Brookings: Topics - Cuba

Time to Bet on Cuba

Ted Piccone — Mon, 18 Mar 2013 00:00:00 -0400

Cuba’s efforts to “update” its socialist system through a series of economic reforms just got more complicated. The death of Venezuela’s Hugo Chávez, its principal benefactor, could seriously disrupt what is already a precarious process of maintaining top-down political control while liberalizing elements of the economy. Raúl Castro’s announcement that he will step down in five years and the emergence of younger leaders born after the 1959 revolution add further uncertainty to the island’s future.

These new circumstances offer President Obama a rare opportunity to turn the page of history from an outdated Cold War approach to Cuba to a new era of constructive engagement. In his second term in office, he should place a big bet by investing political capital in defrosting relations, an approach that will advance U.S. interests in a stable, prosperous and democratic Cuba.

Under Castro, the Cuban government has undertaken important reforms to modernize and liberalize the economy. Cubans are now permitted to buy and sell property, open their own businesses, hire employees and enter into co-ops, with state-owned enterprises on a more equal footing. The updating of the Soviet-style economic system is a gradual and highly controlled process. But the recent legal emergence of formal, small-scale private businesses (cuentapropistas) that can now compete on a more equal footing with state-owned enterprises opens a window into a profound shift in thinking already under way on the island. The reforms also offer new opportunities for U.S. engagement.

Castro’s loosening of the apron strings extends beyond the economy. In January, the Cuban government lifted exit controls for most citizens, which is likely to accelerate the process of reconciliation within the Cuban diaspora. It could also result in a swift uptick of Cubans departing for the United States, demanding a reconsideration of U.S. migration policy to manage the increase. The gradual handoff of power to a next generation of more pragmatic party and military leaders who will determine the pace and scope of the reform process is yet further evidence that the Castro generation is looking forward to securing a viable legacy.

The U.S. approach to Cuba has likewise undergone important changes since Obama took office. Since the expansion of travel and remittances in 2009, hundreds of thousands of the 1.8 million Cuban Americans living in the United States have sent more than $2 billion to relatives there, providing important fuel to the burgeoning private sector and empowering citizens to be less dependent on the Cuban state.

Much more, however, could be done. In his second term, Obama has a wealth of policy options available to him through executive authority that would reframe U.S. support for the Cuban people and advance U.S. national interests.

In his second term, the president can (and should):

Appoint a special envoy to open a discrete dialogue with Havana without preconditions to discuss such issues as migration, travel, counterterrorism and counternarcotics, energy and the environment, and trade and investment. Such talks could result in provisions that strengthen border security, protect Florida from oil spills, break down the walls of communication that prevent our diplomats from traveling outside Havana and help U.S. businesses export more goods, and thereby create jobs.
Authorize financial and technical assistance to support burgeoning small businesses and permit trade in goods and services with certified independent entrepreneurs.
Expand the list of exports licensed for sale to Cuba, including school and art supplies, water and food preparation systems and telecommunications equipment.
Grant general licenses for journalists, researchers, humanitarian organizations and others to facilitate people-to-people exchanges.
Remove Cuba from the list of state sponsors of terrorism, where it does not belong, allowing a greater share of U.S.-sourced components and services in products that enter Cuban commerce.

This list is not exhaustive; the president can take any number of unilateral steps to improve relations and increase U.S. support to the Cuban people, as mandated by Congress. He can also expect significant pushback from a well-organized and vocal minority of elected officials who are increasingly out of step with their constituencies on this issue. (In the 2012 election, Obama’s share of the Cuban-American vote increased by 10 points in Miami-Dade county.) He can win the argument, however, by demonstrating that these measures are in the spirit of the congressional mandate to encourage a free and prosperous Cuba.

The trend toward reform in Cuba is evident and suggests that an inflection point is approaching. Now is the time to employ a new paradigm by opening a long overdue direct dialogue with our next-door neighbor and thereby test the willingness of the Cuban government to engage constructively, including on the case of U.S. citizen Alan Gross. By invoking his executive authority to expand trade, travel and communications with the Cuban people, Obama can continue to help them make the transition from subjects to citizens. The moment has come to rise above historical grievances and extend that outstretched hand he so eloquently promised just four years ago.

Authors

Ted Piccone

Publication: The Hill

Image Source: © Enrique de la Osa / Reuters

Big Bets and Black Swans: Foreign Policy Challenges for President Obama’s Second Term

Thu, 17 Jan 2013 00:00:00 -0500

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Opening to Havana

Ted Piccone — Thu, 17 Jan 2013 00:00:00 -0500

President Obama can break free of the embargo against Cuba by asserting executive authority to facilitate trade, travel and communications with the Cuban people. Ted Piccone drafted this memorandum to President Obama as part of Big Bets and Black Swans: A Presidential Briefing Book.

What can President Obama do about trade, travel and communication with Cuba?
How does Cuba easing its travel restrictions affect U.S. migration policy?
What can Obama do to overcome Congressional opposition to talks with Cuba?

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TO: President Obama

FROM: Ted Piccone

Your second term presents a rare opportunity to turn the page of history from an outdated Cold War approach to Cuba to a new era of constructive engagement that will encourage a process of reform already underway on the island. Cuba is changing, slowly but surely, as it struggles to adapt its outdated economic model to the 21st century while preserving one-party rule. Reforms that empower Cuban citizens to open their own businesses, buy and sell property, hire employees, own cell phones, and travel off the island offer new opportunities for engagement.

Recommendation:

You can break free of the straitjacket of the embargo by asserting your executive authority to facilitate trade, travel and communications with the Cuban people. This will help establish your legacy of rising above historical grievances, advance U.S. interests in a stable, prosperous and democratic Cuba, and pave the way for greater U.S. leadership in the region.

Background:

Early in your first term, you made an important down payment on fostering change in Cuba by expanding travel and remittances to the island. Since then, hundreds of thousands of the 1.8 million Cuban-Americans in the United States have traveled to Cuba and sent over $2 billion to relatives there, providing important fuel to the burgeoning small business sector and helping individual citizens become less dependent on the state. Your decision to liberalize travel and assistance for the Cuban diaspora proved popular in Florida and helped increase your share of the Cuban-American vote by ten points in Miami-Dade county in the 2012 election.

As a result of your actions and changing demographics, families are more readily reuniting across the Florida straits, opening new channels of commerce and communication that are encouraging reconciliation among Cuban-Americans and a more general reframing of how best to support the Cuban people. Cuba’s recent decision to lift exit controls for most Cubans on the island is likely to accelerate this process of reconciliation within the Cuban diaspora, thereby softening support for counterproductive tactics like the embargo. The new travel rules also require a re-think of the outdated U.S. migration policy in order to manage a potential spike in departures from the island to the United States. For example, the team handling your immigration reform bill should be charged with devising proposals to reduce the special privileges afforded Cubans who make it to U.S. soil.

Under Raul Castro, the Cuban government has continued to undertake a number of important reforms to modernize its economy, lessen its dependence on Hugo Chavez’s Venezuela, and allow citizens to make their own decisions about their economic futures. The process of reform, however, is gradual, highly controlled and short on yielding game-changing results that would ignite the economy. Failure to tap new offshore oil and gas fields and agricultural damage from Hurricane Sandy dealt further setbacks. Independent civil society remains confined, repressed and harassed, and strict media and internet controls severely restrict the flow of information. The Castro generation is slowly handing power over to the next generation of party and military leaders who will determine the pace and scope of the reform process.

