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
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 The official position is outdated, hypocritical, and counterproductive.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
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
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
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