest by silently attending Catholic Mass on Sundays dressed in white, while holding photos of political prisoners. In 2016, the CCDHRN reported 9,940 arbitrary detentions — this is the highest figure since 2010. It is important to note that there is a disturbing consensus among watchdog organizations like the CCDHRN: the number of political prisoners is higher than can be accurately documented because of the nontransparent nature of the regime.
Despite the easing of economic and political restrictions, the communists stepped up their campaign against human rights, while the US stood awkwardly in the room doing nothing. What leverage did we have? We had already given the oppressor everything that they wanted, there were no more chips to bargain with.
If decades of trade with Cuba between Latin America and Canada have only enabled the communist regime, it stands to reason Obama’s misguided lifting of sanctions wouldn’t benefit the Cuban people in the long run either.
The left is asking us to believe that Cuba was planning on dropping communism once Raul Castro stepped down, but the uptick in dissident suppression and human rights abuses is indicative of a regime that has no intention of relinquishing its hegemony over the Cuban people.
By making economic and political concessions to Cuba while receiving absolutely nothing of substance in return, we undermined years of activism by giving the communist regime a break that came at no political or ideological cost to them. The communists are still oppressing their people, we just gave them a way to fund it more effectively through tourism and investments.
This is precisely what Cubans at home and in Havana tried to warn us about, but in trademark arrogance, Obama and his sycophants believed that they knew better than Cubans, they knew better than the victims of communism. Elizardo Sanchez, the director of the CCDHRN explains the reality of appeasing communist dictators,
“Neither President Obama, nor the Cuban people, expect spectacular changes, these kinds of regimes are repressive. It’s necessary to maintain their power. So no matter what Obama says or does, it’s impossible to put a good face on the human rights situation here in Cuba.”
In the best case scenario, we would create a regime similar to China in Cuba: fascist, undemocratic, and oppressive, but open to foreign investments.
Cuban-born author, journalist and columnist Carlos Alberto Montaner writes for the New York Times,
Cuba systematically engages in undermining the interests of the United States. It is an ally of Iran, North Korea (to whom it furnishes war matériel), Russia, Syria, the FARC terrorists in Colombia and Venezuela. The F.B.I. recently warned that Cuban intelligence is trying to recruit people in the academic world as agents of influence. It once infiltrated them into the Pentagon and the State Department; today, they are in prison. The Cuba dictatorship continues to violate human rights and shows no intention to make amends.
The small economic changes it has made are directed at strengthening the regime. Why reward that behavior?
Despite a dubious survey that the left points to as proof of a supposed paradigm shift among Latinos —alleging that they want sanctions completely abolished —perhaps we should look to the fact that year after year, millions of Cuban-Americans and their children have perennially supported politicians who uphold sanctions and the embargo. Perhaps this is because they know that any concessions to the communist regime that do not come with monumental political or ideological change, means concessions that will only benefit the oppressor.
Freedom is not won by conceding to tyrants — though you seem to believe otherwise.