Photo Credit: Adalberto Roque, Getty Images
U.S.-Cuban relations have deteriorated considerably since President Barack Obama and First Secretary Raúl Castro agreed to restore diplomatic relations in December 2014. The initial embrace brought the resumption of large-scale U.S. tourism to the Caribbean country, while U.S. companies explored the potential of the island’s markets. Cuban families were able to reunite with greater ease, generating an increase in remittances. This process of normalization was derailed during the Trump administration, recasting the relationship in mounting hostility. However, with President Joe Biden victory in the U.S. president election, Cuba once again appears to be on the diplomatic menu, though the path forward is likely to be complicated by both regional and domestic politics.
In the time after the U.S. and Cuba parted ways during the early Cold War, their relations have remained frozen. U.S. policy was shaped by Fidel Castro’s turn to Communism, the subsequent nationalization of U.S.-owned businesses on the island, and Havana’s close relationship with the Soviet Union. For the new Castro-led Cuba, the U.S. represented a history of imperialist exploitation and provided an important foil for the revolution by representing a large and dangerous enemy just 90 miles to the north. The United States’ efforts to topple the Castro regime—notably during the Bay of Pigs invasion—cemented mutual suspicion and enmity. The U.S. position was also hardened by Cuban efforts to export the revolution to other parts of Latin America (such as Panama, the Dominican Republic, Bolivia, and Nicaragua), and its military exploits in Angola and Ethiopia—through support from the Soviet Union.
The existence of a sizable Cuban exile community in Florida reinforced the sharp divides between the two countries. The United States’ economic sanctions and considerable Soviet largesse (up to USD $4 billion a year in assistance) further solidified the frozen relations between Havana and Washington.
Over 60 years of U.S. economic sanctions failed to bring Castro’s Cuba to its knees. Despite the fall of the Soviet Union in 1992 and a lengthy period of difficult economic conditions (called the Special Period 1992-2000), the Castro regime managed to maintain power. Cuba’s economy was ultimately rescued by the arrival of Hugo Chávez in Venezuela in 1999, who was willing to bail out Cuba’s failed Communist economic experiment.
Beginning in the early 2000s, Cuba provided the Chavéz government with internal security assistance and medical personnel. In return, Venezuela provided Cuba with oil, including a surplus, which it sold on the international market. This helped consolidate the Castro regime and allowed it to postpone badly needed reforms that would stabilize the economy. Indeed, with former Prime Minister Fidel Castro stepping down from power in 2008, his brother Raúl assumed national leadership and introduced a limited range of economic measures to open the economy.
With the gradual departure of Fidel from power and a small, yet significant liberalization of the economy to allow some small business, the Obama administration hoped that an opening of relations between the two countries would promote the exchange of people, goods and ideas. It could also help the expansion of a nascent private sector, helping to nudge Cuba along the path to a more open political and economic system. The crowning moment of the Obama administration’s opening to Cuba came in March 2016, when the U.S. leader paid a visit to the island.
While the Obama administration’s efforts to normalize relations were an important effort to move beyond Cold War mentalities, the U.S. still missed an opportunity to demand more from the Castros on the political front—something that would come back to haunt the Democrats.
The thaw in U.S.-Cuban relations gradually came to an end during the Trump administration, which adopted an increasingly more hard-edged approach. This came in the form of restrictions on commerce with military-owned businesses (which represent a large swath of the Cuban economy including tourism), restrictions on remittances (an important source of income in Cuba), and a ban on educational and cultural exchanges.
The key driver behind the U.S. shift was Cuba’s perceived role in propping up President Nicolás Maduro once he succeeded Chavez in 2013. At the same time, Cuban economic reforms stalled and there was no movement toward the political liberalization that the Obama administration had hoped for. Most recently, President Donald Trump made one last swipe at Cuba as he added the country to the list of State Sponsors of Terrorism—an act that overturns the Obama administration’s removal of Cuba from that list in 2015. The intention of this act was to complicate efforts to rekindle a dialogue between the two countries, make it difficult for U.S. companies to conduct business in Cuba, and maintain economic pressure.
While Florida’s two Republican senators have indicated their opposition to loosening U.S.-Cuban policy, a 2020 survey indicated that 58 percent of Florida’s Cubans favored maintaining diplomatic relations with Havana, and 65 percent felt that all air travel to the country should resume.
For Cuba, the change in U.S. leadership from President Trump to President Biden is a positive development. The tightening of U.S. measures, the pandemic, and an unwillingness to fully embrace economic reforms have strained conditions in Cuba. Their economy has stalled, daily staples are rationed, and there is more than a faint echo of the Special Period.
Further complicating matters for Cuba is the fact that neither China nor Russia have any particular interest in coming to their rescue. To be certain, Beijing and Moscow do not wish to see an anti-U.S. ally fail, but the government of President Miguel Díaz-Canel needs to help itself first.
Although China is one of Cuba’s major trade partners, the Chinese experience in Venezuela has left Beijing cautious about over-lending to a government that refuses to reform its economy with the same eye toward modernization as its Asian sponsor. Moreover, Russia no longer has the funds to finance Cuba as it did during the Cold War. Currently, China has limited itself to the role of a major trade partner to Cuba (having slipped behind Spain in 2019) and Russia is only engaged insofar as several large-scale infrastructure projects. However, under President Miguel Díaz-Canel, Cuba will have to decide if it wants to continue the march into the economic cul-de-sac of the Castroite state or opt for something more along the lines of the Chinese and Vietnamese models of mixing state economics and fostering a private sector.
Source: International Monetary Fund, Direction of Trade Statistics
The Biden administration faces a challenging foreign policy landscape in the Caribbean. Such challenges include a likely new wave of Venezuelan refugees (possibly up to an additional 2 million in 2021), a profound economic crisis throughout most countries in the region due to COVID-19, stretched local government finances, and increased debt burdens throughout the hemisphere. Venezuela has periodically claimed up to 70 percent of Guyana. The claims from Caracas took on a more threatening tone in early January 2021 and were followed by the seizure of two Guyanese fishing boats. Although the boats were released in early February, the United States, Canada, and the English-speaking Caribbean countries rallied behind Guyana, placing Cuba in an awkward position due to its longstanding support for the Maduro regime.
Cuba adds to an already growing foreign policy agenda. Considering the reluctance of Cuba’s leadership to implement meaningful economic reforms (due to its own entrenched interest groups like the military and Communist Party elite) and the Biden administration’s commitments both domestic and abroad, the policy menu is likely to be limited to resuming remittances and allowing air travel to the island. There could also be a return to law enforcement cooperation. And Biden does have the option to undo much of what Trump did as most of the actions were done by Executive Orders. For any substantial new opening, the new U.S. administration will likely need to push Cuba for political freedoms—something that will no doubt be resisted.
2021 could yet prove to be a pivotal year in U.S.-Cuban relations, but much will rest on how domestic politics in both countries play out under their respective leadership.
Scott B. MacDonald is the chief economist at Smith’s Research & Gradings, founding director of the Caribbean Policy Consortium, Senior Associate at the Center for Strategic & International Studies, and a Research Fellow at Global Americans. He is currently working on a book on the new Cold War in the Caribbean.
