Tag: Cuba

Republicans in Congress Really Like the Cuba Embargo

President Obama made a number of spot-on arguments yesterday for why the United States should end the ineffective trade embargo that has helped impoverish the people of Cuba for over fifty years.  However, the core components of the embargo are statutory law that will require an act of Congress to overturn.  While it’s very encouraging to see the president take a leadership role in pursuit of a good policy, getting Republicans on board is going to be difficult to say the least.

Over the last 20 years, there have been 11 votes in the two houses of Congress seeking to eliminate or amend the Cuba embargo.  In all of those votes, loosening the embargo got majority opposition from Republicans.  According to Cato’s trade votes database, it wasn’t even close.  Republican support for the embargo has ranged from 61% (in support of travel ban) to 91% (in support of import ban) with the average level of support at 77.5%.  Indeed, in 2005 more Republicans voted to withdraw the United States from the World Trade Organization than voted to end the Cuba embargo.

That’s not to say that positive movement on the embargo in a Republican congress is impossible.  There are encouraging signs as well: shifting opinion among Cuban Americans alters the electoral politics of the embargo in favor of opposition; resurgent emphasis on free markets may temper the Republican party’s reflexive love for belligerent foreign policy; and long-time Republican opponents of the embargo will now have renewed energy. 

In practical terms, embargo opponents will need to persuade House leadership to schedule a vote and find enough support in the Senate to overcome an inevitable filibuster from Marco Rubio and others.  It may not be impossible, but there’s a lot of heavy lifting left to do.  Hopefully, the President’s actions will be enough to get the ball rolling toward more reform of this antiquated and harmful policy.

Time to Trade with Cuba: Regime Change through Sanctions Is a Mirage

President Barack Obama used negotiations over a couple of imprisoned Americans to refashion the entire U.S.-Cuba relationship. He aims to reopen the embassy, relax trade and travel restrictions, and improve communication systems.

Sen. Marco Rubio of Florida charged the administration with appeasement because the president proposed to treat Cuba like the U.S. treats other repressive states. But President Obama only suggested that government officials talk to one another. And that peoples visit and trade with one another.

More than a half century ago Fidel Castro took power in Havana. In the midst of the Cold War the Kennedy administration feared that Cuba would serve as an advanced base for the Soviet Union. Having tried and failed to overthrow the regime militarily, Washington saw an economic embargo as the next best option.

But that didn’t work either. Even after the Soviet Union collapsed and Moscow ended subsidies for Cuba, sanctions achieved nothing.

Today Cuba’s Communist system continues to stagger along. The only certainty is that economic sanctions have failed.

Failed to bring down the regime. Failed to liberalize the system. Failed to free political prisoners. Failed to achieve much of anything useful.

After more than 50 years.

But that should surprise no one. Sanctions are most likely to work if they are universal and narrowly focused. For instance, the Institute for International Economics found that economic sanctions did best with limited objectives, such as “modest” policy change.

Hagel’s Common Sense on Cuba

Foes of Chuck Hagel have found another reason to oppose his nomination for secretary of defense: he supported ending the 50-year old embargo on Cuba. Hagel also called the idea that the government in Havana constitutes a terrorist threat to the United States “goofy”, referring to Fidel Castro as a “toothless old dinosaur.” Supposedly, this proves he’s weak and won’t stand up to world dictators when vital U.S. interests are at stake. 

In reality, Hagel belongs to a growing group of conservatives who have come to realize the failure of U.S. policy towards Cuba. This group includes former senator Richard Lugar, who until recently was the highest ranking Republican on the Senate Foreign Relations Committee, and Senator Jeff Flake, a freshman Republican from Arizona. Even Paul Ryan (R-WI), the GOP’s former VP candidate, voted against the embargo the last time it came to a vote in the House in 2005. 

You don’t need to think hard to understand why the embargo and travel ban on Cuba have failed: the Castro brothers are still in power in Havana. Five decades of economic sanctions—the most stringent Washington has imposed on any country—have failed to bring about a democratic transformation of Cuba. Moreover, the embargo has served as a scapegoat to the regime.

Elizardo Sánchez Santa Cruz, a leading dissident in Cuba, has aptly summed up that strategy: “[Castro] wants to continue exaggerating the image of the external enemy which has been vital for the Cuban Government during decades, an external enemy which can be blamed for the failure of the totalitarian model implanted here.” Cuban dissident blogger Yoani Sánchez has called the embargo “the regime’s excuse for all its failures” and pointed out that its existence has undermined the work of dissidents on the island. 

Proponents of the embargo (who are now opposing Hagel’s nomination) inadvertently accept this reality. Our friend Frank Calzón, at the Center for a Free Cuba, mentions in the Washington Post several instances when Havana rebutted Washington’s outreach efforts: “Each solicitation has been met with aggressive action.” Why? Perhaps because the Castro regime fears that an end to the embargo and travel ban could weaken its grip on power? 

