AMERICAN TRADE WITH CUBA:
AN ANALYSIS OF THE CURRENT EMBARGO
AND ITS FUTURE

     The embargo levied on Cuba has been described by the US government as "the most comprehensive embargo the United States has against any country in the world." What are the reasons the US has for waging such a battle against a small, faltering nation? Should such an embargo be continued? What are the potential gains and loses of ending the embargo? Questions concerning the embargo abound, but satisfactory answers remain elusive.

     In order to understand the current Cuba debates, an understanding of the island's history is needed. Following the Spanish-American War, the US led a campaign to amend the Cuban Constitution. The Platt Amendment, as it was called, gave the US rights to a Navy base at Guantanamo Bay, and a strong influence in Cuban politics. President Roosevelt later gave up the control over Cuban policy, but retained the Navy base.

     A communist revolution in 1958 brought Fidel Castro to power. In 1960, Castro's regime seized all the property that was owned by foreign interests, including those in the US. Prior to the seizure, about 75% of Cuba's land was owned by foreign interests. The seizure of US property was the principle cause creating the US embargo, begun by John F. Kennedy. A year later, Kennedy initiates the Bay of Pigs attempt to overthrow Castro. The Bay of Pigs was followed a year later by the Cuban Missile Crisis.

     A strong Soviet support for Cuba kept tensions high through the 1960s and 1970s. The quiet tension ended in 1980, when roughly 125,000 Cubans emigrated to the United States. Thus, Miami's Cuban Exile community was born. Since then, many more Cubans have attempted to reach the US. Another major exodus occurred in 1994. About 3,000 Cubans tried to reach America in the single year of 2001. The US Coast Guard was able to interdict about one quarter of those 3,000.

     Today, Cuba has an estimated population of 11.25 million people, on an island about the size of Pennsylvania. One-fifth of Cuba's population in 14 years old or younger. The nation's per capita income is $2,300.

The Current State of the Embargo

     A 1992 law, known as the Cuban Democracy Act (or Torricelli Law) and the 1996 Helms-Burton Act significantly increased obstacles to trading with Cuba. While these recent laws did allow for some exceptions, such as humanitarian and religious aid, the laws made corporate trade much more difficult. One provision made it illegal for any ship that has been to Cuba to dock at an American port for six months. Such a provision made it difficult for foreign nations to trade with both the US and Cuba. The Trade Sanctions Reform and Export Enhancement Act of 2000 relaxed the embargo and allowed certain sales of food to Cuba. Violating the embargo could result in up to a $1 million fine and a decade in prison.

     In a speech, George W. Bush made clear the while certain restrictions on the embargo have been weakened, he still opposes any efforts to allow Cuba to finance purchases. Bush stated that such financing would aid the communist regime. An obvious reason why politicians support the embargo is because of the Cuban exile community in Miami. The Cuban American National Foundation (CANF) is a major lobbying organization, and as such, is a substantial campaign contributor. The day Jesse Helms announced support for the Helms Burton Act (which strengthened the embargo), CANF donated $75,000 to Helms. President Clinton's endorsement of the Cuba Democracy Act garnered him $300,000 from CANF.

     Strong opposition by CANF has not stopped a growing interest in trade with Cuba, though. From 1999 to 2002, at least eight members of the US Senate and eighteen members of the House have visited Cuba with the purpose of exploring trade opportunities. Additionally, the House of Representatives is now considering HR5022, the Freedom to Travel to Cuba Act of 2002. HR5022 is currently in the House Committee on International Relations.

Reasons Why Sanctions are Being Weakened

     The main reasons why sanctions are being weakened are strictly practical and economic. Free-trade with Cuba has the potential to earn the United States billions of dollars. Currently Cuba is trading with other nations. But, the US would seem the most logical trading partner in many circustances, because of our close location. Why should Cuba buy goods from Europe or Asia when the United States is a mere 90 miles away?

     The Texas Senate voted to encourage the federal government the completely rescind the embargo. The Senate cited facts such as that Cuba's oil production has increased by over 400% in only ten years. Texas oil companies would certainly like to be able to purchase much of that oil. The Senate further stated that "Cuba imports nearly a billion dollar's worth of food every year." The farmers in Texas want the opportunity to sell in a Cuba desperate for food. American farmers are beginning to see much of that trade thanks to the Trade Sanctions Reform and Export Enhancement Act of 2000. In the first year of sales to Cuba, the US sold $250 million in crops.

