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Jan 16, 2017 | 09:30 GMT

5 mins read

Cuba Prepares for a New U.S. President

Cuba Prepares for a New U.S. President
(YAMIL LAGE/AFP/Getty Images)
Forecast Highlights

  • The United States will not seriously consider lifting its embargo on Cuba until the country's government makes some concessions on human rights and democratic rule, a likely sticking point for Havana.
  • The Cuban government will try to safeguard the increased economic ties with the United States that President Barack Obama's outreach enabled.
  • Even so, if Havana refuses to comply with Washington's demands, the incoming president could easily reverse his predecessor's policies toward Havana by executive order.

As Donald Trump's inauguration approaches, many of President Barack Obama's signature policy initiatives hang in the balance. Among these is the outgoing president's stance toward Cuba, which has come under increased scrutiny. Since December 2014, the Obama administration has been working to change the United States' approach to the island nation. But the outreach campaign is tenuous, built on several executive orders that the next president could easily and unilaterally reverse. The question now is whether and how Trump will alter the United States' policies on Cuba.

A Tenuous Trend

The Obama administration launched its outreach to Cuba by directing different government bodies to amend various regulations, including aspects of the Cuban Asset Control Regulations, which underpin Washington's embargo on the country. In this way, Obama overturned the restrictions on travel from the United States to Cuba and eased sanctions against the country. The president could not lift the blanket prohibition on trade with Cuba, however. Under the terms of the 1996 Helms-Burton Act, ending the embargo requires a congressional vote and Havana's compliance in implementing reforms, for instance to allow free elections and to disband parts of its domestic security apparatus.

Even with the embargo still in place, the changes in U.S. policy have been a boon for the Cuban economy. Liberalizing travel to Cuba has paved the way for tens of thousands of additional U.S. citizens to visit the country each year. Already, Cuba's tourism revenues have registered the effects of increased U.S. travel, jumping from 1.7 billion Cuban pesos (about $64 million) in 2014 to 1.2 billion pesos in the first half of 2016 alone, figures that are likely underreported. This is a welcome development for Cuba's finances, which have suffered over the past year. As Venezuela contends with its own economic crisis, its financial assistance to Havana has fallen off, contributing to a 0.9 percent contraction in Cuba's gross domestic product in 2016. The influx of tourists from the United States has buoyed small businesses in Cuba's service sector and given some of the country's citizens, particularly those in Havana, an additional source of income, perhaps reducing the central government's spending burden. What's more, it has given the Cuban government an additional source of crucial dollar-denominated revenue.

Prospects for Progress

The power transition in the United States has cast doubt on the future of this revenue stream, though. Depending on how U.S.-Cuban relations progress over the next four years, the Trump administration may decide to rescind the changes that his predecessor oversaw. If U.S. public opinion of Cuba worsens, or if the Cuban government stops offering concessions in exchange for continued adjustments to the Cuban Asset Control Regulations, the next president may increase pressure on Havana. But Cuba's government would likely resist Washington's demands to implement widespread human rights reforms or introduce a democratic electoral system, measures that could threaten the government's grip on power. Leaders in the Communist Party would be reluctant to allow additional parties to participate in Cuba's political system, for example. The steps that the Helms-Burton Act prescribes for lifting the embargo are well outside what the Cuban government would be willing to do. Should Havana refuse to yield to Washington's pressure, however, the United States could respond by reinstating its sanctions on Cuba. Knowing the risks involved in defying the next U.S. administration's wishes, the Cuban government will likely carefully consider whatever requests the United States makes of it.

Moreover, Havana and Washington still have unfinished business to settle. The two have yet to negotiate the repatriation of U.S. fugitives who sought refuge in Cuba during the Cold War and reparations for property Fidel Castro's government seized from U.S. citizens and businesses during its first years in power. Reaching an understanding on those issues may help keep the United States and Cuba on the path to warmer relations under the Trump administration. The Cuban government may also offer to undertake liberalizing reforms in an effort to appease the next U.S. president. Havana would likely make such an overture through low-key diplomatic talks similar to the discussions that led to the first changes to the United States' policy toward Cuba in 2014.

Still, it is hard to say what actions Trump will take toward Cuba over the next four years or when he will take them. Emboldened by the Republican Party's legislative majority, the new administration seems likely to press Cuba on domestic political and human rights issues, though it may wait to do so until a new government takes power on the island. To leave Obama's outreach initiatives in place, Trump would have to either be too preoccupied with other foreign policy matters to consider Cuba or acquiesce to Havana's demands for closer economic ties with no strings attached — an unlikely outcome. And so, as Inauguration Day draws closer, Cuba will have to prepare to make concessions or else part with the economic benefits that the Obama administration's outreach has made possible.

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