Presented at the the James A. Baker III Institute Program, Cuba and the United States in the 21st Century at Rice University, Houston, Texas.

Let me begin by saying that I share the passionate opposition of Cuban-Americans to the communist regime of Fidel Castro. Castro’s government stands against every value and principle we hold dear at the Cato Institute. His government is a tyranny by any definition. It allows no free elections or even organized political dissent. It has jailed, tortured, and killed its political opponents. Its centrally planned economic system has turned Cuba into one of Latin America’s poorest nations and kept 11 million people from enjoying the fruits of private property, free enterprise, and global trade. As much as anyone here tonight, I look forward to that day when the people of Cuba step into the sunlight of liberty.

A Half-Century of Failure

The real dividing line in U.S. policy toward Cuba is how best to undermine the Castro regime and hasten the island’s day of liberation. For almost half a century, the U.S. government has tried to isolate Cuba economically in an effort to undermine the regime and deprive it of resources. Since 1960, Americans have been barred from trading with, investing in, or traveling to Cuba. The embargo had a national security rationale before 1991, when Castro served as the Soviet Union’s proxy in the Western Hemisphere. But all that changed with the fall of Soviet communism. Today, more than a decade after losing billions in annual economic aid from its former sponsor, Cuba is only a poor and dysfunctional nation of 11 million that poses no threat to American or regional security.

A 1998 report by the U.S. Defense Intelligence Agency concluded that, “Cuba does not pose a significant military threat to the U.S. or to other countries in the region.” The report declared Cuba’s military forces “residual” and “defensive.” Some officials in the Bush administration have charged that Castro’s government may be supporting terrorists abroad, but the evidence is pretty shaky. And even if true, maintaining a comprehensive trade embargo would be a blunt and ineffective lever for change.

As a foreign policy tool, the embargo actually enhances Castro“s standing by giving him a handy excuse for the failures of his homegrown Caribbean socialism. He can rail for hours about the suffering the embargo inflicts on Cubans, even though the damage done by his domestic policies is far worse. If the embargo were lifted, the Cuban people would be a bit less deprived and Castro would have no one else to blame for the shortages and stagnation that will persist without real market reforms.

If the goal of U.S. policy toward Cuba is to help its people achieve freedom and a better life, the economic embargo has completely failed. Its economic effect is to make the people of Cuba worse off by depriving them of lower-cost food and other goods that could be bought from the United States. It means less independence for Cuban workers and entrepreneurs, who could be earning dollars from American tourists and fueling private-sector growth. Meanwhile, Castro and his ruling elite enjoy a comfortable, insulated lifestyle by extracting any meager surplus produced by their captive subjects.

Lost Opportunities for Americans

Cuban families are not the only victims of the embargo. Many of the dollars Cubans could earn from U.S. tourists would come back to the United States to buy American products, especially farm goods.

In 2000, Congress approved a modest opening of the embargo. The Trade Sanctions Reform and Export Enhancement Act of 2000 allows cash-only sales to Cuba of U.S. farm products and medical supplies. The results of this opening have been quite amazing. Since 2000, total sales of farm products to Cuba have increased from virtually zero to $380 million last year. From dead last in U.S. farm export markets, Cuba ranked 25th last year out of 228 countries in total purchases of U.S. farm products. Cuba is now the fifth largest export market in Latin America for U.S. farm exports. American farmers sold more to Cuba last year than to Brazil. Our leading exports to Cuba are meat and poultry, rice, wheat, corn, and soybeans.

The American Farm Bureau estimates that Cuba could eventually become a $1 billion agricultural export market for products of U.S. farmers and ranchers. The embargo stifles another $250 million in potential annual exports of fertilizer, herbicides, pesticides and tractors. According to a study by the U.S. International Trade Commission, the embargo costs American firms a total of $700 million to $1.2 billion per year. Farmers in Texas and neighboring states are among the biggest potential winners. One study by Texas A&M University estimated that Texas ranks fifth among states in potential farm exports to Cuba, with rice, poultry, beef and fertilizer the top exports.

Compounding our Failures

Despite the success of our farm exports, U.S. policy toward Cuba has if anything been sliding backwards. In 1996, Congress mistakenly raised the embargo to a new level with passage of the Cuban Liberty and Democratic Solidarity Act. Known as the Helms-Burton act, it threatens to punish foreign-based companies that allegedly engage in the “wrongful trafficking in property confiscated by the Castro regime.” The law is legally flawed because it allows U.S. courts to rule on actions of parties who were not U.S. citizens and were not in the United States when the alleged offense took place. As a foreign-policy tool, the law perversely punishes, not the Castro regime itself, but some of our closest commercial allies such as Canada and the European Union.

The Bush administration has compounded our failed policies by turning the screws even tighter on travel to Cuba. The administration has dramatically ramped up the number of Americans cited for violating the travel ban compared to the Clinton administration. Among the people caught in the government’s dragnet have been a 75-year-old retired schoolteacher from Wisconsin who was fined $1,000 for a bicycle tour through rural Cuba, and man from Washington state who was fined for taking his father’s ashes to
Cuba, where the family had served as Assembly of God missionaries in the 1950s.

Double Standard on Sanctions

Economic sanctions rarely work. Trade and investment sanctions against Burma, Iran, and North Korea have failed to change the behavior of any of those oppressive regimes; sanctions have only deepened the deprivation of the very people we are trying to help. Our research at the Cato Institute confirms that trade and globalization till the soil for democracy. Nations open to trade are more likely to be democracies where human rights are respected. Trade and the development it creates give people tools of communication-cell phones, satellite TV, fax machines, the Internet-that tend to undermine oppressive authority. Trade not only increases the flow of goods and services but also of people and ideas. Development also creates a larger middle class that is usually the backbone of democracy.

