Industry interests could pave a rocky political path for US-Cuba relations
The thaw in tensions between the United States and Cuba will likely be hamstrung by U.S. domestic politics. However, pressures from major interest groups that would stand to benefit from closer U.S.-Cuba trade ties could help facilitate this politically difficult process.
The December 17 announcement by President Obama that the United States would begin normalizing relations with Cuba was met with surprise by both political commentators and many members of Congress and the media. Without full Congressional backing, though, the normalization process will be extremely complex, and has the potential to be fraught with political infighting.
Both support and opposition to normalizing relations between Cuba and the United States is not clean-cut politically. Although they represent minorities within their parties, the emergence of Democratic policymakers opposed to the liberalization and Republicans in favor means that neither party will be able to navigate this policy issue with totally unified support in the caucus.
Senator Robert Menendez (D-NJ) has emerged as the most powerful Democratic lawmaker to oppose the new Cuba policy. As ranking member of the Senate Committee on Foreign Relations, any bill that would seek to lift the sanctions policy the United States has enacted against Cuba would likely have to move through his committee.
On the Republican side, Senators Flake (R-AZ) (who travelled with Senator Leahy and Congressman Chris Van Hollen to retrieve imprisoned U.S. aid worker Alan Gross in December) and Rand Paul (R-KY) have largely supported the new Obama administration policy towards Cuba. Paul, who also sits on the Senate Foreign Relations Committee, will likely temper any unified Republican response to the easing of sanctions against Cuba, particularly if he decides to run for President in 2016.
On this somewhat muddled partisan backdrop, the President has made moves through several cabinet departments to ease the roadblocks to full relations between the two countries. On Friday January 16, the Administration formally announced several changes in policy that would help ease tension: first, Americans will be allowed to travel to Cuba (provided the travel serves religious, educational, or other approved purposes – a full travel ban lift would require the consent of Congress) and travellers would be allowed to bring $400 worth of goods back to the United States, including $100 in alcohol and tobacco. Additionally, airlines will now be permitted to fly scheduled routes to Cuba.
Perhaps just as important, the Treasury Department announced that the cap on remittances would be increased from $2000 per year to $8000 per year. In addition, remittances to Cuban nationals for “humanitarian projects, support for the Cuban people, or devoted to private businesses” would be authorized without limitation. Travellers will be allowed to bring as much as $10,000 in family remittances (For a more complete description of the Treasury regulations, see here.)
The effects of the increase in the cap on remittances are difficult to gauge at this point. Although the bump from $2000 to $8000 per year will likely help needy Cubans, the effect on the politics of Cuba is much more complex to determine. Although recent studies have indicated that the effect of remittances could support embattled regimes by reducing pressures to spend on services, others have argued that the effect could be the opposite, that remittances could “increase the likelihood of democratic transition by undermining electoral support for autocratic incumbents…by making voters less dependent on state transfers.” (For a discussion of the debate, click here.)
Finally, from the Commerce Department, previous rules requiring licenses for agricultural and medical supply exports have been removed (for a full description of new regulations, see here), providing agricultural industries in the United States with a new, potentially very lucrative 12-million population market, which also happen to be the largest wheat market in the Caribbean.
This helps to explain why a group of major agriculture lobbies, including the American Farm Bureau, the American Soybean Association, and the National Association of Wheat Growers, formed a coalition last week to pressure Members of Congress to lift the embargo.
Such an approach to the Cuba-U.S. détente could have particular appeal to Congress members from the major breadbaskets of America in the Midwest, at this point strongly tilted towards the Republican Party. The formation of the coalition was announced by the current Republican Congressman for North Dakota, Kevin Cramer.
Several events this week will likely guide the future of the U.S.-Cuba discussion. Today, January 20, the President will deliver the annual State of the Union address. Though the speech will likely be packed with numerous policy suggestions, President Obama will likely touch on Cuba policy and possible areas of collaboration with Congress.
On Monday/Tuesday, several U.S. lawmakers will return from a 3-day official trip to Cuba to discuss normal trade and diplomatic ties, having met with senior Cuban officials, senior members of the clergy, and several ambassadors to Cuba. The list of lawmakers includes: Senators Patrick Leahy (D-VT), Stabenow (D-MI), Whitehouse (D-RI), Durbin (D-IL), and Congressmen van Hollen (D-MD) and Welch (D-VT).
The inclusion of Senator Durbin and Congressman van Hollen, both senior Democratic Party officials in the Senate and House, makes it appear very likely that the White House is trying to coalesce Democratic lawmakers in Congress around supporting normalized relations between Cuba and the United States. New York Governor Andrew Cuomo will also likely announce an official visit to Cuba on Wednesday to discuss expanded trade ties.
Additionally, on Wednesday and Thursday, Assistant Secretary of State for Western Hemisphere Affairs, Roberta Jacobson, will travel to Havana to discuss the normalization process.The recent announcements of the easing of tensions were scheduled in part to make this discussion smoother, and Secretary Jacobson’s visit will likely illustrate the future path of the Executive branch’s moves and abilities to restore normal U.S-Cuba ties.
Looking forward, the two major issues that can create significant market interest are mechanics of Cuba and the United States Congress expanding trade and investment ties as well as the possible effect of the expanded remittances policy.
There is significant interest among Cuban citizens to expanded telecom from the United States, and the United States has significant potential in expanded agricultural trade, in addition to telecom, construction, and tourism.
Watch out for the formation of coalitions like the new agriculture coalition to increase attention and pressure on members of Congress to ease the U.S. embargo.
