Our Dollar in Havana

by Michelle Bovée

It has only been a few weeks since President Obama announced that the United States would normalize relations with Cuba, and yet speculation about the possible ramifications of this decision has been rampant. Perhaps the season is partially to blame: as one year comes to a close and another begins, there’s a tendency to sum up the past (“15 best celebrity moments of 2014!” “10 things you won’t miss about 2014!”) and make hopeful predictions about the future (“2015 will be the year of wearable technology!” “The future of jobs in 2015!”). After over half a century of heavy sanctions against the Communist island, though, and the isolation and mystery surrounding the country’s politics, it’s no surprise that commentators are full of ideas on how the region will change in the coming year.

Predictions of happy U.S.-Cuban relations and a burgeoning democracy, however, seem a bit premature. The United States may have forbidden trade with the Castro regime and barred U.S. tourists from traveling to Havana, but much of the world is willing to do business with Cuba and the tourism industry is fairly robust–and not because of sympathetic countries like Russia and Venezuela. Canada, for example, has surprisingly close ties with Cuba, and the EU is one of Cuba’s largest trading partners and the source of a large portion of Cuba’s annual tourism.  Havana has even received foreign direct investment from foreign governments, though not in large amounts. Cuba, in short, has not been as isolated from the world as many in America seem to think, at least not economically.

Cuba’s two-tiered currency system, however, has prevented much of this money from reaching worker’s hands, as sales may show a profit in one currency and a loss in another. There has been slow movement towards unifying the currencies over the last year, but until this two-tiered system is fully abolished–and until the rampant corruption that landed Cuba a score of 46 from Transparency International is checked– it is highly optimistic to claim that Washington’s decision will have a powerful positive impact on the Cuban economy, given the island nation’s deep systemic problems. Add this, then, to the many predictions out there already: it seems unlikely that the United States lowering some trade restrictions will do much to reduce poverty among Cuba’s general population.

The move is highly symbolic, though, and could have a great impact in the long run, especially if Washington votes to drop the embargo entirely. The embargo has been an ineffective strategy for convincing the Castro brothers to accept human rights and democracy, and there seems to be little reason to uphold a policy that hasn’t been working. Additionally, the embargo has provided Havana with five decades of political ammunition and fodder against Washington: every problem in the country could easily be blamed on the United States. This political propaganda goldmine has helped the Castro regime maintain its firm hold over the country, as it has provided them with a convenient external enemy against which the people could rally. By loosening restrictions the United States has a chance to reposition itself in Cuban citizens’ eyes as a partner, an ally, rather than a threat, and perhaps, after 50 years of hardline failure, it is time to try a little soft power.