These trends suggest that an inflection point is approaching and that now is the time to try a new paradigm for de-icing the frozen conflict. The embargo — the most complex and strictest embargo against any country in the world — has handcuffed the United States and has prevented it from having any positive influence on the island’s developments. It will serve American interests better to learn how to work with the emerging Cuban leaders while simultaneously ramping up direct U.S. outreach to the Cuban people.

I recommend that your administration, led by a special envoy appointed by you and reporting to the secretary of state and the national security advisor, open a discreet dialogue with Havana on a wide range of issues, without preconditions. The aim of the direct bilateral talks would be to resolve outstanding issues around migration, travel, counterterrorism and counternarcotics, the environment, and trade and investment that are important to protecting U.S. national interests. Outcomes of these talks could include provisions that normalize migration flows, strengthen border security, break down the walls of communication that hinder U.S. ability to understand how Cuba is changing, and help U.S. businesses create new jobs.

In the context of such talks your special envoy would be authorized to signal your administration’s willingness to remove Cuba from the list of state sponsors of terrorism, pointing to its assistance to the Colombian peace talks as fresh evidence for the decision. This would remove a major irritant in U.S.-Cuba relations, allow a greater share of U.S.-sourced components and services in products that enter Cuban commerce, and free up resources to tackle serious threats to the homeland from other sources like Iran. We should also consider authorizing payments for exports to Cuba through financing issued by U.S. banks and granting a general license to allow vessels that have entered Cuban ports to enter U.S. ports without having to wait six months. You can also facilitate technical assistance on market-oriented reforms from international financial institutions by signaling your intent to drop outright opposition to such moves.

Under this chapeau of direct talks, your administration can seek a negotiated solution to the thorny issue of U.S. and Cuban citizens serving long prison sentences, thereby catalyzing progress toward removing a major obstacle to improving bilateral relations.

You should, in parallel, also take unilateral steps to expand direct contacts with the Cuban people by:

• authorizing financial and technical assistance to the burgeoning class of small businesses and cooperatives and permitting Americans to donate and trade in goods and services with those that are certified as independent entrepreneurs, artists, farmers, professionals and craftspeople;

• adding new categories for general licensed travel to Cuba for Americans engaged in services to the independent economic sector, e.g., law, real estate, insurance, accounting, financial services;

• granting general licenses for other travelers currently authorized only under specific licenses, such as freelance journalists, professional researchers, athletes, and representatives of humanitarian organizations and private foundations;

• increasing or eliminating the cap on cash and gifts that non- Cuban Americans can send to individuals, independent businesses and families in Cuba;

• eliminating the daily expenditure cap for U.S. citizens visiting Cuba and removing the prohibition on the use of U.S. credit and bank cards in Cuba;

• authorizing the reestablishment of ferry services to Cuba;

• expanding the list of exports licensed for sale to Cuba, including items like school and art supplies, athletic equipment, water and food preparation systems, retail business machines, and telecommunications equipment (currently allowed only as donations).

The steps recommended above would give your administration the tools to have a constructive dialogue with the Cuban government based on a set of measures that 1) would engage Cuban leaders in high-level, face-to-face negotiations on matters that directly serve U.S. interests in a secure, stable, prosperous and free Cuba; and 2) allow you to assert executive authority to take unilateral steps that would increase U.S. support to the Cuban people, as mandated by Congress.

To take this step, you will have to contend with negative reactions from a vocal, well-organized minority of members of Congress who increasingly are out of step with their constituents on this issue. Your initiative should be presented as a set of concrete measures to assist the Cuban people, which is well within current congressional mandates, and as a way to break the stalemate in resolving the case of U.S. citizen Alan Gross (his wife is calling for direct negotiations). Those are winnable arguments. But you will need to be prepared for some unhelpful criticism along the way.

Conclusion:

Current U.S. policy long ago outlived its usefulness and is counterproductive to advancing the goal of helping the Cuban people. Instead it gives Cuban officials the ability to demonize the United States in the eyes of Cubans, other Latin Americans and the rest of the world, which annually condemns the embargo at the United Nations. At this rate, given hardening attitudes in the region against U.S. policy, the Cuba problem may even torpedo your next presidential Summit of the Americas in Panama in 2015. It is time for a new approach: an initiative to test the willingness of the Cuban government to engage constructively alongside an effort to empower the Cuban people.

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Obama: Take Advantage of Change of Momentum in Cuba

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Ted Piccone

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Venezuela's Transition – A "Delicate Condition"

Diana Villiers Negroponte — Fri, 04 Jan 2013 15:10:00 -0500

President Hugo Chávez is reported to be in a “delicate condition” following recent surgery to remove cancerous cells. He remains in a Havana hospital, remote from the economic and security problems of Venezuela. In his place, Nicolás Maduro governs the nation as the executive vice president with powers far in excess of those designated to a U.S. vice president. For all intents and purposes, the union leader with strong socialist inclinations has the constitutional power to appoint and dismiss ministers, negotiate with the National Assembly and to preside over the Federal Government Council. Were Chávez to die on, or after January 10 – the constitutionally designated inauguration day – Maduro would assume the office of the president and proceed to hold elections 30 days thereafter. It would appear that a peaceful transition can take place.

A peaceful transition becomes more complicated if Chávez dies before January 10. In that event, according to the constitution, National Assembly President Diosdado Cabello shall assume the presidency and arrange for presidential elections. Cabello has indicated publicly that he is willing to postpone the inauguration, which would extend the time in which he is eligible to inherit the presidential responsibility. With Maduro as Chávez’ chosen successor, and the clear favorite of the Cuban government, there appears little risk of upsetting the pre-determined transition to Maduro. However, Cabello is a master behind-the-scene-player of Chavista factional politics and a former general in the Venezuelan army. He should not be discounted. Furthermore, a former Venezuelan Supreme Court Justice has accused Cabello of masterminding a drug trafficking ring, and he is said to be on the DEA’s watch list.

However, the subsequent presidential elections provide a strong opportunity for the opposition forces, gathered together in the mesa de la unidad (MUD), to win. The MUD’s candidate in the October elections led a well-organized campaign that lost because it could not distribute housing, social services and was limited to three minutes per day of radio/TV time while Chávez monopolized the media with 10 hour per day use of national media. Despite the uneven, if not unfair, campaign terrain, Chávez did less well in 2012 than he did at the previous presidential election. The opposition remained united and stood behind its standard bearer, Henrique Capriles Radonski.

Maduro will be well placed to use the same tactics to win the presidency. He can offer to fulfill Chávez’ promise of 25,000 new homes in Caracas. He can dominate the airwaves and warn the electorate that a vote for the opposition is a vote for upheaval. We should not assume, therefore, that Chávez’ death will result in the death of Chavismo, known by the party’s official name the Partido Socialista Unido de Venezuela (PSUV).

Should Capriles and the MUD demonstrate a sustained lead in the polls, the PSUV can call upon its 400,000 militia to provoke disturbances. These young men and women, wearing their signature Chávez red shirts, have been trained to fight against a foreign invasion. An internal electoral campaign is not a foreign invasion, unless rumors of U.S. support for the opposition provoke increased antagonism. Short of taking up arms, the militia can occupy roads and organize counter presidential rallies that result in numerous injuries, if not deaths. They might succeed in creating serious political unrest that justifies the call for “un estado de excepción” (state of exception, a.k.a. state of emergency). In this event, Article 337 of the constitution permits the executive vice president, together with his cabinet, to suspend temporarily citizens rights, with noted exceptions. According to Article 338, in the event of internal or external conflict which might threaten the security of the state, the state of emergency can last for 90 days with a further extension of 90 days. During that time, constitutional guarantees would be suspended.

