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Thursday, January 19, 2017

Tangible Results Of U.S.-Cuba Outreach

Tangible Results of the U.S.-Cuba Outreach

    
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The Obama administration launched its outreach to Cuba by directing different government bodies to amend various regulations, including aspects of the Cuban Asset Control Regulations, which underpin Washington's embargo on the country. In this way, President Obama overturned the restrictions on travel from the United States to Cuba and eased sanctions against the country. The president could not lift the blanket prohibition on trade with Cuba, however. Under the terms of the 1996 Helms-Burton Act, ending the embargo requires a congressional vote and Havana's compliance in implementing reforms, for instance to allow free elections.
Even with the embargo still in place, the changes in U.S. policy have been a boon for the Cuban economy. Liberalizing travel to Cuba has paved the way for tens of thousands of additional U.S. citizens to visit the country each year and for tens of thousands of Cubans to travel to the United States. Already, Cuba's tourism revenues have registered the effects of increased U.S. travel, jumping from 1.7 billion Cuban pesos (about $64 million) in 2014 to 1.2 billion pesos in the first half of 2016 alone, figures that are likely underreported. This is a welcome development for Cuba's finances, which have suffered over the past year. As Venezuela contends with its own economic crisis, its financial assistance to Havana has fallen off. The influx of tourists from the United States buoyed small businesses in Cuba's service sector and has given some of the country's citizens an additional source of income, perhaps reducing the central government's spending burden. What's more, it has given the Cuban government an additional source of crucial dollar-denominated revenue.
The power transition in the United States has cast doubt on the future of this revenue stream, though. Depending on how U.S.-Cuban relations progress over the next four years, the Trump administration may decide to rescind the changes that Trump's predecessor oversaw. If U.S. public opinion of Cuba worsens, or if the Cuban government stops offering concessions in exchange for continued adjustments to the Cuban Asset Control Regulations, the next president may increase pressure on Havana. But Cuba's government would likely resist Washington's demands to implement widespread human rights reforms or introduce a democratic electoral system, measures that could threaten the government's grip on power. Should Havana refuse to yield to Washington's pressure, however, the United States could respond by reinstating its sanctions on Cuba. Knowing the risks involved in defying the next U.S. administration's wishes, the Cuban government will likely carefully consider whatever requests the United States makes of it.