Tag: Cuba

Nothing new

President Obama said a lot more about foreign policy in last night’s State of the Union message than many of us expected. But did he say anything new?

His first entry point to international affairs was notable:  he got there via exports and trade, pivoting quickly to TTP, the Trans-Pacific Partnership and TTIP, the Trade and Investment Partnership with Europe. Though he didn’t name them, that’s what he was referring to when he appealed for Congress to provide him with what is known as trade promotion authority to negotiate deals with Asia and Europe that are “not only free, but fair.” Nothing new here, just an interesting elevation of economic diplomacy to pride of place. Ditto the plea to close tax loopholes that encourage American companies to keep their profits abroad.

But after a detour to the internet and scientific research, the President was soon back on the more familiar territory of national security. He plugged smart leadership that builds coalitions and combines diplomacy and military power. He wants others to do more of the fighting. But there was little or no indication of how collapsed states like Syria, Yemen and Libya might be governed in the future.

Leaving it to their own devices hasn’t worked out well, but this is a president who (like all his predecessors) doesn’t want to do nationbuilding abroad and who (unlike many of his predecessors) has been disciplined enough to resist it. He talks non-military means but uses force frequently and says he wants an authorization from Congress to use it against the Islamic State, which he is doing anyway.

Russia is isolated and its economy in tatters, the President claimed, but it also holds on to Crimea and a large part of Donbas in southeastern Ukraine. He offered no new moves to counter Putin but rather “steady, persistent resolve.” On Cuba, the Administration has already begun to restore diplomatic ties. The President reiterated that he wants Congress to end the embargo, which isn’t in the cards unless Raul Castro gets converted to multi-party democracy in his dotage.

Iran is the big issue. The President naturally vaunted the interim Joint Plan of Action and hopes for a comprehensive one by the end of June. He promised to veto any new sanctions, because they would destroy the international coalition negotiating with Tehran and ruin chances for a peaceful settlement. All options are on the table, the President said, but America will go to war only as a last resort. Nothing new in that either, though I believe he would while many of my colleagues think not.

Trolling on, the President did cybersecurity, Ebola, Asia-Pacific, climate change and values (as in democracy and human rights), stopping briefly at Gitmo and electronic surveillance along the way. Nothing new here either, just more of that steady, persistent resolve.

Notable absences (but correct me if I missed something):  any mention of the Israel/Palestine “peace process,” Egypt, Saudi Arabia (or the Gulf), India (where the President will visit starting Sunday), Latin America (other than Cuba), North Korea.

What does it all add up to? It is a foreign policy of bits and pieces, with themes of retrenchment, reduced reliance on US military power (but little sign of increased diplomatic potency), prevention of new threats and support for American values woven in. The President continues to resist pronouncing a doctrine of his own but wants to be seen as a moderate well within the broad parameters of American internationalism. He is wishing to get bipartisan action from Congress on a few things:  trade promotion authority, the authorization to use force, dismantling the Cuba embargo, closing Guantanamo. But none of this is new ground.

He is also prepared to forge ahead on his own. As I’ve noted before, this lame duck knows how to fly.

In case you didn’t watch it last night and have more patience than I do, here is the whole thing:

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Tehran’s interest in Havana

Hamid Bayati of the Tehran Times asked me some questions about Cuba. I answered:

Q. After more than 5 decade US end his invade policy toward Cuba, how do you evaluate this event?

A. I think this is a good development. It ends a policy that wasn’t working and raises the odds of a peaceful democratic transition in Cuba, which is very much in the interest of both Cubans and Americans.

Q. US president said the policy to isolate Cuba do not have any specific results but why [doe]s Washington has same policy toward Countries such as Russia, Iran or N. Korea?

A. The Cuba embargo is a unilateral policy. Other countries don’t participate or support it. The sanctions on Russia, Iran and North Korea are widely supported and therefore have a much stronger effect.

Q. Why [do] Republicans in US criticize Obama decision to normalize relation with Cuba?

A. Some Republicans (and some Democrats) see the decision as rewarding the autocratic Castro regime. It certainly will provide the regime with some marginal benefits, but it will also encourage the private sector and relieve a good deal of individual suffering.

Q. Some experts say Obama wants to end his presidency with good events and changing diplomacy toward Cuba happened in this frame, what is your idea on this issue?

A. The President had loosened restrictions on travel and trade with Cuba a great deal already. Normalization of diplomatic relations was a natural next step. It is also a politically savvy one, as younger Cuban Americans strongly support it.