Three factors work in favor of stability and against declaring a state of emergency: Cuba’s need to sustain the delivery of 90,000 barrel per day of subsidized oil, the China Development Bank’s interest on continued payments on its $42.6 billion loan to the Venezuelan government, and Washington’s desire to improve relations with Caracas and reintroduce the DEA into Venezuela. For several months, Maduro had discussions with senior officials at the State Department, and there is talk of resuming diplomatic relations at the level of ambassador.

Furthermore, Maduro faces significant economic problems. Severe macroeconomic distortions, an over-valued currency, capital flight and shrinking domestic production require responsible management of the economy and the support of the multilateral lending agencies, as well as the return of private investors. As Foreign Minister, Maduro was exposed to the realities of international pressures, as well as opportunities should he redirect the ship of state towards a stable, balanced and investor friendly management of the Venezuelan economy.

Authors

Diana Villiers Negroponte

Image Source: © Carlos Garcia Rawlins / Reuters

What Roles for Foreign Direct Investment in the New Cuban Economy?

Mon, 10 Dec 2012 09:00:00 -0500

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December 10, 2012
9:00 AM - 10:30 AM EST

Stein Room
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC

Today’s ailing Cuban economy is marked by high labor costs, low wages and small inflows of foreign investment. In 2011, under President Raúl Castro’s leadership, the government started instituting reforms to open the economy. Positive developments in international tourism, nickel and cobalt mining, and high value-added agriculture serve as foundations for future growth. But progress made to date has yet to take full advantage of the plethora of competing sources of capital offered by today’s more diversified global economy. In order to remain competitive and preserve quality social services, Cuba could learn from its own experiences with joint ventures and free trade zones, and from the experiences of other developing countries, to harness foreign capital as a vital tool of national development. Will President Barack Obama, in his second term, take advantage of Cuba’s economic opening to forge a new path for relations with Havana?

On December 10, the Latin America Initiative at Brookings hosted the launch of a new study, “The New Cuban Economy: What Roles for Foreign Investment?” by Brookings Nonresident Fellow Richard Feinberg, professor of International Political Economy at the University of California San Diego. The report explores the role of foreign capital in the future of the Cuban economy, including recommendations for Cuba, the United States, and international financial institutions. Feinberg was joined by Diego Ruiz, vice president of Global Public Policy and Government Affairs for PepsiCo, Inc., and Christopher Sabatini, senior director of policy at the Americas Society and Council of the Americas. Senior Fellow Ted Piccone, deputy director of Foreign Policy at Brookings, provided introductory remarks and moderated the discussion.

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What Roles for Foreign Direct Investment in the New Cuban Economy?

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The New Cuban Economy: What Roles for Foreign Investment?

Richard Feinberg — Sun, 09 Dec 2012 00:00:00 -0500

The Cuban revolution defined itself in large measure in terms of what it was not: not a dependency of the United States; not a dominion governed by global corporations; not a liberal, market-driven economy. As the guerrilla army made its triumphal entry into Havana and the infant revolution shifted leftward, a hallmark of its anti-imperialist ethos became the loudly proclaimed nationalizations of the U.S.-based firms that had controlled many key sectors of the Cuban economy, including hotels and gambling casinos, public utilities, oil refineries, and the rich sugar mills. In the strategic conflict with the United States, the “historic enemy,” the revolution consolidated its power through the excision of the U.S. economic presence.

For revolutionary Cuba, foreign investment has been about more than dollars and cents. It’s about cultural identity and national sovereignty. It’s also about a model of socialist planning, a hybrid of Marxist-Leninism and Fidelismo, which has jealously guarded its domination over all aspects of the economy. During its five decades of rule, the regime’s political and social goals always dominated economic policy; security of the revolution trumped productivity.

Fidel Castro’s brand of anti-capitalism included a strong dose of anti-globalization. For many years, El Comandante en Jefe hosted a large international conference on globalization where he would lecture thousands of delegates with his denunciations of the many evils of multinational firms that spread brutal exploitation and dehumanizing inequality around the world.

Not surprisingly, Cuba has received remarkably small inflows of foreign investment, even taking into account the size of its economy. In the 21st century, the globe is awash in transborder investments by corporations, large and small. Many developing countries, other than those damaged by severe civil conflicts, receive shares that significantly bolster their growth prospects. The expansion of foreign direct investment (FDI) into developing countries is one of the great stories of recent decades, rising from $14 billion in 1985 to $617 billion in 2010.1 While FDI2 cannot substitute for domestic savings and investment, it can add significantly to domestic efforts and significantly speed growth.

Today’s ailing Cuban economy, whose 11.2 million people yield the modest GNP reported officially at $64 billion3 (and possibly much less at realistic exchange rates), badly need additional external cooperation—notwithstanding heavily-subsidized oil imports from Venezuela. As with any economy, domestic choices made at home and by Cubans will largely determine the country’s fate. Yet, as Cubans have been well aware since the arrival of Christopher Columbus, the encroaching international economy matters greatly; it can be a source of not only harsh punishments but also great benefits. In the Brookings Institution monograph Reaching Out: Cuba’s New Economy and the International Response, I explored the modest contributions already being made by certain bilateral and regional cooperation agencies and the larger potential benefits awaiting Cuba if it joins the core global and regional financial institutions— namely the International Monetary Fund, the World Bank, the Inter-American Development Bank, and the Andean Development Corporation. This sequel explores the contributions that private foreign investments have been making, and could make on a much greater scale, to propel Cuba onto a more prosperous and sustainable growth path.

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Richard Feinberg

Image Source: © Enrique de la Osa / Reuters

Overcoming Obstacles to U.S.-Cuba Dialogue: Joint Recommendations from Cuban and American Scholars

Mon, 21 May 2012 09:30:00 -0400

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May 21, 2012
9:30 AM - 11:30 AM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

Despite important steps both in Cuba and the United States to increase engagement, tensions between Washington and Havana continue to run high. Nonetheless, a number of academic, cultural and people-to-people exchanges are breaking the ice of Cold War-era politics and creating new opportunities for improving ties between the two countries. In that spirit, the Cuba-United States Academic Workshop (Taller Académico Cuba-EEUU or TACE), led by the University of Havana, American University and CRIES (Regional Coordination for Economic and Social Research), has met six times since 2009 in an atmosphere of open and constructive debate. TACE brings together scholars, former diplomats and economists to discuss relations between Cuba and the United States and search for common ground.

On May 21, the Brookings Institution hosted a panel of Cuban and American academics for the first public presentation of the group’s joint recommendations on ways to overcome some of the obstacles to engagement and contribute to a gradual improvement in bilateral relations. Andrés Serbin, Executive President of CRIES, offered introductory remarks. Carlos Alzugaray and Jorge Mario Sánchez from the University of Havana, as well as Philip Brenner and Sally Shelton-Colby from American University, served as panelists during the discussion. Senior Fellow Ted Piccone, deputy director of Foreign Policy at Brookings, moderated the conversation.

After the program, panelists took audience questions.

