This article analyses the significance of the March 2016 visit to Cuba by President Barack Obama, assesses changes in the bilateral relationship since December 17, 2014 (when Presidents Castro and Obama announced the resumption of diplomatic relations after 53 years of hostility), and considers the challenges ahead.
For three days in March, the world media lens was focused on Barack Obama, the first sitting US president in 88 years to set foot in Cuba. It was an extremely successful visit. His press conference with Cuban President Raúl Castro and his nationwide address were both broadcast live to the Cuban people. He met with dissidents and fledgling Cuban entrepreneurs, watched a baseball game with Castro, and even participated in a TV skit with one of Cuba’s top comedians.
But Obama’s trip was about more than show and show biz, or even cementing his foreign policy legacy. It was about charting a new and “respectful” future for relations between the world’s “closest of enemies” – and attempting to make irreversible his initiative.
Obama’s historic visit had been set in motion 15 months earlier, on December 17, 2014, when he and Castro laid to rest “the last remnants of the Cold War” by agreeing to resume “normal” relations. Since then, there’s been a whirlwind of diplomatic, commercial, cultural, and people-to-people activity.
• There have been three meetings between the presidents.
• Washington belatedly removed Cuba from a list of countries sponsoring terrorism.
• Embassies re-opened in Washington and Havana.
• Secretary of State Kerry, several US governors, major city mayors and leaders of agricultural and commercial associations visited Cuba.
• Washington lifted some restrictions on bilateral financial dealings.
• Direct postal service resumed.
• American tourists are flocking to Cuba in record numbers.
• There will soon be regular airline and ferry service. American hotel chains are cutting management deals. Airbnb operates. Carnival cruise ships are adding Cuban ports of call.
• Netflix has established a digital beachhead, while Google and General Electric have successfully concluded negotiations.
No wonder nearly 800 deal-seeking American businesspeople, and corporate CEOs (from Xerox, PayPal, Marriott, Airbnb, Starwood Hotels and Resorts, and Starfish Media) accompanied Obama to Havana.
Although there’s clearly tremendous potential for trade and investment, actual on-the-ground accomplishments have so far been limited. Why? In part, Cuba – which wants to attract private investment while maintaining its socialist system – is moving forward with caution, understandably leery of being overrun by an American commercial juggernaut. Its own entrenched bureaucracy also acts as a convenient brake on change. Most important, the US embargo remains the law of the American land, still dictating much of what business can actually do in Cuba. And there’s another impediment: most Americans still don’t understand Cuba.
Some background information is pertinent. Even before Obama’s negotiators expressed interest in the spring of 2013, communist Cuba was already in the midst of a quiet but wrenching transition. In 2011, President Raúl Castro, who succeeded his brother Fidel in 2006, introduced a series of “Guidelines”, designed to bring radical economic improvement to the sickly Cuban economy. Some results:
• 500,000 Cubans are now self-employed.
• Scores of inefficient factories have been closed.
• Land has been distributed in usufruct to 300,000 small farmers.
• Cooperatives – agricultural and industrial – have been established.
• Cubans are free to buy and sell their houses and cars.
• Havana alone boasts 560 paladares (private restaurants) and 7,000 casas particulares rooms (bed-and-breakfast facilities).
• Cubans are now allowed to leave the country for up to two years without penalty.
• Internet access, while still painfully slow, has increased enormously.
With or without American involvement, Cuba is changing, a homegrown process that will continue after Castro retires in 2018.
Understanding Cuba’s complex internal reality has never been easy, as is deciphering the challenging world of Cuba-US relations. This article will attempt to provide some context while contemplating the challenges (and potential) that await.
The Lure of Cuba for Americans
Cuba, a small Caribbean island nation of 11.2 million people just 90 miles south of the United States, has long exercised an outsized pull on the American imagination.
US political interest in Cuba has its roots in 19th century notions of Manifest Destiny. The US even tried several times to purchase the island from Spain. While those efforts failed, Cuba was dominated by US commercial and political interests for much of the first half of the 20th century. That ended abruptly in 1959 when Fidel Castro and his guerrilla army overthrew US-supported president Fulgencio Batista. Washington retaliated by cutting off relations, and Cuba countered by expropriating US investment.
Thus began 50-plus years of waxing-waning-waxing hostility, America’s overt and covert attempts at regime change, Cuba’s friendship with the Soviet Union and Venezuela, and, of course, the longest running, most restrictive economic embargo in modern history.
The embargo – introduced in 1960, and subsequently strengthened on two occasions – prohibits American investment in Cuba, extending credit to Cuba to buy American goods, and importing Cuban-made goods into the US. Even foreign banks couldn’t – until recently – use the US dollar in transactions with Cuba. (Washington heavily fined several European banks as recently as this year for violating that restriction.) Ordinary tourism was also forbidden. To complicate matters, the 1996 Helms-Burton law made it impossible for any American president to end the embargo without Congressional approval.
Early in his first term, Obama began chipping away at the embargo’s travel restrictions, making it slightly easier for Americans, including Cuban-Americans, to visit. The resulting trickle of US tourists became a flood after December 17, 2014. (see table 1 below)
Not surprisingly, the US Tour Operators Association chose Cuba as its top emerging destination for 2016. When Washington finally fully opens the door to ordinary tourism, officials estimate three million Americans may visit the island. To cope, Cuba will need to modernise its painfully inefficient infrastructure, build more hotels and resorts, increase flights and ferry services. All of which, of course, means investment opportunities.
