The Effects of Minimal Trade With Cuba
For the purposes of clarity and coherence, it is worth correcting what is probably a
commonly held notion on the subject of trade between America and Cuba: the United States no
longer imposes a full trade embargo on Cuba. America has traded with Cuba since 1992. A nearembargo, however, does exist, greatly restricting trade and commerce between the two nations.
This near-embargo has had several major effects on Cuba. Initially, Cuban businesses suffered,
which consequently starved the Cuban Economy as a whole. This starvation coupled with
isolation culminated in the economic undermining of the Castro Dynasty which now faces
uncertainty and poverty throughout its island.
Business relationships between America and Cuba are virtually nonexistent. The
regulations of the United States and the dysfunctional business environment of Cuba combine for
a formidable business deterrent. The Cuban economy remains a dependent one and hosts the
majority of its work force in unproductive industries (“Economy” 7). In Cuba, Que Linda Es
Cuba, Robin Alexander emphatically repeats the sentiments that plague the economy; it is
deprived of a “creative spirit” (Alexander 7). In addition, starting a business in Cuba does not
mean one will necessarily improve his socio-economic status. On the other hand, ideas of
ingenuity and profitability have historically been used to describe the American economy.
While the island nation desires some of the economic ideals of America, Cuba is also
anxious to acquire the purchasing power of the American Dollar. The lack of trade and
cooperation between the United States and Cuba has rendered the Cuban economy untrained in
the arts of Capitalism; Cuba desperately needs direction and influence. American business
practices would compliment and advance the affairs of various Cuban businesses, if only, there
were meaningful interaction.
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Cuba’s number one most productive industry, tourism, generated 2.4 billion dollars
grossly in 2010 (“Economy” 7). To help put this figure in perspective, the national debt of Cuba
is about 18 billion dollars (“Economy” 7). Cuba seeks to implement tourism as an economic
foundation for the nation, but it lacks access to what would be its most profitable market,
America (Smith 171). The United States is the most desirable market because of the value of the
dollar. Indeed, the proximity of America in relation to Cuba would work out just fine for both
nations as they are less than 100 miles apart. Cuba’s intention is to expand its tourism sector by
renovating Havana, but it sorely needs the American market to help fund the Cuban dream of a
New Havana (Smith 172). Cuban tourism is neither able to readily acquire the dollar nor is able
to easily produce it as a method of payment, thus, the number one revenue generator for Cuba
(tourism) is stuck between a rock and a hard place, fiscally speaking.
The troubles that plague the tourism industry and other business sectors also apply to the
economy as a whole as they are microcosms of the Cuban national economy. The debt of Cuba
dominates its monetary affairs just as the Santa Clara Mountain range dominates the north
central portion of the island. World financial institutions do not extend credit to the indebted
nation, hence Cuba must structure deals with other nations (“Economy” 7). Simply put, Cuba is
able to feed itself but just barely and at great expense and debt. Cuba historically has never been
independent. This is true, first, in part, because of colonial rule. Next, it bad been heavily
dependent on America, and, in the more recent past, it had heavily depended only on Russia.
Even so, a friendly Moscow has had to write off Cuban debt. Of late, Cuba has made steps to
become independent, and this is the source of Cuban pride. The problem for Cuba still remains.
This passion, although valuable, has not cured the fundamental ills of the nation.
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In U.S. News Digital Weekly, Jorge Benitez quotes a Cuban as saying, “In Cuba, it's a
great myth that we live off the state. In fact, it's the state that lives off of us.” This reveals that
the problems of the Cuban economy are often systemic, institutionalized, and self inflicted. The
unproductiveness of the Cuban economy is something like a stereotype and has become
synonymous with Cuban national affairs. The business sectors lack proper order and expertise in
its endeavors. There exists a culture of clashing between work administration and labor unions,
which can obstruct production at times (Alexander 9).
A lack of natural resources aside, the Cuban government itself is responsible for much of
the sour business climate as its prohibitions and regulations fail to meet the needs of its people.