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Overcoming Obstacles to U.S.-Cuba Dialogue: Joint Recommendations from Cuban and American Scholars

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Andrés Serbin

Executive President

Ted Piccone

Philip Brenner

Professor, School of International Service

Jorge Mario Sánchez

Senior Scholar, Center for the Study of the Cuban Economy (CEEC)

Sally Shelton-Colby

Diplomat in Residence, School of International Service

Balancing Preservation and Transformation in Cuba: A Conversation with Eusebio Leal

Fri, 18 May 2012 10:00:00 -0400

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May 18, 2012
10:00 AM - 11:30 AM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

Cuba is undergoing a gradual economic and social transformation that potentially carries great importance for the island nation, as well as for its relationships with the United States and the rest of Latin America and the Caribbean. Part of this transformation includes the physical redevelopment of Old Havana, spearheaded by Dr. Eusebio Leal, the city’s chief historian and a leading public figure in Cuba. Dr. Leal has led the government’s efforts to remake Havana as a prime destination for travelers from around the world—more than 2.7 million paid a visit to Cuba last year alone—while at the same time preserving the city’s cultural, urban and architectural heritage.

On May 18, the Latin America Initiative and the Metropolitan Infrastructure Initiative at Brookings hosted Dr. Leal for a discussion on progress to restore Old Havana, establish a self-sustainable financing system to preserve Cuba’s historical sites, and promote tourism. Brookings Nonresident Senior Fellow Richard Feinberg and Robert Puentes, senior fellow and director of the Metropolitan Infrastructure Initiative, provided commentary on the opportunities and challenges of urban redevelopment in today’s Cuba and its effects on the wider Cuban economy. Brookings Vice President and Director of Foreign Policy Martin Indyk provided introductory comments and Senior Fellow and Deputy Director of Foreign Policy Ted Piccone moderated the discussion.

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Balancing Preservation and Transformation in Cuba: A Conversation with Eusebio Leal

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Martin S. Indyk

Eusebio Leal

Director
Old Havana Restoration Program and Historical Center

@ Brookings Podcast: Economic Reform in Cuba

Ted Piccone — Fri, 06 Apr 2012 15:25:00 -0400

Under the leadership of Raul Castro, Cuba has been making increasing economic reforms, aiming for greater participation in the global economy. Senior Fellow Ted Piccone says Raul Castro is following a path toward "socialized capitalism," along the lines of reforms taken in communist Vietnam and China.

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Cuba Is Changing, Slowly but Surely

Ted Piccone — Thu, 19 Jan 2012 11:23:00 -0500

As I sat on the curb in front of central Havana’s Capitolio, the impressive domed hall that resembles the U.S. Capitol building, and watched the 1950s-era Plymouths and Soviet-made Ladas go belching by, I was sure I had entered a surreal time warp a mere one-hour flight from Miami. And yet, after a week of meetings with Cuban and foreign diplomats, journalists, academics and artists, I became convinced that Cuba, indeed, is changing in many ways.

As a relative newcomer to the intricacies of the Cuba question, I was immediately struck by Cuba’s unique blend of decaying splendor, cultural prosperity, restricted freedoms and relative poverty. As everyone knows, Cuba’s highly centralized system, with its impressive achievements in health, education and the arts, is still recovering from the loss of massive Soviet subsidies, hurricanes and a steady outflow of its well-educated workforce. Creditors in China and elsewhere are growing tired of underwriting Cuba’s struggling economy as it tries to move away from its ossified past and into the 21st century. So something had to be done about liberalizing the economy.

A closer look, however, reveals something more profound—a wholesale mental shift, outlined clearly by President Raul Castro over the last two years, that the time has come to move the Cuban people from wholesale dependence on the state to a new era of individual responsibility and citizenship.

This is going to take time. The economic reforms or “updating” of Cuba’s Soviet-style economic system, approved last spring at the Communist Party’s first National Congress in 14 years, are just beginning to be enacted. They include an expansion of licenses for private enterprise (over 350,000 have been granted), opening more idle land to farmers and cooperatives, allowing businesses to hire employees, empowering people to buy and sell their houses and cars, and opening new lines of credit with no legal ceilings on how much Cubans can borrow. Non-state actors are allowed now to sell unlimited services and commodities directly to state-owned enterprises and joint ventures, thereby opening new channels of commercial activity between farmers and tourist hotels, for example. Think Viet Nam or China. The reforms include tough measures too, like shrinking the buying power of the longstanding ration card that every Cuban gets to purchase subsidized basic goods, cutting unemployment benefits, and eventually dismissing anywhere from 500,000 to one million employees from the state sector as bureaucratic middlemen become obsolete and tax revenues rise.

These changes, while painful, are reason enough to be optimistic about Cuba’s economic future. But something much more fundamental is at work—a turn away from government control of pricing and subsidizing products throughout the economy to a more decentralized framework of subsidizing persons based on need. At heart, the Castro government is prepared to move Cuba from a society based on equity of results to equality of opportunity, infused with a culture of humanism. Not that Cuba’s system ever offered true equality, as one taxi driver reminded me as we drove down Havana’s famous seaside Malecon. The door, however, is now opening wider to the inevitable rise in inequality that comes from capitalism, even restrained forms of it. Whether one is able to prosper as a self-employed restauranteur, or is the beneficiary of generous relatives sending remittances and goods home from Miami, new gradations in Cuba’s economic and social strata are on the way. As long as someone arrives at their wealth legally and pays their taxes, assured one senior party official, they are free to become rich.

The big question for Cuba’s leaders today is whether they can bring their people with them down this new, uncertain path after five decades of Cuban-style communism. If reforms happen too quickly, it could cause excessive dislocation and unhappiness and potentially destabilize the regime. Already bureaucrats who have something to lose under the new system are resisting change, much to Raul Castro’s chagrin. If the pace of change is too slow, on the other hand, budding entrepreneurs, the middle class and disaffected youth, who have no overt commitment to the values of the 1959 revolution, may give up sooner and head to greener pastures in the United States, Spain or Canada. As it is, Cubans are leaving the island in droves to join their families in Florida and beyond, beneficiaries of U.S. policies that grant Cubans preferred immigration benefits once their feet reach American soil, and of Spanish laws that grant some Cubans Spanish citizenship.

The trick for party officials, then, is to demonstrate enough tangible improvements that Cubans will maintain faith in their ability to lead the country even after the Castros leave the scene. This explains the Communist Party’s determined effort to intensify popular consultations throughout the island and to keep up the momentum and rhetoric of slow but steady change. “In everything we do,” said one official, “we will try to be inclusive.”

There is, indeed, a daunting list of challenges ahead. Cuban officials are working overtime to update legal codes and systems to conform to the new economic policies. A revised tax code is being drafted as well as designs for a new labor system that will handle the growing category of self-employed workers not currently covered by Cuba’s labor code. A massive education campaign is needed not only to inform and consult the general public but to explain to local officials and civil servants how this is all going to work. New rules for foreign investment remain unfinished business. And major investment is needed to update Cuba’s sagging infrastructure, especially in the telecommunications sector where cell phones and internet penetration remain the lowest in the hemisphere.

