International News / News Articles

Cuba Enters Global Economy Side-Stepping American Embarg

by Samantha Jo Haub

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Since the Cold War, relations between the United States and the Republic of Cuba have been strained, if not non-existent. In 1960, the U.S. imposed a trade embargo on Cuba, isolating Cuba’s economy and contributing to the Cuban economic crisis of the 1990s. After Fidel Castro stepped down from Cuban presidency in 2008, his younger brother, Raul Castro, has continued the rule of the Cuban Communist Party (PCC) through the communist state. Despite the ongoing political and economic standoff with the United States, Cuba is beginning to open itself to foreign trade and relations, which could lead to improved civil and social rights.

Cuba has recently seen economic advancement despite the U.S. embargo.  According to the CIA website, Cuba has continued to receive an estimated 100,000 barrels of petroleum products daily from Venezuela on preferential terms or greatly reduced prices. In exchange for subsidized oil, Cuba has provided Venezuela with a skilled labor force, including 30,000 medical professionals. Recently, however, the constant supply of petroleum products has been threatened by the violent protests and political unrest in Venezuela.

Despite the discounted petroleum that Cuba receives from Venezuela, Cuba’s economic growth has been idled by excessive foreign debt. The tide may be turning though as Cuba was newly relieved of large portions of its debt owed to both Mexico and Russia. The Havana Times reported in November of 2013 that Mexico agreed to pardon 70 percent of Cuba’s $487 million dollar debt to foster a closer economic and political relationship. Mexican Finance Secretary, Luis Videgaray, noted that the remaining 30 percent of the debt will be repaid over a period of ten years. In addition to the debt write-off, Mexico and Cuba furthered bilateral relations by establishing an extended line of credit for trade and investment, a treaty of extradition and legal cooperation, tourism agreements, as well as a mutual recognition of higher education degrees and coursework.

In addition, Russian ITAR-TASS News Agency reported that December of last year, Russia reached an agreement with Cuba that resulted in Russia pardoning 90% of Cuba’s $35 billion debt to Russia, leaving only a $3.5 billion remaining balance. Russian Foreign Minister Sergei Lavrov stated, “The part of the debt that isn’t written off—and that’s 10% of the total—will be reinvested in the Cuban economy on agreement between the two sides. We’re interested in making these investments productive to the maximum.” Russian energy companies such as Zarubezhneft, Rosneft and Inter RAO are already hoping to expand business into Cuba.

Following in the footsteps of Russia and Mexico, France is seeking to establish an economic connection with the newly-opened Republic. At the end of last April, French Foreign Minister and former Prime Minister, Laurent Fabius, made a historic visit to Raul Castro in Havana to further improve the countries’ mutual ties. This was the first visit Cuba had received from French diplomats in thirty-one years. “We want to push forward our relations in the area of culture, education, economics and politics,” said Fabius. “Of course, we have different points of view on certain issues, which don’t stop us from exchanging perspectives and moving forward.” Fabius also met with Cuban counterpart Bruno Rodriguez and other Cuban cabinet members. France already had sixty firms operating in Cuba with international trade valued at $388 million in 2013.

Since the initial visits by foreign minister Fabius, France has continued expansion of economic relations with Cuba. According to the Cuban news, on May 6 Cuba was inaugurated to the XXXIV International Tourism Fair, furthering their ties with the outside world. Cuban Minister of Tourism, Manuel Marrero, pledged that Cuba will continue to broaden the island’s tourism offerings to include sustainable recreational activities that will promote additional foreign investment. Cuba has already experienced a 5% increase in tourism since the start of negotiations with the European Union this past winter.

The same day of Cuba’s inauguration to the International Tourism Fair, airlines Cubana de Aviación and Air France signed an agreement of commercial cooperation in order to strengthen travel between France and Cuba. Direct flights from France will be extended to other Cuban cities, such as Las Antillas, Santiago, Santa Clara and Holguín. Increased number of flights between Havana and Paris are expected to further bolster French tourism and eventually branch out to other Caribbean islands.

Led by France, other nations are continuing to improve political and economic ties with Cuba. The U.S. still stands by the embargo, which in turn will continue to block American businesses from benefiting from the looming economic boom in Cuba. It may be in the best interest of the U.S. to take a lesson from France and conduct trade while agreeing to disagree politically.

As Cuba opens up to European trade, only time will tell if Cuba will be able to maintain a communist state. According to the Human Rights Watch, Cuba remains one of the only Latin American countries to repress groups and individuals that criticize their government. It is possible that more interaction with the European world will increase Cuban citizens’ social awareness and political desire for democracy. Already Cuba is catching up with the modern era and is hosting the VII Conference Against Homophobia and Transphobia from May 5 through May 24 in order to ensure the protection of individuals who do not identify as heterosexual. A new work code has also been established in Cuba that protects against discrimination in the work place based on sexual orientation and identity.

After witnessing pardoned debt, foreign investment and civil rights strides, the world is waiting to see if the Cuban populace will overcome economic hardship and finally gain a democratic voice in their own government—even if the U.S. refuses to participate in the advance.

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