Accordingly, Raúl Castro’s plan is to (conservatively) liberalise Cuba’s economy. With its skilled, inexpensive workforce, geo-strategic location, recently opened, state-of-the-art Mariel port/industrial park facilities, and the pent-up demand for goods from “el Norte”, Cuba is suddenly an American investment magnet.
Consider Cuba’s dependence on imported food. The island currently imports over 80% of its food, at a cost of almost $2 billion. Reforms to encourage Cubans to produce more food have not been successful, largely because of insufficient incentives.
While limited embargo exemptions allowed American farmers to make cash agricultural sales to Cuba, Cuba has since cut back on its purchases – in part to diversify its supplies, and in part to express its unhappiness with the embargo. (see table 2 below)
American agricultural producers are understandably keen to regain and expand sales to Cuba, which is why governors from several farm states as well as agricultural delegations have worn a path to Havana. Significantly, the first US investment approved for Cuba is for small tractors, ideal for the island.
The Obstacles to Overcome
Ending the embargo remains the sine qua non for improving US-Cuba relations. While only Congress can eliminate it, Obama is doing his best to eviscerate its provisions. Before he left for Havana, he changed rules to allow American dollar transactions. In Havana, he committed himself to redoubling efforts to end the embargo completely. In many ways, the most significant accomplishment of his successful visit may have been to make the status quo untenable.
But even if the embargo disappeared tomorrow, roadblocks to normal relations remain:
Compensation. US claimants maintain they’re owed $8 billion (including interest) for expropriated property. After the revolution, Cuba paid compensation to a number of countries, but Washington blocked this for Americans. Havana says it is prepared to pay compensation, but counters the United States owes it compensation (estimated at $105 billion – $1.1 trillion) for the impact of the embargo and other hostile acts.
Guantánamo. The issue, largely emotional and based upon a perceived historical wrong, is important for Havana. Cuba maintains the 1903 agreement that gave the 4,500-square mile facility to the US as a coaling and naval station was signed under duress and, 113 years later, should be revoked. Every year the US sends the agreed-upon annual rent of $4,085, and every year the Cubans refuse to accept it. The United States has considered the base – which houses 9,500 American military personnel – as its outpost for so long that returning it to Cuba will not be easy.
Regime Change/Democracy Promotion Activities. Washington long supported terrorist acts against Cuba carried out by Florida-based Cuban exile groups. Today, it illegally beams TV and radio propaganda signals at Cuba, and financially supports dissidents and programs inside Cuba aimed at toppling its government. Cuba says those must stop. The Americans consider them “democracy promotion” activities and say they will continue. As recently as January 2016, in fact, the State Department issued a request for proposals for “Projects Fostering Civil, Political and Labor Rights” in Cuba, with funding of $5.6 million.
Human Rights. American officials, including Obama, have criticised the Cuban government for what they consider its lack of press freedom and individual liberties. Cuba sees this as American hypocrisy (given the record of prisoners tortured at Guantánamo, and the scores who remain without trial). Accordingly, Washington’s support for groups supporting the government’s overthrow means it has no choice but to rein in dissidents. There is also a radical disconnect between the liberal capitalist perspective on human rights and the socialist collectivist one. Cuba, for example, points proudly to its own (often superior) record on universal health care and education compared to the US. The reality is that this ongoing thorny issue is unlikely to be resolved until there is a complete normalisation of bilateral relations.
Since December 2014, there has been remarkable diplomatic progress. President Obama’s visit was a resounding success, and ministerial meetings on bilateral matters continue to slowly but steadily whittle away at 50 years’ worth of disputation.
Progress has not been limited to policy. Who could have imagined the presidents of Cuba and the United States chatting amiably while watching a baseball game between Cuba’s national team and the Tampa Bay Rays? Or Cuban baseball stars who had defected to the United States returning home for visits (and being greeted warmly)? Or the Buena Vista Social Club performing at the White House? These symbolic moments highlight what is growing public support in both countries for this new and better relationship.
The record on trade and investment remains mixed, as both sides feel out potential opportunities, with Americans pushing for greater changes and the Cubans pursuing a policy enunciated by Raúl Castro: “without haste, but without pause”. Cuba is interested in more trade and investment from the United States, and American commercial missions to the island have been enthusiastic about Cuba’s potential. The embargo, however, remains in place – and is the major obstacle to any significant improvement.
While much uncertainty hangs on the results of the 2016 presidential election, some points are clear. The Republican and Democratic front-runners both generally support Obama’s approach to Cuba. While some Republican presidential hopefuls may favour overturning the initiatives, their prospects for doing so will swim up against two formidable currents: the increasing commercial interest in the island (symbolised by the imposing US-Cuba Business Council composed of leading American financiers, investors and trade groups), and the growing people-to-people contacts resulting from rapidly increasing tourism.
Common sense and pragmatism – both badly needed when it comes to Cuba – appear to be slowly winning the hearts and minds in the United States. It has taken almost six decades, but full normalisation – and not just the opening of embassies – appears within reach.
About the Author
John M. Kirk is Professor of Latin American Studies at Dalhousie University in Canada, and the author/editor of 16 books on Cuba.
Stephen Kimber, a professor of Journalism at the University of King’s College in Canada, is the author of What Lies Across the Water: The Real Story of the Cuban Five.
1. Source: Personal communication from José Luis Perelló, Faculty of Tourism Studies, University of Havana, January 19, 2016 and his article, “US Tourism to Cuba in the New Scenario of Bilateral Relations”, From the Island, no. 26 (March 11, 2015)
2. Source: U.S.-Cuba Trade and Economic Council, Inc., “Economic Eye on Cuba: December 2015”