Q. Some experts say the US has been to blame for Cuba’s economic problems, which include crumbling infrastructure, low levels of foreign investment and …. Does this event (new relation between US and Cuba) help Cuba improve economy?

A. It may mean some marginal improvements in the economy, but Cuba’s economic problems are mostly due to its own mismanagement, lack of respect for property rights, restrictions on foreign investment and lack of respect for the rights of Cubans. Until those things change, there won’t be a big change in the economy.

Q. Raúl Castro, Cuba President, said this new relation does not change Cuba old policy especially on socialism, so is it possible we see change in Havana policies in coming years?

A. Everything the Castros do is done in the name of socialism. That is a bit of a joke. Raúl has allowed the growth of a vibrant private sector. That is likely to prevail over the state sector sooner rather than later, but Cubans overwhelmingly want to preserve some aspects of socialism: their free health care and education, for example. That is their right, though it is unclear whether the state will have the resources required.

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The United States is to establish diplomatic relations with Cuba. Stronger than expected economic and job growth. American companies repatriating. Russia cancels natural gas pipeline. Pro-Russian separatist push in Ukraine stalls. Iran declares its commitment to reaching a nuclear agreement. Baghdad reaches oil export and revenue agreement with Erbil

Today’s headlines may seem disconnected, but there are two common threads:  oil and money, which themselves are tightly wound together.

Little explanation is needed. The Cuban regime is on its last economic legs. It needs an opening to the US to survive. Its massive subsidies from Venezuela are coming to an end, because Caracas is one of the countries most forcefully hit by the decline in oil prices. The economic upturn in the US, and return of US companies from abroad, is at least partly due to more cash in consumers’ pockets, due to lower prices at the pump, and readier availability of energy resources. Russia’s South Stream pipeline fell victim to the combination of sanctions and lower natural gas prices. Russian support for the separatists in eastern Ukraine is falling short in part because the Russian economy is in an oil-price-induced nose dive, along with the ruble. Iran needs a nuclear agreement more than it did a few months ago in order to get sanctions relief that will help it deal with lower oil prices. Both Erbil and Baghdad needed an agreement, not only because of the ISIS threat but also because of lower oil prices, which pinch their finances as much as ISIS’s.

It would be nice to hear some other good news: reduced Russian and Iranian support for Syria’s President Assad, a pickup in China’s economy, and an end to recession in Europe are all within the realm of the possible. May this icy account of an official Iranian visit to Assad is a harbinger.

There is of course a price to pay for the benefits of lower energy prices. US oil and gas production, which had been climbing rapidly at $100/barrel, will slow down at $50/barrel. Oil company stocks are down. The stock market is jittery. Kim Jong Un, his economic woes relieved, is emboldened and less vulnerable.

The balance for America’s foreign policy is however positive. It is also likely to be long-lasting. American oil and gas production may stop climbing so fast, or even fall, laying the foundation for another price rise in the future. But the new technologies that enable exploitation of “tight” oil and gas are viable at anything above $80/barrel, and likely at prices a bit lower. Nor is the US the only country in which these technologies can be used. China, the UK, Poland and many others also have “tight” oil and gas. Once they start producing it, $80/barrel or so will become a ceiling for oil prices, a level that will require serious fiscal discipline in many oil-producing countries, both friend and foe. Russia, Venezuela and Iran have all been budgeting at $100/barrel or more.

The demand side also has an impact on foreign policy. While supply has been booming in the Western Hemisphere, demand is booming in the East, especially China and India. Middle Eastern oil that used to get shipped to Europe and the US will now go to Asia. That is already true for 50% of the oil coming through the strait of Hormuz. The percentage is headed up to 90% within the next decade. US diplomats are busily reassuring Gulf oil producers that Washington is fully committed to maintaining its close relations with them, but it is hard to believe we are that dumb (or that they are).

Rapidly declining oil imports from the Gulf will eventually make the Americans reevaluate. If and when the Iranian nuclear issue is resolved, Washington will want to renew the effort to move its diplomatic and military attention even more definitively to the East, where its economic and commercial focus already lies. China and India will have to pick up more of the burden for energy security, by holding larger oil stocks (neither keeps the 90 days that International Energy Agency members commit to) and naval patrolling. The US should be welcoming them with open arms into a multilateral effort to protect Hormuz. A few extra burdens of this sort would also encourage New Delhi and Beijing to restrain their oil demand and contribute more to limiting global warming.

