[NYTr] As Cuba Changes, US Policy Stagnates
 
Date: Wed, 19 Dec 2007 22:21:48 -0600 (CST)


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CIP Americas Program - Dec 19, 2007
http://americas.irc-online.org/am/4836

Cuba Changes, U.S. Policy Stagnates

by Wayne Smith and Jennifer Schuett 
Americas Program, Center for International Policy (CIP) 	

Change and continuity are the two words that best describe Cuba and its
relations with the United States.

After nearly 50 years of the predictable leadership of Fidel Castro,
presidential power has transferred to his brother Raul. But this is not
the topic of discussion; rather it is the official recognition of
longstanding problems, the easing of restrictions on private
businesses, and the official encouragement of public discussion that
has everyone talking about change in Cuba.

Cuban-American community politics in Miami are also evolving. "The
Miami of 10 years ago is not the Miami of today," notes Alfredo Duran
of the Cuban Committee for Democracy. Miami's Cuban-American community,
which was once known for its hard-line positions against the Castro
regime, has grown disenchanted with the U.S. foreign policy of
isolation and embargos. Community leaders are now talking about the
need for a foreign policy of dialogue and engagement.

But continuity, not change, reigns in Washington. The Bush
administration is sitting on the sidelines, failing to take advantage
of the new opportunities for meaningful engagement. Unfortunately, this
continuity in Cuba policy is expected to persist until after the
presidential elections.

A Call for Debate

In his last major policy speech in November 2005 Fidel Castro warned
that Cuban socialism might be destroyed from within. He cited a rampant
black marketbfrom pilfered goods to illicit businessesbas the main
culprit, and he called for increased state controls and the end of
private restaurants and taxis.

But Raul Castro recently said the black market exists as a result of
low wages. To remedy this, Raul Castro ordered that the government pay
farmers what it owed them, and he tripled the official price paid for
beef and milk. What's more, private restaurants and taxis have not been
shut down.

In his first major policy speech this past July 26, Raul Castro
ridiculed the bureaucracy and the dysfunctional agricultural system. He
called for structural changes and a debate as to how best to bring
about these changes.

Will the United States be in a position to take advantage of the
changing situation in Cuba? According to Col. Larry Wilkerson of the
College of William and Mary, "The United States hasn't been capable of
anything resembling diplomacy since Sept. 11, 2001. Its whole foreign
policy is broken and in many situations it is being written off as
irrelevant." Calling U.S. Cuba policy "the dumbest policy on the face
of the earth," Wilkerson says that he can't think of a better way to
signal that the U.S. government is once again capable of diplomacy and
a sensible foreign policy than by having it announce in January 2009,
following the inauguration, that we are moving to engage with Cuba and
to lift travel controls. Once the travel controls are removed, the
entire Cuba policy will begin to unravel, predicts Wilkerson. But he
asks, "Will the winning Democratic candidate be prepared to make such
an announcement?"

After the Democrats gained control of both houses of Congress, many
expected rapid progress toward a new Cuba policy. But the prospects for
reform of the failed Cuba policy have suffered from the failure of the
presidential candidates to criticize current policy. The presence of a
strong lobby in favor of the present policy has also obstructed change.

Shamefully, the Democrats have failed to push forward new legislation
that would lift travel restrictionsbeven though preventing Americans
from traveling violates their rights and is entirely counterproductive
to foreign policy goals.

Worse than the congressional standstill on the travel ban was the
defeat in August 2007 of an amendment introduced by Rep. Charles Rangel
(D-NY) to simplify the complicated process under which Cuba pays for
agricultural produce exported by the United States. According to the
U.S. International Trade Commission, this legislation would have
spurred a $92-$195 million increase in sales annually for American
farmers. Sixty-six Democratsbmost of whom were encouraged by donations
from a conservative Cuban-American political action committeebjoined
with the Republican majority to defeat the bill.

But there is good reason to remain optimistic about the prospects for
policy reform after the presidential elections. The Cuban-American
community, which until recently has been against any change in policy,
is coming around to a more constructive position.

New Thinking in Miami

Miami has long been known as home to the Cuban-American community. For
years it served as the base for hard-liners pushing for a punitive
embargo against Cuba. The concentration of citizens with emotional and
historical connections to Cuba makes this community a passionate
advocacy group and at times the only constituency with a voice in the
matter of U.S. foreign policy toward the island. Led by the powerful
Cuban American National Foundation (CANF), along with a Bay-of-Pigs
veterans' organization, Cuban-Americans have historically demanded a
tight embargo and many continue to prepare for a post-Castro government
in Cuba.

After the collapse of the Soviet Union in 1992, the community held
emergency meetings to decide the fate of the island, drafted two
constitutions and a peace accord, and prepared reconstruction plans.
However, all of these proved to be futile and ineffective attempts to
shape Cuban domestic affairs.

