home Cuba, Economic Sanctions Odds & Ends from Miami: Cuba, Post Script

Odds & Ends from Miami: Cuba, Post Script

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Due to the feedback that I have received from my last blog post regarding Cuba, I felt obliged to write this post-script. As some of you may be aware, my last blog and the posts written by the Pobletes have generated a lot of traffic into The D.C. Dispatches this past couple of weeks.

Part of that feedback included a friend’s email with articles to read for my consideration.   The articles are found here and here. I promised my friend that I’d read them over the holidays and formulate a response. My response is the basis of this post.

The one article that merits a response comes from Nicholas Kristoff, columnist for the New York Times. Mr. Nicholas Kristoff’s column argues that the embargo is a failed policy for the following two reasons:

“We probably helped keep the Castro regime in power by giving it a scapegoat for its economic and political failures. Look around the world, and the hard-line antique regimes that have survived — Cuba and North Korea — are those that have been isolated and sanctioned. Why do we think that isolating a regime is punishing it, rather than protecting it?”

“Our economic embargo hurt ordinary Cubans, reducing their living standards, without damaging Cuban elites. The embargo kept alive the flames of leftism in Latin America, creating a rallying cry for anti-imperialists.”

Mr. Kristoff’s point that both Cuba and North Korea have been isolated does not match the reality for both of these countries. An embargo against a country is only effective if the rest of the world follows. If some countries decide not to follow the embargo, then the embargo is weakened. In the case for both countries, both countries had or have patrons that will continue to trade with them.

Focusing on Cuba, Mr. Kristoff does not count that the rest of the world does business with Cuba. Which leads to the next question, “If Cuba does business with other countries why is Cuba still poor?” Ironically, the answer comes from Mr. Kristoff’s column, which he writes, “The critics are absolutely right that the Cuban regime is both oppressive and economically incompetent.” An example of the regime’s incompetence was a Cuban law that states that allows for investment in the island. So far, so good.

The problem was that the law allowed only exiled Cubans to invest, but did not allow her citizens to invest in their economy. The President’s critics were correct to call the President’s desire to normalize relations a bailout. If Cuba and the US were companies or even potential business partners, why would the US would want a partnership when you know the other side is incompetent in their own business practice. Wouldn’t this be a case of a money pit, where one throws good money after bad? This kind of action is what gets CEO’s and Board of Directors fired.

Mr. Kristoff’s argument about the embargo hurting ordinary Cubans is weakened by his admissions of the regime’s incompetence in handling the economy. Columnist Michael Totten’s article about Cuba writes that the maximum salary for ordinary Cubans is $20 Dollars a month. His article is found here. In some cases when a foreign company invests in Cuba, they have to pay the Cuban government. As Mr. Totten explains,

“The government contracts with Spanish companies such as Meliá International to manage Havana’s hotels. Before accepting its contract, Meliá said that it wanted to pay workers a decent wage. The Cuban government said fine, so the company pays $8–$10 an hour. But Meliá doesn’t pay its employees directly. Instead, the firm gives the compensation to the government, which then pays the workers—but only after pocketing most of the money. I asked several Cubans in my hotel if that arrangement is really true. All confirmed that it is. The workers don’t get $8–$10 an hour; they get 67 cents a day—a child’s allowance.”

Ponder those facts. If ordinary Cubans are getting paid $20 per month or .67 per day, how would they be able to afford to pay the American goods that will come to the island, if the embargo is overturned. What incentive would the Cuban government have to either change the wage scale or raise it? Again, how will flooding American goods into Cuba help the ordinary Cuban? If tourism from the rest of the world were not helping the ordinary Cuban, how would American tourism do it?

As the year 2015 begins, it would be interesting to see how those who call for lifting the embargo reconcile these and other facts.

In closing, let me wish all of you a Happy New Year and may you have a prosperous 2015.

  • JAG

    The embargo argument is a circular one. 1) 190 countries trade with Cuba, so why are they still in the situation they are in? 2) The 53 year embargo has not been able to get the Castro brothers out of power and they have out lasted 10 US Presidents. I think the US would not simply be the 191st country to trade with Cuba, but rather the most powerful country in the world and one that is 90 miles from the Island with about 15% of its population.

    • JAG, there is a roadmap in place for the normalization of relations with Cuba that Congress passed, and President Clinton signed on March 12, 1996. If Cuba wants the privileges that come from access to the U.S. market, including our financial and global trading system, it needs to follow that roadmap. U.S. taxpayers should not be forced to underwrite (through loan guarantees, tax incentives for US companies, etc) the reconstruction of a failed Communist State. If Cuban Communist Party leaders, there is only one political party in Cuba, want to remain stubborn sticks in the mud, so be it. The United States has more important things to do with its time, money, and resources.

    • Gringo

      I think the US would not simply be the 191st country to trade with Cuba…

      Currently the “embargo” permits Cuba to import US agricultural and medical goods- for cash.
      The “get rid of the embargo” argument ignores the fact that all those 190 countries trading with Cuba, and all those foreign tourist hotels in Cuba have done little to improve the totalitarian poverty which Cubans suffer. Why is this so? The Castro brothers have tight control over this foreign trade. Such as the government getting the lion’s share of the salary the foreign tourist hotels pay Cubans.

      Why would increased US trade do what Canadian and European trade have not done to improve the totalitarian poverty the Cubans suffer?
      As long as the Castro bros- or their heirs- control things in Cuba, things will not improve. Recall HL Mencken’s famous definition of Puritanism: “The haunting fear that someone, somewhere, may be happy.” The haunting fear that the Castro bros is the someone, somewhere on the island of Cuba has accumulated enough wealth to become independent of Cuba’s totalitarian regime.

  • Arthur Freyre

    JAG, thank you for your comments. Our economy is powerful, but not at the combined strength of 190 countries. I wish it were so, but we still have a lot of work. The problem is that our goods will not go to the ordinary Cubans but to the elites. As Kristoff wrote, the government controls the economy. They want to keep that control. Just as China controls the flow of goods into their country, the Cuban government will do the same.

  • Nice post.

  • Pingback: The first 2015 Carnival of Latin America and the Caribbean | Fausta's Blog()

  • Brian

    I’m pretty sure the Cuban people are just tired of being used as pawns, on one side by the Castro government and on the other side by politicians in Washington that don’t give a damn about them. Too bad the only solution anybody can offer seems to be a combination of the words “Helms”, “Burton” and “Act”.

  • Arthur Freyre

    @Brian, @ Gringo and for those who are curious, here was my earlier post on Cuba. http://jasonpoblete.com/2014/12/20/odds-ends-cuba/ @Brian, this would address your comment about the ordinary Cuban especially coming from the opposition that is coming from Cuba.

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