Cuban Embargo: Loosening Restrictions Secures Diplomatic Dialogue

The world has not seen cooperative Cuba-United States relations in over 55 years. But with continued persistent effort by the Obama Administration, the embargo preventing diplomacy between the two countries is slowly dissolving. The process that has been ongoing for a year is increasing in intensity as more sanctions against American exports to Cuba have just been lifted by the U.S. government. This decision by the Obama Administration comes with an underlying justification that both economies will have an opportunity to benefit from trade through each country’s comparative advantage. U.S. exports provide Cubans with more diversified goods such as industrial materials but many may overlook what Cuba could potentially offer the U.S. from its specialized goods if sanctions on Cuban imports are loosened. Cuba maintains a comparative advantage in sugar, its main export, which it supplied significant amounts to the U.S. prior to the embargo. With its close proximity to Florida, a favourable vacation climate, and exotic culture, Cuba will certainly be a beneficiary in tourism if travel sanctions continue to disband. Even now with only limited travel to Cuba allowed for certain categorized individuals, Cuba is seeing a significantly noticeable influx of American tourism. Since the Obama Administration’s initial loosening of the Cuban embargo at the end of 2014, Cuba is seeing an expected 3.9% increase in GDP tourism contribution in 2015 and it continues to steadily increase.[1] This is contrasted with Cuba’s tourism figures over the past ten years which have inconsistently fluctuated. There is very little doubt that Cuba’s economy will heat up as aggregate demand on the island increases with sanctions being loosened. However, this issue that faces Cuba-United States relations goes beyond the economic realm.

Times seem quite different now than they were around the time of the Cuban Revolution and when the embargo was first implemented. In Cuba during the 1950s, the economy suffered various rises and falls in GDP, as the GDP per capita at the beginning of the decade in 1950 was 2,046 USD (1990 base year) and in 1959 near the closing of the Cuban Revolution was 2,067 USD, an unavailing increase of 1%.[2] This has been accompanied with times of large-scale unemployment. At the implementation of the embargo in 1960, Cuba witnessed a steady decline in GDP per capita year after year for 5 consecutive years with a GDP per capita in 1960 of 2,052 USD (1990 base year) and 1,988 USD in 1965.[3] While correlation does not equal causation, it is still difficult to doubt that losing a major global trading partner in the U.S. had a large effect on Cuba. It seems that Cuba’s economy has progressed and adapted well under the circumstances as its GDP per capita in 2013 was 3,745 USD (1990 base year).[4] Cuba learned much about adapting economically after they faced a major economic crisis in the 1990s when their major global ally, the Soviet Union, disbanded at the end of the Cold War. The conditions for standard of living have changed noticeably. The life expectancy in Cuba in 1960 was 64.2, over 5 years less than that of the U.S. at the time.[5] Today, the two countries’ life expectancies are virtually identical. While Cuba’s economy has managed to carry on without the U.S., it is still evident that resumed Cuba-United States diplomacy along with reduced sanctions will revitalize Cuba’s economy. What then is preventing the U.S. from eliminating the embargo completely?

While times have changed for both countries over the last 55 years, some Americans believe that initial justification for the embargo is still relevant to this day. Fidel Castro may not still be in power but another Castro, his brother Raúl, is. The Soviet Union may not still be present, but communism in Cuba still is. But are all the elements in the time of the initial embargo still existent? It is important to note that the United Nations have denounced the Cuban embargo for much of the 21st century. With the end of the Cold War marks the end of communist superpowers and the end of much of the paranoia that communism may spread to the United States. With all this being said, there are some who believe there are reasons for Cuba to be hesitant with sanctions being lifted. Some fear part of Cuba’s cultural identity will be washed away. The potential for American investment in Cuban real estate paints a picture of vast skyscrapers dominating the Havana landscape, something countries such as Costa Rica have made efforts to avoid. Some Cubans have also understandably resented the U.S. for keeping the embargo in place after all these years to the point of scapegoating when there are issues in their country. All in all, if these sanctions continue to disband, the future of Cuba-United States relations does contain some unpredictable aspects. When two countries that haven’t shaken hands in 55 years begin to tear down the blockade, no one truly knows what lies ahead.

[1] "Travel & Tourism Economic Impact 2015 Cuba." World Travel & Tourism Council. 2015. < impact research/countries 2015/cuba2015.pdf>.

[2] Bolt, J. and J. L. van Zanden. “The Maddison Project: collaborative research on historical national accounts. The Economic History Review.” (2014).

[3] Bolt, J. and J. L. van Zanden. “The Maddison Project: collaborative research on historical national accounts. The Economic History Review.” (2014).

[4] "GDP per Capita (current US$)." World Bank 2016. <>.

[5] "The History of Life Expectancy." World Life Expectancy. <>.