The ramifications of lower oil prices are profound. We would do well to start thinking hard about them and acting accordingly.

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The Cuba saga is far from over

Political responses to President Obama’s Cuba opening have been predictably partisan:  most Democrats support it, most Republicans oppose it. Democrats are right that the embargo hasn’t worked, but Republicans are right that this opening will bestow some political legitimacy on an authoritarian regime.  All of that is well rehearsed.

Politically, the President is likely to win this round on points. Attitudes in the Cuban American community, and in the general population, have been tilting his way for some time. Marco Rubio may nevertheless gain prominence and conservative support from blocking key aspects of the opening–like the naming of an ambassador and dismantling of the embargo–in Congress. It won’t help in Congress that Cuba continues to harbor American fugitives.

There is still a lot of uncertainty about the political impact of what the President is doing inside Cuba. My own visit there last spring suggested that Cubans are really not sure what they want politically. Most treasure their socialist education and health systems and would like their economic plight eased, but beyond that their aspirations are far from well-articulated. That’s no surprise: they have lived in a tightly controlled one-party system for a long time. Thinking about alternatives has not been encouraged.

The President’s Republican critics are correct when they say it is not clear how his diplomatic and economic opening will lead to political change in Cuba. The Castros have demonstrated that they are not fools. They wouldn’t be doing this if they thought it would bring regime change. The dissident community, which has been unable for more than 50 years to take advantage of the economic pressure the American embargo brought to bear on the Castro regime, wants Western-style human rights and democracy. While they will try to exploit the opportunity, they are not overjoyed with what President Obama has done.

How things turn out will depend on the Cuban people. The dissidents do not seem to have deep roots there, but the regime doesn’t either. The state-controlled part of Cuba’s economy is on its last legs. Government employees are paid a pittance. Lots of people already have second jobs in the more or less private sector, from which they earn 10 times and more than from their nominal government employment. The state is withering away. Its capacity to maintain the health and education systems that Cuban citizens treasure is in doubt.

The government also faces a difficult immediate issue: how to unify the two currencies the country uses. Raul Castro has promised to do this before the end of 2014. The Cuban peso, in which most government salaries are paid, is all but worthless. The CUC, a convertible currency in which most transactions are now conducted, dominates the economy. Presumably the Cuban regime hopes the opening with the US will help it garner hard currency and smooth the transition to a single currency, which will have to be called “Cuban peso” but be valued closer to the CUC. If that process goes awry, Cubans could get very unhappy with their political system very quickly.

It is not only the Cuban regime that would be at risk. The United States can ill afford an economic and political collapse in Cuba that brings another million or more Cubans to Florida. It is in our interest that the transition to democracy happen, but also that it be smooth and not disruptive. President Obama has opened a new chapter, but the saga is far from over.

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90 miles from you know where

Politico Magazine yesterday published my piece based on a visit to Cuba last week under the heading “The Dangers of Collapse in Cuba.”  Here is the lead paragraph:

Cuba’s 1950s cars and Havana’s crumbling facades have long been its iconic symbols in the American imagination. They don’t disappoint, as I discovered on a trip to Cuba last week. But I didn’t expect zippy Hyundais with Miami FM on their radios or a private collection of contemporary Cuban art, installed floor to 20-foot ceiling in a fabulous apartment with a terrace overlooking the Gulf of Mexico. Both the apartment and the art would put many wealthy New Yorkers to shame.

You’ll have to go to the  Politico Magazine website for more. 
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Cuba is an island, but…

Though in many respects isolated, Cuba is like most countries–especially small ones–in depending for its fate on the rest of the world.  It was once a Soviet satellite that agreed to host nuclear weapons targeted against the US and tried to export its revolution throughout Latin America (including Puerto Rico) and to Africa, where they say 2400 Cubans died in what they consider liberation wars.  Judging from my visit to Havana last week, Cuba is now more interested in its relationship with Venezuela and the United States, the two most important sources of its vital hard currency.

The relationship with Venezuela echoes Cuba’s revolutionary past.  The Castros shared with Hugo Chaves, whose face still graces more than one wall in Havana, a belief in social revolution and a “Bolivarian” alternative to capitalism.  Caracas still helps to keep Cuba financially afloat with subsidized oil supplies, payments for Cuban doctors, and other less transparent transfers.  Cubans understand this reliance on cash-strapped Venezuela is likely coming to an end.  That generates at least part of their sense of urgency about economic reform.

