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Since 1960, the United States has maintained an economic embargo on Cuba, an island nation just ninety miles off the coast of Florida. The embargo was an instrument of Cold War policymaking, as Cuba became a communist nation under Fidel Castro and seized American economic assets without compensation. Even after the Cold War ended, the United States maintained the embargo as a political instrument in hopes of weakening the Castro regime. However, in the 1990s and 2000s, the embargo came to be seen by other Latin American nations as an unjust extension of American imperialism and some pundits allege that the embargo came to isolate the United States from the rest of the Western Hemisphere just as much as the embargo isolated Cuba from the American mainland. Last week, President Obama announced that he was taking executive action to weaken the long standing Cuban embargo and that he would move to normalize relations with Cuba. The President’s action received bipartisan support from those who believe that the embargo harms America’s relations with other Latin American nations, yet also received bipartisan criticism for rewarding a dictatorial regime that abuses the rights of its citizens. The President’s actions have forced 2016 presidential contenders such as Hillary Clinton, Rand Paul, Jeb Bush, and Marco Rubio to weigh in on the issue and depending on how well the President’s normalization push goes, it could become a significant issue in the Republican presidential primaries and the 2016 general election.
This topic brief will highlight some of the important steps taken to get Cuba and the United States to the negotiating table, discuss what actions President Obama will take to weaken the embargo, and the political impact that normalizing Cuban relations may have over the next two years, especially with regards to presidential politics.
Readers are also encouraged to use the links below and in the related R&D to bolster their files about this topic.
The Road to a Deal
The origins of the Cuban embargo date back to the late 1950s when rebel forces under the leadership of Fidel Castro ousted Cuban dictator Fulgencio Batista. Batista had ruled Cuba as a dictator since 1952 and the United States was a supporter of his regime because of Batista’s favorable attitude toward American business interests on the island. Prior to Castro coming to power, American corporations owned more than $1 billion in Cuban sugar, cattle, mineral, and utility assets. When rebels threatened Batista’s rule in the 1950s, the United States initially supplied him with military aid, but this ceased in 1958, due in part to growing human rights violations. Lacking American military assets, rebel forces successfully toppled Batista’s regime in January 1959.
After assuming power, Castro sought to find the best deal possible between the two poles of the Cold War world. President Dwight D. Eisenhower was very skeptical of Castro’s approach toward government, especially after he appointed several communist-leaning advisors to key posts. Since the United States refused to supply the new government with weapons, citing the arms embargo it placed on both sides of the Cuban civil war in 1958, Castro moved to get weapons from the Soviet Union, which was only too happy to have an ally in such close proximity to the United States. When the United States moved to restrict the import of Cuban sugar and close off all American exports to the island except food and medicine, Castro nationalized American property between 1960 and 1961 without compensation. This triggered even tighter restrictions and the severing of diplomatic relations in January 1961.
The embargo policy heightened tensions between the U.S. and Cuba, with the Central Intelligence Agency (CIA) drafting several plans to assassinate Castro and replace his government. The most notable of these, the Bay of Pigs Invasion in April 1961, was an unmitigated disaster. The Cuban Missile Crisis in October 1962, arguably the closest that the world has come to nuclear war, was precipitated by the Soviet Union trying to move nuclear weapons onto the island. A deal ended the standoff whereby the United States pledged never to invade Cuba and remove nuclear missiles in Turkey in exchange for the Soviet removal of nuclear weapons in Cuba. Following the Cuban Missile Crisis, the United States increased its restrictions on trade and travel to Cuba. By this time it had also succeeded in expelling Cuba from regional bodies such as the Organization of American States (OAS).
The goal of the embargo policy was to increase hardship in Cuba and cause a weary public to topple the Castro regime. Most international sanctions have this goal in mind, but history shows that such policies rarely work. Instead, regimes such as Castro’s tend to blame an outside power for the economic hardship, thereby giving them a convenient scapegoat. For example, the embargo has been blamed for causing an underdevelopment of Cuba’s infrastructure, especially its utility industry, as American investment has been denied to the island. The island is also barred from receiving the benefits of American tourism and its foreign exchange since Americans are prohibited from going there unless they meet very strict criteria. Cuban-Americans also have the amount of money they can send to loved ones on the island restricted under the embargo. Another argument against sanctions is that they violate human rights, as people who live under a regime bear the brunt of the sanctions instead of those who are in power (this argument can be found as a justification for why the United States should continue providing food aid to North Korea). The sanctions were strongly supported by America’s Cuban-American exile community, located largely in South Florida, most of whom fled Cuba after Castro came to power. These exiles in some cases were part of the political and financial elite that were displaced with the fall of Batista and they hoped to overthrow Castro and reclaim their property. Some older Cuban-American exiles still harbor these dreams.
