Home » Political Economy Corner » What are the Main Determinants of the Current Form of the US Cuban Embargo? by Roger R. Betancourt

What are the Main Determinants of the Current Form of the US Cuban Embargo? by Roger R. Betancourt

Two events standout as formally determining the main current features of the US Cuban Embargo: one is normally associated with the embargo and one is not.  The first event is the Helms- Burton Act of 1996.  It represents a tightening of the embargo in almost all aspects: with respect to the number and type of transactions involved; with respect to its purpose, through a more aggressive advocacy of regime change in the direction of democracy; and perhaps most importantly with respect to a substantial extension of the economic agents subject to the restrictions, potentially and unilaterally including all countries.

Passage of the Act in 1996 was facilitated due to the outrage caused by Cuba’s downing of two unarmed planes in January of the same year, leading to 4 deaths, and the Clinton administration’s need to respond in some form.  This law generates the most international consternation among global elites due to its potential sanctions on private economic agents from other countries.  For instance, one of its discretionary provisions allows lawsuits against foreign investors who make use of property expropriated by the Cuban government.  US Presidents with positions as varied as Clinton, Bush and Obama have waived the application of this feature of the law every six months since its adoption in 1996.  This Act remains the main legal determinant of most current embargo provisions with some exceptions.

A most important exception is a considerable softening of restrictions for Cuban citizens traveling to the US stemming from the Immigration Accord of 1994 between Cuba and the US.  This accord was a bilateral agreement whereby the formal and unilateral travel restrictions on Cuban citizens wishing to come to the US associated with the embargo were substantially softened. It normalized permanent legal flows from Cuba to the US for a minimum of 20,000 Cuban citizens every year.  Holders of Cuban exit visas were allowed by this agreement to immigrate legally into the US once they obtained entry visas from the US through the Interests Section in Cuba.  This major change in an embargo restriction was a response to a humanitarian concern about the number of people who lost their lives trying to exit Cuba in rafts.  In exchange the Cuban government agreed to increase its activities preventing departures in rafts and the US agreed to return the ones that succeeded in leaving to the island or to third parties, if they were found before reaching US shores.  This accord is still in place, having survived the Helms-Burton Act!  Furthermore, the Cuban government has rescinded the need for an exit visa and related fees as of January 13, 2013. Hence, Cuba just lifted one of its own embargo restrictions on its citizens.

Mention should also be made of an important restriction of the embargo that affects capital flows.  It has been in place somewhat informally since the 1960’s, but it is adopted formally in the Helms-Burton Act.  To wit, the latter requires all US Directors at International Financial Institutions to vote against the admission of Cuba as a member.  Admission is one of the conditions for receiving grants and loans from these institutions.  Yet, this restriction on capital flows is rarely discussed as part of the lifting of the embargo.

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