Will Obama Lift the Trade Embargo Against Cuba?

By Jason Simpkins
Managing Editor
Money Morning

U.S. President Barack Obama has opened the door to a broader relationship with Cuba by loosening travel and communication restrictions. But will pressure from numerous Latin American states and a promise to usher in a new era of cooperation and dialogue in the Western Hemisphere ultimately result in the revocation of the 47 year-old trade embargo?

And what would it mean if the Cuban trade embargo were actually abolished?

President Obama has already loosened several restrictions enacted by his predecessor George W. Bush. Prior to his arrival at the Summit of the Americas in Trinidad and Tobago last weekend, Obama relaxed restrictions on travel to Cuba, making it easier for Cuban Americans to visit and transfer money to relatives on the island.

"There are no better ambassadors for freedom than Cuban Americans," Obama said in a campaign speech last year. "It's time to let Cuban Americans see their mothers and fathers, their sisters and brothers. It's time to let Cuban American money make their families less dependent upon the Castro regime."

The administration will also begin issuing licenses to allow telecommunications companies to provide cell phone and television services to Cuba, and to allow family members to pay for relatives on the island to receive those services.

It's too early to assess the impact of these measures on businesses, but analysts anticipate that airline carriers, Internet and telephone service providers, and bank services companies will benefit from new business opportunities.

"This is a big deal; it's a significant change in U.S. policy," former Ambassador David A. Gross, the U.S. coordinator for international communications and information policy and a partner at the law firm Wiley Rein, told the Los Angeles Times.

Telecommunications carriers will now potentially be able to establish roaming agreements with Cuban carriers, Gross said. That would make it possible for Cuban Americans to buy cell phones and payment plans in the United States and send them to Cuba for their relatives to use.

The government said Monday that it would allow U.S. telecom providers to establish fiber-optic cable services linking the United States to Cuba. Access to thousands of potential new customers would benefit any number of U.S. communications companies and Internet service providers. Television and radio companies, such as Sirius XM Radio Inc. (SIRI), could also potentially provide service to Cuba.

The Obama administration will also allow computers, software and phones to be donated to Cuba without a government license.

Relaxed travel restrictions will also provide a slight boost for airline companies, but the larger question for carriers is whether or not travel to Cuba will be opened up for all Americans. Currently, U.S. citizens are only permitted to visit Cuba for sporting events, humanitarian missions, exercises in journalism, and purposes related to agriculture.

"This is definitely a step in the right direction for the airline industry and for the travel industry," Michael Zuccato, general manager for Cuba Travel Services, an agency that specializes in booking travel to Cuba, told the LA Times. "But the big thing will be when the restriction is lifted for everyone. You'll see a tremendous boost in tourism."

A New Beginning for Latin American Relations

Regardless of the economic implications, the decision can already be viewed as a diplomatic success, in that it has enhanced dialogue not only with Cuba but the Latin American world.

"We have sent word to the U.S. government in private and in public that we are willing to discuss everything - human rights, freedom of the press, political prisoners, everything," Cuban President Raul Castro said. "We could be talking about many other things... We could be wrong, we admit it. We're human beings."

U.S. officials have responded warmly and at the Summit of the Americas, Obama said his administration is prepared to "engage with the Cuban government on a wide range of issues - from drugs, to migration and economic issues, to human rights, free speech and democratic reform."

"Let me be clear," Obama said. "I am not interested in talking for the sake of talking. But I do believe we can move U.S.-Cuban relations in a new direction."

The summit, which was meant to examine ways to counter such global crises as climate change, drug trafficking, arms dealing, energy shortages, and the collapse of the global economy was almost entirely absorbed by the perceived thawing of U.S.-Cuban relations. 

In fact, by reaching out to Cuba, Obama seems to have already won the hearts and minds of many Latin American leaders who view both the embargo and U.S. attitude toward Cuba as outdated, ineffective, and to some extent, cruel.

"I know there are cultural and political problems. It's not easy to overcome conservative sectors in each country, but I think Obama will tend to advance and understand there is no more need for an embargo against Cuba," Brazilian President Luiz Incacio Lula da Silva said on his weekly radio address.

However, the Folha d S. Paulo, the Brazilian daily, pointed out that Lula would not be so direct at the summit, because he "wants that the issue causes no embarrassments for Obama, with whom he is genuinely enchanted."

Even the more radical Venezuelan Prime Minister Hugo Chavez - who at the last summit made frequent attacks on the "imperialist" policies of President Bush - was impressed by Obama's progressive stance, saying he had "no doubt" diplomatic ties with Washington would improve.

"We've begun talking with Obama and I think we've got off to a good start," Chavez said. "He should advance rapidly toward what he's called a new relationship with Cuba, based on respect, without conditions. I think there's a good possibility of that happening."

Canadian Prime Minister Stephen Harper said that while his country maintains diplomatic relations and economic interaction with Cuba, it is "more difficult when there is a chill between the U.S. and Latin America.

"If we are to move Cuba forward economically, my sense is that trying to find ways to engage [it] economically will enhance that objective," Harper said. "If one wants to break down state socialist and economic nationalist policies, I don't think a trade embargo is the way to do that." 

Actions Speak Louder Than Words

Analysts are largely divided on what effect, if any, lifting the embargo would have.

Vicki Huddleston, chief U.S. diplomat in Cuba from 1999 to 2002, said in an interview with NPR, that the Cuban government has learned to live without the United States and that by maintaining the embargo we will alienate the eventually successors to the Castro regime. 

"The president has the popular support of the American people and now even the Cuban American people as well as the authority to put into place a new policy," Huddleston said. "He could allow the sale of communications equipment, televisions, radios. Allow the Cuban government to connect to the Internet...This kind of policy of engagement would help us realize our values help the Cuban people have contact with the outside and it would no longer be a domestic policy and I think that's about to happen."

However, critics contend that it is not a lack of effort on the part of the United States, but rather unwillingness on the part of Cuba's leadership that is preventing such progress.

"We're all in favor of real engagement we just hope the Cubans will want to engage with us," said James Cason, who succeeded Huddleston in Cuba, under the Bush administration. "I think we're going to be disillusioned. Those that want to have rapid normalization they'll find that once again the Cuban government will sabotage any efforts to have closer relations."

Since the summit, the Obama administration has been a little more reserved when it comes to lifting the trade embargo.

"That's way down the road, and it's going to depend on what Cuba did, Cuba does going forward," Larry Summers, Director of the White House's National Economic Council said Sunday on NBC television's "Meet the Press."

Changes in U.S. policy toward Cuba will be decided "on the basis of Cuba's behavior, on the basis of the steps that they choose to take and choose not to take, in terms of their policies in this hemisphere," he added.

"Actions are always going to speak louder than words, regardless of how long the speeches are," said White House spokesman Robert Gibbs. "We will continue to evaluate and watch what happens, we are anxious to see what the Cuban government is willing to step up to do, and I think the president believes that significant action's been taken."

News and Related Story Links:

  • Trinidad & Tobago Express:
    Embargo up to US, Cuba
  • Brazzil Magazine:
    Brazil Vows Not to Embarrass Obama over the Cuba Embargo