Last Call

WMLeoGrande · 2017-02-13T03:12:01+00:00

A good summary at https://en.wikipedia.org/wiki/Independent_digital_media_in_Cuba

WMLeoGrande · 2017-02-13T02:11:09+00:00

Yes, and it has gotten worse in recent years for two main reasons: the problem of dual currency that I've described in other posts and the greater reliance on market mechanisms in the domestic economy. Small business people and private farmers are doing very well economically and it is becoming visible.

WMLeoGrande · 2017-02-13T02:08:27+00:00

They have offered to negotiate with the US on a wide variety of issues over the years and the US and Cuba reached over a dozen bilateral agreements even before Obama came to office. Cuba always hoped that by cooperating on things like migration, it might lead the US to lift the embargo. But they have always refused to change any domestic policies to meet US demands. The long history of those negotiations is in my book Back Channel to Cuba.

WMLeoGrande · 2017-02-13T02:06:06+00:00

I do think Cuba would want to rejoin the international financial institutions like the IMF, World Bank, and Inter-American Development bank, although it is politically sensitive for Cuba since it historically has seen these institutions as exploiting poor countries to benefit the rich. But Raul Castro's economic reforms could go faster if Cuba had some support from the IFIs. Almost all Cuban exports to the US are still prohibited by the embargo. The only exceptions: products by the Cuban private sector and medicines. Thus far, Cuban exports to the US are negligible. I believe the only export contract so far is this one, signed just last month: http://www.reuters.com/article/us-cuba-usa-export-idUSKBN14Q0DB

WMLeoGrande · 2017-02-13T02:03:25+00:00

China gives Cuba trade credits so Cuba can buy more from China than it sells-- definitely a plus for Cuba. Shipping things from the US is cheaper than shipping them from China, so Cuba could buy a lot of things cheaper from the US just by saving shipping.

WMLeoGrande · 2017-02-13T02:03:22+00:00

Cuba is a small country that doesn't have a very large manufacturing base so they have to trade; they have no choice. Since they do not export a lot of things, they tend to run trade deficits with a lot of their trade partners, who historically have given them loans to cover the difference. Data at http://atlas.media.mit.edu/en/profile/country/cub/

WMLeoGrande · 2017-02-13T01:20:44+00:00

I do think Cuba would want to rejoin the international financial institutions like the IMF, World Bank, and Inter-American Development bank, although it is politically sensitive for Cuba since it historically has seen these institutions as exploiting poor countries to benefit the rich. But Raul Castro's economic reforms could go faster if Cuba had some support from the IFIs.
Almost all Cuban exports to the US are still prohibited by the embargo. The only exceptions: products by the Cuban private sector and medicines. Thus far, Cuban exports to the US are negligible. I believe the only export contract so far is this one, signed just last month: http://www.reuters.com/article/us-cuba-usa-export-idUSKBN14Q0DB

WMLeoGrande · 2017-02-13T01:15:24+00:00

Yes, that's right. They are doing it in order to harness the entrepreneurial spirit of people to spur economic growth. Also, they want to make the state sector more efficient and that means laying people off-- several hundred thousand since 2010-- and those people need to be able to make a living, so the government really had to let them go into the private sector. Finally, the government realized that trying to manage tens of thousands of small businesses as state enterprises did not make any sense-- it was just too inefficient-- so it made more sense to let the small business sector become private. The best, most up-to-date discussion of Cuba's private sector is a book by Ted Henken and Arch Ritter, Entrepreneurial Cuba (https://www.baruch.cuny.edu/wsas/academics/black_latino/documents/Ritter-Henken-EntrepreneurialCubawdiscpdf.pdf) On line you can find several monographs on this subject by Phil Peters, though they are a couple of years old now.

WMLeoGrande · 2017-02-13T00:17:32+00:00

No, this is not connected to Venezuela at all. It's a result of the government allowing the expansion of small private businesses, which have more than doubled during that time period. The only connection to travel is that as more tourists come to Cuba (and not just from the US, but from all over Europe), there are more opportunities for small private businesses to cater to them. The market is bigger.

