Yahoo Finance Biden’s forgotten promise to Cuba
Camilo Condis is the type of scrappy entrepreneur Americans normally cheer. He’s the co-owner of a small electrical company in Havana, Cuba that used to piggyback on the robust tourist economy, but made a pivot when COVID hit and tourism dried up. Condis, 37, is now trying to capitalize on the green-energy revolution by installing solar panels in a region that desperately needs energy self-sufficiency.
The problem is, Condis gets tangled in American politics in nearly every facet of his business.
Sixty years of U.S. sanctions on Cuba have left the island with almost no domestic production, so Condis must import everything he needs to do business. U.S. sanctions make it impossible to buy on credit or pay for purchases through a bank account. He used to visit the United States regularly, buy what he needed in cash and bring it back on the plane. But tighter visa restrictions and other strictures imposed during the Trump administration largely closed that supply chain.
“The economy is very, very bad right now,” Condis says of conditions in Cuba. “Our first ask is to differentiate the private sector from the Cuban government. If they want to sanction the Cuban government, that’s fine, but don’t sanction the civil society in general. There have to be ways for U.S. government to say, 'The Cuban private sector not going to be a target.'”
To many visitors to Cuba, an easing of U.S. sanctions seems logical and long overdue. Cuba is no longer a client state of the Soviet Union, which dissolved in 1991, or its Russian successor. It poses no unusual national security threat to the United States. In 2014, President Obama began a rapprochement meant to boost U.S. trade with Cuba and export American influence. It seemed to be working, with Cubans in exile flocking home to be part of the new Cuba. Yet President Trump shut that down and imposed new sanctions even tougher than those in place before.
As a presidential candidate, Joe Biden promised to “promptly reverse the failed Trump policies that have inflicted harm on the Cuban people and done nothing to advance democracy and human rights.” But Biden’s only moves so far have been a minor easing of travel restrictions and a few other modest changes. The toughest sanctions remain in place, one factor triggering the largest flood of Cuban migrants to the United States ever.
I visited Cuba in January as one of 20 Americans on a fact-finding trip sponsored by the Global Interdependence Center, a Philadelphia nonprofit focused on economic cooperation among nations. Shortages were apparent everywhere. Locals wait in long lines for food and gas. Public bathrooms lack tissue paper and toilet seats. Internet service works at dial-up speed, if it’s even available. Buildings routinely collapse from lack of maintenance. There was a common refrain in meetings with government officials, local businesspeople and community leaders: End the sanctions. Reduce our misery. Give us access to American stuff.
[See 7 surprises from a visit to Cuba]
“There is no animosity in Cuba toward the United States,” Carlos Fernández de Cossío, the deputy foreign minister, told our group. The most important thing the United States could do, he said, is reverse Trump’s 2021 decision to put Cuba on the list of countries supporting terrorism, along with Iran, Syria and North Korea. “The United States could do this and no American would feel any pain. Acting on this would have no cost within the U.S.”
American business groups want the same thing. The U.S. Chamber of Commerce supports “barrier-free economic and commercial partnership between the United States and Cuba,” so American businesses can freely export to the island. Trade economist Gary Hufbauer of the Peterson Institute for International Economics estimates that U.S. exports to Cuba, barely $300 million per year now, could surge to $8 billion under normalization and $13 billion if the United States ever inked a free-trade deal with the country. That’s in the range of U.S. trade with Vietnam or Peru. Cuba wouldn’t be a huge market, but it would be a target-rich environment for certain U.S. exporters, such as poultry and rice farmers, telecom gear makers, technology service firms, cruise lines, tourism operators and real-estate developers.
More trade would also Americanize a land still clinging to Marxist ideology, normalization advocates say. “The premise is that you kill them with kindness,” says Juan Cruz of the Center for Strategic and International Studies, who worked on Cuba policy in the Obama and Trump White Houses. “Put so many things in place that you discredit their system. Inundate them with good shampoo, soft towels and rock music. History shows that when you open those kind of things, no system can hold back.”
So what’s the problem?
Strident opposition to normalization from some Cuban-Americans whose families fled the country when Fidel Castro seized power in 1959. Many of those refugees lost homes, land, bank deposits and the majority of their possessions, or have relatives who did, when Castro nationalized privately-owned assets. Some are now members of Congress, mainly from Florida, where the Cuban-American population totals more than 1 million. “They were born there and had to flee, or saw parents or grandparents who had to flee,” says JP Chavez, co-founder of the Miami public-affairs consultancy Vocero. “It leaves quite a scar on some of these folks.”
