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The Economics of the Cuban Embargo

The time has come and almost gone for Washington to repair its broken relations with Cuba. For 53 years the White House has maintained a punishing embargo on trade with Cuba. Its proponents, with the goal of removing Cuba’s revolutionary government, still plead: “give it time.”

In 2001 President George W. Bush allowed for an exception permitting US companies to sell agricultural products to Cuba for immediate payment, although imports from Cuba remained off limits. Other economic sectors received no benefits.

Cuban Americans particularly from south Florida now export goods and remittances to relatives and friends while importing profits from sales made to fellow Cubans in Cuba, giving them an advantage denied to the rest of the country.

Washington pundits attribute superhuman strength to the anti-Castro lobby; thus no President would attempt to lift the trade and travel embargoes on the island. Yet, Cuban Americans trade with and travel to Cuba freely on a daily basis. The “embargo” applies to everyone except Cuban Americans.

This growing international trade, disguised as sending goods to needy family members in Cuba, now includes filling the hulls on 10 or more daily charter flights from US cities to Cuba. Cuban Americans send goods, often with “mules,” to provide family members in Cuba, needing supplies for their businesses. The “mules” return with cash, derived from sales of these goods. Some of the new Cuban stores and restaurants supplied by Miami-based Cubans make substantial profits, some of which get spent in Cuba, and ends up in Cuba’s central bank.

Miami, the United States’ poorest large city, derives income because it provides jobs involved in buying and selling the goods sent to Cuba. Jobs also arise from routine tasks created around the daily charter flights to and from Cuba, and the fees collected from take offs and landings. Add to this, the work for accountants, book-keepers and others.

Some unemployed Cuban Americans get jobs as mules transporting the goods and money from one country to the other. Miami banks also benefit.

In Cuba, this trade also creates jobs and wealth. Mercedes runs a paladar [private restaurant]in Havana’s Vedado neighborhood, “because we draw tourists who like good food, which I serve at my paladar.”

Some paladar customers flew to Havana from Miami. These Cuban Americans come to visit relatives and maybe check on their new investments in Havana family-run businesses. “Relatives in Florida supply me with food I can’t get easily in Cuba,” Mercedes said, “like some spices, and packaged goods. I send them money for these products. They make a profit, and so do I. The government makes money from taxes I pay, and jobs grow in Cuba’s tourist industry.”

US-based charter flights have full hulls, even those with few passengers. One charter flight company manager told us: “Passengers don’t matter that much. The hull is totally full.”

Much of the Cuba trade flows through the Miami International Airport, meaning capital moves from the US to Cuba; most of the luggage contents, however, remain in Cuba. The boon to Miami airport services means jobs, fees and taxes, which remain as capital in south Florida. The goods purchased in south Florida by Cubans (relatives, mules, etc) benefit local businesses.

This trade multiplies jobs throughout the area — as well as it does for Cuba: In Miami sales emanate from stores and lead to jobs in transportation, parking, hotel facilities, restaurants, and luggage-handling. Count the businesses providing services to the people traveling to Cuba and sending goods there. Don’t omit the expanded police force, and extra officials required in immigration, and customs; nor fail to consider jobs servicing air planes, and their jetways, and additional personnel needed for landings and take offs, and extra jobs in airport administration and maintenance created by expanded travel. Think of Miami’s increased tax revenues.

South Florida represents a Cuban settler state within the United States. It counters its interests against those of the dominant society, with the society’s ignorant acquiescence. The Miami-based Cuban Americans and their Cuba-based families have used US-Cuba policy, the embargo representing the power of the nation for their own self-interest, and in order to attain a comparative advantage vis a vis the rest of the American population.

Since 1960, commitment to overthrow of the Cuban government has functioned as US foreign policy on Cuba, a policy now controlled informally by south Florida Cuban-Americans. The Cuban American ethnic enclave assumed the political power needed to turn south Florida into an autonomous Cuban settler state inside US boundaries, so that the embargo does not get applied to the Cuban American enclave. The enclave barons use the embargo to secure, for themselves, a protection of the Cuba trade monopoly.  This challenges stated US national interests.

Camouflaged by ubiquitous anti-Castro rhetoric, the Cuban American entrepreneurs have manufactured a lucrative business with the island, regulated by the very government they pretend to hate. The rightwing congressional representatives pretend to fight for every law to punish the “Castro regime” while in practice turn a dead eye to the growing trade that helps Florida’s and Cuba’s economy. Preserve the embargo, but make an exception for Cuban Americans.

By recognizing the facts about this trade, the White House might become inspired to lift the embargo – a move to benefit all Americans. US government revenue would grow from opening trade and travel with Cuba. In the process we might also regain a missing piece of US sovereignty!

Saul Landau, Professor Emeritus, California State University, Pomona, produced FIDEL and WILL THE REAL TERRORIST PLEASE STAND UP, available on dvd.

Nelson P. Valdes is Professor Emeritus, University of New Mexico.

 

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