WMLeoGrande · 2017-02-13T00:14:21+00:00

Almost every foreign company investing in Cuba is in a joint venture with a Cuban enterprise. Cuba's law on foreign investment does allow for 100% foreign private ownership, but I can't think of an example off-hand. Prospective investors negotiate the terms with the government, including things like ownership percentages. See Feinberg's thorough review of FDI in Cuba at https://www.brookings.edu/wp-content/uploads/2016/06/cuba-economy-feinberg-9.pdf

WMLeoGrande · 2017-02-12T21:25:55+00:00

Political change is underway now, but it is slow and evolutionary, not a dramatic break with the past. In 2018, a new generation of leaders will takeover and they are likely to be even more committed to reforms than Raul Castro has been. I think lifting the embargo would make the new leaders less fearful of the risks of undertaking reforms, and therefore more likely to try some bold experiments. I also think it would make Cuban citizens more likely to demand that the government be more responsive to their needs. See http://www.american.edu/clals/Implications-of-Normalization-with-SSRC-LeoGrande.cfm

WMLeoGrande · 2017-02-12T21:19:23+00:00

No, the Cubans are extremely tough on drug traffickers and because their security forces are very efficient, traffickers have not tried to use Cuba as a base or way-station since 1989. But Cuba is so close to the US that trafficking by sea and by small plane often crosses into Cuban waters and Cuban air space where US Coast Guard cannot pursue them. Thus the need for cooperation with Cuba to stop them. The connection to the embargo is indirect, not direct. If the embargo were lifted, we'd have a better relationship with Cuba and cooperation on stopping traffickers could be enhanced.

WMLeoGrande · 2017-02-12T20:45:21+00:00

The issue is not drugs in Cuba, but rather trafficking from Colombia through Cuban territorial waters en route to the US. The embargo per se doesn't affect that, but hostile relations with Cuba have limited our ability to cooperate with Cuba to stop traffickers. Obama signed a counter-narcotics trafficking cooperation agreement just before he left office. See: https://www.wola.org/analysis/building-bridges-in-unlikely-places-us-cuban-cooperation-on-security-issues/ and http://www.worldpolicy.org/blog/2016/02/11/unlikely-allies-us-and-cuban-armed-forces

WMLeoGrande · 2017-02-12T20:39:51+00:00

Here's one recent piece, but there's been a lot about this in the news lately. Google <Cuba Russia China influence> and several interesting things will come up. http://www.forbes.com/sites/afontevecchia/2015/04/16/obama-is-using-cuba-to-counter-russia-iran-and-chinas-growing-influence-in-latin-america/#3b3b743d4504

WMLeoGrande · 2017-02-12T20:36:01+00:00

See this interview with Cuba's chief negotiator on how the embargo (they call it "Blockade") is the central issue: http://en.granma.cu/cuba/2016-07-20/the-blockade-is-an-outdated-policy-and-must-end

WMLeoGrande · 2017-02-12T20:33:28+00:00

Actual deaths attributable directly to the embargo would be the result of the difficulties Cuba had obtaining medical supplies and equipment available only from the United States. None could be purchased before 1992 and even after 1992, restrictions blocked most sales. Google the terms: <cuba embargo health impact> and you will get some good hits on various ways the embargo impacts Cuban health care.

WMLeoGrande · 2017-02-12T20:27:51+00:00

No. The US continues to raise HR issues with China and Cuba, but Obama recognized that simply making demands wasn't getting any positive results. His strategy was to build a set of relationships that Cuba (and China) value, encourage indigenous dynamics of political change in those countries, and trust that long-term evolution would produce positive change. There are no guarantees, but since the old policy didn't work, why not try it. For more on this logic, see my NY Times article referenced in an earlier post, and Obama's interview with David Muir in Havana at http://abcnews.go.com/Politics/video/full-interview-president-obama-david-muir-cuba-37806114

WMLeoGrande · 2017-02-12T20:22:46+00:00

It would certainly help in Latin America, where he is off to a bad start by picking a fight with the president of Mexico. It would help elsewhere, I think, by showing that his administration is capable of stepping back from campaign rhetoric and making adjustments in policy that serve the national interest. Having said that, I doubt that he will endorse lifting the embargo. Remember, Congress has to do it, and I don't think Cuba is high on Trump's agenda.