Ironically, those who argue that national security concerns are reasons to oppose changing U.S. policy towards Cuba ignore that the embargo has also become somewhat of a U.S. security liability itself. A 2007 report by the Government Accountability Office points out that enforcing the embargo and travel ban diverts limited resources from homeland security that could be used to keep terrorists and criminals out of the United States. The GAO report warned that arrival inspections from Cuba intended to enforce the embargo are “straining Customs and Border Patrol’s capacity to inspect other travelers according to its mission of keeping terrorists, criminals, and inadmissible aliens out of the country.”     

It would be naïve to think that ending the embargo will somehow transform Cuba into a democratic society. As long as the Castros are in change, that won’t happen. But it’s equally naïve to believe that there are great benefits and no significant downsides to the current policy. Chuck Hagel doesn’t have a Cuba problem. Just the opposite. He has shown common sense in ending one of Washington’s most anachronistic foreign policies.

Lifting the Cuban Travel Ban Is Good for U.S.

This morning the Cuban government announced reforms of its 52 year old travel ban. In mid-January, the Cuban government will cease requiring exit visas and invitations from foreign nationals so Cubans can leave. It’s unclear how the new plan will be applied in practice. The Cuban government’s announcement might not be as welcome as people hope, but this is a substantial change in rhetoric. My colleague Juan Carlos Hidalgo wrote about how such an approach would affect Cubans here.

Assuming the travel ban is mostly or entirely lifted, this policy change will also affect Americans in numerous ways.

First, the United States has a unique immigration policy for Cubans. Known as the “wet foot/dry foot policy,” if a Cuban reaches American soil he or she is allowed to gain permanent residency within a year. If a Cuban is captured at sea, he or she is returned to Cuba unless they cite fears of persecution. This means that most Cubans who want to leave, with the exception of violent or other criminal offenders, will be able to stay in the United States if they are able to make it to American soil. No other nationality in nearly a century, except the Hungarians in the 1950s, has been subject to such a generous policy.

Because of their unique legal-immigration status, the Cuban-born population living in the United States was excluded from estimates of unauthorized immigrants and very few of them are likely in violation of any immigration laws.

Second, the United States is the number one destination abroad for Cubans. Additionally, nearly 60 percent of Cuban-Americans were born abroad compared to less than 40 percent for all other Hispanic groups. Cubans tend to be older, more likely to own homes and businesses, more geographically concentrated in Florida, more educated, wealthier, and have fewer children than other Hispanic immigrant groups. They are overwhelmingly positive for the American economy.

Third, Florida has been the main destination and beneficiary of Cuban immigration since the 19th century century. Ybor City, a section of Tampa, owes its birth and development to Cuban and Spanish-born entrepreneurs like Ignacio Haya and Vincente Martinez Ybor who made the city a cigar manufacturing powerhouse by the early 20th century. For generations, Ybor City was known as “Little Havana.”

In addition to the tobacco trade, Cuban-American entrepreneurs in Ybor City also specialized in legal services, accounting offices, real estate development companies, and advertising. Restaurants have probably had the biggest impact on the habits of Americans. The Columbia Restaurant, currently Florida’s oldest restaurant, was opened by Cuban- born Casimiro Hernandez in 1905. It started as a small corner cafe serving authentic Cuban sandwiches and café con leche and has since expanded to seven other locations.

The situation was similar in Miami where Cubans excelled at opening small businesses and revitalizing large sections of the city that had begun to decay. Ever since the earliest Cubans came to America, they haven’t wasted any time in their pursuit of the American dream.

Fourth, Cuban immigration to Florida has not lowered the wages for Americans working there. According to an authoritative peer-reviewed paper written by Berkeley labor economist David Card, the sudden immigration of 125,000 Cubans on the famed Mariel boatlift in 1980 increased the size of Miami’s total labor market by 7 percent and the size of its Cuban workforce by 20 percent.

For non-Cubans in Miami with similar skills, wages were remarkably stable from about 1979-1985. A massive and sudden increase in labor supply did not lower wages for Americans or increase their unemployment. Miami businesses rapidly expanded production to account for the influx of new consumers and workers and Cuban immigrants started businesses with a gusto, thus creating their own employment opportunities.

Cuba’s reform of the travel ban could reignite Cuban immigration. In 2011, roughly 40,000 Cubans gained legal permanent residency and refugee status in the United States. That number could increase dramatically if the Cuban government truly got out of the way and let its people move toward relative freedom and economic opportunity.

Beginning in mid-January, assuming U.S. policy does not change (an unlikely scenario given that neither political party wants to upset the politically influential Cuban community in South Florida), we could witness a large new wave of Cuban immigration to the United States.

Despite entertaining movies like Scarface, the long run consequences of the Marial boatlift have been good for Americans, Cuban immigrants, and Florida. Cuban-Americans reveal a pattern of success and achievement similar to other contemporary immigrant groups and those in our country’s past. Immigrants are more successful in the United States than their former countrymen left behind. American capitalist institutions are the main cause of this, but it’s also because immigrants are overwhelmingly committed to economic advancement and the hard work that takes.

