Following historic protests in Cuba where thousands took to the streets, Cuban officials have repeatedly blamed the six-decade U.S. embargo on Cuba’s food, fuel and medicine shortages.
Amid the coronavirus pandemic, Cuba health officials insist the embargo limits the import of crucial vaccine components — the communist country has produced its own Covid-19 vaccines — as well as components for medical equipment such as respirators.
Cuban President Miguel Díaz-Canel has said the embargo is “genocidal” and calls it U.S. “politics of economic asphyxiation.”
Although the U.S. can export food, medicine and medical supplies to Cuba, the embargo makes it more difficult.
The United Nations and human rights groups have called for an end to the embargo; in the U.S., it’s a constant topic of debate when it comes to U.S.-Cuba policy.
When the embargo was fully implemented in 1962 by President John F. Kennedy, there was no trade. It was initially a response to Fidel Castro’s confiscation of American businesses and properties on the island following the 1959 revolution, which was the largest expropriation of U.S. assets ever. There are 5,913 unresolved certified claims — totaling $1.9 billion at the time — made by American citizens.
Over the years, the U.S. has added more laws on the embargo, making it harsher — while also creating more exceptions. It’s now a complex set of laws with many layers.
“The embargo has more holes than Swiss cheese,” said Pedro Freyre, chair of Akerman’s International Practice, which provides legal counsel to U.S.-based companies affected by the embargo.
While food from the U.S. is available for export to Cuba, those who want to sell to the island requires authorizations or licenses from the Treasury and Commerce Departments, which makes it more cumbersome.
Sending medicine and medical supplies from the U.S. to Cuba is trickier because they cannot be exported if there is a “reasonable likelihood” the product could be used for torture, re-export or the production of Cuba’s biotechnological industry. It must be verified on-site that the products are being used for their intended purposes.
The State Department said it regularly authorizes the export of agricultural products, medicine and medical equipment, as well as humanitarian goods, to Cuba. In the first six months of 2021, Cuba imported $123 million worth of chicken from the U.S.
The majority of the exports are in the agricultural sector and include chicken, soybeans and corn. In 2007, the U.S. was among Cuba’s top five trading partners, and in 2008, U.S. exports of agricultural products to Cuba peaked at $684 million. That number has gone down since then as Cuba has diversified its supplier network, according to some experts.
The embargo does not prevent other countries from trading with Cuba, but if a product contains 10 percent of American-created content, then it must get a license from the U.S. to be exported to Cuba.
“When you take global supply chains into consideration, that significantly limits the amount of products that can be exported to Cuba, even from third countries,” said Ric Herrero, executive director of the pro-engagement Cuba Study Group.
Other countries may fear investing and trading with a heavily sanctioned country that is also on the U.S. State Sponsors of Terrorism list.
Because the embargo does not allow Cuba to obtain financing by U.S. companies, Cuba has to pay for imports with hard currency.
Banks in other countries often avoid doing business with Cuba, not only because of the complexity of the U.S. sanctions but also because Cuba “does not have a very good payment record,” Freyre said. Cuba has defaulted on billions of dollars’ worth of loans.
“The Cuban economy is so small and conditions are so difficult that it’s just not a very attractive market,” said Freyre, who noted that Cuba’s centralized, Marxist economy is the main reason for its poverty.
After Kennedy imposed the embargo, relations between Cuba and the Soviet Union strengthened, eventually leading to the Cuban missile crisis. For decades, the Soviet Union heavily subsidized Cuba and accounted for 80 percent of Cuba’s international trade. But when the Soviet Union collapsed in 1991, it sent Cuba into a deep economic crisis it has never really recovered from.
It was during this period that the U.S. passed the Cuban Democracy Act, which strengthened the embargo and constrained presidential power, stating it could only be lifted if the president reports to Congress that Cuba has met a series of conditions, including free and fair elections.
The CDA allowed the export of medicines and medical supplies for humanitarian reasons. It also banned vessels that enter Cuba for trade from loading or unloading in the U.S. within 180 days after leaving Cuba, unless authorized by OFAC — making it more expensive to send shipments.
The next phase of the embargo came in 1996 with the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act, also known as the Helms-Burton Act. It was signed into law weeks after Cuban MiG fighters shot down two planes belonging to the Cuban exile group Brothers to the Rescue, killing four people.
“That gave the impetus for Congress to act,” said Herrero. “It was an election year, and President Bill Clinton wanted to lock in Florida.”
The Helms-Burton Act made it harder to lift the embargo by making the existing laws and regulations permanent unless lifted by Congress or if an expanded series of conditions are met by Cuba, including “a transition government.”
It also allowed the original owners of Cuban properties confiscated by Castro to sue in U.S. courts foreign companies that were using them for business, though this part of the law was not enacted until 2019 by President Donald Trump.
A subsequent U.S. law enacted in 2000, the Trade Sanctions Reform and Export Enhancement Act, allowed the direct sale of agricultural products and other food to Cuba.
Jason Poblete, a Washington, D.C., attorney who supports sanctions on Cuba, said while “the measure makes it easier to export food and medicine,” it “adds more steps not otherwise needed when exporting to a nonsanctioned country.”
During the Obama years, restrictions were eased on U.S.-Cuba trade, financial transactions and travel, but Trump reversed much of them.
After six decades, even some who support sanctions on Cuba say it’s undeniable that the embargo has mainly been about domestic politics.
“Sanctions are a tool, not a policy,” Poblete said. “All sides should agree on this, but folks keep talking past one another without focusing on achievable solutions.”
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Source: CNBC News