     Beyond the loss of food sales to Cuba, the embargo costs the US in other ways. For example, Cuba is trying to bill itself as a stopping point for air-cargo traveling between Europe and Latin America. Currently, the city of Miami is the major stopping point. If Cuba is successful in taking the air-cargo business, the economic loss for Miami will be tremendous.

     Some have claimed that the embargo should be lifted because it does not work. Congressman Ron Paul (L-TX) has said that the embargo creates hatred for America among the Cuban population. Rev Robert Sirico echoed Congressman Paul's statement and added that in any case, sanctions do not injure the leaders of oppressive regimes. The sentiment that leaders are immune to the effects of sanctions was also stated by Donald Schulz writing in the Journal of Interamerican Studies and World Affairs. When President Bush gave his speech saying trade financing for Cuba would support an oppressive regime, Castro replied in a statement that:

                   No high-level Cuban leader can be bribed. None of them are millionaires, as is the
                   president of the United States, whose monthly salary is nearly double that of all the
                   members of the State Council of Ministers of Cuba for a whole year. None of them
                   can be included in the long list of neo-liberal friends of Mr. W. in Latin America who
                   are Olympic champions of embezzlement and robbery."

Castro has certainly used the embargo to create Cuban distrust for America and democracy.

     Rather than enforcing an embargo that cannot work, Donald Shulz advocated a plan of active engagement. He believes the US should "flood Cuba with foreign students, businessmen, teachers, tourists, researchers, journalists, artists, and other carriers of liberal, democratic, and materialistic values."

     Still others have accused the United States with blatant hypocrisy and disregard for international law. Anthony Kirkpatrick wrote that any claims against Cuban human-rights abuses must be compared with Amnesty International reports of abuse here in America. Donald B. Ardell wrote more strongly of American hypocrisy.

                   The embargo is illogical and inconsistent, continued by the Administration solely
                   to pander to a small but influential voting bloc of ex-patriot extremists in [Florida].
                   We trad with hideous regimes, such as Saudi Arabia, for goodness sakes!

     Ardell makes a valid point. According to the US Department of State, Saudi Arabia regularly violates basic human rights. Nonetheless, President George W. Bush has said that he and the Crown Prince of Saudi Arabia enjoy "a strong personal bond." The United States even trades with communist Vietnam now. Why would the US government sanction Cuba for its human rights abuses when the government's own documents name numerous other nations that are equally atrocious abusers and yet benefit from free-trade with America?

     The stamina of the "ex-patriot extremists" Ardell wrote about may be weakening, though. A recent poll conducted by Florida International University's (FIU) Institute of Public Opinion Research found Cuban immigrant living in Miami are becoming more pessimistic about democratic change coming to Cuba. As recently as 1991, 47% of ex-patriots believed "major political change" would occur in Cuba within one year. Only 2% of the 1991 respondents thought change would take more than a decade. And 4$ said change would never come. A decade later, in 2000, the percentage believing change would never come increased from 4% to 21%. The precentage who believed change would take at least a decade increased from 2% to 11%. Meanwhile, the percentage who saw change coming within a year declined from 41% to 7%. The Cuban exiles have even become much more willing to see sanctions weakened. In 1991, only 29% thought medicine should be exempted from the embargo. In 2000, that 29% had increased to 43%. FIU began questioning respondents about allowing food sales to Cuba in 1993. At that time, only 15% supported the idea of food sales. By 2000, 37% supported food sales. Clearly, the Cuban community of Miami is seeing less chance for democratic reform in Cuba and many are willing to see at least basic humanitarian sales to Castro's government.

Reasons for the Continued Embargo

     Many proponents of the embargo have a difficult time defending sanctions on the grounds of effectiveness. After all, the embargo has been in place for decades, yet Castro still reigns. Instead of defending the embargo's effect on democratic reforms, George W. Bush has defended the embargo as "a moral statement." Further, Bush has derided Cuba because it is the only non-democratic nation in the West. Bush stated, "There is only one national leader [in the West] whose position of power owes more to bullets than ballots." Bush went on to say that efforts to end the embargo would simply "prop-up" the failing communist policies.

