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The Cuba Stalemate

A Former State Department Expert on Cuba Calls the Embargo an Idea Whose Time Has Passed
Wayne S. Smith
From the Print Edition:
Matt Dillon, Spring 96

Change is not only afoot in Cuba, it is well along the road. In "The Future of Cuba" (Winter 1993/94 Cigar Aficionado) I noted that the economic reform process had begun, was irreversible and would take on a momentum of its own. So it has been. Dollarization and a tentative self-employment law have been followed by the opening of farmers' and artisan markets, and by a significant broadening of the foreign investment law. These measures, plus the need to reduce the state sector of the economy, are putting mounting pressure on the government to expand the private sector. Hence, a small business law is now being discussed and will probably be adopted sometime this year.

Cuba, in short, is on the way to a thoroughly mixed economy. The results are encouraging. From the free fall of a few years ago, when the Cuban economy was retracting by 10 to 12 percent a year, it has begun to recuperate. Last year brought a growth rate of 0.7 percent and economists estimate the economy will grow 2.3 percent in 1996. Not much, to be sure; Cuba has a long way to go to full recovery. Other reforms must follow. Still, the corner has been turned.

There have also been profound changes in Cuba's foreign policy over the past few years. It is no longer assisting revolutionary movements, no longer has troops in Africa or anywhere else and is no longer the military ally of the former Soviet Union.

Yet, none of this has resulted in any relaxation of U.S. policy toward Cuba. The principal instrument of that policy, our 35-year-old trade embargo, not only remains firmly in place but has actually been tightened. Why is this? If we can lift the embargo against Vietnam, extend most favored nation treatment to China and negotiate with North Korea, why can we not show some flexibility toward Cuba? Was there something in the genesis of the trade embargo against Cuba that produced such rigidity?

A quick examination of how and why the embargo was imposed would suggest that that was not the case. On the contrary, the embargo was established for perfectly logical reasons. The process began in the summer of 1960 when the Cuban government ordered two U.S. oil companies, Standard and Texaco, to refine Soviet crude oil at their Cuban refineries, rather than the oil they had been bringing in from their own sources. Not surprisingly, they refused. Also to no one's surprise, the Cuban response, on July 1 of that year, was to nationalize both companies' holdings in Cuba. A few days later, the United States retaliated by cutting the Cuban sugar quota, and that led, in August, to Cuba's nationalization of virtually all U.S. property on the island.

By the end of 1960, this tit-for-tat process had produced an embargo on trade between the countries--one that was expanded to include, by 1962, even food and medicine, and trade between Cuba and U.S. subsidiaries overseas. The latter was a particularly sticky point, for while the United States may consider, say, Ford of Argentina to be a branch of the American company, Argentina considered--and considers--it a company incorporated in Argentina, to be fully subject to local law and trading practices. Efforts by the United States to impose its law and practices on such companies are inevitably resented and seen by the host governments as a violation of their sovereignty. At first, however, given that most of those governments sympathized with the United States against Cuba and even cooperated with the trade embargo, the question was moot. But only for a time.

I should note at this point that I was, in a sense, present at the creation. As a young foreign service officer in the U.S. Embassy in Havana (until we broke relations in January 1961) and then during much of 1961 as an officer in the Department of State, I not only helped write some of the language that went into the embargo, but saw all the documents outlining our justification for imposing it. Essentially, these reflected three objectives:

* First, to punish Cuba for having nationalized our properties without compensation, and
perhaps even to force it into a compensation
agreement.

* Second, to raise the costs to the Soviets, and to the Cubans, of maintaining their alliance and pursuing policies detrimental to U.S. interests.

* Third, to reduce the resources Cuba could pour into assistance to revolutionary movements, especially in Latin America.


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Comments   2 comment(s)

Donald Newger May 27, 2012 10:15am ET

Which begs the question, is there more involved here than is in the surface of this issue? Let your imagination run wild and think of all the movie that could come from that though train!


Donald Newger May 27, 2012 10:15am ET

Which begs the question, is there more involved here than is in the surface of this issue? Let your imagination run wild and think of all the movie that could come from that though train!


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