Understanding the Failure of the U.S. Embargo on Cuba

Understanding the Failure of the U.S. Embargo on Cuba

HAVANA, Feb. 5th  On February 3, 1962, President John F. Kennedy imposed the U.S. embargo on Cuba.

The 60th anniversary of the embargo is a stark reminder of the United States’ policy failures of the longest-lasting series of sanctions in its foreign policy history.

Today, more than half a century since the embargo was put in place, the Biden administration continues to uphold this symbol of hostility between the U.S. and Cuba in the midst of the most challenging humanitarian crisis on the island since the 1990s.

The Washington Office on Latin America (WOLA) and the National Security Archive recently hosted a discussion with Cuba experts Dr. William LeoGrande, Dr. Ricardo Torres Pérez, and Gail Reed to examine why the embargo has endured until today, and what its current impact is on Cuba’s economy and Cuba’s humanitarian crisis.

This conversation helps to contextualize the long-standing history of antagonism between the two countries on the opposite sides of the Florida Straits and its impact on the Cuban people.

This commentary, based on the experts’ discussion, will serve to further describe the origins of the embargo, its evolution, current standing, and impact.

As WOLA’s Assistant Director for Cuba Mariakarla Nodarse noted, “The United States cannot be oblivious to the damage caused by its own actions. The administration has an obligation to address the many ways U.S. policy contributes to the worsening humanitarian situation in Cuba.”

The Embargo’s Historical Background 

The comprehensive set of sanctions that is recognized today as the embargo was formalized by President John F. Kennedy in 1962.

It banned all trade and financial transactions with the island unless licensed by the Treasury Department subject to detailed regulations contained today in the 56-page Cuban Assets Control Regulations.

This embargo was built on the precedent set by President Eisenhower who cut off U.S. exports to the island, except for food and medicine. President Johnson then expanded the embargo’s reach through a multilateral policy of economic denial in 1964, which severely inhibited Cuba’s efforts to foster economic relations with other countries.

Despite continued efforts by the United States to cut off the island from the rest of the world, most of Europe and Latin America reinstated their relations with Cuba after close to a decade.

WOLA Senior Fellow Dr. LeoGrande examined how, prior to the Obama-era relaxations, certain parts of the embargo retracted or expanded under different presidents, each with their own political priorities. Some administrations employed tactics that make it significantly more difficult now to dismantle the embargo apparatus.

President Reagan was the first to add Cuba to the State Sponsor of Terrorism List (SSOT), and President George H.W. Bush signed the Cuban Democracy Act to once again prohibit Cuba’s ability to buy products from U.S. companies operating in third countries.

Further cementing the permanence of the embargo, the 1996 Helms-Burton Act made it virtually impossible for the president to undo the set of sanctions without congressional approval.

On December 17, 2014, President Obama broke the mould in the U.S. approach to Cuba policy. His administration lifted restrictions for Cuban-Americans to travel and to send family and donative remittances, reestablished the U.S. Embassy in Havana, removed Cuba from the SSOT list, expanded access to the internet, and licensed a range of trade opportunities for U.S. companies.

Beyond these specific policies, this shift in discourse by a U.S. president signalled the biggest change in U.S.-Cuba policy since diplomatic relations were severed in 1961, and ushered in a new era in the relations, leading to 23 bilateral accords on issues of mutual interest.

The next two years saw an unprecedented boom in private-sector activities in Cuba, significant openings for civil society discourse, and other reforms by the Cuban government.

In 2017, the Trump administration undid all the progress Obama achieved and more. It swiftly imposed new restrictions prohibiting U.S. companies from doing business with certain Cuban companies managed by the armed forces and prohibited U.S. visitors from staying in hotels operated by those companies.

It eliminated people-to-people educational travel, placed strict caps on family remittances, and made it impossible to send remittances by wire service.

It also interrupted consular services and significantly diminished staffing at the U.S. Embassy in Havana following the onset of unexplained health incidents, now known as the ‘Havana Syndrome’ cases, due to concerns of foul play by foreign states that have now been dismissed following findings by the Central Intelligence Agency (CIA).

Trump also decided to implement Title III of the Helms-Burton Act to enable U.S. nationals to pursue lawsuits against any business or person, U.S. or foreign, benefiting from property nationalized after 1959 discouraged foreign investment in Cuba.

Finally, the Trump administration put Cuba back on the SSOT list during its final days in office in an effort to make it harder for President Biden to repair U.S.-Cuban relations.

Today, U.S. policy towards Cuba is at a standstill. Despite multiple campaign promises during the 2020 election campaign, the Biden administration has not advanced engagement policies with the island. It has begun restaffing the U.S. Embassy in Havana, but with no clear timeline on the resumption of consular services.

Its policy review is still paused, and after having received recommendations from the Working Group on Remittances on the best options for re-opening wire services, there has been no word of when a more flexible policy will be in place. The Working Group was established in July of 2021 immediately following the protests of July 11.

