Constant dollars

Cuba says the US embargo is “genocidal”. What is he really doing?

Following historic protests in Cuba where thousands took to the streets, Cuban officials have repeatedly blamed the six-decade US embargo on food, fuel and medicine shortages in Cuba.

Amid the coronavirus pandemic, Cuban health officials insist the embargo restricts the import of crucial vaccine components – the communist country has produced its own Covid-19 vaccines – as well as components for medical equipment such as respirators.

Cuban President Miguel Díaz-Canel said the embargo was “genocidal” and called it “an American policy of economic suffocation”.

While the United States can export food, medicine, and medical supplies to Cuba, the embargo makes things more difficult.

The United Nations and human rights groups have called for an end to the embargo; in the United States, it is a subject of constant debate when it comes to American-Cuban politics.

When the embargo was fully implemented in 1962 by President John F. Kennedy, there was no trade. It was initially a response to Fidel Castro’s confiscation of US businesses and properties on the island following the 1959 Revolution, which was the largest expropriation of US assets ever. There are 5,913 certified unresolved claims – totaling $ 1.9 billion at the time – made by US citizens.

Over the years, the United States has added more embargo laws, making it tougher – while creating more exceptions. It is now a complex set of laws with many layers.

“The embargo has more holes than Swiss cheese,” said Pedro Freyre, president of Akerman’s International Practice, which provides legal advice to US-based companies affected by the embargo.

While food from the United States is available for export to Cuba, those wishing to sell on the island need approvals or licenses from the Treasury and Commerce departments, which makes it more onerous.

Sending drugs and medical supplies from the United States to Cuba is more delicate because they cannot be exported if there is a “reasonable probability” that the product could be used for torture, re-export or the production of Cuban biotechnology industry. It must be verified on site that the products are used for the intended purpose.

The State Department said it regularly allows the export of agricultural products, medicines and medical equipment, as well as humanitarian goods, to Cuba. In the first six months of 2021, Cuba imported $ 123 million worth of chicken from the United States

The majority of exports are in the agricultural sector and include chicken, soybeans and corn. In 2007, the United States was among Cuba’s top five trading partners, and in 2008, US agricultural exports to Cuba peaked at $ 684 million. That number has since declined, as Cuba has diversified its network of suppliers, according to some experts.

The embargo does not prevent other countries from trading with Cuba, but if a product contains 10% US-created content, then it must obtain a license from the United States to be exported to Cuba.

“When you factor in global supply chains, it drastically limits the amount of products that can be exported to Cuba, even from third countries,” said Ric Herrero, executive director of the Cuba Pro-Engagement Study Group. .

Other countries may be afraid to invest and trade with a heavily sanctioned country that is also on the list of US states that support terrorism.

Because the embargo does not allow Cuba to obtain financing from American companies, Cuba must pay for imports in hard currency.

Banks in other countries often shy away from doing business with Cuba, not only because of the complexity of US sanctions, but also because Cuba “doesn’t have a very good payment record,” Freyre said. Cuba has defaulted on billions of dollars in loans.

“The Cuban economy is so small and the conditions are so harsh that it’s just not a very attractive market,” said Freyre, who noted that Cuba’s Marxist and centralized economy is the main reason for its poverty.

After Kennedy imposed the embargo, relations between Cuba and the Soviet Union strengthened, ultimately leading to the Cuban Missile Crisis. For decades, the Soviet Union heavily subsidized Cuba and accounted for 80 percent of Cuba’s international trade. But when the Soviet Union collapsed in 1991, it plunged Cuba into a deep economic crisis from which it never really recovered.

It was during this period that the United States passed the Cuban Democracy Act, which tightened the embargo and restricted presidential power, declaring that it could only be lifted if the president reported to Congress that Cuba had fulfilled a series of conditions, including free and fair elections.

The CDA has authorized the export of drugs and medical supplies for humanitarian reasons. It also prohibited ships entering Cuba for commercial purposes from loading or unloading in the United States within 180 days of leaving Cuba, unless authorized by OFAC, making it more expensive to ship shipments. .

The next phase of the embargo came in 1996 with the Cuban Freedom and Democratic Solidarity Law (LIBERTAD), also known as the Helms-Burton Law. It was enacted weeks after Cuban MiG fighters shot down two planes belonging to the Cuban exile group Brothers to the Rescue, killing four people.

It gave Congress the impetus to act, ”Herrero said. It was an election year and President Bill Clinton wanted to lock himself in Florida.

The Helms-Burton Act has made lifting the embargo more difficult by making existing laws and regulations permanent unless they are lifted by Congress or if an expanded set of conditions are met by Cuba, including “a transitional government ”.

It also allowed the original owners of Cuban properties confiscated by Castro to sue in U.S. courts foreign companies that used them for business purposes, although this part of the law was not enacted until 2019 by the President Donald Trump.

A subsequent US law enacted in 2000, the Trade Sanctions Reform and Export Enhancement Act, authorized the direct sale of agricultural products and other foods in Cuba.

Jason Poblete, a Washington, DC lawyer who supports sanctions against Cuba, said that while “the measure facilitates the export of food and medicine,” it “adds more steps that are not otherwise necessary in the process. export to a non-sanctioned country “.

During the Obama years, restrictions on trade, financial transactions, and travel between the United States and Cuba were relaxed, but Trump rolled back much of them.

After six decades, even some supporters of the sanctions against Cuba argue that it is undeniable that the embargo mainly concerns domestic politics.

“Sanctions are a tool, not a policy,” said Poblete. “All parties should agree on this, but people keep talking to each other without focusing on workable solutions.”

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