Cuba’s Market Reforms are No Reason to Lift the Embargo
The U.S. should recognize Cuba’s announcement of reforms as a sign of regime weakness, not proof of liberalization.
On June 17, Cuban Prime Minister Manuel Marrero unveiled 176 economic reforms, marking the greatest economic shift since the Cuban Revolution ended in 1959. Among the reforms are the large-scale authorization of private banks and businesses, no longer requiring foreign investors to form joint business ventures with the government, and allowing foreign investors to buy shares of state-run companies.
In seeking to reform their broken communist system, Cuba’s leaders seem to have rediscovered free enterprise. However, these reforms do not necessarily represent a departure from autocracy in the minds of Cuba’s militant communist leaders. Though the reforms promise to expand the private economy, they do not change the fundamental lack of property rights, independent courts, and limits on arbitrary state action. A want of guaranteed protection of private property will leave people, banks, businesses, and foreign investors vulnerable to political interference and expropriation.
In a speech at the last plenary session of the Party’s Central Committee, President Miguel Díaz-Canel defiantly claimed that the reforms were to make the government “more dynamic, more proactive, and less bureaucratic,” and “advance the defense of socialism.”
Those optimistic about the reforms should be wary of such language that smacks of China’s “socialism with Chinese characteristics,” where economy is allowed to grow freely only in––and never beyond––service to the party-state. Indeed, Díaz-Canel cited the models of China and Vietnam for Cuba’s post-reform development outlook. If these reforms are only tactical, they should not be accompanied by relief of U.S. pressure.
Fortunately, President Trump reversed the conciliatory policies of the Obama and Biden administrations that sought to appease the regime. He redesignated Cuba as a state-sponsor of terrorism and restricted transactions with entities associated with Cuba’s military and intelligence apparatus.
In what has become the longest-running economic embargo in history, the U.S. has prohibited trade with the island since 1962 under the Kennedy administration. Since then, the Cuban regime has been deprived of over $130 billion.
The economic damage of the embargo has been accentuated by the lack of oil flowing to Cuba. The cessation of oil exports from Venezuela following the U.S. indictment and capture of Venezuelan President Nicolás Maduro cut off a crucial source of Cuban energy. The problem intensified when the U.S. imposed tariffs targeting the flow of crude oil and refined petroleum to the island. When Mexico soon after paused oil sales, Cuba’s economy was brought to its knees. With little source of energy, country has faced severe power outages, with some lasting over 24 hours.
The U.S. Department of Justice also indicted former Cuban President Raúl Castro of the Cuban regime on May 20. To Cuba’s leaders, this may have foreboded a similar fate to that of Maduro if the regime did not change its ways.
President Trump has made clear that any embargo relief would come only after the Cuban regime made tangible progress toward an open market and society. And while U.S. pressure seems to have elicited desire for change, the government has provided no timeline for reform implementation. Nor should Americans trust that reforms will not be reversed.
The country has toyed with reforms for decades, such as when it experimented with privatized agriculture after the fall of the Soviet Union led to severe food shortages and political crisis. The reforms of this “Special Period” were wildly successful, leading to increased food production, but were reversed once the threat to the regime subsided.
For nearly 70 years, Cuba has been one of the greatest threats to American commerce and national security in the Western Hemisphere. U.S. measures sanctioning Cuba’s state-run economy are only responses to the regime’s bad behavior. Cuba has a long record of lending military and intelligence support to other hostile regimes in Latin America, such as those of Hugo Chavez in Venezuela and Daniel Ortega in Nicaragua.
The emergency reforms are a sign of weakness. If the U.S. eases sanctions without guarantee of genuinely free markets and fair elections, the Cuban regime may recover and slow or reverse reform yet again.
Cuba’s reforms are not evidence that the regime deserves relief––they are evidence that pressure is working. Because Havana has used limited market openings before to preserve communist rule, the U.S. should keep sanctions in place until reforms are irreversible and accompanied by political liberalization. If the U.S. wants to safeguard its commercial and security interests––and those of the Cuban people––it must not let up now.