Cuba: What Does Cuba Mean to the US?

The US and Cuba are moving toward normalization of relations for the first time in more than 50 years. Christopher Sabatini, PhD, Adjunct Professor, School of International and Public Affairs at Columbia University, who has been a key player in the growing rapprochement, shared his insights with the Forum. Dr. Sabatini reviewed the history of US sanctions against Cuba and discussed the path to normalization of relations. He described the necessary steps to capitalize on the enormous potential of this diplomatic thaw, noting that the US and Cuba must create a collaborative environment that nurtures diplomatic cooperation, business exchange, and tourism.

“Promoting exchanges is essential to promote a democratic transition and erode the Castro dictatorship from within,” Dr. Sabatini observed. “More human contact through tourism and the growth of a private sector of entrepreneurs will build a sense of empowerment among Cubans, which is an essential requirement for a democratic transition.”

History of the Embargo

Dr. Sabatini reprised the history of turbulent US-Cuba relations beginning with the 1961 expropriation of US-owned property by Fidel Castro’s regime and the Cuban Missile Crisis, which sparked the embargo. In 1992, anti-Castro Cubans in the US, fearing that President Bill Clinton would lift the embargo, persuaded the US Congress to codify the embargo into law.

The embargo was further strengthened by The Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Helms–Burton Act). The act extended the embargo to apply to foreign companies trading with Cuba and penalized foreign companies allegedly "trafficking" in confiscated property formerly owned by US citizens or by Cubans who have since become US citizens. The legislation also specified conditions to be met before the embargo could be lifted, including the ouster of the Castro regime, release of all political prisoners, and “freedom of expression” for Cubans.

The Thaw

Despite these stringent restrictions, executive action can relax some elements of the embargo without meeting all the conditions. Beginning in December 2014, President Barack Obama has taken Executive Actions to normalize relations with Cuba, including:

removing Cuba from the “Terrorist” list

re-opening the US embassy in Cuba

expanding permissible travel to 12 categories

easing banking and remittance restrictions

allowing greater import/export exchange, including telecommunications and food exports from the US

allowing Cuban-registered boats into US ports.

Negotiations on migration issues, drug interdiction, and mail services are ongoing. The success of these Executive Actions will depend on how the US Commerce and Treasury departments write the regulations that will codify the President's actions.

A Growing Private Sector

Hundreds of proposals have come from US businesses such as Home Depot, Google, Verizon, Sprint, and Air BnB seeking to establish a presence in Cuba. Havana alone has 37 Hot Spots that Cuban youths use to communicate via the Internet. Today, there are 100 flights daily from the US to Cuba. Travelers can use debit and credit cards in Cuba and bring back $400 worth of goods (with a $100 cap on cigars and cigarettes).

On the Cuban side of the equation, reforms have allowed Cuban citizens to start up their own small enterprises in 300 pre-determined categories. The result has been more than 500,000 new private start-ups, most of which have received their capital and inputs from relatives in the US.

Cuba Today

The thaw looks promising, but Cuba is still a Communist state, Dr. Sabatini reminded the Forum. Its policy drivers are ideology and self-interest. Most members of the Politboro fought in the 1959 revolution and are over 70 years of age. At 83, Raul Castro, Fidel’s brother and successor, promises to step down in 2018, yielding control to Fidel’s hand-chosen, 55-year-old successor Miguel Diaz-Canel. How this transition will play out is unpredictable, Dr. Sabatini said.

For the past 10 years, Cuba has been kept afloat by Venezuela’s gift of 100,000 barrels of oil per day. As a result, Cuba is highly dependent on Venezuela’s bilateral trade in goods and services, which amounted to 20.8% of Cuba’s GDP in 2012. As the price of oil has fallen, and with the death of Castro-friendly Venezuelan President Hugo Chavez, this largesse may be restricted.

