Forbes: It's Time For The U.S. To End Its Senseless Embargo Of Cuba

Forbes 

@ http://www.forbes.com/sites/realspin/2013/01/16/its-time-for-the-u-s-to-end-its-senseless-embargo-of-cuba/

01/16/2013

By Daniel Hanson, Dayne Batten & Harrison Ealey

For the first time in more than fifty years, Cuban citizens can travel abroad without permission from their government.  The move, part of a broader reform package being phased in by Raul Castro, underscores the irrationality of America’s continuation of a five-decade old embargo.

While the embargo has been through several legal iterations in the intervening years, the general tenor of the U.S. position toward Cuba is a hardline not-in-my-backyard approach to communism a la the Monroe Doctrine.  The official position is outdated, hypocritical, and counterproductive.

The Cuban embargo was inaugurated by a Kennedy administration executive order in 1960 as a response to the confiscation of American property in Cuba under the newly installed Castro regime.  The current incarnation of the embargo – codified primarily in the Helms-Burton Act – aims at producing free markets and representative democracy in Cuba through economic sanctions, travel restrictions, and international legal penalties.

Since Fidel Castro abdicated power to his brother Raul in 2008, the government has undertaken more than 300 economic reforms designed to encourage enterprise, and restrictions have been lifted on property use, travel, farming, municipal governance, electronics access, and more.  Cuba is still a place of oppression and gross human rights abuse, but recent events would indicate the 11 million person nation is moving in the right direction.

Despite this progress, the U.S. spends massive amounts of money trying to keep illicit Cuban goods out of the United States.  At least 10 different agencies are responsible for enforcing different provisions of the embargo, and according to the Government Accountability Office, the U.S. government devotes hundreds of millions of dollars and tens of thousands of man hours to administering the embargo each year.

At the Miami International Airport, visitors arriving from a Cuban airport are seven times more likely to be stopped and subjected to further customs inspections than are visitors from other countries.  More than 70 percent of the Treasury’s Office of Foreign Assets Control inspections each year are centered on rooting out smuggled Cuban goods even though the agency administers more than 20 other trade bans.  Government resources could be better spent on the enforcement of other sanctions, such as illicit drug trade from Colombia, rather than the search for contraband cigars and rum.

At present, the U.S. is largely alone in restricting access to Cuba.  The embargo has long been a point of friction between the United States and allies in Europe, South America, and Canada.  Every year since 1992, the U.S. has been publically condemned in the United Nations for maintaining counterproductive and worn out trade and migration restrictions against Cuba despite the fact that nearly all 5,911 U.S. companies nationalized during the Castro takeover have dropped their claims.

Moreover, since Europeans, Japanese, and Canadians can travel and conduct business in Cuba unimpeded, the sanctions are rather toothless.  The State Department has argued that the cost of conducting business in Cuba is only negligibly higher because of the embargo.  For American multinational corporations wishing to undertake commerce in Cuba, foreign branches find it easy to conduct exchanges.

Yet, estimates of the sanctions’ annual cost to the U.S. economy range from $1.2 to $3.6 billion, according to the U.S. Chamber of Commerce.  Restrictions on trade disproportionately affect U.S. small businesses who lack the transportation and financial infrastructure to skirt the embargo.  These restrictions translate into real reductions in income and employment for Americans in states like Florida, where the unemployment rate currently stands at 8.1 percent.

What’s worse, U.S. sanctions encourage Cuba to collaborate with regional players that are less friendly to American interests. For instance, in 2011, the country inked a deal with Venezuela for the construction of an underwater communications link, circumventing its need to connect with US-owned networks close to its shores.

Repealing the embargo would fit into an American precedent of lifting trade and travel restrictions to countries who demonstrate progress towards democratic ideals.  Romania, Czechoslovakia, and Hungary were all offered normal trade relations in the 1970s after preliminary reforms even though they were still in clear violation of several US resolutions condemning their human rights practices.  China, a communist country and perennial human rights abuser, is the U.S.’s second largest trading partner, and in November, trade restrictions against Myanmar were lessened notwithstanding a fifty year history of genocide and human trafficking propagated by its military government.

Which, of course, begs the question: when will the U.S. see fit to lift the embargo?  If Cuba is trending towards democracy and free markets, what litmus test must be passed for the embargo to be rolled back?

The cost of the embargo to the United States is high in both dollar and moral terms, but it is higher for the Cuban people, who are cut off from the supposed champion of liberty in their hemisphere because of an antiquated Cold War dispute.  The progress being made in Cuba could be accelerated with the help of American charitable relief, business innovation, and tourism.

A perpetual embargo on a developing nation that is moving towards reform makes little sense, especially when America’s allies are openly hostile to the embargo.  It keeps a broader discussion about smart reform in Cuba from gaining life, and it makes no economic sense.  It is time for the embargo to go.

Daniel Hanson is an economics researcher at the American Enterprise Institute.  Dayne Batten is affiliated with the University of North Carolina Department of Public Policy.  Harrison Ealey is a financial analyst.