The collapse of the Soviet Union provided a brief opening for improved U.S.-Cuban relations since Cuba lost its primary benefactor. The Atlantic writes on December 18 that the fall of the Soviet Union in 1991 denied Cuba a $5-$6 billion annual subsidy and the island was forced to endure a period of fiscal austerity now known as the “special period.” The Castro regime still did not collapse, though, and instead of pursuing a more generous foreign policy toward Cuba, the U.S. Congress hardened its stance. In light of the Cuban government’s continued abuse of the rights of political dissidents – who the Cuban government considers terrorists – Congress passed the Helms-Burton Act of 1996 that strengthened the Cuban embargo. The legislation allowed for legal action against any non-American company that did business with Cuba, prohibited recognition of a Castro-led Cuban government (either by Fidel or his brother Raul), and clearly stated the United States’ desire for a more democratic Cuba, among other components.
The problem with America’s hardline stance on the embargo by the 1990s is that the rest of the Western Hemisphere was moving in a different direction. By this time, according to the International Crisis Group on December 19, other Latin American nations began pushing for the United States to end the embargo. As more socialist-minded Latin American governments were elected in the 2000s, these demand only grew and The Atlantic article previously cited says that President Clinton and President George W. Bush saw tenets of Helms-Burton as significant constraints on their attempts to create a more lenient foreign policy toward the Cuban government. In addition, The Christian Science Monitor reports on December 18 that regional summits in recent years have been concerned with America’s embargo policy rather than other matters of regional concern such as anti-terrorism and the fight against illegal drugs. For example, the Summit of the Americas in Colombia in 2012 was dominated by discussions of Cuba’s exclusion from the meeting. Thus, the Cuban embargo has become a significant foreign policy headache for America’s attempts to work with its allies and its enemies in Latin America.
Changing circumstances in Cuba have also allowed for more flexibility in reaching some type of accord to break the impasse between both countries. Reuters on December 19 discusses the rise of Raul Castro, Fidel’s brother, to power in 2006. Raul was his brother’s defense minister and he is currently serving as Cuba’s president. At eighty-three years of age he is quite old, but he has shown a greater willingness than his brother to pursue market reforms to bolster the Cuban economy. It appears as if China might be the model Cuba is trying to emulate, whereby a Communist Party maintains its grip on power yet allows for some private economic activity. The Economist reports on December 17 that Raul’s reforms have been slow, but the private sector is prospering on the island as private farmers, small businesses, and co-operative enterprises now employ 20% of the island’s labor force. The Atlantic also notes that Cuba has benefitted from a close relationship with Venezuela over the last two decades. Former Venezuelan President Hugo Chavez was an admirer of the Castros and awarded Cuba a generous oil subsidy under the country’s Petro Caribe program. This enabled Cuba to receive 100,000 barrels of subsidized oil per day in exchange for military advisors, cheap agricultural goods, and medical assistance. Economists estimate that the Petro Caribe program has given the Cuban economy $36 billion over the last decade, which has helped the island recover from the hardship of the 1990s. However, Venezuela’s decline under the weight of falling global oil prices and under the leadership of new President Nicolas Maduro has caused Cuba to begin looking elsewhere for allies since its main economic lifeline is at risk of being severed.
