Americans see Cuba as unpredictable investment
America isn’t famed for its forgiving foreign policy: the global superpower can afford to pick its friends and sanction its enemies. Yet, they say that all things in life must at some stage come to an end.
Since 1961, Cuba has been closed off to the American market, but now, for the first time in half a century of political tensions, their presidents have announced plans to restore ties. As trade and travel between the countries becomes feasible, analysts are torn about the potential impact of this opportunity on American businesses and the Cuban economy.
On December 17, US President Barack Obama and Cuban President Raul Castro announced a new era in relations between the two countries. For the first time in decades, Washington and Havana seemed to be on the same page. The leaders publicised the exchange of captive American Alan Gross for the remaining imprisoned members of the Cuban Five. They declared that embassies would open once again and travel restrictions would be eased. On January 15, America followed through with its pledge. Although direct trade is still limited, the Treasury and Commerce Departments issued a new set of guidelines that will permit US companies to export telecommunications, construction and agricultural equipment to Cuba, and will loosen in part the travel and banking restrictions.
As can only be expected in politics, the move has attracted its fair share of criticism.
Hardliners in Congress argue that the Castro regime hasn’t changed and that its financial gain from U.S. business and tourism will be used to further the repression of the Cuban people. They are blunt about the reality that as long as the Republicans control the Senate, Obama’s powers only extend so far. Team Obama, however, is celebrating the first steps towards diplomatic normalisation. His allies point to the lack of change until now as a key reason why continued sanctions would be futile. They argue that better economic ties will serve American business interests across Latin America and could in the long-term improve the quality of life for the average Cuban.
Currently the island of 11 million people has little disposable income. Yet, there is arguably large potential in the market if better infrastructures and communications are able pave the way for reform. According to the Peterson Institute for International Economics, if the full embargo was lifted, American merchandise exports to Cuba could amount to $4.3 bln annually.
It will certainly be interesting to see how businesses respond to the new developments. Many Americans will likely still see Cuba as an unpredictable investment environment, and many may be reluctant to make the first move, but it will only need a few to be tempted by the opportunity to make a historical difference. In Florida, certainly, the geographical closeness could sway communications and agricultural firms into taking the bold step across the water.
There is certainly a significant way to go before Cubans and Americans could be reaping the benefits of these reforms, and questions about the policies of the Castro regime are still legitimate.
Yet Obama was voted into power with the promise of change and change always has to start somewhere. Many probably never expected to see the day we’d even be discussing the possibility of US-Cuban relations; the political and historic implications here could prove to be a whole lot larger than the deal itself.