One area where Cuba seems to be moving in a positive direction is tourism. From 1990 to 2010, the estimated number of tourists has risen from 360,000 to 2.66 million. In addition, thanks to President Obama’s decision to allow Cuban-American families to visit the island and send remittances as much as they want, Cubans have received over 400,000 visits and roughly $2 billion from relatives in the United States. These are proving to be important sources of currency and commerce that are helping families cope with reduced subsidies and breathe life in the burgeoning private sector. A walk through crowded Old Havana, where construction crews are busy restoring one of the Americas’ great colonial treasures, offers compelling evidence that Cuba can be a strong magnet for Europeans, Canadians, Chinese and—some day—hundreds of thousands of American visitors. And Pope Benedict’s visit in late March will shine an international spotlight on a Cuba slowly opening its doors to the world, yes, but more importantly, to an increasingly vocal and confident Catholic Church intent on securing a more prominent and relevant place in Cuban society.

For now, Cuba’s slow-motion evolution toward a hybrid phase of economic liberalization and political control remains a work in progress. The next Communist Party conference to be held later this month is likely to bring only modest changes in the regime’s aging leadership, for example, but promises of adopting term limits for senior government officials appear all but certain to be fulfilled. Raul Castro, a military man who believes in discipline, organization and institutions, has instituted regular cabinet meetings and clear lines of communication. In this sense, he is no Fidel. These, too, are signs of change that will, with time, make long overdue reconciliation with the United States inevitable.

Authors

Ted Piccone

Image Source: © Enrique de la Osa / Reuters

Reaching Out: Cuba’s New Economy and the International Response

Fri, 18 Nov 2011 09:00:00 -0500

Event Information

November 18, 2011
9:00 AM - 10:30 AM EST

Saul/Zilkha Rooms
The Brookings Institution
1775 Massachusetts Avenue, NW
Washington, DC 20036

Since the collapse of the Soviet Union, a resilient Cuba has dramatically diversified its international economic relations with states like Spain and Canada and now with emerging market powers like China, Brazil, and Venezuela. Despite increasing ties to the international community, Cuba remains absent from the core international financial institutions such as the IMF and World Bank.

On November 18, the Latin America Initiative at Brookings hosted the release of a new study by Brookings Nonresident Senior Fellow Richard Feinberg titled, “Reaching Out: Cuba’s New Economy and the International Response.” The report explores recent Cuban economic reforms and offers recommendations for how the international development community, including the United States, should respond. Following his remarks, Carlos Alzugaray Treto, professor of international affairs at the University of Havana, and Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, provided commentary. Senior Fellow Ted Piccone, deputy director of Foreign Policy at Brookings, provided introductory remarks and moderated the discussion.

After the program, panelists took audience questions.

Participants

Panelists

Gary Hufbauer

Senior Fellow
Peterson Institute for International Economic

Carlos Alzugaray Treto

Professor
University of Havana

Reaching Out: Cuba’s New Economy and the International Response

Richard Feinberg — Thu, 17 Nov 2011 15:53:00 -0500

INTRODUCTION

Five decades after Fidel Castro’s “26th of July Movement” marched victoriously into Havana on New Year’s Day, 1959, the United States and Cuba, separated by less than 100 miles of choppy waters, remain deeply distrustful neighbors entangled in a web of hostilities. Heated U.S. policy debates over how best to respond to the Cuban Revolution—through legislation in the Congress or executive orders issued by the Executive Branch—implicitly assume that there are only two players in contention: Washington and Havana. Yet, this conceit takes us very far from the realities of Cuba today.

Since the collapse of its former patron, the Soviet Union, a resilient Cuba has dramatically diversified its international economic relations. Initially, Cuba reached out to Europe, Canada, and a widening array of friendly states in Latin America. Over the last decade, Cuba has reached out to forge economic partnerships with major emerging market economies—notably China, Brazil, and Venezuela. Spanish firms manage many of the expanding hotel chains in Cuba that cater to 2.5 million international tourists each year. A Canadian company jointly owns mining operations that ship high-priced nickel to Canada and China. In the next few years, China is poised to spend billions of dollars building a large petrochemical complex at Cienfuegos. A Brazilian firm will modernize the Mariel Port so that it can accommodate very large container ships transiting the newly widened Panama Canal. Petroleum companies from ten or more countries have lined up to explore for deepsea oil in Cuban waters in the Gulf of Mexico.

Despite these advances, the Cuban economy remains in the doldrums (as described in Section 1). The main constraint slowing the Cuban economy is not U.S. sanctions (even as they have hit hard). Rather, it is Cuba’s own outdated economic model, inherited from the Soviet Union, of central planning. Cuba’s many commercial partners would like to invest more in Cuba and would prefer to purchase more Cuban exports to correct the imbalances in their bilateral trade accounts, but are frustrated by Cuba’s scant economic offerings.

Section 2 of this policy paper tells the story of Cuba’s outreach to the dynamic emerging market economies, as seen from the perspective of Cuba and also through the eyes of its Chinese, Brazilian, Venezuelan and Mexican partners—examining their motivations as well as their anxieties and frustrations. How does Cuba fit into their international economic and geo-political strategies, and what are the domestic political drivers behind their friendships with Havana? Canadian interests are also explored, as Ottawa has sharply differentiated its Cuba policy from those of its close North American ally.

While comprehensive U.S. sanctions attempt to undermine the Cuban economy, European countries have been sending development assistance, albeit in modest amounts. European aid targets its resources to empower municipalities, private farmers and cooperatives—to strengthen social forces less dominated by Havana’s powerful bureaucracies. Section 3 describes these European and Canadian cooperation programs as well as the creative initiatives of the non-governmental organization Oxfam, and draws lessons—pointing out potential pitfalls as well as opportunities—for future international development programs operating in the difficult Cuban context.

One hundred and eighty-seven nations are members of the International Monetary Fund (IMF) and World Bank—virtually equivalent to the universal membership of the United Nations. Cuba’s absence from these leading international financial institutions (IFIs) stands out as a stark anomaly. As Section 4 of this paper reveals, Cuban authorities are no longer opposed to engaging with the IFIs. As institutions that pride themselves on their universality, the IFIs ought to reach out to assist Cuba as it strives, however gradually and haltingly, to reform its economic structures. With their deep experience in countries seeking to improve the efficiency and competitiveness of their economies, and to transit to more decentralized modes of economic decision making, the IFIs are natural partners for Cuba today.

This paper recommends a step-by-step approach, beginning with modest confidence-building measures, for bridging the gap between the IFIs and Cuba. It also addresses legal and political constraints on U.S. policy, including restrictive Congressional mandates, and suggests practical strategies for overcoming them. Information gaps in the public debate are corrected; in fact, there are viable mechanisms for gradual rapprochement.

Many Cubans remain suspicious of the IMF and World Bank, viewing them as agents of “capitalist imperialism.” Yet, the IFIs have worked successfully in promoting poverty alleviation and economic growth in two of Cuba’s closest allies, Vietnam and Nicaragua. To ally Cuban anxieties, Section 5 explores the IFI’s new terms of engagement, designed to be more sensitive to the national institutions and policy priorities of borrowing countries. The IFIs today partner successfully with many countries whose stated goals are growth with equity, efficiency with dignity—the very goals embraced by Cuban authorities.

This study (Section 1) opens with a discussion of the accomplishments and shortcomings of the ailing Cuban economy: the paradox of the Cuban revolution is that while it endowed its citizens with abundant human capital it has sadly left them without the tools or incentives to fully employ their acquired talents. The Cuban economy is characterized by sagging industrial and agricultural production, insufficient savings and investment rates, poor export performance and chronic deficits in merchandise trade, and repeated suspensions of service on external debts. The scarcity of consumer necessities, over-crowded housing, and the indifferent quality of services make daily life in Cuba especially challenging, and ambitious Cuban youth are frustrated at the lack of attractive opportunities for productive and well-paid employment.