As Dr. LeoGrande noted, “For sixty years, the economic embargo has failed to achieve any of its stated policy goals while exacting a high human cost, stifling the development of the Cuban economy and making daily life harder for Cuban families.”

The Embargo’s Impact on the Cuban Economy Today

Dr. Ricardo Torrez Pérez, a leading Cuban economist who is currently a research and teaching fellow at American University, examined the impact of the U.S. embargo on Cuba at a macro level. As a small island, Cuba is in a position where it depends on trade to survive.

As a result of the complete prohibition on trade with the United States, a 2021 estimate by the Cuban government found that the embargo has cost the country close to $144 billion. A similar figure has been acknowledged by the United Nations.

Under the Obama administration, actors in the private sector boomed. With the reversal of U.S. policies in 2017 and the onset of the COVID-19 pandemic, cuentapropistas (private entrepreneurs and small business owners) have been among some of the most impacted by the limits on remittances, travel, and trade.

As Dr. Torres Pérez stated, “One of the arguments behind the current policy is that the private sector is a marginal actor in Cuba and we want the Cuban government to embrace a liberal economic policy as well. However, the sanctions hurt the private sector [the most].” 

Peter Kornbluh, the director of the Cuba Project of the National Security Archive, described during the event how the embargo limits the people of Cuba from accessing the internet to support their small businesses, take online U.S. courses, and use financial services like PayPal. He stated how the embargo stands as “a punitive approach which endures to this very day under the Biden administration.” 

Due to the asymmetry between the size of the U.S. and Cuban economies, the gap between their GDPs has only continued to grow. The undeniable truth is that on the economic front, while the embargo has a severe impact on the Cuban economy, it has little cost to the United States. “The embargo is there because the U.S. can afford to have an embargo—even a full embargo—on Cuba,” notes Dr. Torres Pérez.

How the Embargo Complicates Humanitarian Assistance

Gail Reed, public health specialist, journalist, and founder of Medical Education Cooperation with Cuba (MEDICC) highlights that “the U.S. embargo [has] nefarious consequences for Cubans, jeopardizing health and [the] welfare of women, children, people living with cancer and HIV/AIDS.”

Its complex licensing requirements effectively prevent food, medicine, and medical equipment from reaching Cubans. They discourage sales of medical equipment to the island, resulting in the cancellation of ventilator sales by a Swiss company to Cuba during the pandemic.

Regulatory requirements also impose onerous challenges to the provision of humanitarian assistance. These restrictive policies make it extremely difficult to send aid to Cuba for fear of running afoul of the U.S. Treasury’s Office of Foreign Assets Control and incurring hefty fines.

Their impact has damaged the Cuban healthcare system’s ability to respond effectively to the COVID-19 pandemic, with a toll on human lives.

Despite these restrictions, Cuba managed to develop its own COVID-19 vaccines, bypassing a series of significant challenges. Their development, including the research, production, and rollout, was delayed because purchases of necessary supplies and shipping were complicated by the embargo.

The Biden administration’s show of empathy with other countries during the pandemic led them to issue exemptions to certain sanctions interfering with public health responses in Iran, Syria and Venezuela, but these same efforts were notably absent with Cuba. Notwithstanding these obstacles in receiving much needed medical supplies, Cuba has achieved a 90% vaccination rate with the vaccines it developed.

Recommendations for Key Reforms

The U.S. embargo has endured for 60 years, failing in its initial goal of inciting regime change and promoting democracy. As Dr. LeoGrande stated in his final remarks, it no longer benefits any players in the game— not the United States and certainly not the Cuban people. Yet it continues to be one of the most persistent aspects of U.S. foreign policy toward Cuba.

Nevertheless, there are important areas of opportunity to advance modest, but key reforms in U.S.-Cuba policy. The timeliest ones should be those that help address the direst aspects of the humanitarian crisis on the island. These include:

  • Suspending U.S. regulations that impede food, medicine, and other humanitarian assistance from reaching the Cuban people.
  • Removing all restrictions on family and non-family remittances.
  • Fully re-staffing the U.S. Embassy in Havana, with the necessary measures to ensure the safety of U.S. personnel, and resuming consular services in Cuba.
  • Rolling back the Trump administration’s measures that restrict travel to Cuba, since they limit mutually beneficial dialogue between the U.S. and Cuban people, and make it more difficult for Cuban-Americans to visit and reunite with family on the island, particularly for those with families outside of Havana.
  • Removing Cuba from the State Sponsor of Terrorism (SSOT) list, as this unwarranted designation places another roadblock in the path towards improved relations and creates further obstacles to purchasing or receiving humanitarian goods.

The Biden administration should recognize the 60th anniversary of the embargo as an inflexion point for its policy approach and make good on campaign promises that have gone unheeded for too long.