President Bush seems to understand this powerful connection between trade and democracy when he talks about China or the Middle East. In a speech on trade early in his first term, the president noted that trade was about more than raising incomes. “Trade creates the habits of freedom,” the president said, and those habits begin “to create the expectations of democracy and demands for better democratic institutions. Societies that open to commerce across their borders are more open to democracy within their borders. And for those of us who care about values and believe in values–not just American values, but universal values that promote human dignity–trade is a good way to do that.”

The president has rightly opposed efforts in Congress to impose trade sanctions against China because of its poor human rights record. In sheer numbers, the Chinese government has jailed and killed far more political and religious dissenters than has the Cuban government. And China is arguably more of a national security concern today than Castro’s pathetic little workers’ paradise. Yet China has become our third largest trading partner while we maintain a blanket embargo on commercial relations with Cuba. President Bush understands that economic engagement with China offers the best hope for encouraging human rights and political reforms in that country, yet he has failed to apply that same, sound thinking to Cuba.

In fact, the Venezuelan government of Hugo Chavez is doing more to undermine America’s national interest today than either Cuba or China. Chavez shares Castro’s hatred for democratic capitalism, but unlike Castro he has the resources and money to spread his influence in the hemisphere. Chavez is not only bankrolling Cuba with discounted oil but he is also supporting anti-Americans movements in Nicaragua and other countries in our neighborhood. Yet we buy billions of dollars of oil a year from Venezuela’s state oil company, we allow huge Venezuelan investments in our own energy sector, and Americans–last time I checked–can travel freely to Venezuela. The one big difference between Venezuela and Cuba is that we don’t have half a million politically active Venezuelan exiles living in a swing state like Ohio.

This is not an argument for an embargo against Venezuela, but for greater coherence in U.S. foreign policy. In a world still inhabited by a number of unfriendly and oppressive regimes, there is simply nothing special about Cuba that warrants the drastic option of a total embargo.

Cuban-American Politics

For all those reasons, pressure has been building in Congress for a new policy toward Cuba. In the past five years, the House and occasionally the Senate have voted to lift the travel ban to Cuba, and also to lift the cap on remittances and even to lift the embargo altogether. Yet each time efforts in Congress to ease the embargo have been thwarted by the administration and the Republican leadership. Support for the embargo certainly does not come from the general American public, but from a group of Cuban-American activists concentrated in southern Florida. By a fluke of the electoral college, Republican presidents feel obligated to please this small special interest at the expense of our broader national interest.

It’s ironic that many of those very same Cuban-Americans who support the embargo also routinely and massively violate the spirit if not the letter of the law. Each year, Cuban Americans send hundreds of millions in hard-dollar remittances to their friends and families back in Cuba. Another 100,000 or so Cuban Americans actually visit their homeland each year. These are supposed to be so-called “emergency” visits, although a disproportionate number of the emergencies for some strange reason occur around the Christmas holiday. In the name of politics, Cuban American leaders want to restrict the freedom of other Americans to visit
Cuba while retaining that freedom for themselves.

Expanding Our Influence in Cuba

Instead of the embargo, Congress and the administration should take concrete steps to expand America’s economic and political influence in Cuba. First, the travel ban should be lifted. According to U.S. law, citizens can travel more or less freely to such “axis of evil” countries as Iran and North Korea. But if Americans want to visit Cuba legally, they need to be a former president or some other well-connected VIP or a Cuban American.

Yes, more American dollars would end up in the coffers of the Cuban government, but dollars would also go to private Cuban citizens. Philip Peters, a former State Department official in the Reagan administration and expert on Cuba, argues that American tourists would boost the earnings of Cubans who rent rooms, drive taxis, sell art, and operate restaurants in their homes. Those dollars would then find their way to the hundreds of freely priced farmer’s markets, to carpenters, repairmen, tutors, food venders, and other entrepreneurs.

Second, restrictions on remittances should be lifted. Like tourism, expanded remittances would fuel the private sector, encourage Cuba’s modest economic reforms, and promote independence from the government.

Third, American farmers and medical suppliers should be allowed to sell their products to Cuba with financing arranged by private commercial lenders, not just for cash as current law permits. Most international trade is financed by temporary credit, and private banks, not taxpayers, would bear the risk. I oppose subsidizing exports to Cuba through agencies such as the Export-Import Bank, but I also oppose banning the use of private commercial credit.

Finally, the Helms-Burton law should be allowed to expire. The law, like every other aspect of the embargo, has failed to achieve its stated objectives and has, in fact, undermined American influence in Cuba and alienated our allies.

Lifting or modifying the embargo would not be a victory for Fidel Castro or his oppressive regime. It would be an overdue acknowledgement that the four-and-a-half decade embargo has failed, and that commercial engagement is the best way to encourage more open societies abroad. The U.S. government can and should continue to criticize the Cuban government’s abuse of human rights in the U.N. and elsewhere, while allowing expanding trade and tourism to undermine Castro’s authority from below.

We should apply the president’s sound reasoning on trade in general to our policy toward Cuba. The most powerful force for change in Cuba will not be more sanctions, but more daily interaction with free people bearing dollars and new ideas.

How many decades does the U.S. government need to bang its head against a wall before it changes a failed policy?

Thank you.