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Will Washington or Havana Move Toward Warmer Relations?

By Connie Mack, Jennifer McCoy, Christopher Sabatini, and Jerry Haar
Latin America Advisor October 12, 2011

Originally published in the Dialogue's daily Latin America Advisor

Q: In a roundtable discussion, U.S. President Barack Obama told Hispanic journalists Sept. 28 that he will always be ready to change U.S. policy toward Cuba, but added he needs evidence that Havana is ready for reforms. Cuban Foreign Minister Bruno Rodríguez dismissed Obama's statements as "old and repetitive." Meantime, 34 U.S. lawmakers asked Spanish oil company Repsol to stay out of Cuban waters, saying the company would be bankrolling a regime "that violently crushes dissent." Will Washington or Havana make a move toward warming relations? Do hazards particular to Cuba's government await Repsol or other companies seeking to do business in Cuba? How much is the United States pressuring companies not to do business in Cuba, and is that likely to change any time soon?

A: Connie Mack (R-Fla.), chairman of the U.S. House Western Hemisphere Subcommittee: "The Cuban regime has historically made opportunistic policy adjustments, like opening up to private investment, when it faces economic hardship. During the 1990s, Cuba was on the verge of collapse due to the end of Soviet subsidies, and the Castro regime had to capitalize on foreign investments (1990), allow the U.S. dollar to circulate within the economy (1992) and free 300 prisoners (1998). Then, as Cuba regained its footing aided by Venezuelan support, we saw one of Cuba's harshest crackdowns on dissidents (2003) and the rejection of the U.S. dollar with a 10 percent tax placed on remittances arriving in dollars (2007). Now that the island's most recent ideological and resource-rich supporter, Venezuela, is struggling to keep its own nation afloat, the Castro regime is back on the scene manipulating the international community in an effort to sustain the communist nation of Cuba. The Cuban government must make serious concessions to ensure freedom and improve human rights on the island. Let us not forget that American Alan Gross has fallen victim to this cruel regime while the Obama administration continues to open avenues of funding to the island from the United States. The United States should only consider relations with Cuba when real democratic reforms are instituted, including free and fair elections, the release of all political prisoners and a free and independent press that is allowed to operate without fear of oppression or violence. Companies like Repsol and others seeking to do business in Cuba should realize they are supporting and propping up the economy of a failed communist regime. The world's democratic nations should come together and unite in denouncing the Castro government's brutal tyrannical ways and to work to bring freedom, security and prosperity to the Cuban people."

A: Jennifer McCoy, director of the Americas Program at The Carter Center in Atlanta and professor of political science at Georgia State University: "Havana and Washington are at an impasse because of the imprisonment of Alan Gross, an American citizen arrested in Cuba for bringing equipment into Cuba under U.S. democracy promotion programs that are illegal in Cuba. Washington refuses to discuss any further significant change in policy until Gross is released. Cuba meanwhile views the democracy programs as a continuation of Bush policies of regime change and has its own desires for the humanitarian pardon of five Cubans who have been imprisoned in the U.S. for spying. The U.S. Congress hews the hardest line here. The Helms-Burton law explicitly says that the only aid that can go to Cuba is to support democracy activists opposed to the current regime until this regime (or anyone with the last name of Castro) is gone. For this reason, both Republican and Democratic Cuban-American legislators in the House and Senate have insisted that the democracy programs continue at high levels ($20 million for a tiny targeted population, compared with only $13 million development aid for 8 million Nicaraguans living in the second-poorest country in the hemisphere, after Haiti). Many of the same legislators are also pressuring for foreign companies not to engage in oil drilling in Cuba. Both Cuba and the U.S. have the desire to talk about practical matters of mutual interest, including capacity to respond to potential oil spills, joint responses to natural disasters and cooperation on counter-narcotics and counter-terrorism. While some initial technical discussions on these topics may be possible in the current climate, any significant warming of relations awaits Washington's recognition of the important changes already taking place in Cuba with regard to small entrepreneurs and the release of long-time political prisoners; and Cuba's follow-through on its prior commitment to delink the case of Alan Gross from a pardon for the Cuban Five."

A: Christopher Sabatini, editor-in-chief of Americas Quarterly and senior director of policy for the Americas Society and Council of the Americas: "It's difficult for either side to do much to warm relations. On the one side, with its recent crackdown on dissidents and the ongoing detention of Alan Gross, the Cuban regime has made it politically impossible (not to mention morally difficult) for President Obama to press for further opening. On the other side, there are serious constraints on how far the Cuban regime can go as long as the Castros and their geriatric colleagues control the reins of power. But for a start, the Cuban government needs to release Mr. Gross, currently held under false pretenses. Once he has been released, there is plenty the United States can do—both to improve relations and further freedom. For too long, U.S. policy has allowed itself to be held hostage to the Cuban government. There are many things that the United States should do to expand the scope for independent activity in Cuba. Among them are expanding the scope for U.S. companies to export software and hardware and facilitating the security of U.S. travelers to Cuba. The congressional letter to Repsol makes little sense coming from the Florida delegation. The question for those across the Florida straits—whose constituents benefit from U.S. tourists flocking to pristine sandy beaches—shouldn't be how to prevent Spain's Repsol from participating but how to avoid those contracts going to those with dreadful environmental records, like the Venezuelan, Vietnamese and Chinese companies. That's what will happen if Repsol is locked out. In fact, if they really want to protect their local industry, those congresspeople should be helping U.S. companies to get involved—because, let's face it, given its current economic dire straits, Cuba's going to drill anyway. "

A: Jerry Haar, associate dean and director of the Pino Global Entrepreneurship Center in the College of Business Administration at Florida International University: "What happens when an unstoppable force meets an immovable object? This paradox of physics best describes the half-century relationship between Cuba and the United States. Neither side has altered its basic position, although lobbying by U.S. business to end the embargo and normalize relations with Cuba has intensified. (U.S. firms are permitted to do business with Cuba in only certain commercial categories such as food and medicine.) Foreign investment in Cuba in tourism, mining and natural resources in particular is not insubstantial, with Canada, Italy, Mexico and Spain being the biggest investors. The business environment, however, is risky and many companies currently or previously operating there have horror stories to tell, such as forced divestiture, confiscation, and tax, regulatory and labor hassles and penalties. With respect to Repsol, Cuba has reserves of nearly 5 billion barrels of oil and almost 10 trillion cubic feet of natural gas, with the potential to become another Ecuador or Colombia in fossil fuels. Such tremendous potential, along with the longstanding governmental and commercial relationship between Spain and Cuba, not to mention Repsol's deepwater drilling capacity (and lack of competition from U.S. oil companies), mean that any U.S. congressional efforts to persuade Repsol to stay out of Cuba will be perceived as naïve, arrogant, heavy-handed and futile. What lawmakers should focus on are jurisdiction and liability issues, especially contingency plans for working with the Cuban and Spanish government and companies in the event of a major oil spill and environmental catastrophe."