US and Cuba Dawn of a New Era?

Global Centre Stage

"Change is coming to the Americas. It may or may not lead to better times. But they will certainly be different.” These comments, made by the Financial Times in its editorial supporting President Obama’s sudden and unexpected decision to normalise relations with the Castro regime in Cuba, highlight why the dramatic announcement is more than a major foreign policy victory for Obama, writes Prof Riordan Roett

The dramatic and unexpected announcement by the White House on December 17, 2014 that the US would begin to normalise relations with the Castro regime in Cuba took everyone by surprise. Diplomatic relations were broken in 1961 after Fidel Castro consolidated power on the island. It became apparent that negotiations between the two governments had been underway for some time. An important role as facilitator was undertaken by Pope Francis and the Holy See as well as a small contingent of US government officials. The government of Canada also played a very useful diplomatic role. One of the main goals of the talks was to win the release of Alan Gross, an American development worker, who had been held in a Cuban prison for five years on spying charges. The US released three Cuban spies held in American jails; a high ranking Cuban security official, who had provided information for the US, was released from confinement in Cuba. The US announced that the Cuban government would also release 53 prisoners held in Cuban security facilities.

Time for a New Approach

The White House announced that the rapprochement would include reopening the US embassy in Havana. The White House also said that Washington would review the status of Cuba as a state sponsor of terror. Other actions taken by President Obama included additional exemptions to the economic sanctions that were implemented after the Cuban missile crisis in 1962, in a bid to isolate the island and, hopefully, contain its ability to export communism to other countries in the region. The embargo itself cannot be fully lifted by the White House; it will require Congressional action and that is unlikely in the foreseeable future given the fact that the Republican Party took control of Congress in January 2015 and a majority of its party members appear to be adamantly opposed to further liberalisation of US ties with the Castro regime.

The new exceptions to the embargo (the US does export pharmaceutical products and poultry to the island now) are to support the island’s nascent entrepreneurial sectors, such as agricultural and construction equipment for small-scale farmers and builders. The new rules also authorise the export of telecommunications goods and services with the goal of fostering greater openness for the average Cuban citizen. General commerce with state enterprises remain prohibited.

It will now be easier for American citizens to visit Cuba. They will also be able to import up to $400 of Cuban goods with a $100 limit on tobacco and alcohol products. Critical for the Cuban government, normalised relations will enable the Cuban regime to access multilateral financing and technical assistance. US financial institutions will be able to open correspondent accounts with Cuban counterparts to process certain transactions. The current cap on remittances to Cuban nationals will be increased fourfold, from $2000 a year to $8000 and will not require a license. The strict licensing requirements that have been in effect for many years have been a major irritant for US Cuban citizens keen to send financial assistance to their families in Cuba.

To finalise the agreement, President Barack Obama and President Raul Castro spoke by telephone; President Castro also addressed the Cuban people in a televised programme that indicated his support for the agreement, but also emphasised that the 'principal issue' between the two countries – the political regime – had not been part of the arrangement. From Washington’s perspective, it is recognition that the embargo has not weakened the communist regime and may well have helped it by using the embargo to demonise the US. The embargo has not been effective in encouraging democracy or providing greater support for human rights protection. In a televised address, President Obama stated that ‘these 50 years have shown that isolation has not worked. It’s time for a new approach...let us leave behind the legacy of both colonisation and communism, the tyranny of drug cartels, dictators and sham elections.”

Decisive Foreign Policy Victory

The dramatic announcement is seen as a major foreign policy victory for Obama after a series of initiatives that left the president looking weak and indecisive.

The White House also indicated that it will be a major shift in US relations with the countries in the hemisphere all of whom recognise the Castro regime and have been critical of the US in its stubborn position of retaining the economic embargo.

Diverse political leaders such as the presidents of Venezuela and Brazil welcomed the decision. It will also remove a major irritant from the April 2015 Summit of the Americas meeting in Panama. The government of Panama has officially invited President Castro to attend. But before the December policy announcement, it was not clear whether President Obama would attend the meeting given the former position of Washington not to recognise Cuba in hemispheric affairs.

An Enlightened Decision

The decision was also a calculated judgement on the part of the White House that change was inevitable on the island. President Castro is 83-year-old; Fidel is 88. Raul Castro has stated that he will not seek re-election in 2018 when his term ends. If Vice-President Miguel Diaz-Canel becomes chief executive, he will represent a younger generation of the revolutionary leadership and there may be new opportunities for further measures that will open the economy and provide greater exchange between the two countries.

There is little evidence that the White House decision was influenced by Cuba's increasing contact with foreign governments – China and Russia, in particular. China has been very diplomatic in its ties with Latin America, concentrating on purchasing commodities and raw materials. The dramatic fall in the price of oil has weakened whatever plans Moscow and President Putin may have had in reasserting Russian influence in the Caribbean. To most observers, this was an enlightened decision by a lame-duck president to confront a difficult and unsuccessful policy and to renegotiate terms of engagement between Havana and Washington.