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Obama felt strongly about opening up to Cuba and disregarded opposition from anti-Cuba hard-liners, including Dem. Sen. Bob Menendez of New Jersey and a conservative Cuban-American voting bloc in South Florida. Trump was happy to reverse many Obama policies, and hard-liners got his ear. The new Trump sanctions hit as COVID was wrecking Cuba’s tourism business. Cubans couldn’t even get ventilators from the United States to help treat COVID patients, a slight many Cubans still bitterly bring up.
Cubans don't say this outright, but the need for relief is becoming acute. The Cuban economy is in miserable shape, with Cubans debating whether it’s worse now than during the desperate days known as the “special period” in the 1990s, after the Soviet Union collapsed and Cuba lost its powerful sponsor. The Cuban economy shrank by 11% in 2020 and has barely recovered since then. Venezuela is a key ally that supplies Cuba with oil and other goods, but Venezuela’s own economy is foundering and supplies to Cuba have dwindled.
Cuba clearly needs better friends. But to some extent, it torpedoes its own interests. On July 11, 2021, thousands of Cubans fed up with deprivation hit the streets in nationwide protests, which the communist government, led by President Miguel Díaz-Canel, suppressed with force. Authorities put more than 700 protesters in jail, including many who were demonstrating peacefully, according to human rights groups. The crackdown neatly aligned with the hard-liners’ claim of a cruel authoritarian regime undeserving of democratic outreach.
Yet there’s also a latent industriousness in Cuba that seems worthy of American support. The Cuban government has allowed people to start private businesses during the last several years, and there are now 6,000 such businesses, roughly three times the number of government-controlled firms. Owners are allowed to keep the profits, after paying taxes and fees.
But barriers to success swamp what American entrepreneurs might be used to. “Importing raw materials is the biggest barrier to making anything in Cuba,” one business owner told the GIC group. “At moments you just want to scream.” The lack of financing means Cuban importers have to pay for everything up front, with dollars or euros often exchanged for Cuban pesos on a vibrant black market that operates largely on Telegram.
Barriers to prosperity are sending many Cubans packing. Nearly 300,000 Cubans—about 2.5% of the population—have left the island during the last two years, seeking better opportunities elsewhere, mostly in the United States. Many are educated young people who see no outlet for their skills in Cuba. But some want to stay. “I’m still here because I want us to change, and I want to see it first-hand,” says Condis, the electrical contractor.
The migration surge could be an impetus for Biden to act. Some Cubans get visas to come to the States legally, but many fly to Central America and then trek to the southwest border, where Cubans are now the second-largest group of migrants by nationality, after Mexicans. Improving conditions in Cuba would persuade more Cubans to stay or return home. Biden has the executive authority to ease sanctions, as Obama did, without Congressional action.
Biden seems less interested in Cuba than Obama was, however, and there's political risk to following through on his campaign pledges. Menendez, the New Jersey Democratic senator and the son of Cuban immigrants, was a crucial Biden ally during the last two years, when Dems had just a one-vote majority in the Senate. Biden may have been unwilling to cross him, given the support he needed for big bills such as the 2022 Inflation Reduction Act. That could change now that Republicans control the House and no Democratic legislation is likely to pass.
Florida politics are another factor. Obama won Florida in 2008 and 2012, when Florida was considered a swing state a presidential candidate needed to take to win the election. Florida then went for Trump in 2016. Chavez, the Miami consultant, thinks Obama’s opening to Cuba two years earlier cost Democrats Hispanic support in Florida, and elsewhere. “We’ve seen a significant shift among Hispanic voters toward the Republican Party,” Chavez says. “One big reason is cozying up with socialist regimes. Folks down here in south Florida don’t like that. Republicans have been able to capitalize on this anti-socialism movement, and Cuba is the cornerstone of that.”
Biden flipped the script in 2020, winning the presidential election without Florida, which is now more of a red state than a swing state. So maybe he could antagonize Cuban-Americans in Florida without much political blowback. Yet he still faces a problem even Cubans recognize: While there’s organized opposition to normalizing relations, there’s no powerful advocate in favor. Democratic Sen. Ron Wyden of Oregon plans to introduce a bill this year to end U.S. sanctions on Cuba. But he has floated that bill before, with Republican Sen. Marco Rubio of Florida and others blocking it.
Business lobbyists say they do expect Biden to roll out new efforts to ease up on Cuba, either this year or next. A White House spokesperson told Yahoo Finance, “We don’t have anything on this at this time.” Cuba, for its part, could entice Biden by offering concessions, such as the release of jailed protesters or other actions Biden could point to as a move toward democracy. But Cuba, 64 years after Castro's revolution, still rejects democracy.
Getting back together is hard to do.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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