In Cuba Policy Debate, Theories Don’t Cut It
It’s time for those who theorize that closer business ties to Cuba will trigger economic and political reform, and want to scuttle U.S. sanctions, to face some inconvenient truths.
First and foremost, from an economic perspective, the very concept of trade and investment in Cuba is grounded in a misconception about how “business” takes place on the island. In most of the world, trade and investment means dealing with privately-owned or operated corporations. That’s not the case in Cuba. In Cuba, foreign trade and investment is the exclusive domain of the state, i.e. Fidel and Raul Castro. There are no “exceptions.”
Here’s a fact: In the last five decades, every single “foreign trade” transaction with Cuba has been with a state entity, or individual acting on behalf of the state. The state’s exclusivity regarding trade and investment was enshrined in Article 18 of Castro’s 1976 Constitution.
The state’s exclusivity extends also to what the rest of the world considers to be “humanitarian” transactions. The U.S. government frequently cites the cash sales of U.S. foodstuffs and medicine to Cuba to refute those who exaggerate the “totality” of the U.S. embargo. Indeed, since passage of the 2000 Trade Sanctions Reform and Export Enhancement Act (“TSREEA”), more than $4 billion in U.S. agricultural and medical products have been sold to Cuba. It is an unpleasant fact, however, that all those sales by more than 250 privately-owned U.S. companies were made to only one Cuban buyer, the Castro government.
It should be no surprise then that these U.S. products end up with huge, price mark-ups, on the shelves of the stores set up by the Castro regime that only accept “hard currencies,” such as the U.S. dollar or Euro. These are stores where mostly tourists shop. Little of the food or medicine is made available to Cuba’s general population. Neither does it end up on the ration cards Cubans are condemned to using.
It requires a tremendous leap of faith or belief in some extreme and unprecedented model of trickle-down economics, to argue or theorize that current or more U.S. sales to Castro’s monopolies have or can ever benefit the Cuban “people.”
This being the case with limited, cash-only sales of U.S. food and medicine, try imagining the disproportionate benefit the state has derived from three decades of trade with the Soviet bloc, or the billions in European and Canadian trade and investment in the Cuban state since the collapse of the Soviet Union in 1991. There is not a shred of evidence to suggest any of the benefits got beyond the Castro regime.
Because trade and investment entails dealing only with the Castro’s monopolies — a reality people would (or should) find unpalatable — it begets the question: How can these monopolies be weakened and dismantled?
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