The United States currently has a financial, economic, and commercial embargo against the island nation of Cuba. It was first imposed as a sale of arms to the country in March 1958 during the Batista regime. About two years after the Cuban Revolution, exports to Cuba except for food and medicine occurred because the Castro regime nationalized American-owned oil refineries without compensation. By February 1962, the embargo was extended to virtually all exports.
There are currently six statutes in place which enforce the Cuban embargo from an American perspective, with the most recent being the Trade Sanctions Reform and Export Enhancement Act of 2000. Unless Cuba decides to move toward a government based on democracy and improves their record of human rights, the U.S. will keep the embargo in place. Only humanitarian U.S. products can be sold in Cuba, with even foreign subsidiaries of U.S. companies not allowed to trade.
Cubans call the embargo the “Blockade,” although a physical naval blockade of the island has not been in place since the missile crisis of 1962. Cuba can trade with other countries when they are not under the jurisdiction of domestic laws, and it has been a member of the World Trade Organization since 1995.
The United States currently holds about $6 billion in financial claims against the Cuban government.
List of the Pros of the Cuban Embargo
1. It keeps the potential harm from the Cuban government in check.
When the Carter Administration attempted to end the travel ban to Cuba in 1977, the response from their government was quick and decisive. They decided to empty out their institutions and prisons, which created a sudden surge of asylum seekers and illegal immigrants from the island. Even with some of the changes that have occurred since Fidel Castro stepped down from power, there are two very different political viewpoints between the U.S. and Cuba. That is why the embargo remains. Cuba doesn’t want our political influence on the island, just as the U.S. government wants to keep ideas of extreme socialism at bay as well.
2. There may be no benefit to the Cuban people if the embargo is lifted.
Although the structures of the Cuban government have been slowly reforming and evolving, lifting the embargo will not likely help the average citizen on the island. Cuba continues to maintain a Communist economy and structure throughout society. The government owns virtually all of the industries and businesses operating on the island. If the United States were to lift the embargo today, up to 90% of the money spent there would go to the government, emboldening their position against their people. It would become a new monetary resource that could create more human rights violations.
3. Cuba has failed to meet the conditions necessary to lift the embargo in the first place.
When the current structure of the embargo was set by the United States in 1962, there were clear points outlined that if met, would cause it to be lifted. Cuba has simply ignored them or decided that the relationship they used to have with the U.S. is no longer important. Human rights have always been the primary stipulation of the embargo. There must be improvements in its human rights record, political prisoners must be released, and Americans want to see political opposition allowed with permanent labor unions present before considering a change to the relationship between these two countries.
If the U.S. decides to lift the embargo without compliance, even if it has been in place for nearly 50 years, the outcome could make Americans look weaker to the rest of the world on the issue of human rights. It would also give other nations the impression that the United States does not always follow through on its demands.
4. Other global economies have not experienced value with Cuban trade.
The United States is the only country who is still enforcing an embargo on trade with Cuba. Some have minor restrictions in place, but the legality of owning Cuban goods within the national border is not illegal like it is in the United States. This trade opportunity has not been as extensively good as expected, with minimal gains experienced in Europe, Latin America, and Canada from these products.
List of the Cons of the Cuban Embargo
1. The Cuban embargo hurts the people more than it does the government.
The initial goal of the Cuban embargo from an American perspective was to hurt the Castro administration. When we look at the outcomes of this policy, it is clear to see that the people who are hurting because of this decision are the citizens of the island. The average person living in Cuba does not have access to many of today’s best medicines, medical procedures, or even agricultural tools because many of these items come from the United States. Even if other nations trade with Cuba to supply some of these items, the amount available is nowhere near what it would be if the embargo were lifted.
2. It is a policy which hurts the economy of the United States.
Economic experts estimate that the cost of the Cuban embargo on the U.S. economy has averaged between $1 billion to $5 billion each year. Then multiply that cost times 50 to see how much the cost has been. Cuba was once one of the most essential trading partners of the United States. Small businesses would benefit greatly if the embargo was lifted because they could provide essential skills and tools to the local population. That means both economies would see a financial lift because it would open the doors to free trade once again.
3. The embargo on Cuba is clearly not working.
For some people, the definition of insanity is that you continue to take the same action while expecting a different result each time. It is an ineffective policy demonstrated by the fact that Cuba hasn’t complied with it for over five decades. It is not working. When the U.S. developed the embargo in the first place, the Soviet Union was working to establish a weapons base on the island that would put the entirety of the United States in range of enemy nuclear missiles.
The Cold War is over. Cuba is no longer a threat for such an outcome, so it doesn’t represent the same threat to American safety. Many of the policy relics from that era have gone away, but not this one. Is there any justification for a continued embargo if no legitimate threat is present?
