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U.S. President Barack Obama’s visit to Cuba last week, the first by a sitting president in 88 years, aimed to bring the two countries and their people closer together, moving beyond bad memories of the Cold War. Within sight — although not immediately — are trade and business opportunities for American businesses, and also tourist visits for Americans, but they would require Congressional approval to lift U.S. economic sanctions against Cuba.
The U.S. has given up its earlier agenda of attempting to force change in Cuba, and now prefers to allow any change to occur naturally, according to Gustavo Arnavat, senior advisor at the Center for Strategic and International Studies, a public policy think tank based in Washington, D.C. “Trade is — on a practical level — the most important issue, because a number of U.S. businesses are interested in pursuing trade deals or opportunities in Cuba,” he said. Tourism is another form of trade, and many Americans want to visit the island, he added.
According to Arnavat, the U.S. is interested in increased engagement between the people of the two countries that could “lead to more prosperity for the American people, but also for the Cuban people.” That would, over time, lead to changes on the island in other areas like human rights, he added.
In a break from the strained ties of earlier years, the mere announcement of Obama’s visit in February led to “a flowering of government-to-government discussions on a whole variety of issues” between the two countries, according to Alex Lee, deputy assistant secretary for South America and Cuba affairs at the U.S. Department of State. Officials discussed issues concerning the environment, cooperation in law enforcement and search-and-rescue operations, human trafficking and commercial opportunities, he said.
“Obama wanted to … continue to build momentum, and to send a clear message to the Cubans that the U.S. remains serious [about building] trust which has been lacking for so many years.” –Gustavo Arnavat
“[Those discussions covered] human rights, too, in a very respectful way,” said Lee. However, human rights in Cuba and greater private sector participation in its economy continue to be challenging issues, he added. Concerns over people being arrested in Cuba for no apparent reason remains an area of continuing frustration for the U.S., he explained. “It contrasts so starkly with what we have been able to accomplish on these complicated sets of issues that we’ve been negotiating with the Cubans.”
Arnavat, who was in Cuba along with Obama, discussed how the U.S. and Cuba could build on the president’s visit on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. Lee shared his insights on emerging U.S.-Cuban ties at the 2nd Cuba Opportunity Summit in New York City on March 17. (Listen to the podcast at the top of this page.) The summit was organized by Knowledge@Wharton, The Lauder Institute and Momentum Event Group.
Historic Visit, but Business as Usual
While Obama’s visit was “historic,” it was also “very normal,” according to Arnavat. As with any other presidential visit, it featured accompanying businesses and other delegations and bilateral discussions, especially on commercial aspects, he said.
Obama had two audiences, Arnavat said. One was the American audience “and certain elements in that audience that expected him to focus on issues like human rights,” he added. “[Obama] was also speaking more importantly to the Cuban people and giving his view on governance and laying out his policy objectives with respect to Cuba.”
Obama also made it clear that he wants to put the Cold War behind him, said Arnavat. “[Obama] said [that] a lot of bad stuff [occurred] between us, but that has to remain in the past. He also made it clear that the U.S. had no intention or capacity to cause change in Cuba.”
In other words, Obama’s message was that “the Cubans and only the Cubans can bring about political and economic change; the U.S. cannot and will not force that kind change in the Cubans,” said Arnavat.
Lee said much progress has already been achieved on Cuban-U.S. ties. “I am talking about this from the perspective of somebody who has worked on this relationship when the relationship was frozen in amber,” he said. “In the past 15 months we have made remarkable progress. The government-to-government discussions and negotiations in very complicated areas have been very successful.”
Lee highlighted a few accomplishments. One is the recent agreement between the two countries to have regularly scheduled airline flights. There were also deals struck in Cuba by Verizon and Sprint. On March 14, Verizon and The Telecommunications Company of Cuba (ETECSA) announced the signing of a direct interconnection agreement for the exchange of wireline voice traffic between Cuba and the United States. In November, Sprint signed a direct roaming agreement with the Cuban government.
Going forward, U.S. businesses that want to engage with Cuba “need to look and assess very carefully the area of interest to see whether they can do it under the embargo, to see whether the Cuban government is going to facilitate it,” said Lee. “This is a very top-down society, and the Cuban government wants to prioritize investment to Cuban government-owned companies. That is a fundamental reality.”
