Economic sanctions on Cuba to thaw slowly

Economic sanctions on Cuba to thaw slowly
Aug. 1, 2015

The Copa, it turns out, is not the hottest spot north of Havana. That
distinction belongs to the blast furnace that doubles as the ground
transportation staging area at Miami International Airport, where
thousands of Cuban visitors could soon be reunited with families
separated by 54 years of political and economic estrangement.

For now, President Barack Obama's decision to re-establish diplomatic
ties with the Island that Time Forgot has largely humanitarian
implications. Most of the economic sanctions imposed by the United
States on Cuba in 1962 — and toughened by the Helms-Burton Act in 1996 —
will remain in place at an annual cost of about $1.2 billion to the U.S.
and nearly $700 million to Cuba.

There has been a discernible thaw among younger Cuban-Americans in their
attitude toward former Cuban dictator Fidel Castro and his 84-year-old
brother Raul, who succeeded him in 2006. But given the unrelenting
antipathy among Cuba's aging but still politically powerful expatriate
community in Miami, there is little likelihood that the main economic
components of the embargo will be loosened before next year's U.S.
presidential election.

Florida's 29 electoral votes are too important to ignore.

Sweet and sour

Due in part to reporting by William Randolph Hearst and Joseph Pulitzer,
the United States in the late 19th century was drawn into a war with
Spain that eventually led to Cuban independence and a major American
stake in the island's large agricultural sector.

By the mid-1920s, more than half of Cuba's sugar industry was American
owned, and nearly all of its considerable output was exported to the
United States. Overall, the U.S. accounted for about two-thirds of Cuban
trade during dictator Fulgencio Batista's seven-year reign of corruption
and terror in the 1950s.

As the Cold War heated up after Castro assumed power in 1959, American
attempts to topple him ranged from the sadly tragic (the Bay of Pigs
invasion in 1961) to the lamely comic, like providing the Cuban leader
with exploding cigars and beard-eviscerating shoe dust.

For his part, Castro returned the disfavor by nationalizing U.S.
industries, allowing the Soviet Union to deploy nuclear missiles south
of Havana, and encouraging 125,000 Cubans (many of whom were alleged to
be criminals) to overrun South Florida in the Mariel boatlift of 1980.

Frozen in time

As of 2012, per capita economic output in Cuba was 80% lower than in the
U.S., the legacy of a command economy, the loss of financial support
from the now-defunct Soviet Union, and U.S. economic sanctions that
failed to achieve their political objective.

Because the sanctions can be circumvented through third parties,
however, the U.S. is still Cuba's fifth-largest trading partner, a
position solidified by President George W. Bush's decision to allow the
sale of agricultural commodities. Obama has chipped away at the
sanctions through executive orders, allowing the export of some
telecommunications and medical services.

In 2010, Fidel Castro was reported to have told an American journalist
that "the Cuban model doesn't even work for us anymore." It never worked
for the Cuban people, of course, and the baby steps that Raul Castro has
taken to loosen state control have done little to end political
oppression and human rights violations. Even after granting a few
economic freedoms, Cuba remains closer to North Korea than to Vietnam or
China in adopting market-based principles.

Not to be deterred, investors are anxiously lining up in anticipation of
the promised end of Raul Castro's presidency in 2018. Some American cash
already has flowed to the island, primarily in telecom and banking.

But in a 2013 paper published by the Council on Foreign Relations,
authors Julia Sweig and Michael Bustamante warned that Cuba's aging
population and "dilapidated physical infrastructure" will make economic
rapprochement a lengthy process.

"Cuba's ongoing changes do not resemble the rapid transition scenario
envisioned in the 1996 Helms-Burton legislation that conditioned the
removal of the U.S. embargo on multiparty elections and the restitution
of private property that was nationalized in the 1960s," they wrote. "In
this respect, Washington remains more frozen in time than Havana."

If so, that would be quite an accomplishment.

Tom Saler is an author and freelance financial journalist in Madison. He
can be reached at www.tomsaler.com.

Source: Tom Saler - Historical Perspectives Tom Saler - Economic
sanctions on Cuba to thaw slowly -
http://www.jsonline.com/business/economic-sanctions-on-cuba-to-thaw-slowly-b99547619z1-320382411.html