Cuba faces substantial challenges. Its infrastructure is crumbling, and blackouts are frequent as decade-old Chinese-built generators start to fail. Agriculture has remained antiquated, and malnutrition is endemic among the elderly. The daily diet of rice and beans lacks sufficient protein, even when supplemented with ration cards. The average monthly income of $20 is insufficient to meet people’s basic needs.  An infusion of $1.5 billion to $2 billion per year is required to increase food production to meet the country’s needs. In addition, basic services such as healthcare are lacking.

The Future

Because President Obama's changes were only Executive Actions, they can be rolled back by a future president to restore the punitive embargo simply with a signature, Dr. Sabatini pointed out. One barrier to such a reversal would be if the US private sector has already become vested in these reforms, has established markets in Cuba, and will act to protect its investments and growing market share.

Ensuring that the President's goals are met and that US policy in the hemisphere has a long-overdue course correction will mean that all who want change in Cuba and in US policy pay attention to what emerges from the US Departments of Commerce and Treasury. They will ultimately determine the success or failure of these historic policy initiatives, Dr. Sabatini concluded.

Discussion

Sen. Martin Looney (CT): Who are the new leaders that are emerging in Cuba? You would have to be over 65 years of age to know the pre-revolution Cuba. What do younger Cubans think?

Dr. Sabatini: There is a new entrepreneur class emerging in Cuba. President Raul Castro created 300 new private enterprise categories and, in the last 5 years, small businesses engaged in writing code for US software, driving taxis, and expanding organic farms that have flourished. Raul Castro envisions maintaining Communist control and allowing a slow opening of the economy, like China. But the Cuban economy is not robust enough to sustain such a course. The young elite want to create a model more like Costa Rica or Brazil.

Sen. Kevin de León (CA): When visiting Cuba, it is startling to see how many Canadians and Europeans are vacationing in Cuba. The US policy is embarrassing. It is a fossilized, Cold War mentality and has unintended consequences.

Dr. Sabatini: The US policy toward Cuba has been controlled by a small but vocal constituency of Cuban Americans in Congress as well as the Cuban lobby.

John Burchett (Google): Google’s experience in Cuba has been very positive.  Younger people are more externally focused, they want Internet connectivity. We continue to submit proposals but the response to accept is slow because of the conflict between young people and older politicos who fear change.

Dr. Sabatini: The conflict between what the young people want and what the Old Guard will support is complicated because decision-making is hypercentralized in Cuba. Raul Castro makes all the important decisions. After the Arab Spring, the Old Guard perceives that Twitter and other online communication channels are dangerous because they can be used to foment revolution.

Sen. John Alario (LA): What is the status of the Cuban military?

Dr. Sabatini: Cuba is a militarized economy, with the military overseeing the means of production. The military controls 75% of the economy through the management of hundreds of enterprises in key economic sectors.

Kevin Lynch (Iberdrola): How does Venezuela’s instability impact Cuba?

Dr. Sabatini: Cubans are worried about their relationship with Venezuela, and Raul Castro has visited other oil-producing states such as Nigeria and has started off-shore drilling projects. One of the unintended consequences of the embargo is that the US cannot negotiate with Cuba about oil spills that could occur only 70 miles off Key West. Furthermore, Cuba faces $10 million in sovereign debt payments this year and has no funds to meet them. This is one of the factors driving the transition toward greater openness with the US.

Sen. Eduardo Bhatia (PR): The Cuban people give their love to the Castros but they are ready for a new nation and, like East Germany, they will quickly integrate with the US economy.

Dr. Sabatini: Cuba is opening up to private investment. Incentives are being provided to private groups for major projects. For example, a deep water port that can receive larger ships coming through the expanding Panama Canal has been built. This port will compete with New Orleans and other US ports. A Cuban beer company has been sold to Anheuser-Busch InBev. Private groups can access idle state land to create agricultural projects.

Sen. Jonathan Dismang (AR): It seems that property rights are the key to the disagreements about Cuba. Many lawsuits are ongoing.