During his 2008 and 2012 presidential campaigns, President Obama took a stand toward tempering the American embargo on Cuba. According to The Wall Street Journal on December 18, President Obama announced in a Miami auditorium in 2008 that he wanted to ease the embargo on Cuba. This flew in the face of political orthodoxy at the time which held that presidential candidates who wanted to win the battleground state of Florida needed to take a hard stance on the embargo in order to win the Cuban-American vote there. However, President Obama went on to win the state in 2008 and 2012, due in part to younger Cuban-Americans favoring an end to the embargo policy. For example, The Wall Street Journal article notes that a Florida International University poll taken earlier this year found that 68% of Cubans in the Miami-Dade County area favor re-establishing diplomatic relations with Cuba, with 90% of younger respondents favoring this shift in American foreign policy. Indeed, during his first term President Obama loosened some of the travel restrictions on visiting Cuba. At Nelson Mandela’s funeral in December 2013, President Obama gave the first public demonstration of his willingness to interact with the Cuban regime as he shook hands with Raul Castro.
It was revealed last week that secret talks have been talking place between American and Cuban authorities in Canada over the last eighteen months to create an environment where diplomatic ties can be normalized and the embargo can begin to be loosened. The Economist on December 17 explains that one of the big stumbling blocks in the talks was America’s insistence that Alan Gross, a worker for the U.S. Agency for International Development, be released. Gross was jailed by Cuban authorities in 2009 for giving away satellite equipment to Cuban Jews. Cuban authorities see such activity as a way to spread American-style propaganda and subvert the Castro regime. Cuba was willing to exchange Gross for three convicted Cuban spies that were languishing in American jails, but the United States did not want to exchange a civilian for intelligence assets. Those spies were arrested by the United States in 2001 for spying on Cuban exiles and American military installations in Florida. Eventually, a deal was struck whereby Gross would be exchanged with the three Cuban spies in exchange for Cuba’s release of fifty-three Cuban political prisoners and a U.S. intelligence asset named Rolando Sarraff Trujillo, who Cuban authorities arrested in 1995. The Los Angeles Times on December 18 explains that the deal was helped by Pope Francis, who acted as a trusted mediator. Francis, who is of Argentinian origin, has long hated the American embargo policy, so he was more than willing to help the United States reach a deal.
President Obama’s Upcoming Actions on the Embargo
The breakthrough between American and Cuban authorities covers much more than an exchange of intelligence assets, political prisoners, and a hostage. It is bundled with other promises that the United States government will begin the process of dismantling elements of the Cuban embargo, will normalize relations with Cuba, and will remove the country from the State Department’s state sponsors of terrorism list. The exchange of personnel brokered in Canada and by Pope Francis is merely a confidence building measure that lets both nations know that the other side is acting in good faith.
First, it should be noted that all of the actions that President Obama is taking are executive actions. This means that he is acting on his own without the approval of Congress. The President has shown a greater willingness to use executive actions for large-scale measures more than arguably any other president before him. Just this year alone the President has taken executive action on immigration, student loan debt, and the minimum wage for federal contractors. The early steps for loosening the embargo will come from the White House, with The New York Times saying on December 18 that the President’s aim is to keep the framework of the embargo in place but make it an empty shell. Extempers should note that only Congress can officially end the embargo against Cuba, as federal legislation – namely Helms-Burton – established it, but the White House argues that President Obama does have powers via the Treasury Department to loosen regulations on travel, exports, and other financial transactions.
The first steps that President Obama will take, according to The New York Times article previously cited, is to call for the Treasury Department to ease restrictions on agricultural exports and allow more free financial transactions from American banks to the island. The Economist article from December 17 explains that the Treasury Department will also allow Cuban-Americans to send more remittances back home by raising the cap from $500 to $2,000. The Office of Foreign Assets Control within the Treasury Department will also scrap requirements that people seeking to travel to the island receive permission from the federal government. In addition, the Commerce Department will be tasked with allowing American companies to export construction and telecommunications equipment to Cuba. The New York Times writes on December 19 that business interests are excited about entering the Cuban market as the country has a demand for American agricultural goods. In fact, some American firms such as Cargill and Archer Daniels Midland Company currently export corn and soybeans to Cuba. Tyson Foods and Pilgrim’s Pride also sell frozen chicken to the island. These transactions are allowed under a trade act passed in 2000 that allowed some agricultural goods to flow to Cuba. Telecommunications firms are likely to be interested in going into the Cuban market as well because the country’s mobile phone and Internet infrastructure is significantly underdeveloped, with Cubans often complaining of slow Internet speeds and poor service. The New York Times adds that John Deere and Caterpillar, who manufacture farming and mining equipment, see financial potential in Cuba as well because the island has some of the world’s largest deposits of nickel. The Economist on December 18 writes that the lifting of the embargo may also enrich Major League Baseball as the embargo has forced Cuban baseball players, some of the best in the world, to defect since they would not be given a license to play in the United States on the chance that they would pay taxes to the Cuban government, a prohibited act under the embargo.
