Home » Political Economy Corner » What is the US Cuban Embargo? by Roger R. Betancourt

What is the US Cuban Embargo? by Roger R. Betancourt

Embargoes are restrictions on economic activities for political or policy purposes. Embargoes involving international trade are perhaps the most notorious due to their impact on international relations. Since these restrictions are imposed unilaterally they are usually viewed as acts of hostility toward the recipients of the restrictions. Embargoes differ in terms of three dimensions: 1) the aspects of international economic interactions that are subject to the restrictions; 2) the purposes for which the restrictions are imposed; and 3) the economic agents to whom the restrictions apply. The US Cuban embargo is unique due to a combination of its duration, the extent of restrictions , the purposes for which they apply, the economic agents to whom they apply and their interactions.

The Cuban embargo in the common use of the term was originally imposed as a total trade embargo, excluding food and medicines, by the Kennedy administration in February and March of 1962. Some of its provisions went back to 1960 and the Eisenhower administration. It was an implicit reluctant recognition of the permanence of the Castro regime and an explicit signal of US displeasure with Cuba’s having become an ally of the Soviet bloc. Such use of embargoes had a long history in the US. For instance, in the early 19th century the Jefferson administration imposed a trade embargo on England and France to signal its sovereign right to remain neutral and its displeasure with both sides pressuring the US not to trade with the other one.

Due to the Missile Crisis in October of 1962, leading to the removal of nuclear missiles in Cuba introduced by the Soviets, the embargo was extended in 1963 beyond restrictions on transactions of goods and services to restrictions on labor flows, e.g., travel restrictions, and to restrictions on capital flows, e.g., the freezing of Cuban assets in the US. At this point the embargo involved substantial restrictions on all aspects of international economic interactions. The reasons for the restrictions now included not only signaling displeasure or hostility but also national security and the possibility of additional economic retaliation for the expropriation of US assets in Cuba. Moreover, other countries were asked to participate in the embargo. All OAS members but Mexico agreed to participate in 1964.

In the ensuing 50 years the embargo has gone through a number of major transformations with respect to: softening or tightening the restrictions on transactions of goods and services as well as those on capital and labor flows; the purposes for which it has been tightened or softened; and even the set of economic agents that are supposed to abide by the restrictions. For instance, in the latter dimension, the OAS abandoned official participation in the embargo in 1975. Moreover, the embargo has both formal statutory and discretionary features as well as informal ones. Since the discretionary ones and the informal ones can be softened or tightened at any particular time, often without public scrutiny, the embargo can and has been tightened and softened in some aspect for one reason or another by every US administration up to and including the Obama administration.

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