The Cuban government recognizes these deficiencies and in April 2011 promulgated reform “guidelines” with 311 initiatives aimed at addressing these and other structural flaws. The guidelines are replete with internal contradictions and continue to render homage to central planning; but the pro-reform fractions were strong enough to insert language which, if acted upon, would transform Cuban political culture and social ethics. As this study suggests, in our interdependent world, external agents—such as national economic cooperation agencies and the IFIs—can legitimately transfer ideas and resources that increase the authority of reformers in their internal struggles against the entrenched forces of inertia and resistance. Notwithstanding its centralized leadership, Cuba, like the United States, is hardly a unitary actor.

This policy contribution seeks to reframe the debate, to break it loose from the narrow U.S.-Cuban bilateral optic, to instead appreciate the opportunities offered by Cuba’s pro-reform impulses, to grasp the breadth of Cuba’s international economic relations, to examine more closely the economic cooperation programs of our allies on the island, and to reconsider U.S. interests in allowing the international financial institutions to perform their proper mission of promoting economic progress in Cuba. Section 6 summarizes key findings and policy recommendations for the international development community, the IFIs, and for the Cuban and U.S. governments.

This paper flows from the traditional notion that it is in the interests of the United States, and the international development community within which the U.S. has long played a leadership role, to promote progressive economic reforms, however gradual and partial, in countries opening to international trade and investment and seeking to enhance market mechanisms and empower a domestic private sector. While there is no automatic, linear relationship between market-oriented economic reform and political liberalization, political theory and recent history suggest that one trend tends to reinforce the other, especially in the Western Hemisphere and in the long run. Moreover, in the absence of direct leverage over a nation’s political institutions, promoting economic reform may be the most realistic option for advancing political pluralism. In Cuba today, the opportunity is in economic policy, legitimized by the regime and openly and widely debated by the Cuban public; whereas the government’s powerful security apparatus maintains its tight control over political activity and insists on the hegemony of the Cuban Communist Party.

Some in the United States have long supported severe sanctions intended to starve the Cuban regime of resources and thereby precipitate a political breakdown. Yet, within the national security bureaucracy of the U.S. Executive Branch, notwithstanding occasional presidential rhetoric, there is a strong preference for gradual, peaceful evolution in Cuba. A sudden breakdown, it is feared, would entail substantial risks for U.S. interests, including an immigration crisis right off of our shores, and in the worst case, irresistible pressures for intervention to quell a bloody civil war and halt a mass exodus of refugees.

Furthermore, prolonged efforts to impoverish an economy run counter to long-standing U.S. foreign assistance policies and our fundamental humanitarianism, that favor attention to the basic human needs of the poor majorities in developing countries. The exemptions to the sanctions against Cuba that have been carved out over the years, for example allowing for the sale of some foods and medicines, and more recently, the liberalization of family travel and remittances, speak to these American traditions.

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Richard Feinberg

Image Source: Â© Enrique de la Osa / Reuters

Cuba's New Emerging Market Strategy: Has the United States Made Itself Irrelevant?

Thu, 04 Aug 2011 12:30:00 -0400

Event Information

August 4, 2011
12:30 PM - 2:00 PM EDT

Moynihan Board Room
The Woodrow Wilson International Center for Scholars

Washington, DC

Over the last decade, Cuba has diversified its economic relations, building trade and investment ties with China, Brazil, Russia and Venezuela while also maintaining relations with Canada, Mexico and Europe.

On August 4, the Latin America Initiative at Brookings joined the Latin America Program at the Woodrow Wilson International Center for Scholars for a discussion with Richard Feinberg on the diversification of Cuba's international economic relations over the last decade.

The discussion focused on several key components of Cuba's international economic relations, including diplomatic and economic motivations behind each new economic partnerships. Feinberg also spoke on Cuba's south-south strategy and what it means for U.S. policies toward Cuba today and in the future.

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Moderator

Panelists

Foggy Forecast for U.S.-Cuba Relations

Ted Piccone — Mon, 02 May 2011 00:00:00 -0400

Winds of change are blowing in both Havana and Washington these days, but in what direction no one really knows. Prevailing headwinds from entrenched interests on both sides are scrambling the signals, and may leave the Cuban and American people in the dust.

Let's try to read the variables currently in play. In Cuba, the sixth Communist Party Congress recently met for the first time in 14 years to ratify President Raul Castro's promising yet cautious plans to liberalize Cuba's economy while maintaining a firm grip on political power. The gerontocracy of "historicos" present at the birth of the revolution anointed 80-year old Jose Ramon Machado Ventura as deputy to 79-year old Raul. Only three new members were named to the political bureau, with 12 retreads, including five generals, holding on to their seats. Younger Cubans once groomed to lead a post-Castro Cuba had been sidelined earlier for a variety of transgressions. Raul Castro's older brother Fidel, now officially out of power, appeared on stage to bless the proceedings as a sort of cheerleader-in-chief.

And yet, underneath the sad spectacle of a fading elite, Raul Castro has managed to get a potentially sweeping set of economic reforms adopted by the party apparatus. Framed as essential "to ensure the revolution's very survival," these new measures look like a desperate attempt to stave off bankruptcy. They range from licensing private economic activity, opening idle land to farmers and allowing businesses to hire employees, to empowering people to buy and sell houses and cars and encouraging foreign investment. They include tough measures too, like shrinking the buying power of the longstanding ration card that every Cuban gets to subsidize basic goods, cutting unemployment benefits, and eventually dismissing anywhere from 500,000 to one million employees from the state sector.

It is too early to tell whether these measures will have the intended effect of breathing new life into a moribund Cuban economy. One key question is whether Cuban citizens will register enough small businesses to generate the kind of tax revenue the Cuban regime calculates it needs, and whether they will have enough left over to survive under a less generous welfare system. But at least they will have an opportunity to become more independent of the state, which employs about 85 percent of the five million strong workforce.

With greater self-employment may come a taste for some political freedom as well, though the Castros and their allies will no doubt continue to clamp down on dissent. In a nod toward the younger generation, Raul Castro agreed to devote a special party congress next January to address political reforms, including a proposal to limit presidential terms to ten years. And the recent release of all the 75 political prisoners caught up in the infamous "Black Spring" crackdown on dissidents in 2003 is one small sign that pressure for change, both internal and external, is having some effect.

It is not clear, then, whether this cloudy forecast will lead to brighter days for Cubans or the next Caribbean hurricane. But to the extent the United States can influence the trend (an assumption too easily taken for granted), now is the time to try. Unfortunately, a different type of old guard -- this time on Capitol Hill with roots in the Cuban-American diaspora in Florida and New Jersey -- is determined to block any meaningful change in U.S. policy.

In the earliest days of his administration, President Obama promised "a new beginning" in U.S.-Cuba relations and to his credit took some initial steps to expand travel and remittances for Americans with family on the island. He quickly fell, however, into the trap of a tit-for-tat approach, demanding additional reforms even as the Castro regime moved in a more positive direction. Despite having clear executive authority to do much more to loosen the embargo, Obama chose a timid approach of hiding behind the case of a USAID contractor arrested in late 2009 for distributing computer and satellite equipment under a Bush-era democracy promotion program. This certainly kept the hardliners in Washington and Miami happy for a while, but did nothing to protect Democrats from eventual defeat in the 2010 midterm elections. With the ascendancy of the Republicans to control of the House, including pro-embargo legislators as chairs of key committees, all hope for congressional action to soften the embargo is gone.