To normalize relations, the United States will be looking to establish an embassy in Cuba, along with an American ambassador, while Cuba will seek to do the same in the United States. Politico on December 19 explains that the United States currently has an Interests Section working in Havana under Jeff DeLaurentis, who is likely to become the American ambassador to the island. In fact, the United States would not even have to build a new compound for its embassy because it could just rechristen the purpose of its Special Interests section in Havana.
In another concession to the Cuban government, the United States will look into removing it from the State Department’s sponsors of terrorism list. This list designates countries that “have repeatedly provided support for acts of international terrorism” and it allows for trade sanctions against these nations. It also serves a deterrent to foreign investment in the listed countries as those assets can be frozen or those sending funds can be sanctioned as well. Currently, the list includes four countries: Cuba, Iran, Sudan, and Syria. Cuba was added to the list on March 1, 1982. The New York Times on December 18 explains that President Obama has given the State Department six months to re-evaluate Cuba’s position on the list, which will require it to examine whether Cuba has supported international terrorism over the last six months and whether it has renounced terrorism and ratified international agreements against it. The International Crisis Group argues that this is a formal exercise with a pre-determined conclusion as Cuba is already working with Canada, Europe, and the United Nations on counterterrorism operations and it is actually working to reduce militant activity in other Latin American nations. For example, Cuba is putting pressure on the Revolutionary Armed Forces of Colombia (FARC) to end its campaign against the Colombian government. It is also exercising some pressure on Venezuelan authorities to reach a peaceful solution to that country’s political crisis. Therefore, after the six month deadline it is expected that Cuba will be removed from the state sponsors of terrorism list, thereby enabling it to access more global trade and financial services.
There are still a few stumbling blocks for normalizing relations, though. The two areas that have been identified are how the extradition of some political actors may be handled and how American naval installations at Guantanamo Bay will be treated. With regards to extradition, the United States and Cuba each have certain people they want to have extradited for various crimes. For Cuba, it would like to have those Cuban-Americans who planned elements of the Bay of Pigs or those who have supported political conspiracies against the Castro regime extradited for trial. The United States argues that doing so would put those individuals lives at risk, so it will be unwilling to meet Cuba’s demands. Similarly, Cuba, according to Al-Jazeera on December 18, has a few notable figures such as Assata Shakur, a black liberationist who was convicted of killing a New Jersey state trooper in May 1973. Shakur fled to Cuba with the help of the Black Liberation Army (BLA) in 1979 and she is one of the Federal Bureau of Investigation’s (FBI) most wanted fugitives. However, Cuba is unlikely to turn her over because it deems her crime as political in nature and feels as if she would be politically persecuted were she to be extradited back to the United States.
With regards to Guantanamo Bay, the United States has had a naval station there on a perpetual lease since the signing of the Cuban-American Treaty of 1903. Foreign Policy notes on December 19 that aside from housing a detention camp for prisoners in the war on terrorism, the facility is the logistical hub of the Navy’s Fourth Fleet that delivers humanitarian, disaster relief, and medical assistance throughout Latin America. Cuba’s government since Fidel Castro took over has resented the presence of the American navy in Guantanamo and has refused to cash American checks, delivered on a yearly basis, for the leasing of the facility. Foreign Policy argues that the Cuban government wants the Americans to abandon the Guantanamo, saying that it is akin to the illegal occupation of their country and that the American Navy has no right to be there without its permission. The United States was embroiled in a similar dispute over the Panama Canal in the late 1970s and was engaged in a spat with Ecuador over the housing of military bases over the last decade. In both cases, the United States left. America has an interest in maintaining Guantanamo to facilitate the navy’s efforts toward interdicting narcotraffickers and defending its Western Hemispheric interests. Cuba may want the facility to go away, but American abandonment of it would be politically unpopular. With the Cuban government in need of some financial resources, the United States may be able to convince it to begin cashing the checks for the facility, but extempers should pay attention to the Guantanamo situation as it could be a perpetual thorn in the side of diplomats on both sides toward achieving a smooth normalization of relations.
