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Thaw at last – Cuba and the US get talking

Cuba
Trade
United States
Politics
Thaw

F_A under a Creative Commons Licence

The restoration of diplomatic relations between the US and Cuba announced on Wednesday is welcome – and long overdue.

Cubans have been celebrating in Havana. And – not that you’d guess from some of the news reporting from Miami – it’s been welcomed by Cubans living in the US too.  

The fiercely anti-Castro lobby that reporters go to when wanting ‘the Cuban exile view’ is now in a minority. This is partly due to demographic change as the hardliners grow old or die and a new generation of Cubans living in the US want relations between the two countries to be ‘normalized’.

Normalization has long been high on the list of Cuban commentators living in Cuba too – such as journalist Roberto Veiga, formerly of Espacio Laical, now co-founder of debating forum Cuba Posible in Havana.

The big breakthrough came this week with an agreement, brokered by Pope Francis, to exchange prisoners. The remaining three Cuban intelligence operatives of the ‘Cuban Five’, imprisoned in the US for almost 15 years, were exchanged for two US citizens convicted of spying, including Alan Gross.

Each country will now re-open embassies that have been closed for more than half a century. Some currency, trade, travel and investment restrictions will be relaxed. For example, limits on the amount of money Cubans living in the US can send to relatives in Cuba will increase from $500 to $2,000 a month.

But the prospect of a rapid and full lifting of the US-imposed trade embargo is a far more complicated matter. While there is much that President Obama might be able to achieve using his executive powers, lifting the embargo would need to be passed by a Republican-controlled Congress. Not so easy politically.

Constitutionally too, it is tricky. The embargo’s current incarnation – codified primarily in the 1996 Helms-Burton Act – stipulates that sanctions may not be lifted until Cuba holds free and fair elections and transitions to a democratic government that excludes the Castros. President Raúl Castro is not due to step down until 2018. And while radical economic reforms have been taking place in Cuba since 2011, political space has been opening at a snail’s pace. There is little sign that the Communist government is about to relinquish control – and certainly not at the bidding of the US.

Rafael Hernández, editor of the influential Cuban magazine Témas, told me earlier this year that he thought it unlikely that the embargo would be lifted but rather that it would ‘fade away’ as more and more exceptions are introduced.

There is plenty of pressure on both sides of the water for the trade blockade to end (or fade away).  It has cost Cuba more than a trillion dollars since it was imposed in 1960. But the US is losing out too. Which is why the US Chamber of Commerce has come out against the embargo, saying that it is harming US business interests, especially those of smaller companies that do not have the means to get around it by registering branches in separate jurisdictions. Meanwhile, other countries are finding ways round the blockade to trade with Cuba and invest in it.

Especially galling for the US is the spectacle of Cuba building a massive $900-million trans-shipment hub at its north coast port of Mariel with Brazilian investment (and Chinese interest). This deep harbour facility, just 144 kilometres away from Florida, would be of greatest use to the US – were it not for the embargo. From 2015, a deeper and wider Panama canal will be able to accommodate giant ‘post-Panamax’ ships carrying three times more cargo, drastically cutting transport costs. Cuba’s new trans-shipment hub at Mariel will be able to accommodate these mega-vessels whose contents can be transferred onto smaller ships for regional distribution – to, say, the US’s east coast ports, in theory...

 When Barack Obama came to power, one of his first foreign policy moves was to express a sincere desire to improve relations with Cuba. For the US there are strong economic incentives and international political ones. Attempts to isolate Cuba in the world have led to the US’s own isolation, as Rob Miller of the Cuba Solidarity Campaign in London points out. Last October, 187 countries at the UN voted against the blockade. Only a handful, including Israel, ever support the US position.

Front cover Cuba issueIf relations are to be normalized, it is also important that the US remove Cuba from its list of ‘states that sponsor terrorism’. This is what has made handling payments so difficult for third parties who want to trade with Cuba but fall foul of US laws. For example, in June this year French bank BNP Paribas was fined a record $8.9 billion by the US regulatory authority after admitting transactions with Cuba.

For more on Cuba see our October issue: The new Cuba – socialist update or capitalist sell-out?

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