Cuba Starts to Open Up, But the US Government Isn’t Interested
Cuba has just approved economic reforms with the goal of opening up its economy to foreign investment. On March 29, Cuba’s National Assembly unanimously passed a bill which includes changes to tax rates on foreign investment, speedier approval processes for joint venture agreements, and legal assurances to foreigners that may be wary of the country’s government.
According to the BBC, Cuba began allowing foreign capital into the country in 1995. Its total GDP has more than doubled since then. The new reforms may be a reaction to last year’s poor growth rate – the target was 7%, but with a rate of 2.7%, it didn’t even reach half of that.
While many foreign investors are eager to enter a new market, investors in the United States will not be able to due to an embargo by the US Government that has been in place since 1960. The embargo has restricted or eliminated (it has been tightened and loosened over the past 50 years) doing business with Cuba, and restricted the amount of money that Cubans living in the US could send back to their families as remittances. Cuba is also one of four countries on the US Department of State’s list of State Sponsors of Terrorism (It shouldn’t be too hard to guess the other three before clicking the link!).
Relations with Cuba are complicated, but have been a bit closer since President Obama has been in the White House. Near the very beginning of his term in 2009, Obama reversed some of the strict sanctions that had been placed on Cuba by the Bush administration. For example, Americans with family in Cuba are now allowed to travel to Cuba. In 2011, the embargo was loosened even further so that any American can travel to Cuba as part of a “people-to-people” exchange trip that emphasizes academic, humanitarian, and religious exchange.
Last year, President Obama famously (or infamously, depending on how you see things) shook hands with Cuban President Raul Castro at the 2013 memorial for Nelson Mandela. The White House attempted to down play the handshake on by saying it “wasn’t a pre-planned encounter” and happened spontaneously.
While this statement may have dashed the hopes of Americans looking to have more open relations with Cuba, things have been improving lately. In the past, the embargo on Cuba made perfect sense: The Cold War was on, and the West was afraid of the USSR and the threat of a Communist country so close to US borders. An ally of the USSR, Cuba was also openly hostile toward the United States, which led to the Cuban Missile Crisis in 1962, in which nuclear missiles placed on the island were in range of Washington, DC.
However, the Cold War is over, and Fidel Castro left office for health reasons in 2008 and had his brother Raul replace him. This is notably around the same time as Obama’s election and the subsequent warming of relations with Cuba.
At the moment, one of the major sticking points is that an American USAID contractor was arrested in Cuba and sentenced to prison for 15 years on suspicion of setting up an “illegal communications network” in 2011. The United States also has several Cuban citizens in prison on espionage charges. Obama has claimed that the US will not fully open up to Cuba until these issues are resolved. Until then, the rest of the world will be investing in the country while the US and Cuba work out their differences.