If Cuba truly lifts the travel ban, it will be a blessing for all Cubans.  Many of them will likely immigrate to the United States, which will also be good for us.

Cuba Lifts De Facto Travel Ban … Maybe

In a move expected for over a year, the Cuban government announced today that, starting January 13th, it will lift the travel ban it imposed on its citizens since 1961. This is certainly not an official travel ban. Cubans are allowed to leave the island as long as they get an exit visa and have a letter of invitation from the country they want to visit. But in practice, only few Cubans get the exit visa—and most of them, if not all, are sympathetic to the regime. Well known dissents like Yoani Sánchez are repeatedly denied their exit visas despite having invitation letters from abroad. So in practice, it is a travel ban on the Cuban people.

What lies behind the decision is up for debate. Perhaps it has to do with the fact that the economic “reforms” implemented by the regime in recent years aren’t working. The Economist recently reported that the timid changes announced shortly after Raúl Castro came to power “have indeed paused.” Exactly a year ago, I wrote about how the U.S. government registered the first rise in illegal Cuban immigration by sea in 3 years. Given the increasingly tough economic conditions, La Havana might be resorting to the “escape valve” of emigration to ease social discontent.

Or maybe little will change in practice, as has been the case with the much heralded economic reforms. Cubans are required to apply for a passport and, as the official newspaper Granma announced today, the issuance of passports will be denied for several reasons such as:

  1. Defense and national security reasons.
  2. Having a security measure pending.
  3. Having “obligations” with the Cuban government.
  4. Preserving a “qualified” labor force for the development and security of the country.
  5. “Public interest” reasons determined by the authorities.

As we can see, the new restrictions to get a passport are so nebulous and discretionary that in practice it’s very likely that the Cuban government will continue to prohibit most of its people from traveling. Thus, it’s better to wait and see if the restrictions are actually lifted and Cubans are allowed to travel abroad more or less freely. If that happens, a new dynamic will enter into play that might accelerate (or delay) the implementation of further political reforms.

Fidel Castro, Medicare Beneficiary?

There’s no proof yet, but it looks an awful lot like Medicare might be subsidizing the Castro brothers.

I, for one,  was not surprised to read that Medicare payments for non-existent medical services are ending up in Cuban (read: government-controlled) banks. Nor that “accused scammers are escaping in droves to Cuba and other Latin American countries to avoid prosecution — with more than 150 fugitives now wanted for stealing hundreds of millions of dollars from the U.S. healthcare program, according to the FBI and court records.”

In fact, I have been wondering for some time when we would see evidence that foreign governments have been stealing from Medicare. The official (read: conservative) estimates are that Medicare and Medicaid lose $70 billion each year to fraud and improper payments, a result of having almost zero meaningful controls in place. That’s practically an open invitation to steal from American taxpayers. Kleptocratic governments—and other organized-crime rings—would be insane not to wet their beaks.

In this National Review article, I explain how easily it could happen:

Last year, the feds indicted 44 members of an Armenian crime syndicate for operating a sprawling Medicare-fraud scheme. The syndicate had set up 118 phony clinics and billed Medicare for $35 million. They transferred at least some of their booty overseas. Who knows what LBJ’s Great Society is funding?

I also explain how these vast amounts of fraud aren’t going to stop without fundamental Medicare and Medicaid reform. Give the National Review article a read, and tell me if you share my suspicion that Medicare is bankrolling other governments.

A Troubling Sign that Economic ‘Reform’ in Cuba Isn’t Working

The number of Cubans intercepted at sea trying to reach the coast of Florida more than doubled in the last fiscal year according to figures released by the Department of Homeland Security. In the previous fiscal year, 422 Cubans were intercepted at sea by the Coast Guard, while in the fiscal year 2011 (which just ended on September 30th), 1,000 Cubans were caught. Moreover, the number of Cubans who actually reached the U.S. shore increased by 70%, from 409 in fiscal year 2010 to 696 in fiscal year 2011. This is the first rise in illegal Cuban immigration by sea in 3 years according to authorities.

This is yet another sign that the much heralded economic “reforms” announced by Havana aren’t working. The massive layoffs of hundreds of thousands of public employees undertaken by the government of Raúl Castro were meant to be absorbed by Cuba’s almost non-existent private sector. The Communist regime tried to ease the pressure by allowing private employment in 178 economic activities, such as masseurs, clowns, shoemakers, locksmiths, and gardeners. However, as I warned over a year ago, it capped the number of permits for these private activities at 250,000 while also penalizing the new entrepreneurs with stiff tax rates. It doesn’t take a Nobel Prize winner in economics to realize that Cuba’s nascent private sector wouldn’t be able to make room for all of the newly unemployed. What then for these people?

Earlier this year I talked to an official from the U.S. Interest Section in Havana who told me that we shouldn’t be surprised if we see a steady increase of Cubans trying to escape the island towards the United States. Faced with a dilapidated economy, hundreds of thousands of unemployed, and growing social unrest, the Castro regime wouldn’t hesitate in letting more Cubans use the “escape valve” of emigration. We might be seeing the first signs of this.

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