A First Step: U.S. – Cuba Relations

The United States implemented an embargo on Cuba in 1960. Right before the embargo, Cuba had been purchasing about $300 million in U.S. goods a year, not adjusting for inflation which was about half of what it was before the Castro revolution. This embargo was an attempt to trigger a new revolution in the country against the communist regime (On the Rocks). In recent years, the embargo is just a reminder of the past, ineffective and unneeded. The embargo has been ineffective in its goal, with the Castro’s continuing their regime for over 50 years since it was first implemented and has been at odds with the United States’ normally free trade policies. Recently, President Obama has relaxed the embargo, allowing for more travel and economic activities between the two countries. Household remittance allowances have increased from $500 – $2,000 per quarter and reduced difficulty in attaining travel licenses will increase travel between the two countries. Furthermore, the restrictions on ship travel between the two countries have been lifted, allowing for more efficient exports for U.S. companies (Gallucci).

Economists have opposed the embargo for many years because it has affected the nation in ways that were opposite to the goals of its implementation. Rather than causing economic difficulties that would lead to uprisings against the communist Castro regime, the embargo gave an excuse for the struggling economy that Castro would otherwise have had to answer for. This tactic is not uncommon with nations that have poor trading relationships with the U.S. Venezuela has given lower prices for gas to a variety of countries with poor relationships with the U.S. as a way of political defiance. To worsen the embargo’s effects, it kept Cuba out of political groups such as The Organization of American States, which could have encouraged more openness (The New Normal). The embargo has played a role in the poor Cuban economy; however, the overall desired effect has not worked in the 54 years that it has been active.

Although the new measures enacted by President Obama are a step in the direction towards free trade between the United States and Cuba, they will have little effect on the economy of the small island nation. Over the past several years, the measures against Cuba have been relaxing. This has allowed for more trade and travel between the two nations. The new measures simply allow for slightly more trade, which will mainly affect the trade of agricultural goods to Cuba that are not covered by the embargo. Furthermore, although the U.S. tourism to Cuba is expected to double or triple, greatly increasing the nations $2.6 billion industry (US. Citizens currently account for 3.2% of the total visitors). Also, the increased remittance is significant, allowing for more money to flow into the country but it is still a small portion of what is needed. This being the case, these measures alone will not significantly boost the Cuban economy, which is still mainly controlled by the government. In numbers, the Cuban economy is not even supposed to grow by 3% which is needed to start the economy on a track towards health. Given the struggling economy and the government control, Cuba is not expected to attract many investors who could allow for more free trade in the future. Overall, the Country’s prospects for the future are still limited by the lack of a free economy (Gallucci). In order to improve Cuba in the long run, more measures are needed to free up their economy on a national as well as an international scale.

 Works Cited

“On the Rocks.” The Economist. The Economist Newspaper, 22 Oct. 1960. Web. 13 Apr. 2015. <http://www.economist.com/news/americas/21636921-rocks>.

Gallucci, Maria. “Lifting US Sanctions On Cuba Has Economic Perks But Isn’t A Boon For Trade, Analysts Say.” International Business Times. IBT Media Inc., 17 Dec. 2014. Web. 13 Apr. 2015. <http://www.ibtimes.com/lifting-us-sanctions-cuba-has-economic-perks-isnt-boon-trade-analysts-say-1761780>.

Peralta, Katherine. “Better Economic Relations With Cuba Could Be a Win-Win.” US News. U.S.News & World Report, 23 Dec. 2014. Web. 13 Apr. 2015. <http://www.usnews.com/news/articles/2014/12/23/better-economic-relations-with-cuba-could-be-a-win-win>.

“The New Normal.” The Economist. The Economist Newspaper, 3 Jan. 2015. Web. 13 Apr. 2015. <http://www.economist.com/news/leaders/21637388-loosening-embargo-will-pay-dividends-far-beyond-cuba-new-normal>

Fletcher, Michael. “U.S. Trade Embargo with Cuba Keeps Broader Economic Impact at Bay for Now.” The Washington Post. The Washington Post, 18 Dec. 2014. Web. 13 Apr. 2015. <http://www.washingtonpost.com/business/economy/us-trade-embargo-with-cuba-keeps-broader-economic-impact-at-bay-for-now/2014/12/18/7d418a30-86dd-11e4-b9b7-b8632ae73d25_story.html>.

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2 thoughts on “A First Step: U.S. – Cuba Relations

  1. Does the lack of free economy significantly affect Cuba’s international trade relationships? Do Cuba’s own current trade restrictions reduce potential American transactions? It is just interesting to me that Cuba has been restricting their own trade for so long while we have touted the power of our own embargo.

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  2. When foreign companies invest in Cuba, they must partner with the government as minor share holders. This is an unfair deal for the investing companies, so they are not encouraged to invest. Furthermore, on an international scale, only a small part of the embargo has been relaxed. The two countries are a long way from reaching a free trade agreement where all industries are allowed to buy and sell between the countries. Currently, only Agriculture is able to increase their exports, but in order for the Cuban economy to be stimulated in a large enough way, they must be opened up to other US markets such as tourism and other industries and consumer goods. Although the embargo is not the only issue plaguing Cuba’s economy, it is certainly a factor that can be fixed for the better of the country.

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