Lewis Diuguid

Lewis Diuguid: Obama’s historic visit to Cuba expected to result in pressure to increase trade with U.S.

Cubans in July 2015 held a sign that read “Welcome USA” while standing in front of the newly reopened U.S. embassy in Havana, Cuba. U.S. President Barack Obama will likely face a warm welcome when he makes a historic trip to Cuba in March. Obama and Cuban President Raul Castro on Dec. 17, 2014, announced talks to re-establish diplomatic relations between the two countries.
Cubans in July 2015 held a sign that read “Welcome USA” while standing in front of the newly reopened U.S. embassy in Havana, Cuba. U.S. President Barack Obama will likely face a warm welcome when he makes a historic trip to Cuba in March. Obama and Cuban President Raul Castro on Dec. 17, 2014, announced talks to re-establish diplomatic relations between the two countries. Bloomberg

President Barack Obama’s announcement of his historic trip to Cuba in March will occur amid two divergent trends between the United States and the communist island nation 100 miles off the southern tip of Florida.

Tourism to Cuba from the United States soared in 2015. The government of Cuba reported that about 161,000 people from the U.S. visited Cuba, which was an increase of 76.6 percent over 2014, the New York-based U.S.-Cuba Trade and Economic Council Inc. noted this month in its “Economic Eye on Cuba” report.

The U.S. and Cuba this week also signed an agreement to resume commercial flights for the first time in more than 50 years. Dozens of new flights — up to 110 daily — are expected to begin operating next fall. Only charter flights have been connecting the two countries up to now.

Tourism has increased since Obama and Cuban President Raul Castro in December 2014 signed an agreement to normalize diplomatic relations between the two countries since Cuba’s 1959 communist revolution, which Fidel Castro led, and the Cuban missile crisis that followed. The Cuban embassy in Washington, D.C., and the U.S. embassy in Havana opened last year for the first time in decades.

With increased U.S. tourism, Cuba has benefited from more news media attention and badly needed dollars that many Americans have left behind. Humanitarian donations from the U.S. to Cuba also increased 392 percent, rising to $4.6 million in 2015 from $939,705, the U.S.-Cuba Trade and Economic Council reports.

But Obama’s March 21-22 visit with first lady Michelle Obama will have to try to jump start increased trade between the two countries.

The official statement from the White House on Thursday said the president will try to further “normalization of relations with Cuba — advancing commercial and people-to-people ties that can improve the well-being of the Cuban people.” Obama also plans to express U.S. support for human rights in Cuba.

Obama is to meet with President Castro and “members of civil society, entrepreneurs and Cubans from different walks of life” before heading to Argentina on March 23.

The thaw in diplomatic relations with Cuba was expected to result in increased exports to Cuba. Actually the opposite has been the case.

The U.S.-Cuba Trade and Economic Council reports that exports of food and agricultural products from the United States to Cuba plunged 83 percent in December and 41.4 percent for 2015 compared with 2014. The products listed included frozen chicken, soybean oil cake, herbicides, corn, soybean flour/meals, calcium phosphates, soybeans, fresh fruit, whiskeys, bourbon and animal feed.

The total value of U.S. exports to Cuba for 2015 was $170.67 million compared with $291.26 million for 2014. U.S. exports to Cuba haven’t been as low as they were in 2015 since 2002 when U.S. exports amounted to $138.6 million. The 2015 figure also was a drop of 75 percent from $710 million in U.S. exports to Cuba in 2008, the U.S.-Cuba Trade and Economic Council notes.

U.S. Secretary of Commerce Penny Pritzker on Wednesday called on the government of Cuba to open its economy to American business and investment. Pritzker has said the Cuban government can do more to improve the economic ties between the two countries.

The U.S.-Cuba Trade and Economic Council report notes that Cuba may be bracing for hard economic times because of decreasing financial support from Venezuela.

President Castro in December warned Cubans to prepare for tough economic times in 2016 because falling oil prices lessen the likelihood that Cuba can depend on billions of dollars of subsidized oil and cash from Venezuela. Castro told the National Assembly to expect 2 percent growth in gross domestic product this year, half the rate his government reported in 2015.

The U.S.-Cuba Trade and Economic Council report also noted that other countries such as Russia, China and Iran “do not have the focus to replace Venezuela as benefactors of significance.” China’s economy in the last year has been troubled with its stock market losing a significant amount of value while Russia and Iran have been affected by the same drop in the price of oil as Venezuela.

“Thus, the government of the Republic of Cuba may be entering a period of cautiousness, and a full-on re-engagement with the United States may become problematic while the policy of the government of the United States remains to seek commercial, economic and political change within the Republic of Cuba,” the report says.

Cuba is likely to focus on trade with other countries including Brazil, Argentina, Vietnam, Mexico, Spain, Canada, New Zealand and France. The U.S.-Cuba Trade and Economic Council also notes that reduced exports from the United States also may be to increase political pressure on Congress from U.S. companies, states and local governments to remove the U.S. economic embargo, which has maintained a chokehold on Cuba for more than 50 years.

Obama will have his hands full in his historic meeting with Cuban officials in March. No U.S. president has visited Cuba since Calvin Coolidge, a Republican, went there 88 years ago.

Although Obama has done tremendous work to thaw diplomatic relations between the two nations, the Republican-controlled House and Senate are dead-set against lifting the economic embargo, often citing human rights concerns. Republican presidential candidates also have expressed opposition to normalizing relations with Cuba.

What Obama has accomplished so far he has done alone, and that likely will continue to be the case during his visit to Cuba and until his term in office is over. The fear among Cubans is that unless former Secretary of State Hillary Clinton wins the Democratic nomination and is elected the 45th president of the United States in November, the advances made under Obama will quickly be reversed under Republican leadership.

That fear is not unfounded.

  Comments