"Miami has its own foreign policy," explains former CANF member and
Bay-of-Pigs' veteran Tony Zamora, who recalls that as the 'foreign
minister' of Miami he would "encourage foreign diplomats to take a
hard-line against Cuba."

"The Miami of 10 years ago is not the Miami of today," says Duran. Like
other former CANF members, he and Zamora are now calling for
engagement, not confrontation.

One indication of the change underway in Miami is voter-registration
patterns. Increasingly Cuban Americans are turning away from the
Republican Party. Today, 25% of Hispanic voters in Miami are registered
Democrats, but political observers say that percentage of voters who
identify with the Democratic Party is much higher. The reason for the
discrepancy, as Duran observes, is that the "Grandmother Factor" comes
into play since many younger Cuban-Americans don't want to reveal to
their grandmothers that they are Democrats.

Especially in the 21st and 25th congressional districts, represented by
Lincoln Diaz-Balart and Mario Diaz-Balart respectively, polls indicate
that a majority of Cuban Americans does not agree with current U.S.
policy.

Change But Opportunities Still Limited

Despite the gradual changes in Cuba and changes in the Cuban-American
community, Washington hasn't budged. According to Dan O'Flaherty of the
National Foreign Trade Council, "Until the current law is changed,
there will be no broad opportunities for trade." In fact, trade with
Cuba has decreased in the past two years as a result of the highly
restrictive Trade Sanctions Reform and Export Enhancement Act.

The Cuban economy, however, has been growing at annual rates of 11% on
the average. The relative stability of the Cuban economy is due in
large part to high nickel prices, Venezuelan oil subsidies, and doubled
trade with China. The discovery of five potentially high-quality oil
reserves in the Florida Straits has also boosted economic prospects, as
bidding for drilling rights comes from Malaysia, China, and Canada,
among others.

Timothy Deal of the U.S. International Business Council says that it is
"hard to be optimistic" about the prospects for U.S. investment in
Cuba. Before 1958, 90% of all foreign direct investment in Cuba was
American. But today there are numerous obstacles constructed by both
the U.S. and the Cuban governments. The embargo, the Cuban American
Democracy Act, and the Helms Burton Act effectively block American
investment. On top of this, Robert Muse of Muse & Associates notes that
there are more than 5,900 certified property claims totaling $1.9
billion that need to be resolved. From the Cuban side, Law 52 (passed
in 1982) limits foreign partners to 49% ownership. Likewise, Law 77
(passed in 1995) restricts the types of business ventures that foreign
investors may undertake.

"Cuba seeks limited foreign investment on limited terms," explained
Deal. The Cubans do not want McDonalds or Wal-Mart. Though the number
of foreign firms in Cuba has dropped in recent years, foreign currency
reserves have increased due to the increased involvement of Venezuela
and China.

In addition to the legal barriers, American investors regard Cuba as a
relatively small market with high risks, and are thus less inclined to
push for a change in U.S. foreign policy. However, Deal believes that a
bilateral investment treaty could reduce some risk, creating greater
interest in investment in the growing Cuban economy.

Former Sen. George McGovern, who visited Cuba in October 2007, notes
that conditions in Cuba for dramatically increased U.S. agricultural
sales to the island are excellent. McGovern says that the U.S.
government, rather than addressing economic underdevelopment and social
injustice in the hemisphere, is absorbed by its fear of Fidel Castro.
He added that not much had changed in that respect since 1963 when he
gave his first speech before the U.S. Senate, entitled "Our Castro
Fixation vs. the Alliance for Progress."

Although the Cuban economy is growing, agricultural production remains
weak. Cuba has launched efforts to increase production, but it will
need to import much of its foodstuffs for years to come. Meanwhile,
U.S. farmers have a marked advantage in that they are the closest major
producers, allowing for lower cost and faster deliveries.

American farmers began selling agricultural products to Cuba in 2001
under the Trade Sanctions Reform and Export Enhancement Act of 2000. By
2006 Cuban agricultural purchases had reached $600 million. "They could
have gone much higher," explains McGovern, "but the Bush administration
imposed a cumbersome system of payments through international banks."
If Cuba were to pay for products as other countries do, U.S.
agricultural exports to Cuba could climb to at least $1.5 billion
annually.

Cusp of Change

Cuba is on the cusp of change. By contrast, there has been little
change in Washington. U.S. policy toward Cuba remains as ill-conceived
and counterproductive as ever.

There is hope, however, that the changing political equation in Miami,
pressure from economic interest groups interested in trade and
investment, and support by the majority of Americans for normalization
of relations with Cuba will lead long overdue policy change after the
2008 elections.

[Wayne Smith, a former head of the U.S. Interests Section in Havana, is
a CIP senior analyst, and Jennifer Schuett is a program associate with
CIP's Cuba Program, providing analysis for the Americas Program at
www.americaspolicy.org. This article draws on comments by participants
at the Imperatives for a New Cuba Policy conference sponsored by the
Center for International Policy in October 2007.]

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