WASHINGTON — On Dec. 17, 2014, President Barack Obama announced that the U.S. would restore full diplomatic relations with Cuba, after almost 55 years of economic and diplomatic isolation from the U.S. An economic embargo has been in place against Cuba since 1960, after Fidel Castro overthrew the Batista regime and angered the United States with Communist rhetoric and socialist policies.
The restoration of relations comes after 18 months of secret talks between the two nations, facilitated in part by the Vatican and Pope Francis. While a full lift of the economic embargo would require congressional action, President Obama has pledged to take unilateral action to push change.
Immediately following the news, Cubans said that the restoration of relations and easing of sanctions give them hope for a better future. The hope is that better relations with the U.S. will ease Cuba into progress toward the 21st century and more economic freedom.
Ted Henken, professor at Baruch College, said that “without the U.S. to blame, the shortcomings of the Cuban government will be much more transparent. The Cuban government will no longer be able to blame the United States for the obstacles that entrepreneurs face.”
Cuba has long been economically dependent on other countries. During the Cold War, Cuba heavily relied on imports and aid from the USSR to prop up its economy and government. After the collapse of the Soviet Union, Cuba’s GDP fell 33 percent in one year and led to a decade of near standstill growth and extreme isolation.
Today, Cuba receives much of its aid and support from Venezuela, as well as remittances from abroad. 115,000 barrels a day of oil, or two-thirds of Cuba’s consumption, comes from Venezuela. However, with the rapidly dropping oil prices around the world, Venezuela has become politically and economically unstable, with a 97 percent probability that within the next five years it will default on its bonds. With memories of the hardships following the collapse of the economy after the USSR fell, Cubans are wary of Venezuela’s downward spiral.
Remittances from the U.S. made up four percent of Cuba’s GDP in 2013. They crawled to about $2.8 billion in 2013. In 2009, President Obama lifted the limit on remittances to family members.
Cuba’s standards of living are considered low. Some estimates say that minimum hourly wage translates to about five cents per hour and economic growth this year was just 1.4 percent. GNI per capita reached $5,980 last year, which is just one-tenth of GNI per capita in the United States. The Heritage Foundation gives Cuba’s economic freedom a score of 28.7, putting the nation at the very bottom of the repressed category, just above North Korea. Eighty percent of food is imported. Only one-fourth of Cubans have access to the Internet, which is mostly controlled and censored by the government.
So will December’s announcement address any of these problems? For one, access to the Internet will most likely increase. The idea is that with more information and access to the outside world, Cubans themselves will start to demand change. However, critics of this point to China, where access to the Internet is high but government controls limit the amount and type of information available to its citizens.
The announcement also made it possible for remittances from non-family members to increase from $500 per quarter to $2000 per quarter. President Obama directed Secretary of State John Kerry to review Cuba’s standing on the state-sponsored terror list. Cubans may have more access to US exports, which have been estimated to be $4.3 billion in potential goods that could be going to the island nation without the restrictions.
An easing of travel restrictions could increase profits from tourism, especially with the lift on a ban of travelers using American credit and debit cards. One small business owner, Niuris Higueras Martínez, says she thinks this shift, in particular, will help the Cuban economy, stating that Cubans will have “to learn a the banking and credit culture that does not exist yet” but will eventually profit for it.
There are vast-reaching political consequences of the announcement. The Cuban-American population in Florida, very powerful and long opposed to lifting any restrictions toward Cuba, has shifted in its disapproval of changes in relations between the U.S. and Cuba. This powerful lobby, which resides in a presidential swing-state, has always made its voice heard. But polls in recent months have shown that opinions, especially among younger generations, have shifted in favor of restoring diplomatic ties.
Some in Congress oppose President Obama’s actions. Florida Senator Marco Rubio, a Cuban-American and 2016 Republican presidential hopeful, says that the restoration of relations is “a victory for oppression.” Another potential 2016 Republican presidential candidate, Senator Rand Paul of Kentucky, said that “it was probably a good idea” to restore ties.
The most dramatically positive response, however, may have been from other Latin American countries. President Obama’s relations with the leaders of other countries in Latin America have become increasingly strained throughout his terms as president. But immediately after the December announcement, leaders around the region praised the President, calling him “brave” and “extraordinary” and describing this moment as “historic.” With the Summit of the Americas just a few months away, this move may be just what the President needed to reclaim some legitimacy in the region.
– Caitlin Huber