And yet, swirling below the hot air in Congress, President Obama managed to release new regulations last January that potentially could unleash new forces for change here and in Cuba. The new rules, which largely return us to the Clinton era years of expanded people-to-people exchange, provide general licenses for religious, media, research and educational travel; allow more U.S. airports to fly charter flights to the island; and permit Americans to make financial transfers up to $2000 a year to any Cuban not part of the government or party leadership. This latter item could open a critical lifeline to new microenterprises seeking small grants and loans to get started. The Treasury Department's guidelines, however, still cling to a strict interpretation of the rules, at least on paper. Humanitarian organizations, for example, may not rely on one-off volunteers to carry supplies to needy people, and travelers "are prohibited from importing into the United States any merchandise purchased in Cuba, including but not limited to cigars and alcohol." So much for helping struggling small businesses sell their handicrafts to eager Americans with cash to spend.

Nonetheless, with little room for political change in Cuba or the United States in the short term, it looks like this is as good as pro-reform constituencies in both countries are going to get. The key question is what they make of it. A determined effort by Americans to reach out and provide help to Cubans willing to take risks for economic and political freedom could make a difference in building constituencies from below for further reforms. In the meantime, be prepared for a bumpy ride.

Authors

Ted Piccone

Publication: The Huffington Post

Image Source: © Desmond Boylan / Reuters

Cuba: A Country for Old Men

Ted Piccone — Mon, 25 Apr 2011 00:00:00 -0400

In a discussion on KCRW's "To The Point," Ted Piccone examines Cuba's dictatorship and the role of the Obama administration with respect to the Castro regime. Piccone highlights new engagement strategies that focus on people-to-people connections.

KCRW: What about President Obama and what do you think the United States should do at this point [in Cuba]?

Ted Piccone: I think the idea that we are going to somehow push them off the cliff any day now is a false hope. This is a regime that has figured out how to survive for a long time, beyond many of our own presidents. So, I think we have to be realistic about what we can do that is constructive. I think that President Obama has actually taken things on a productive, constructive course. Some initial steps that allow for, initially family travel, more remittances. But now, with the new set of regulations released in January, and a new set of guidelines that just came out last week, you can see additional travel for religious organizations, for educational travel, for people-to-people contact, that will help the flow of ideas and people and commerce. And I think that some unpredictable things could happen.

Ted Piccone: We have not really tried this idea of more constructive engagement. We did try some of it in the 90s under the Clinton administration, but then a period of retrenchment under the Bush administration. I think it is time to start that again. Especially now that, under Raul Castro, if these rules take affect in a serious way, there are some new openings and opportunities – particularly in the small business arena. [For example, ] they might be able to, as farmers, farm their own land. [The land is] actually leased from the government, but they’ll be given more opportunities to do so. And through these other kinds of licensed businesses, the United States can, through people-to-people exchanges and advice, and technical assistance, be there to help the Cuban people break away from the state.

Listen to the full interview at kcrw.com »

Authors

Ted Piccone

Publication: To the Point (KCRW)

U.S.-Cuba Relations: Moving Policy Forward in 2011 and Beyond

Tue, 15 Feb 2011 12:00:00 -0500

Event Information

February 15, 2011
12:00 PM - 1:30 PM EST

Saul/Zilkha Rooms
The Brookings Institution
1775 Massachusetts Avenue, NW
Washington, DC 20036

In January 2011, the Obama administration announced much anticipated new rules liberalizing people-to-people exchanges with Cuba. Policymakers, stakeholders and observers are anxious to see what impact renewed contacts between the two countries will have on the overall U.S.-Cuba relationship. From human rights and migration to deep-sea drilling and economic reforms, the bilateral agenda promises to be fraught with tensions and mixed signals. Will the Obama administration use its executive authority to extend engagement to new areas like trade, telecommunications and energy? Or will political sensitivities on both sides of the Florida straits continue to limit the pace of change?

Read legal analysis prepared in conjuction with the event:
"Presidential Authority To Modify Economic Sanctions Against Cuba" by Stephen F. Propst >>

On February 15, the Latin American Initiative at Brookings hosted former New Mexico Governor Bill Richardson for keynote remarks on these recent developments and the outlook for U.S.-Cuba relations. The governor was joined by Stephen Propst, a partner with the law firm of Hogan Lovells U.S., LLP, and Patrick Kilbride, senior director for the Americas at the U.S. Chamber of Commerce. At the event, Propst released a new report, conducted at the request of the Cuba Study Group, on the scope of presidential authority to ease U.S. sanctions further.

Senior Fellow Ted Piccone, deputy director of Foreign Policy at Brookings, moderated the discussion. After the program, the panelists took audience questions.

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U.S.-Cuba Relations: Moving Policy Forward in 2011 and Beyond

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Transcript (.pdf)

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20110215_cuba

Participants

Moderator

Panelists

Bill Richardson

Former Governor of New Mexico

Patrick Kilbride

Senior Director for the Americas
U.S. Chamber of Commerce

Stephen Propst

Partner
Hogan Lovells U.S., LLP

@ Brookings Podcast: New Relationships for the United States and Latin America

Mauricio Cárdenas — Fri, 11 Feb 2011 10:00:00 -0500

The United States has found excellent export markets among the vibrant economies of nations from Mexico to Brazil, and shares common problems – and common goals – with many of its neighbors to the south. Expert Mauricio Cardenas discusses the opportunities for the U.S. in new relationships with such countries as Brazil and Cuba, and ongoing problems, such as the drug violence in Mexico.

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To Effect Change in Havana, Support the Cuban People

Ted Piccone — Mon, 31 Jan 2011 13:31:00 -0500

We've all heard the stories about modern life in Cuba — menial wages, long lines for public services, fewer subsidies for basic necessities, restrictions on travel both on and off the island, vigilante committees that monitor and harass anyone who questions the regime. No doubt, life for the Cuban people is tough, and only getting tougher.

So why should the United States make it even harder for them?

For 50 years now, the United States has seen Cuba as the enemy, with a long list of laws and regulations codifying an embargo to show for it. Over the last two decades, however, as Cuba has sunk lower and lower on the list of countries of concern to our security, it has become harder to justify our outdated, Cold War notions of enemy and friend.

By any conventional measure, Cuba poses little to no security threat to the United States. Its active military has shrunk from an estimated 235,000 in 1999 to 50,000 10 years later. According to the State Department, the regime no longer has the resources to project power abroad. Its place on the official U.S. list of country sponsors of terrorism continues despite the U.S. government's own conclusion that it provides no direct financial assistance to terrorist groups or armed struggle in the region or beyond.

Moreover, Cuba's economy is in woeful condition. Its sugar industry has collapsed due to lower prices, the end of Soviet subsidies, mismanagement and lack of investment, sapping the potential it offers in the era of ethanol. Economic activity has suffered further from multiple devastating hurricanes and droughts. As a result, hundreds of thousands of public employees are being forced off the government payroll with little hope of productive employment in the near future.

As Cuba continues its inexorable decline, the United States has remained on the sidelines while others have stepped in to throw Cuba a lifeline. Hugo Chavez's Venezuela has led the way mainly through subsidized oil imports in exchange for Cuban medical services. China and Russia have also increased their trade, investments and direct aid, including a $6 billion investment from China's state oil company to expand Cuba's main refinery. Spain and Canada remain robust partners, particularly in tourism. And although remittances from Cuban exiles play an important part both in improving the lives of the Cuban people and generating revenue for the state, most reports indicate life has gotten noticeably worse for most Cubans over the last decade.

