-Analysis-

Former US President Barack Obama's strategy toward communist Cuba made a clear-eyed diagnosis based on an initial assumption. This was that a half-century-long economic embargo had not attained its stated objective (regime change), and had even proved to be counterproductive in that regard.

Over recent decades, evidence points to several key reasons for this failure. For a start, generalized sanctions with maximalist objectives (like regime change) tend to fail. That is because authoritarian regimes are able to redistribute the cost of sanctions, and ensure it is borne by their political rivals and society as a whole, rather than the regime. Worse, the sanctioned regime can use sanctions to reward its allies. The Iranian government for example conceded to firms tied to the Revolutionary Guards control of sanction-busting, black-market operations that were economic opportunities that emerged precisely because of sanctions.

Observing the failure of the embargo policy, Obama saw a need for fundamental change toward Cuba — and toward the use of embargoes in general. When the Obama administration decided to apply sanctions to Venezuela, these targeted particular people and firms, not the entire Venezuelan economy (the administration of President Donald Trump has maintained the same line toward Caracas).

Decisions must create interest groups that raise the cost of reversing them

The second element of the Obama diagnosis was that any change of policy toward Cuba had to be done through Executive Orders, meaning without requiring the approval of Congress, which had a Republican majority opposed to the president. The decisions must also create interest groups that would have a stake in maintaining them, and effectively raise the cost of any later attempt to reverse them.

Judging by the limited change the Trump administration has made to the new Cuba policies (despite some rhetoric to the contrary) Obama's diagnosis seem to be right. Let us consider for example one essential component of the new Cuba policy, namely a ban on US firms doing any business with Cuban firms controlled by the armed forces. In principle this change does not contradict a central element of Obama's diagnosis, namely that Cuban society's subsistence greatly depends on regime provisions. Doing business with Cuban state and military firms, in other words, does not empower civil society and social actors.

On the other hand it is symptomatic that the new policy exempts from this ban those US firms that have already developed ties to Cuba (like airlines, cruises or the Marriott hotel chain). The reason again falls within Obama's diagnosis: not exempting them would have prompted these firms to start lobbying against their government's change of policy, not to mention potentially take legal action against the new administration.

Paradoxically, the change approved by the Trump administration that will have most impact in Cuba (restoring restrictions on personal travel to Cuba by US citizens) could also confirm Obama's diagnosis: significantly reducing trips to the island will adversely affect the revenues of taxi drivers, tourist guides, waiters, craftsmen, bed and breakfasts, eateries and the like, or broadly, the island's small businesses. Just the people and sectors US authorities say they want to empower.


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