4. The United Nations General Assembly votes against the embargo repetitively.
The U.N. General Assembly has voted every year since 1992 for a resolution that calls for the Cuban embargo to be finally lifted. In the 2018 vote for this resolution, the outcome was 189 to 2, with only Israel joining the United States against it – with zero abstentions from the global body. Even when the U.S. put forth amendments to the resolution that criticized the lack of civil liberties on the island and the human rights record of the government, only Ukraine and the Marshall Islands joined with Israel to support the Americans.
“There are no winners here today,” said Nikki Haley, who was the U.N. Ambassador at the time. “There are only losers. The United Nations has lost. Most of all the Cuban people have lost and are left once again to the brutal whims of the Castro dictatorship.”
The most “no” votes that the resolution has ever received since 1992 was 4.
5. It places Americans at risk of legal trouble for owning Cuban goods.
The penalties for owning Cuban products within the borders of the United States are severe and extensive. According to information supplied by CNN Money, importing cigars from Cuba comes with a fine of up to $250,000 and can cause you to spend up to 10 years in prison. Even under the new rules passed under the Obama administration for travel to the island, you can only bring back $400 worth of goods, 25% of which can be alcohol and cigars.
You must have a license to travel to the island as well, which means you can be there for religious activities, educational purposes, professional research, humanitarian projects, or to produce journalism. About 170,000 people legally visit from the United States each year.
6. The Cuban embargo stops people from visiting the country.
Although the travel restrictions have eased somewhat in recent years, the fact remains that the individuals who could help to spread ideas of democracy and capitalism to the island were forbidden to go there in the first place. Most governments change only when there is a bottom-up movement that creates so much pressure on the nation’s leaders that there is no other alternative. Since the American people could not visit the island, the impact that they could make on society was minimal at best.
This result would often lead Cubans to defect or seek asylum when visiting the United States for authorized purposes, such as sporting competitions. The list of professional baseball players who have defected from Cuba is extensive, with many of them playing multiple season in the top flight of the league. There is also the option to defect to another nation to become a free agent, which allows them to skip the MLB draft and earn more money. These people are separated from their families, especially since the Cuban government denies exit visas to the families of those who defect.
7. We are already admitting thousands of Cuban refugees each year.
According to information from The Heritage Foundation, the United States was allowing over 32,000 Cuban refugees into the country by way of the naval bases located at Guantanamo and Panama during the Clinton Administration. At the time, they were calling for a reduction to 20,000 per year since allowing this population movement would further reduce the impact of the embargo. The reality of this situation is that thousands of people are already fleeing the island through legal processes to change their way of life. If there is such concern about immigration and vetting, then eliminating the embargo would help the United States start to help people in their home nation instead of admitting them entry here.
8. U.S. Dollars are already an authorized currency in Cuba.
Since July 1993, the Castro administration in Cuba has authorized the use of the greenback since the peso had become essentially worthless on the global stage. The official exchange rate in the 1990s was 1-to-1, but the black market ratio was 130 pesos for every $1. Since no one would work for the local currency (which equaled $3 per month back then), the bottom-up changes forced the government to encourage more work by paying in U.S. currency.
The black market systems are already paying well for entrepreneurs operating outside of the government’s view, so it would make more sense to legitimize those efforts to create on-the-books economic opportunities for everyone involved.
9. It would stop forcing women into prostitution as a way to feed their families.
“Many Cuban women have turned to prostitution in a desperate effort to feed their children and families, since government rationing provides only half of the average family’s monthly nutrition needs,” The Heritage Foundation reports. Using the minimum wage as a basis for calculation, it could purchase four liters of milk, a pound of pork, or a two-pound chicken in the unofficial markets. Many families don’t even have access to soap, which causes tuberculosis and malaria to spread. Power blackouts occur daily in most major cities. Industries are only operating at one-third capacity.
Who is to blame for the conditions which are present on the island, some of which have existed for 20+ years? Is it the country who refuses to change, or is it the nation which implemented the embargo in the first place?
A Final Thought on the Pros and Cons of the Cuban Embargo
When John F. Kennedy knew that the Cuban embargo was going to take place, he secured the purchase of 1,200 cigars from the island just hours before the laws changed. Pierre Salinger, who served as the Head of Press, told Cigar Aficionado in 1992 that the president called him into the office to provide help in securing “a lot of cigars” by the following morning. Kennedy would take out the order signing the change in the law immediately after the Cuban items were delivered to his office.
Whether or not the Cuban embargo was successful in the 1960s is up for debate, but the actions of those enforcing the laws suggests a certain level of hypocrisy. By using the power of the office to obtain items that would soon become illegal for the average American, it shows that this policy is more for political purposes than for general welfare.
The pros and cons of the Cuban embargo make it clear that unless there is the political will to do something about this situation, both governments are happy to let things be as they are. Although there are plenty of supporters on both sides of this debate, it is the people who are the real losers here with this economic policy. Cubans are unable to benefit from the advances in American technologies, and Americans are unable to take advantage of the quality of products that come from the island.
Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.