Political Fallout from Normalizing U.S.-Cuban Relations
The announcement of the breakthrough between President Obama and President Castro led to an interesting mix of reactions. Republican Senator Rand Paul (KY) praised the President’s decision and in a piece in Time on December 19 he argued that trading with human rights violators such as Cuba was actually beneficial because when people acquire the products of capitalism they will want greater freedom. Paul made a parallel to Vietnam and China, both of whom the United States have engaged in new trade relationships despite their poor human rights records. Other Republican senators such as Jeff Flake of Arizona and Mike Enzi of Wyoming signaled their support of the President’s position. On the opposite side, Republican Senator Marco Rubio (FL) blasted the President’s position, with The Christian Science Monitor reporting on December 18 saying that he argued that the concessions given to Cuba will just end up enriching the Castro regime. Democratic Senator Bob Menendez (NJ), who like Rubio is of Cuban descent, was very critical of the move and argued that it was a betrayal of those seeking greater freedom and human rights.
Those who argue against the embargo question the wisdom of more American business investment suddenly changing the Castro regime. The BBC reports on December 18 that Cuba still has a two-tiered currency system whereby tourists and the country’s political elite use dollars for their transactions, while the rest of the Cuban population uses pesos. Major financial transactions without an embargo are likely to be completed in dollars, which will serve to bolster the coffers of the Cuban government but provide very little new income for the rest of the country’s population. The Washington Post on December 17 chided the President for giving the Cuban government an “undeserved bailout,” arguing that the embargo was effective in reducing the appeal of Cuban communism throughout Latin America, that the Cuban regime’s promise to release political prisoners would prove hollow, and that the collapse of Venezuela may have finally forced the Cuban government to reform itself. Others fear what signal America is sending to its allies by dropping sanctions. The BBC article previously cited explains that American allies in the Middle East, Asia, and Europe may worry that the United States cannot be relied upon to secure long-term sanctions against Iran and Russia and may soon shift its policy to foster greater engagement with those nations. Indeed, after the breakthrough between both sides was announced the Iranian leadership quickly blasted Western sanctions against its nuclear program, saying that the Cuban example showed that sanctions do not work and are unjust. Foreign Policy explains in a separate article on December 19 that the belief that America can change Cuba is a ridiculous premise anyway, whether it happens through sanctions or other private business investment. It notes that America has tried to change other countries for more than a century, including Haiti, the Philippines, Nicaragua, the Dominican Republic, Panama, Guatemala, Libya, Iraq, and Afghanistan, but its efforts have come to naught despite spending trillions of dollars on pro-democratic efforts. The idea that private investment will change Cuba is a fallacy according to Foreign Policy because countries have a responsibility to charter their own destiny rather than rely on an outside power. Finally, there is the China and Vietnam argument, which can actually be turned against Rand Paul. It is this argument that extempers who are not in favor of the President’s embargo policy should pay attention to (and similarly extempers who support the President’s stance should position their speeches to “spike” this out so they cannot be attacked by judges or other speakers in cross-examination). The Fiscal Times, in an article published by The Week on December 19, explains that private business investment has not brought more democracy or even human rights to China and Vietnam. Instead, businesses have merely solidified the status quo in those countries. The reason is that businesses value profits, not democracy or human rights. Once they establish themselves, businesses are conservative institutions and they do not like change. New governments can mean new tax policies or even a reduction in their power. The Fiscal Times notes that in the recent Hong Kong protests, Western businesses were not supportive, arguing that the unrest triggered by them endangered existing contracts and hindered the making of new ones. Therefore, opponents of the President’s embargo position argue that Western business will only serve to keep Cuba’s communist, human rights abusing government in power instead of helping to democratize it.