The relationship with the United States is far more fraught.  Opposite my favorite Cuban jazz bar in Obispo stands a Western Union office, where Cubans line up to get transfers from relatives in the US and elsewhere.  Like this young woman in American flag tights:

Waiting for your remittance
Waiting for your remittance

The sign in the window shows Fidel and Raul under the heading

The Revolution, thriving and victorious, goes forward.

Pardon the poor photography:

The Castro brothers grace a Western Union office
The Castro brothers grace a Western Union office

It doesn’t get a lot more ironic than that:  powered by US dollars sent from Miami.

It wasn’t supposed to be this way.  The original idea of the American embargo, which the Cubans call a blockade, was to starve the regime of the resources it needed to survive, causing collapse of the Castro regime.  Various presidents have tightened and loosened the embargo, depending not only on what is going on in Cuba but also on American politics.  Even in its current relatively loose form, the embargo certainly hurts the Cuban economy.  Because of US legislation restricting access to ports and banks by non-American (as well as American) companies that do business in Cuba, many cruise and cargo ships don’t call at Cuban ports and many companies don’t officially transact business with Cuba.

Cubans are resourceful though and one way or another manage to get access to most of the US equipment they need, including Apple computers and sophisticated sound boards for their recording studios.  It is expensive and difficult, but possible.  Along the way, a good deal of illicit money presumably changes hands.

The question is what purpose this serves.  Most Americans, and most Cuban Americans (even in Florida), believe the policy should change.  It is an older generation of members of Congress who keep the embargo in place.  It is unclear to me at this point what Cuba would have to do to get it removed, though I suppose the issue of property claims is close to the top of the list.

A US Foreign Claims Settlement Commission has certified 5911 claims worth $6.4 to $20.1 billion, depending on whether you compound the interest or not.  Even if he has lived rent-free, I can only imagine how a Cuban who has lived 55 years under the Castro regime will feel when a foreign claimant arrives to take possession of her house.  Or how the successor regime will feel about digging into its empty pockets to compensate the claimants, plus 6% interest accumulated over 41 years (I don’t know why 41).

What the embargo has not done is cause the collapse of the regime.  Quite to the contrary, the Castros seem to revel in isolation and hostility, which helps them to claim a legitimate role as defenders of Cuba’s independence.  One loyalist told me that in the end the Revolution is mostly about “dignity,” which he associated with Cuba’s ability to make its own way in the world, and “respect,” which he associated with pride in its uniqueness.  This should sound familiar to those who have been following the Arab uprisings.  Vague as they are, these sentiments are not to be trifled with.

But dignity and respect won’t go far without a stronger economy, which is where I started this series of posts on Cuba.  What the Cubans want from the United States above all is more tourism, which will depend I imagine on building far better hotels.  The shabbiness and poor management of the once fashionable Plaza, where we stayed at a cost of about $150 per night, is almost unbelievable, even for someone who travels as much as I do in poor countries and conflict zones.

Increased tourism will also depend on simplifying the process for going there.  This is a Washington issue, not a Havana problem.  At least for those on group tours, the Cubans issue tourist cards easily and require you to fill out a simple health form. Procedures at passport control both entering and leaving were not onerous (certainly not as onerous as some instances non-American friends recount about entering the US).  There are charter flights, including some operated by American Airlines, non-stop from Miami (and Tampa) to Havana.  Based on the experience of my fellow travelers, those are far more reliable and no more expensive than flying from Cancun (avoid Cubana!).

It’s the US government that requires you to read complicated licensing rules and threatens you with exorbitant fines if you violate their less than clear provisions.  More than one Cuban asked who we think we are punishing.  They have a point, especially as the tourist industry is the leading edge of capitalism in Cuba.

The Cubans would also like the US to use the monster container port they have built at Mariel, once the jumping-off point for so many Cubans to leave the island because it is so close to Florida.  The odds of that seem low at this point, but importing goods into the US from Cuba would somehow be a fitting end to an embargo whose logic and purpose seem lost.

The United States is no more an island than Cuba when it comes to interacting with its neighborhood.  Cuba will be a major issue for us as it transitions, if only because of geography, family ties and property claims.  We need to be thinking now about how to help enable post-Castro Cuba to achieve a dignified and respectful outcome for the island’s more than 11 million inhabitants.

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