Obama's Cuba Visit: An important but limited step


In 2009, Obama fulfilled an election promise to remove limits on family travel and remittances, and today more than 400,000 Cuban-Americans visit annually. More recently, the number of authorised categorises for non-family travel (such as travel for religious, educational, cultural, scientific and business purposes) was expanded, with enforcement on the remaining restrictions now virtually non-existent.

In the wake of the Cuban revolution, the US severed diplomatic relations with Cuba in 1960 and imposed an embargo. Designed to strangle the Cuban economy, create opposition to Fidel Castro’s government and thereby promote a transition to democracy, the embargo is widely acknowledged to be decades-long policy failure. Instead, it pushed Cuba towards 30-year alliance with the Soviet Union (although historians debate whether closeness with the USSR had been one of Castro’s original goals).

The collapse of the Soviet Union led to the end of its patronage and introduced the Special Period of deep economic austerity during the 1990s (a period so severe that Cubans lost weight) but even then, the US embargo failed to dislodge the Cuban regime. In fact, the embargo has often been seen as producing an effect opposite to its intention. By allowing the Cuban government to point to the US as a source of its economic woes, the embargo has been used as an effective form of blame-avoidance as well as a nationalist-rallying cry.

Although measuring Cuban public opinion can be a challenging exercise, it is clear that most Cubans support the normalisation of relations and the lifting of the embargo, which has long been a thorn in US-Latin American relations where it is seen as an illegitimate attempt of a hegemon to impose its will on the sovereignty of a smaller nation and where historical sensitivities regarding US involvement in Latin American countries still run strong. While it may be surprising that Latin American democracies have treaded softly in criticising Cuba for being the lone dictatorship in their midst (Venezuela’s drop in democratic credentials notwithstanding), it should be noted that most democracies, including many of the United States’ closest allies, regularly join Latin American countries in an annual vote at the United Nations General Assembly condemning the US for its embargo.

It is important to note that the embargo is by no means absolute and has in fact waxed and waned in its severity. It was loosened under President Carter but often tightened under Republican presidents, though President Clinton tightened it as well. Loosening and tightening typically occurred under several dimensions, including limits on remittances sent by Cubans in the US to their families on the island, the ease with which permits to travel to Cuba could be obtained, and the severity of limits on exports to Cuba, including by foreign companies with business in the US or whose products include US components or intellectual property. Exemptions for food and medicine account for the current level of US exports to Cuba, worth $300 million in 2015. However, these exemptions are by no means total. A common complaint is that the Cuban healthcare system has difficulty acquiring a number of medicines used worldwide, even when they are manufactured outside the US, because the pharmaceutical multinationals that produce them also do business in the US or because the medicine has US patents. The embargo, thus, has extra-territorial effects.

Obama's Olive Branch

President Obama’s decision to normalise diplomatic relations reflects a number of issues. It ends an outdated legacy of Cold War politics, removes an irritant in relations with Latin America countries, and constitutes a foreign policy achievement in his last year in office. It is also cost-free domestically as US opinion polls show support for normalising relations as well. Many Americans have wanted to visit Cuba and a large array of business interests, from travel and hospitality industries to the agricultural machinery sector and beyond, have expressed both interest in Cuba and frustration at losing business opportunities to the multinationals of other countries. The decline in both opposition and influence of the once powerful Cuban-American lobby of the Miami area is also notable. This is, in part, due to a demographic transition in that community. Younger generations, born in the US, tend to support normalisation and are eager to grasp evolving business opportunities. The small size of the protests against normalisation and President Obama’s visit speak clearly to shrinking opposition in Miami.

Ironically, the largest opposition comes from the US Congress. While normalisation of diplomatic relations is a decision that lies with the executive, and was thus clearly within President Obama’s power to accomplish, the lifting of the embargo requires Congressional action since Republican opposition in both the House and the Senate remains strong. This opposition has less to do with public opinion (Republican voters are split on the lifting of the embargo) or the preferences of the American business community but instead is part of a pattern of reflexive opposition to the Obama administration’s initiatives. The contrast with earlier normalisations with communist regimes, particularly China in 1979 and Vietnam in 1995, is startling. While President Nixon’s 1972 visit to China constituted a surprise, and while normalisation with Vietnam was painful to some (the US lost 55,000 lives there), support for the restoration of diplomatic relations and a deepening of economic relations extended across the elites of both parties.

Nonetheless, the Obama administration has taken a number of steps through executive action to whittle away at the embargo. In 2009, Obama fulfilled an election promise to remove limits on family travel and remittances, and today more than 400,000 Cuban-Americans visit annually. More recently, the number of authorised catagories for non-family travel (such as travel for religious, educational, cultural, scientific and business purposes) was expanded, with enforcement on the remaining restrictions now virtually non-existent. While visiting Cuba for tourism is still technically illegal, Americans can visit under a category of person-to-person travel and claim that they spent a significant portion of their time talking to Cubans. To facilitate the large increase in Americans visiting Cuba, steps have been taken to permit regular airline travel between the two countries. While this will replace an expensive and cumbersome system whereby only charter flights were allowed, Cubana de Aviacion, the Cuban airline, will not be flying to the US. This is because its aircraft could be seized under American court orders regarding the compensation of property seized during the revolution. Equally important are attempts by the administration to permit greater Cuban use of the US banking system, though banks have so far been wary of falling afoul of legislative measures limiting their involvement with Cuba.

