Home » Political Economy Corner » Who benefits and loses if the US-Cuba embargo is lifted? by Jorge A. Sanguinetty

Who benefits and loses if the US-Cuba embargo is lifted? by Jorge A. Sanguinetty

The answer depends on the conditions under which the embargo is lifted. I focus on the expected distribution of benefits (and costs) between the government and the Cuban population. A unilateral move by the US Government, without any quid pro quo by the Cuban government can be expected to yield significant benefits to the official establishment with benefits of an unknown magnitude to the population at large. I posit that the magnitude of the latter depends on the degree of internal liberalization of the Cuban economy. Until Raul Castro took over, the centralized command of the Cuban economy was subject to a set or constraints arguably more restrictive than the US embargo. What I have called the internal embargo consisted in the Cuban government outright prohibition for Cubans to own enterprises, freely employ workers or trade domestically and internationally. To many Cubans, probably a majority, such constraints were the main cause of the country ´s secular economic crisis.

Lifting the US embargo under such circumstances was reasonably expected to yield most of the economic and political benefits to the Cuban government and limited economic and no political benefits to the population. With the recent partial economic (not political) liberalization policies implemented by Raul Castro, we can expect that the distribution of economic benefits would be more favorable to the Cuban people. Such new economic freedoms carry a dose of informal political freedoms as Cubans are able to develop relationships among themselves that were tightly constrained until recently, like freedom of assembly, to communicate, and to make transactions and agreements without the tutelage of the government. To wit, as the private sector develops because the government is forced to reduce the inflated payrolls of its enterprises, the authorities lose control on those newly liberated workers.

Nonetheless, the system might have reached a point of equilibrium under which an unconditional lifting of the US embargo might still accrue enough economic benefit to the Cuban government that it leads to a roll back of some recent reforms in order to cut loses in the political, albeit informal, arena. This will be a strong reason to oppose an unconditional lifting on the embargo for those who care about the wishes for freedom and welfare of the Cuban people. Many international observers oppose the US embargo on the basis of several debatable assumptions. One is the belief that the embargo has served the Castro government as an excuse for its economic failures, and once lifted the excuse will disappear. Another assumption is that Cubans don´t know that the embargo might have constrained their economy, but not as much as the restrictions of virtually all economic activity by the Cuban government. There are also many Cubans that believe that the US embargo is the only leverage left to pressure the Cuban government to lift internal restrictions in both the economic and the political fronts. It is doubtful that, under the current conditions, a non-negotiated lifting of the US embargo is likely to bring about democracy in Cuba.


3 Comments

  1. […] for Cuban residents, they are hopeful that reopening borders between the US and Cuba will bring social and economic benefits for all Cubans. The embassy hasn’t opened its front doors just yet and already there are conflicts between […]

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