(February 3)The US first imposed an arms embargo on Cuba on March 14, 1958. On October 19, 1960 almost two years after Batista was overthrown the embargo was extended to other imports except for food and medicine after Cuba took over US-owned oil refineries.
On February 7, 1962 the embargo was extended to include almost all exports. The embargo does not prohibit the trade of food and humanitarian supplies. The US can use it economic power to enforce US sanctions on other countries but it is not always possible. The European Union is Cuba's largest trading partner. Even the US is the sixth largest exporter to the US. 6.6 percent of Cuba's imports come from the US no doubt all food and humanitarian supplies. However, Cuba must pay cash for everything a factor that also limits its imports.
While some of Cuba's economic problems may be traced to poor management, the role of the US embargo also remains an important factor.
Cuba plagued by electricity shortages caused by US embargo
As noted, in 1962 the US imposed an embargo on Cuba. As a result Cuba often does not have enough fuel to run all of its power plants causing electricity blackouts. Just last year, the Trump administration sanctioned Cypriot and Panamanian tankers that were bringing oil to Cuba's power plants. US thinks nothing of enforcing its own sanctions on other countries which it can do to some extent because of its economic power especially on weaker countries.
Cuban economic problems
Many of Cuba's economic problems can be traced back to the collapse of the USSR in 1991. Having lost its main trading partner along with large Soviet subsidies, the Cuban GDP shrunk by a whopping 35 percent between 1989-1993. As a result Cuba decided to reduce some of its government owned projects that were inefficient and introduce more market capitalist features into its economy. However, the government retained control of major industries and kept a free health care and education system as well as subsidizing many cultural events.
At the same time, Cuba encouraged small businesses especially in the restaurant area and tourist bed and breakfast lodging. At present the government still controls 68 percent of jobs but the private sector controls the other 32 percent.
The Obama boom
In 2015 then president Barack Obama reinstated diplomatic relations with Cuba although he did not rescind the blockade. However, US travelers were able to flood into Cuba including many Cubans who had fled to the US but still had relatives in Cuba. The influx of US tourists gave a big boost to hotels, restaurants and the entire tourist industry. The relaxation of the terms of the embargo had even led to US Cuba cooperation on the development of drugs. However just as trade and other relations between Cuba were improving, Donald Trump came into power in the US.
The Trump reversal
Last year Trump revoked many of Obama's changes. Among other changes he banned US residents from staying in Cuban government hotels, eating in state restaurants, or using government tourism agencies. In other words, he wants the US to use only private enterprise facilities in Cuba as far as possible. Even with the new restrictions in the first four months of last year, 257,000 people visited Cuba from the US and this excludes passengers on cruise ships. Perhaps the new restrictions will result in a rise of prices in private restaurants, hotels and tourist agencies and discounts in government facilities to attract more customers from other countries.
The drop in US tourism since the imposition of new Trump restrictions has meant Cuba has less foreign currency to buy foreign goods the require cash payment. US pressure against third country tankers has reduced oil shipments increasing fuel prices and even shortage of fuel to deliver goods from place to place.
Cuban president Miguel Diaz-Canal has announced plans to increase state workers salaries. He wants to encourage self-sufficiency in food production. The president also pledges to get rid of the dual currency system which has one peso that is equivalent in value to the US dollar and another national peso that is worth at present just 1/24 of the convertible peso.
One thing is certain the US embargo hurts ordinary Cubans but has failed to change the regime. In fact Cuba can always blame its economic woes on the US that may help strengthen support for the government.
Trump recently reduced flights to Cuba
In January the US reduced flights allowed to fly to Cuba quite significantly. The announcement of the reduction clearly shows it was meant to reduce hard currency revenue going to the Cuban government, currency it needs to purchase goods it needs overseas. Charter flights will now only be allowed to fly to Havana and no other airports a step already taken with respect to commercial flights.
Pompeo said that the restrictions would further restrict Cuba to obtain financing that he termed was used for the ongoing repression of the Cuban people and also to support what he terms the dictator Maduro in Venezuela. Pompeo boasted that the suspension of public charter flights to nine other Cuban airports the US further impeded Cuba from gaining access to hard currency from US tourists.
The Trump attempts to increase pressure on Cuba has resulted in Cuba developing closer relations with Russia as shown in the appended video from October of last year.
Previously published in the Digital Journal