     Jaime Suchlicki, the director of the University of Miami's Institute for Cuban and Cuban-American Studies, also believes ending the embargo is wrong. Suchlicki wrote that ending the embargo would have several negative effects, including the tacit endorsement of Castro's regime. Suchlicki also mentioned the fact that Castro seized American property following his revolution. However, when the Cuban government seized control of US properties, Castro did offer compensation, much as the US government does with eminent domain. The United States refused the offer, though, and declared the embargo.

     While many business and humanitarians advocate ending the embargo because of free-trade's ability to help the Cuban people and American profits, others claim that lifting the embargo could cost America financially. Many countries that have agreed to sell goods to Cuba on financed money have since ended the practice. Spain, France, Italy, and Venezuela have discovered that Cuba is too poor to pay its debts. Consequently, loaning to Cuba come at a loss to the lending nations. Because of the threats of Cuba not repaying loans, foreign investment in Cuba fell from $488 million in 2000 to $38.9 million a year later. Florida sugar growers also are concerned that trade could cost them. Cuba is a major producer of sugar and could sell considerably cheaper to the US market. Florida sugar growers suffered greatly following NAFTA and fear trade with Cuba could easily bankrupt them.

Cuba's Future

     The world is making a definite and absolute trend toward global free-trade, and economic development. Cuba, much like China, is attempting to include itself in freedom's bounty, while still retaining significant central control. Nonetheless, Cuba is moving toward liberalizing its economy. Castro has used the term "entrepreneurial upgrading" for a practice of allowing locally run, but state-owned companies significant autonomy. The local companies are charged with using technology, creating production according to market demands and managing manpower.

     The Cuban government is making tremendous efforts to keep up with new technology. It is now common for Cuban students to study IT in college, or to take adult courses in computer applications. Cuba is even placing internet computers in every post office.

     Cuba's efforts to embrace the new millennium are reinforced by the young population of the nation, and excellent educational system. Cuba's literacy rate is at 98%, and Cuba has a higher per capita college completion rate than any Latin American country, rivaling even the best European nations.

Assessment of Trade with Cuba

     Trade with Cuba is a difficult and complex issue to debate. Each side has varied and valid issues to raise. However, it is my view that the weight of evidence supports a decision to allow free-trade, without giving federal foreign aid to Cuba.

     It is obviously hypocritical and absurd for the US to trade with Saudi Arabia, Vietnam, and China, yet not with Cuba. Cuba is really no risk to the United States. In fact, the United States spend more money on its military in twelve hours than Cuba does in a year.

     Mark Rasenick astutely pointed out that it makes no sense to continue an embargo that has not achieved its objective in four decades. Granted, Cubas's survival for most of that time was dependent upon the Soviet Union. The loss of Soviet support has hurt Cuba. However, there are numerous other nations willing to sell to Cuba. In fact, America is the only nation with an actual embargo policy against Cuba. So, Cuba is going to trade with some nation. Cuba is going to find a way to participate in the world economy. America is simply choosing to lose the potential sales to Cuba.

     There is risk in trading with Cuba, as France, Italy, and Spain have discovered. However, American businesses should be allowed to decide for themselves what level of risk they are willing to take in trading with and loaning to Cuba. The American government, however, should not risk tax payer money on an obviously high-risk and controversial investment.

     Cuba also represents an untaped human resource for American businesses. Cuba's excellent educational system has created highly qualified and skilled workers. Yet, Cuba's poor economic situation has led Cuban workers to be the lowest paid in the West. US firms often use Chinese labor, or those of other poorer nations. Using Cuban labor would allow US businesses to save money of labor while also saving on shipping product into the US.

     In the end, America has for too long fought a losing battle with Castro. Other nations were always willing to circumvent US policy, and Castro survived. What communism and Castro may not survive, though, is the new economy. Free-trade has the power to bring in the liberal, democratic values that might lead to the changes the embargo has failed to achieve. Of course, as with all new ventures, American business must proceed with caution.

     Castro has seized US assets once, Cuba's totalitarian regime can change policies at whim, and Cuba's credit record is not encouraging. But, with due diligence, America and Cuba could create a situation beneficial to both nations.

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