The people of Cuba are reported to frequently turn to shadow markets for an increasing amount
of their essentials. In addition, illegal side services from government workers are also said to be
part of the Cuban experience (“Economy” 7). In Wayne Smith’s book, A Portrait of Cuba, there
is a chapter titled “An Economy of Circumstance”. This chapter begins with a fitting picture. The
picture is of a man who is tall, expressionless, shirtless, and quite dirty. The man holds in his
right hand a pick axe and in his left a heavily soiled rag. His pants, snug and dirty, were without
belt loops and more curiously they were without pockets. Curious is the irony in this depiction;
this man seemingly worked long and hard hours yet had no pockets to hold his possessions. This
has been the condition of the people of Cuba.
Furthermore, Cuba’s inefficiencies were greatly exacerbated by the market collapse of
Eastern Europe. One by one, the friendly socialist nations fell until only the USSR remained to
care for Cuba. Russia was soon reborn and Cuba found itself more on its own. Cuba failed to
broaden its agricultural sector during the 80s and 90s, mostly because its sugar was seen as a
trade commodity by the accommodating Russians who valued its production and export from the
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island nation (Smith 170). While trading sugar for subsidy worked for a while, it is now a
hindrance to the national economy because falling sugar prices spelled crisis for the agricultural
sector, which has historically been a fiscal mainstay. The volatility of the market during the
2000s also affected another pillar of the Cuban economy. A leading export, nickel, saw its export
price fall thus furthering Cuba’s economic woes (Smith 172). These factors combined with many
internal problems led to the present economy which is not favorable to the people nor the
revolution that took place just decades ago.
According to Smith, “Food riots, demonstrations, even a civil war with appalling blood
shed, loom as an ominous future possibility” (190). The condition of the Cuba will remain dire
if it refuses to correct its course. The Cuban economy will need to be revitalized in order for the
Castro dynasty to remain in the future. The popular nationalist revolution is long over and the
people yearn for the fruits of their labors. Smith argues that “The Cuban people have simply
grown tired of sacrificing,” “tired of food rationing,” and “tired of waiting for a better life to
materialize” (112 ). The circumstances of Cuba have mounted and are a threat to the Castro
regime. Perhaps, the people will soon yearn for change. If the goal of America’s trade embargo
was to economically isolate Fidel Castro’s regime, then it was a success. The economic noose
has been tightening around the neck of the Castro administration for quite some time, and it
seems they may gasp shortly. In the face of poverty, the Castro’s have made many concessions
and will need to continue to do so to keep Cuba afloat.
The undermining of the Castro Dynasty, the poor business environment, and the suffering
of the national economy are all a direct result of the embargo and near-embargo that has been in
effect for over forty years. The situation has had a much lesser effect on America as the trade
numbers are miniscule in the grand scheme of the American economy. Cuba must act on its own
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accord and now is the time. If there is ever a time to “normalize” relations with America it is
now under this current administration. This process has already begun under President George W
Bush. Bush’s tenure saw the multiplying of trade numbers with the island nation. It would seem
that America has reversed its course of action. If America so desires, it can increase the volume
of trade with Cuba but this would empower the regime.
All dollars that come into Cuba are exchanged for “convertible pesos” which represent
90% of face value. The other 10% of the exchange goes directly to the Castro government. This
percentage is officially said to be utilized to provide healthcare and other entitlements, but there
has always been accusations of theft. If America continues to greatly restrict trade then Cuba will
struggle. Even Some of Cuba’s best deals aren’t worth that of American interstate commerce
(“Cuba to Import” 28). Cuba will always be in the market for American goods but Cuba’s market
is of little significance to America’s national economy. Frankly, it’s America’s Atlantic (ocean),
and Cuba is just living in it. In a manner of speech, it is Cuba’s move.
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Works Cited
Alexander, Robin. "Cuba, Que Linda Es Cuba." Guild Notes 24.4 (2000): 6, 7, and 9. Academic
Search Premier. Web. 3 Nov. 2014.
Benitez, Jorge. "Lifting The U.S. Embargo On Castro's Cuba Would Be A Mistake." U.S. News
Digital Weekly 6.9 (2014): 62. Business Source Premier. Web. 3 Nov. 2014.
"Cuba to Import 700,000 Tons of Corn." Southwest Farm Press 33.4 (2006): 28. Academic
Search Premier. Web. 25 Nov. 2014.
"Economy." Background Notes On Countries of the World: Cuba (2011): 7. Business Source
Premier. Web. 3 Nov. 2014.
Smith, Wayne and James Porges. Portrait of Cuba. Turner, ME: Turner Publishing Inc., 1991.
Print.
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