Pressure is rising to address Cuba’s simmering economic and humanitarian crisis.
The country suffered two countrywide electricity blackouts in the span of a week – on March 16 and again on March 22 – as Cuba’s derelict energy grid was pushed to the brink amid a U.S.-led tightening of oil shipments designed to pressure the Cuban Communist Party regime.
While citizens endured the dark on March 16, Cuban officials announced economic policy changes allowing Cubans living abroad and their descendants to invest, own, and form partnerships with private sector firms inside the country. Havana not only welcomed foreign investment in small businesses, but in large enterprises and infrastructure development as well. This attracted international headlines and prompted observers to ask whether Cuba’s leadership might be signaling a willingness to negotiate economic reforms.
As the United States engages in conversations with Cuban leadership about the country’s future, it’s important to review the priorities shaping U.S. foreign policy regarding Cuba, and acknowledge that how the country is governed will ultimately limit or expand its prospects for future economic prosperity and stability.
U.S. foreign policy towards Cuba under Communist Party rule
In 1962, President John F. Kennedy initiated a U.S. trade embargo and sanctions architecture that remains in place today as a key feature of U.S. foreign policy towards the island. The embargo and related sanctions generally prohibit U.S.-based persons and entities from financial transactions and tie-ups with most facets of the island’s economy. Their aim is to minimize opportunities for Cuba’s Communist Party leaders to profit through state capture and corruption from foreign investment and trade linked to the United States.
Over time, U.S. administrations have chosen to widen or narrow the scope and application of sanctions related to the embargo. Carveouts have always existed permitting U.S. entities to apply for embargo exemption licenses that allow for the export to Cuba of humanitarian goods such as food, medicine, and, in more recent years, consumer communication products and services that facilitate the free flow of information among the population.
The State Department maintains a list identifying hundreds of Cuban businesses and entities under the control or influence of Cuban military, intelligence, security, and other politically linked actors. These include luxury tourism hotels, two government ministries, and a secretive military-linked entity known as GAESA, its Spanish-language acronym, that by some estimates controls as much as 40% of the country’s economy and generates revenue 3.2 times greater than the Cuban state budget.
Most importantly however, U.S. foreign policy towards Cuba has been consistently guided by a strong resolve to see fundamental human rights and freedoms restored to the Cuban people. In 1996, Congress codified this commitment to supporting efforts toward a transitional government or democratic elections in Cuba by adopting the Cuban Liberty and Democratic Solidarity Act (also known as the LIBERTAD or the Helms-Burton Act).
The legislation makes the establishment of a transitional government committed to organizing democratic elections and instituting specific institutional reforms a prerequisite for lifting the embargo and sanctions against the Cuban regime. Notably, this legislation recognized that “as long as free elections are not held in Cuba, the economic condition of the country and the welfare of the Cuban people will not improve in any significant way.”
Chief among the declared purposes for the bill was an imperative “to assist the Cuban people in regaining their freedom and prosperity, as well as in joining the community of democratic countries that are flourishing in the Western Hemisphere.”
Cuba tests the waters of U.S. foreign policy resolve
Havana’s announcement seemingly increasing economic openness reflects an evolution in its economic policies but also signals that the regime prioritizes self-preservation more than a sincere openness to structural reforms.
Broader systemic changes to Cuba’s overall governance structure are needed to reintroduce political competition and increase transparency, accountability, and the rule of law. In the absence of these, it remains extremely unlikely that Cubans outside the country will jump to make economic investments, especially at a scale that could infuse any meaningful amount of foreign currency into the country’s struggling economy.
Fundamentally, the same impediments and disincentives that have made investments in Cuba insecure for the past six decades remain.
By announcing unilateral economic policy changes, Cuban authorities are likely making a play to appear willing to adapt to new economic conditions without fundamentally altering the corrupted economic, political, and security system that enables their self-enrichment and protects them from accountability.
Despite the far-reaching impact that fuel shortages have had inside Cuba, the government hasn’t seriously addressed concerns about electricity outages being raised by its own citizens. The regime also continues to surveil and intimidate democracy and human rights advocates, arrest dissenters and protestors, and detain political prisoners.
Russia has also continued to exploit tensions between Washington and Havana by sending shadow fleet tankers that use deceptive shipping practices to deliver internationally sanctioned Russian oil. Despite a U.S. Treasury Department general license issued on March 16 temporarily waiving sanctions on sales of ocean-bound Russian oil but excluding sales to Cuba, the United States decided not to block delivery of a Russian shadow fleet ship estimated to reach the island in the coming days.
Cuba’s prospects for economic reform will remain severely hindered unless systematic political reforms are also introduced.
U.S. foreign policy towards Cuba should continue to be guided by the aims established in the LIBERTAD Act of setting Cuba on the path to sovereign democratic rule. With Cuba’s leadership at the negotiating table, the United States has a historic opportunity to forge a pathway for a transition to democracy that its people have long desired.