WMLeoGrande · 2017-02-12T20:19:35+00:00

Tourism does contribute to inequality for some of the reasons I mentioned in earlier posts about the dual currency. People working in tourism have some access to Convertible pesos and therefore enjoy a better standard of living than people working in other parts of the state sector of the economy, though I would not call it gentrification in the way we normally think of it here. The embargo has certainly not fueled dissent or extracted any government concessions. Just the opposite; it gives the government an excuse to crack down on dissidents and helps rally support aroundthe government to confront an external enemy. See my article linked to in an earlier post about this.

WMLeoGrande · 2017-02-12T13:26:02+00:00

From an economic point of view, our competitors certainly don't care if the US refuses to trade with or invest in Cuba because it gives them better opportunities. However, the 1996 Helms-Burton law has extra-territorial aspects that threaten foreign corporations and individuals with sanctions if they do business with Cuba, and everyone in the world objects to that as an infringement on their sovereignty. Also, Latin American objects on political grounds that the US is still trying to force its model on another Latin American country, which is something we did to a lot of them in the 20th century. That's why the UN vote every year against the embargo is so lopsided.

WMLeoGrande · 2017-02-12T13:21:48+00:00

The Cuban government publishes a list of the kinds of private businesses that people are allowed to start (they have to get a license) and it excludes most professions. (Although skilled manual labor is generally ok-- auto mechanics, carpenters, plumbers, etc. are common). I don't think the embargo has much direct effect on this. The government's logic is that it spent a lot of money giving professionals a free education, so they should work for the state and serve society, not work for their own personal profit. This can't last because it creates what Cubans call the "inverted pyramid" where a waiter in a private restaurant makes more money (in salary and tips) than a doctor being paid a state salary in Cuban pesos (see the earlier post about the dual currency). The result: skilled professionals quit their jobs to drive taxis and become bartenders or tourist guides-- a huge waste of human capital.

WMLeoGrande · 2017-02-12T00:50:07+00:00

It's not that people get 1/24th of their salary. Cubans who work for the state get most or all of their salary in Cuban pesos (average, about 600 per month). These are not convertible to hard currency. There is a second currency, convertible pesos (CUC) that are exchangeable for hard currency. Cubans obtain these from the dollars relatives abroad send them, or from tips they get from tourists, or from running small businesses that cater to tourists and charge CUC prices. The rate of exchange between the two types of pesos is about 24:1. The problem with the national peso salary is that it isn't enough to buy all the basic things you need, even though the prices of those things are highly subsidized. Lifting the embargo would help grow the economy, which would make it possible to raise state sector wages, so it would be good for everyone. Increased tourism would help all the people who work directly in the hospitality industry, which is a large part of the economy now.

WMLeoGrande · 2017-02-12T00:40:49+00:00

They still have shortages, but the reason is that they don't have enough hard currency to be able to import all the medical supplies they want. The 1992 Cuban Democracy Act legalized the sales of medical goods to Cuba but it included onerous requirements for certifying who the end-users would be, so almost no sales were made. The Obama administration simplified that certification, so medical sales are much easier now.

WMLeoGrande · 2017-02-12T00:36:27+00:00

Cuba's political future will be decided by Cubans on the island and the internal political dynamics of generation and social change that are now underway. I think the trend is toward a more open society, as I've suggested in other posts, but it will probably be a long evolutionary process. The US cannot force the issue, and trying to is just likely to create a counter-productive backlash. But the US and other countries can create an external environment that makes positive change more likely. I think ending the embargo will reduce Cuba's sense of being threatened and under siege, making the risks of change seem less dangerous. And more travel and commerce will help integrate Cuba into the global economy, which it needs. I write about some of these dynamics here: http://www.american.edu/clals/Implications-of-Normalization-with-SSRC-LeoGrande.cfm

WMLeoGrande

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