Republican Reactions

The Speaker of the House of Representatives, John Boehner, quickly stated that the Congress would not act to lift the embargo. The former chairman of the Senate Foreign Relations Committee, Democrat Robert Menendez immediately criticised the decision. Republican Marco Rubio of Florida, the new chairman of the Western Hemisphere subcommittee in the Senate, and a fierce opponent of the Castro regime, condemned the policy change. Former Governor of Florida, Jeb Bush, and a possible Republican candidate for the 2016 presidency, condemned President Obama's decision. He commented that 'the benefactors of President Obama's ill-advised move will be the heinous Castro brothers, who have oppressed the Cuban people for decades.' While it is not clear whether the Republicans will do anything beyond publicly condemn the Obama administration, they will have the power to prevent funding for reopening the US embassy in Havana. The Republican majority could conceivably refuse to approve the president's choice for a new ambassador to Cuba. They could also try to withhold funding for aspects of the State Department, and other government agencies, that will be tasked with implementing the process of normalisation.

The Republicans will be supported by a number of conservative think tanks and commentators in the US. Frank Calzon, the executive director of Centre for a Free Cuba, commented that the White House, by agreeing to the prisoner exchange, will only encourage more American hostage-taking. He also argued that President Obama chose to ignore the issue of human rights and political freedom.

But, in general, the reaction across the centre and left of the political spectrum was guardedly positive and supportive. Even the attitude of the Cuban-American community, concentrated in Miami, Florida, has moved to the centre, except for the 'Old Guard', who will never accept liberalisation as long as the Castro brothers remain in control of the island. But the younger generation, born in the US after their families fled in the early 1960, is far more dovish. Their careers are based in the US. While some with ageing relatives in Cuba may be nostalgic about their homeland, the new policies will allow them greater access to the island and enable them to provide greater financial assistance for participation in the slowly emerging market economy.

Support from the Business Community

Will the embargo be lifted? It may not be possible in the short-term, but in the medium-term, most observers believe it will. There is growing support outside the Republican Party, especially in the Tea Party wing, to move forward in the US relationship with Cuba. The US Chamber of Commerce enthusiastically endorsed the Obama administration’s decision. Thomas J Donohue, the president of the Chamber, stated that ‘we deeply believe that an open dialogue and commercial exchange between the US and Cuban private sectors will bring shared benefits, and the steps announced today will go a long way in allowing opportunities for free enterprise to flourish.' The message is clear. The American business community sees important trade and investment opportunities on the island. Donohue, representing a number of analysts, continued that ‘it is imperative that the Cuban government build on today's positive steps with a more ambitious economic reform agenda at home, while we continue to push for the end of the embargo here in Washington.'

A study by the Peterson Institute for International Economics in Washington states that in the absence of the embargo, Cuba would have exported almost $5.8 billion in goods to the US in 2011, while the US would have sent some $4.3 billion in goods in return. Because of the embargo, the reality was that only $352 million of largely agricultural exports emanated from the US that year. American business wants to actively compete with the Europeans, Latin Americans and Chinese for market share as the internal market liberalises and there are greater opportunities for profit.

Regional Implications

Brazil's President Dilma Rousseff commented that Obama’s move to improve relations with Cuba was ‘a moment that marks a change in civilisation.’ The decision also isolates Venezuela, a leading US critic. But even President Nicolas Maduro insisted that Obama’s decision was a ‘gesture of greatness.’ Given Cuba’s dependence on the subsidised petroleum programme, known as ‘Petro Caribe,’ the possibility of that programme disappearing is not that remote. Cuba needs to look for expanded trade and investment opportunities elsewhere to compensate for the increase in imported petroleum at market prices if the Venezuelan programme collapses, given the current economic turmoil in Venezuela. US relations with the European Community (EC) will improve since the EC has been a constant interlocutor with Havana on human rights issues and related matters. The decision on Cuba neutralises the strident criticism of the US and its policies by populist governments in the hemisphere and opens up opportunities for Washington to identify other areas of possible collaboration on issues such as drugs, human smuggling, and immigration.

As the Financial Times commented in an editorial supporting Obama’s initiative, “change is coming to the Americas. It may or may not lead to better times. But they will certainly be different.” It remains to be seen how much President Obama can achieve in the final two years of his administration. Cooperation from the Republican Congress is problematic. But the party needs to look ahead to the 2016 national elections. The Latin American community, while not unified, supports Obama on his initiatives on immigration, education, etc. A relaxation of relations with Cuba will only help the Democrats if the Republicans continue to appear recalcitrant on many, if not all, issues of growing importance to the Latino community in the US.

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Author

Prof Riordan Roett

Prof Riordan Roett is Professor and Director Latin American Studies Program (LASP) & Western Hemisphere Studies (WHS) at the Paul H. Nitze School of Advanced International Studies (SAIS) in Johns Hopkins University.

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