“The government-to-government discussions and negotiations in very complicated areas have been very successful.” –Alex Lee
The opportunities come strung with challenges, noted Lee. “There are many things that the Cuban government could do to facilitate the growth of the private sector, to unleash that job-generating potential of small businesses, [but] they have been reluctant to do it,” he said. “This is a challenge for them. So Cuba [will] remain a difficult and challenging market, but there are opportunities.”
Focus on Human Rights
Obama also spoke with Cuban President Raul Castro on human rights, Arnavat said. “It was a two-way conversation,” he said. “I’m sure President Castro had his perspective on human rights and collective rights, which differs somewhat from that in the U.S.”
Lee pointed out that Cuba remains “very intolerant of people expressing a dissenting view,” adding that short-term arrests have soared in the last couple of years.
In discussions with the Cuban government, the U.S. has also tried to explain why human rights issues are crucial to stronger ties between the two countries. “We also point out to Cuban officials that it is in their interest,” said Lee. “If they want to remove the embargo, they’re going to need legislators to vote for it. Every time that they arrest somebody … or they deny somebody [justice] through a kangaroo court, then that makes it much harder for our legislators sitting on the fence to make the decision to vote for repealing the embargo.”
Outlook on Sanctions
A full lifting of the sanctions would take time, as Arnavat saw it. An important aspect is the travel embargo, he said, explaining that Americans are prohibited from traveling to Cuba unless they fall into one of 12 categories. However, any Cuban who can get a U.S. visa can come to the U.S. as a tourist, he pointed out.
Arnavat noted that a bill is pending before the U.S. Congress to enable Americans to travel freely to Cuba. “If the Republican leadership allows a vote on that, I am sure that it will pass overwhelmingly,” he said. Some political observers give a 50:50 chance for that bill’s passage before Obama leaves office, but any vote on the embargo on trade and investment will not happen until after a new president takes over, he added.
Though Republican Presidential candidate Ted Cruz, whose father was born on the island, has criticized Obama’s Cuba policy, Lee expected a new government in the U.S. to take an encouraging view of the progress that has been made. “It is a goal of this administration to create the incentives for any new administration to come in and say, ‘You know, all of these things that have been negotiated are actually in our national interest. We should keep them,’” he said.
Signs of Change
Early signs of change in Cuban government policies are visible, according to Arnavat. One he pointed to is Raul Castro’s announcement that he would give up power in February 2018. Arnavat noted that while Raul Castro participated in the Cuban Revolution (1953-1959) along with his brother Fidel Castro, reality has set in. “[Raul Castro] knows that like any human being, the clock is ticking and he is not going to live forever,” he said. “It is important for him to pass the torch to a new leadership.”
“Cuba [will] remain a difficult and challenging market, but there are opportunities.” –Alex Lee
Other changes could occur after the 7th Party Congress of the Communist Party of Cuba next month (April 16-18), said Arnavat. He pointed to rumors that among other things, term limits will be introduced so that the president of Cuba cannot serve more than two five-year consecutive terms. Other rumors are of likely changes to the Cuban Constitution to facilitate foreign investment and private sector activities, he added.
“Obama wanted to … continue to build momentum, and to send a clear message to the Cubans that the U.S. remains serious [about building] trust which has been lacking for so many years,” said Arnavat. “[He also wanted to] indicate that … it should be normal for U.S. businesses to want to do business in Cuba and for Americans to want to travel to Cuba and help their fellow Cubans like any other immigrant group.”
However, building trust within Cuba of the true intentions of the U.S. is crucial before the process of fuller engagement gathers pace, said Arnavat. After Obama’s visit, it became apparent that Raul Castro’s retired elder brother Fidel Castro was not about to forget old wounds. In a column published on Monday in Granma, the newspaper of the Cuban communist party, the elder Castro was critical of Obama’s friendly overtures, according to a Wall Street Journal report. “We don’t need the empire to gift us anything,” Fidel Castro wrote.
It may have helped that Obama also gave his overtures a personal touch. Arnavat noted that Obama talked about how he was born in the same year as the Bay of Pigs invasion, in 1961. He also made references to his own background as a person of mixed race. He alluded to the struggles faced by African Americans but pointed out that someone like himself — the son of an African man and a woman who lived on public assistance — went on to become president of the U.S.
“So many people in Cuba are of African descent and of mixed race, so that was a message that was well received by the Cuban people,” said Arnavat. “His approval ratings in Cuba are astronomical.” A poll last year showed Obama had an 80% approval rating in Cuba, he noted. “He is a very popular person [there].”