Dr. Sabatini: You must have been a US citizen when you owned the land to make a claim for a return of expropriated land, so Cubans who fled to the US would not be able to make this claim. There are $9 billion in property claims mostly from US companies such as Texaco, AIG along with Sears, which had significant assets in Cuba before the revolution. But today, the Cuban government still does not respect private property. Even in joint ventures, the Cuban government retains a major controlling share.

Sen. Troy Fraser (TX): How does the thaw affect pilots? Is there a no-fly zone over Cuba; and will this change?

Dr. Sabatini: There has been a no-fly zone, but this is now being renegotiated with the FAA. Americans are using charter planes to fly to Cuba. As the country opens up to more tourists, bigger planes are being used that require more coordination. So this will change.

Sen. Sandy Pappas (MN): At one time, Cubans were very proud of their healthcare system; but now it seems to be plagued with problems. What happened?

Dr. Sabatini: Cuba exports its healthcare professionals for money. Hundreds of doctors have been sent to Venezuela in exchange for oil, creating a dearth of healthcare workers in Cuba. The medical infrastructure is lacking, hospitals are antiquated, and there is a shortage of modern medicines.

Tom Finneran (Moderator): What about human rights?

Dr. Sabatini: Human rights reform is not happening yet in Cuba. The Cuban government continues to repress dissent and discourage public criticism. Dissidents who speak out are beaten up and detained. The Torture Commission and the Red Cross are not allowed into Cuba. While in recent years Cuba has relied less on long-term prison sentences, many short-term political arrests and detentions are made every month. Other repressive tactics employed by the government include beatings, public acts of shaming, and the termination of employment. Normalization of diplomatic relations with Cuba required it to release 53 political prisoners and to allow visits by international human-rights monitors.

Sen. Stan Rosenberg (MA): What is the condition of Cuba’s physical environment, and how will tourism impact it?

Dr. Sabatini: Cuba was left behind when chemical fertilizers and agricultural industrialization became the norm in the US. So food in Cuba is all organic, and a fledgling organic-produce industry is emerging. The lack of manufacturing industrialization has preserved Cuba’s pristine coasts. So Cuba is ripe for tourism but they want to attract high-end tourists who are interested in museums, art, cuisine and ecotourism, like Costa Rica, and not the spring-break crowd.

Speaker Biography

Christopher Sabatini, PhD

Christopher Sabatini, PhD, is the founder and editor of the news-and-opinion website www.LatinAmericaGoesGlobal.org and an adjunct professor at the School of International and Public Affairs (SIPA) at Columbia University in New York.  He has a PhD in Government from the University of Virginia in Charlottesville. From 2005 to 2014, Dr. Sabatini was the senior director of policy at the Americas Society and Council of the Americas (AS/COA) and the founder and editor-in-chief of the hemispheric policy magazine Americas Quarterly. He also chaired the AS/COA Cuba Working Group. From 1997 to 2005, Dr. Sabatini was the Director for Latin America and the Caribbean at the National Endowment for Democracy. From 1995 to 1997, he was a Diplomacy Fellow with the American Association for the Advancement of Science, working at the US Agency for International Development’s Center for Democracy and Governance. He has served as an advisor to the World Bank and the U.S. Agency for International Development and has published numerous articles on Latin America, democratization, political parties, and US policy in the region. Dr. Sabatini regularly provides interviews for The New York Times, The Christian Science Monitor, The Lehrer News Hour, NPR, The Miami Herald, CNN, The Washington Post, and CNN en Español, and is a regular contributor to CNN-GPS and to NTN24’s TV news program Efecto Naim.

Other Foreign Relations articles:

Christopher Sabatini, PhD

Adjunct Professor

School of International and Public Affairs

Columbia University

Sen. Martin Looney

Sen. Kevin de León

Sen. John Alario

Sen. Eduardo Bhatia

Sen. Jonathan Dismang

Sen. Troy Fraser

Sen. Sandy Pappas

Tom Finneran

Sen. Stan Rosenberg

Dr. Christopher Sabatini

Senate Presidents’ Forum

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