What Next: The Journey Ahead

Many Cubans believe that the lifting of the embargo will produce economic growth and a higher standard of living. While the removal of the blockade (as the embargo is known in Cuba) will undoubtedly help sectors such as tourism, it should not be confused with the introduction of capitalism on a broad scale. While about 25 percent of Cubans now work outside the state sector, they continue to be extremely limited in their access to finance and capital. Regulations severely limit both what kinds of private businesses can operate as well as how big they can get (restrictions on the number of tables private restaurants may have being a prime example). The limits on the growth of private businesses were deliberate. Businesses were permitted reluctantly, as a way of allowing Cubans to supplement their state income after the fall of the Soviet Union (and now the diminished ability of Venezuela to help with subsidised oil); limits to their size were a way to check the ensuing growth of inequality.

Nonetheless, Cuba’s peculiar use of a dual currency system (CUCs and pesos) and embrace of tourism has greatly contributed to rising inequality. Designed to hoard hard currency, the CUC is the currency used by visitors to the island. As a result, Cubans in the private sector who cater to tourists are paid in CUCs, which provide much greater purchasing power as well as access to a range of goods that cannot be purchased with pesos. Along with remittances, tourism has thus been a major driver of a higher standard of living for a few but not all. The continued growth of tourism may also have distorting effects on the rest of the economy, particularly in the areas of skills and human capital. Because of its higher income, tourism can drain professionals from technological, educational and medical fields, leading to a dearth of qualified personnel in these areas.

Unless the Cuban government radically reforms domestic economic rules, the lifting of the embargo will not, by itself, produce rates of economic growth similar to those of China or Vietnam when they liberalised their economies. So far, the evidence suggests that gradualism and hesitation in economic reform continue to be the order of the day. A promise of faster, cheaper and more widespread access to the internet is one of the few reforms the Cuban government has announced during this period of normalisation of relations between the US and the island. In this respect, conservative critics in the US have been right. So far, the overwhelming number of liberalising reforms has been on the American side.

This is also true of political reforms. While there has been some limited growth in independent blogging and news reporting and increased freedom to travel abroad, basic rights of freedom of speech and assembly as well as the right to form independent political parties or trade unions remain severely restricted. Indeed, Cuba continues to score extremely poorly in Freedom House’s ratings. While Obama’s speech to the Cuban parliament was broadcast live on Cuban television, as was a journalists’ question-and-answer session with Obama and Raul Castro, official broadcasts returned to their anti-American diet soon afterwards and Fidel Castro, a few days after the visit, warned about a continued American desire to change Cuba’s socialist destiny.

A major player in Cuba’s political future will be its army. Because the army is seen as having excellent managerial competencies, it was given an important role in developing and managing much of the state-run tourism infrastructure and thus has significant economic interests to defend. While the army peacefully accepted major cutbacks in allocations from the state budget and shrank significantly as a result of the Special Period, it is both deeply embedded in the economy and well-regarded by the people. Whether it sees itself as a defender of the revolution or of its particular economic interests, and whether it would be willing to exert pressure or extract concessions in the event of further economic or political reforms, remains unknown.

Although there is still substantial support for the goals and achievements of the revolution, particularly in areas such as education and health, young people are increasingly disengaged ideologically from the regime and impatient for an improvement in both freedom and their material conditions. The Cuban regime, thus, finds itself at a crossroads. Not doing more to improve the standard of living risks transforming impatience into a loss of legitimacy. However, a deeper embrace of capitalism and the free flow of information will ineluctably lead to higher inequality and the creation of an autonomous middle class that might be better positioned to make demands for substantive political change.

Although the normalisation of relations with the US is of great historical significance, Cuba will soon experience another momentous transition with the passing of Fidel and Raul Castro. While there are advocates for substantial economic reform (even if often couched in the language of defending the accomplishments of the revolution) in both the Cuban academy and in its ministries, there is also a strong wing of hardliners opposed to reform. The new leader will need to navigate among these different currents without the legitimacy that comes from having participated in the events of 1959 and in an era of ever greater contact and flows of information with the outside world.

As of this writing, however, what is striking is not only the lack of political reform but the slow pace of economic reform as well. Although the Chinese and Vietnamese communist parties have long learned to combine capitalism with the preservation of their rule, at this point Cuba remains wary of walking too far down that path. As a result, the normalisation of relations says more about changing domestic politics in the US and the desire to remove an irritant in US foreign relations than it does about the prospects for large-scale economic and political reform in Cuba.

The writer is the Associate Professor of Political Science at La Salle University

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Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.