If anything, the United States' main concern now should be the potential of a failed state just 90 miles from its borders. Given the austerity measures recently adopted by President Raul Castro, we should not be surprised to see an influx of Cuban economic migrants to our shores, reviving fears of the chaos and turmoil generated during the rafters crisis of the early 1990s.

In addition to preventing a sudden and potentially violent collapse, the United States has a fundamental interest in fostering a stable, prosperous and democratic Cuba, one that reflects the aspirations of the Cuban people to determine their own destiny, freely chosen through a fair, open and competitive democratic process. On this point, there is general bipartisan consensus in this country. The problem is there is little agreement on how best to support those aspirations with a small but vocal minority of legislators, particularly from Florida and New Jersey, demanding a continuation of the failed embargo policies of the past in the hopes the regime will collapse any day now.

It is hard to understand how a unilateral policy of isolation and punishment advances the cause of democracy and human rights in Cuba. Even in the bad days of the Cold War, the United States championed support to rights advocates behind the Iron Curtain while simultaneously conducting direct diplomacy with states in the Soviet sphere. When history eventually turns in Cuba, as it will, should we be on the side of the Cuban people who are fighting for a better future? Or will we be remembered for acts of aggression, denial and obstruction?

President Obama has stepped gingerly into this dilemma, despite initial promises of "a new day" in U.S.-Cuban relations. His April 2009 decision to expand travel and remittances for Cuban-Americans, restart migration talks and loosen telecommunications regulations was the bare minimum down payment on this vision of change. But shortly thereafter, Washington fell back into a tit-for-tat mode, allowing Havana to dictate the terms of normalization. Even when positive steps were taken by the Castro regime — the release of more than 50 political prisoners since July 2010, and major economic reforms that should reduce the dependence of the Cuban people on the state — the White House moved the goalposts, demanding more fundamental change as well as the release of a U.S. government paid contractor arrested for providing technical support to the small Jewish community on the island.

Now, with ascendant Republican voices in the new Congress, including control of key committees in the House by pro-embargo legislators from Florida, any hope for legislative action needed to lift other restrictions like tourist travel is dashed. This despite polls that show a large majority of Americans, as well as a significant majority of Cuban-Americans (67 percent), favor ending restrictions on all Americans to travel to our neighbor's shores.

It was wise, therefore, for President Obama to exercise his executive authority and announce on January 15 that he will permit expanded exchanges between U.S. and Cuban academic, cultural and religious organizations. The rules also allow financial transfers of up to $2,000 a year from any American to any Cuban not in the senior ranks of the Cuban Communist Party — and more charter flights. These measures will open the door for direct people-to-people engagement, allowing Americans to serve as our own messengers for the kind of democratic and economic changes Cubans so desperately need. Not surprisingly, they were welcomed by a range of key actors, from the Ladies in White fighting for release of their loved ones jailed as political prisoners and other leading human rights dissidents on the island, to academic, business, human rights and religious groups in the United States. The hardliners were aghast, though what punishment they will seek to extract from the Obama administration remains to be seen.

At the end of the day, the future of Cuba rests in the hands of the Cuban people. Like oppressed peoples everywhere, they deserve the full support of the American people as expressed through acts of solidarity, dialogue, trust and direct assistance. That can happen only if both governments get out of the way and allow normal human discourse to flow between two peoples too long separated by history and mistrust.

Authors

Ted Piccone

Publication: South Florida Sun Sentinel

Cuba’s Energy Future: Strategic Approaches to Cooperation

Fri, 22 Oct 2010 09:00:00 -0400

Event Information

October 22, 2010
9:00 AM - 10:30 AM EDT

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

Approaching an uncertain future without Fidel Castro and still struggling to gain its economic footing in the post-Cold War period, Cuba must now make critical decisions to improve its economy and living conditions for the Cuban people. A major challenge facing Cuba is access to energy resources that are environmentally sustainable and sufficient to meet the nation’s revitalization and development goals. What steps can Cuba take to achieve both short- and long-term energy sustainability and self-sufficiency? Is there a role for the United States in this scenario?

On October 22, the Latin American Initiative at Brookings will hosted the release of Cuba’s Energy Future: Strategic Approaches to Cooperation (Brookings, 2010), featuring a discussion with the book’s contributors. Panelists include Jonathan Benjamin-Alvarado, the book’s editor and a professor of political science at the University of Nebraska-Omaha; Jorge Piñon, senior research fellow at Florida International University; Juan A.B. Belt, director of Chemonics International; and Dan Whittle, Cuba program director at the Environmental Defense Fund.

Senior Fellow Ted Piccone, deputy director of Foreign Policy at Brookings, provided introductory remarks and moderated the discussion. After the program, the participants took audience questions.

Transcript

Uncorrected Transcript (.pdf)

Event Materials

20101022_cuba_energy

Participants

Panelists

Jonathan Benjamin-Alvarado

Professor of Political Science
University of Nebraska-Omaha

Jorge Piñon

Senior Research Fellow
Florida International University

Juan A.B. Belt

Director
Chemonics International

Dan Whittle

Cuba Program Director
Environmental Defense Fund

Seizing the Opportunity to Expand People to People Contacts in Cuba

Dora Beszterczey, Damian J. Fernandez and Andy S. Gomez — Tue, 17 Aug 2010 09:28:00 -0400

INTRODUCTION

Last year, President Obama delivered the first step in his promise to reach out to the Cuban people and support their desire for freedom and self-determination. Premised on the belief that Cuban Americans are our best ambassadors for freedom in Cuba, the Obama administration lifted restrictions on travel and remittances by Cuban Americans. The pent-up demand for Cuban American contact with the island revealed itself: within three months of the new policy, 300,000 Cuban Americans traveled to Havana -- 50,000 more than for all of the previous year. Experts estimate that over $600 million in annual remittances has flowed from the United States to Cuba in 2008 and 2009 and informal flows of consumer goods is expanding rapidly.

The administration’s new policy has the potential to create new conditions for change in Cuba. However, if U.S. policy is to be truly forward looking it must further expand its focus from the Castro government to the well-being of the Cuban people. Recent developments on the island, including the ongoing release of dozens of political prisoners, have helped create the right political moment to take action. The administration should institute a cultural diplomacy strategy that authorizes a broad cross-section of American private citizens and civil society to travel to the island to engage Cuban society and share their experiences as citizens of a democratic country. Reducing restrictions on people-to-people contact is not a “concession,” but a strategic tool to advance U.S. policy objectives to support the emergence of a Cuban nation in which the Cuban people determine their political and economic future.

The President has the authority to reinstate a wide range of “purposeful,” non-touristic travel to Cuba in order to implement a cultural diplomacy strategy. Under President Clinton, the Baltimore Orioles played baseball in Havana and in return the Cuban national team was invited to Baltimore. U.S. students studied abroad in Cuba and engaged in lively discussions with their fellow students and host families. U.S. religious groups provided food and medicines to community organizations, helping them assist their membership. However, in 2004, such travel was curtailed, severely limiting U.S. insights about the needs, interests and organizational capacities of community groups and grassroots organizations. Today, visitors traveling under an educational license, for example, number a meager 2,000 annually.

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Authors

Dora Beszterczey
Damian J. Fernandez
Andy S. Gomez