The Cuban-American reaction to the President’s decision has been mixed as well. As previously stated in this brief, younger Cuban-Americans and even exiles from Cuba who came in the 1970s and 1980s are more receptive to ending the embargo than older Cuban exiles. The Cuban-American vote only carries significant weight for presidential contests in Florida, a perpetual tossup state and again, President Obama banked his presidential campaigns in 2008 and 2012 on winning over younger Cuban voters who are not in favor of the embargo. However, extempers should take into consideration that wealthier, older Cuban-Americans still carry more political weight than younger Cubans especially when it comes to fundraising and this may change some of the political calculus for 2016 and beyond. Politico on December 19 discusses how the pro-embargo U.S.-Cuban Democracy Political Action Committee has been energized by the President’s decision to normalize relations. The wealthy Cuban donors in this group tend to be more conservative than other Cubans, who have become less wedded to the Republican Party since the presidency of George W. Bush. Cuban-American donors, as the article notes, tend to become involved when the Cuban embargo issue becomes a matter of concern. For example, between 2006 and 2008 the U.S.-Cuban Democracy PAC raised more than $800,000 when Democrats signaled that they wanted to weaken the embargo. These donors may be called upon in 2016 to donate to a Republican candidate that pledges to re-install a harsh stance against a Castro-led Cuba.
Speaking of 2016 presidential politics, the President’s decision may serve to help the campaigns of two Republican contenders: Senator Rubio and former Florida Governor Jeb Bush. Both men are outspoken opponents of ending the embargo. Rubio’s forceful response to the President’s actions and his suggestion, as reported by the BBC on December 18, to block the nomination of a U.S. ambassador to Cuba or remove funding for normalization activities has put him back on the presidential radar screen. Rubio lost support last year when he backed an immigration reform bill, but the President’s move on Cuba may allow him to bolster his foreign policy credentials and receive more press. Also, Rand Paul’s anti-embargo position gives Rubio an opponent to bounce ideas off of and since Paul is one of the leading contenders for the Republican nomination, it can help elevate Rubio as well. Similarly, Bush’s stance on the embargo may help his position among conservative opponents of the administration, who are already skeptical of running another Bush for the presidency and dislike his stance on immigration reform and Common Core. As The Guardian explains on December 18, former Secretary of State Hillary Clinton came out in favor of President Obama’s actions, which may lay the foundation for Cuba being a significant foreign policy question in the 2016 presidential election. Keep in mind that many of the actions that President Obama is taking are going through via executive order. A new president could come in and overturn those actions, especially if Congress fails to authorize legislation in its next session to end the embargo.
Aside from hoping to win the White House in 2016, opponents of ending the embargo on Cuba could try to complicate the President’s plans in several ways. The Wall Street Journal explains on December 18 that opponents could insert language into appropriations bills prohibiting funds from going to any endeavor that normalizes U.S.-Cuban relations. For example, the $1.1 trillion spending bill that Congress recently passed prohibits funding going toward U.S. agricultural programs to be used to help Cuba. Also, members of Congress might try to block the nomination of an ambassador to Cuba or provide funds for an embassy. Also, opponents such as Rubio might try to block other appointments in the diplomatic service until the White House backs off of normalization. Finally, some have made the case that the President’s actions violate Helms-Burton, which says normalization cannot proceed until all political prisoners are released by the Cuban government and free and fair elections are held.
That said, these steps might not prove very effective. First, there is bipartisan support for the President’s actions and while the Republicans are divided, Democrats have largely backed the President’s position. Second, the U.S. would not need new funds to build an embassy in Cuba and if Jeff DeLaurentis’s nomination was blocked by Congress as the next American ambassador to Cuba, he could continue serving in that role in his current job in Havana for the State Department. He would just lack the ambassador title. Additionally, the President would likely veto any appropriations bills or other legislation that included language blocking his normalization plans, thereby ensuring continued gridlock that may work more against Republicans because they need to show a constructive legislative role after winning the 2014 midterms.
Overall, the steps toward normalizing U.S.-Cuban relations are just beginning. Both sides have made positive gestures toward each other, but the United States is doing much of the heavy lifting in this process, something that has been criticized by opponents of the deal who allege that Cuba is not having to meet any democratic standards in order to get large parts of the embargo lifted. Raul Castro has stated that despite reaching a deal with the United States that Cuba will remain communist, so the next decade, especially after the Castros exit from the scene, will determine whether relations between the two sides warm or grow cold once again. A thaw definitely appears imminent, but unless Congress can give its nod to fully lifting the embargo, a normalization of relations with Cuba will continue to exist on tenuous ground.