It may not be clear how the Castro’s will respond to president Obama’s economic initiative to extend globalization to Communist Cuba, but it is clear that American businesses see far-ranging opportunities. Obama hopes that Cuban private sector entrepreneurial activities will lead the country from the dark ages to a place of prominence in the hemisphere and eventually on the global stage.
Cuba has some serious economic mending to do. And, in terms of economic ties to Cuba, so does the United States, who last year only exported about $266 million in goods to the island. This is down from a recent high of $710 million in 2008. Economists project the US could export $4.3 billion in goods and services to the product-starved island. Agricultural products and housing supplies along with telecommunications and computer services will lead the way but every sector of Cuba’s starving economy is in need.
With a new delegation arriving in Cuba on Saturday, it is hoped that economic progress can be made. Of course, this could be facilitated with Congressional support but with political forces perpetually at odds this resolution seems unlikely. Yet, there is broad American support for ending the economic blockade. Now that we see the face of terrorism in Europe, Cuba hardly seems the same threat.
However, economists have become aware and alarmed at China’s increasing economic foothold in the hemisphere. Always in search of developing energy sources, China has invested heavily in Cuba and in Latin America. In 2013, China’s annual trade in Latin American surged a whopping 2300 percent, a figure that may not mean anything to Republican Presidential hopeful Marco Rubio but certainly does to US business leaders. At the same time as China was posting startling regional gains, the US Census Bureau reports that US exports to Latin America shrunk by 19 percent in 2013 and another 16 percent in 2014. These red flags woke up business leaders and should awaken slumbering politicians.
Obama clearly intends to increase American interests in Latin America and the hemisphere. Reasserting US leadership in Cuba is a step in that direction. American business is likely to pressure political leaders to vote down obstacles and allow providers to establish dominance in an economy that needs everything. If the current envoy can resolve obligations owed by Cuba to former landowners, it would be a big step toward more open trade. Protest as he might, Rubio’s interests are the interests of former Cuban property owners, his largest block of contributors. Americans outside Florida believe Rubio is out of touch. Allowing China to increase trade at the expense of American job opportunities is unacceptable to American labor.
Meanwhile, China and other Asian economies fear that Cuban workers will replace their own in computer, retail and manufacturing facilities that sell to the US. The Castro brothers are committed to communism but how capitalism will affect their policies remains to be seen. Fidel and Raul Castro and their insiders have prospered even as the rest of Cuba lives in poverty.
During the height of American investment in Cuba, the US controlled about 85 percent of the country’s investment. Today, China is the leading investor in the country and with huge infrastructure improvements in Varadero and other cities, the Obama Administration could hardly sit on the sidelines. While the US has a geographical advantage, it remains to be seen how Cuba’s transitional government will respond to American economic advances.
Cuba needs technology hardware, software and infrastructure as well as labor force training. Along with improved telecommunications and Internet comes exposure to previously shuttered democratic philosophies and principles. It will be interesting to see how the Castro’s navigate these waters but Obama has made it clear that American businesses can begin to filtrate Cuba’s markets. If Cubans respond to the Internet the way other citizens have, there may be rumblings for political change.
One US business leader told ABC news, “As private sector workers gain income in the Cuban economy, we can expect them to agitate for government policies for further economic integration. It’s easier for private sector workers to speak up because their income is not so dependent on the government. If your livelihood depends on government, you’d be careful not to alienate the government. That changes as more people move to the private sector.”
This possibility is recognized by Castro, who maintains communism is the form of governance that works best for Cuba. Given that 60 years of the embargo has failed to deliver and that 60 years of Communist rule has likewise failed, US economic clout seems a better means to a democratic end.