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Pounding the Cuban Nail

photo of Havana by Chad Sparkes

There is a lot of truth in the old saying: “When your only tool is a hammer, everything looks like a nail.” Nearly 60 years of economic boycott has turned Cuba into America’s biggest foreign policy nail.

Although he never formally ended sanctions nor approved explicit U.S. tourism to the island, former President Barack Obama established diplomatic relations and liberalized rules on U.S. travel and other economic activity in an effort to coax a post-Castro Cuba toward greater freedom. The effort brought little in return other than a few symbolic gestures.

The Trump administration rolled back some of the Obama-era concessions as early as 2017. The president promised stricter enforcement of the existing ban on American tourism. “People to people” cultural exchanges, which were often little more than disguised tourism, were no longer available to individuals, only to authorized groups. The administration also wanted to prevent U.S. dollars from directly funding the Cuban regime, so Americans were banned from staying in hotels owned by the Cuban government. That meant most of the island’s facilities, other than private homes, became off-limits. Last year, the administration withdrew most diplomatic staff from Havana in response to mysterious “sonic attacks” on U.S. Embassy personnel. The Cuban government denied responsibility for the attacks.

Then, earlier this month, the administration abruptly ended Cuban port calls from U.S.-based cruise ships, scrambling the itineraries of ships that, in some cases, were already on the water. These cruise ships had become the largest base of operations for American leisure visitors, whose onshore spending significant contributed to the local economy. The administration also ended people-to-people cultural exchanges entirely. These changes came amid U.S. efforts to facilitate democratic change in Venezuela, whose socialist strongman Nicolas Maduro still clings to power with the help of Cuban military monitors and secret police advisers.

Although recent statistics are hard to come by, these cumulative adjustments are likely to roll back most of the increase in U.S. travel to Cuba. In 2015, fewer than 165,000 Americans traveled to the island; in 2018, the Havana government reported more than 600,000 U.S. visitors, most of whom arrived via cruise ship.

Will Cuba feel the economic impact of fewer U.S. visitors? Probably. Is it likely to change the behavior of Cuba’s government? If the past is any guide, not in the slightest.

This is the problem with six decades of economic estrangement between the giant U.S. economy and a small, impoverished island next door that by all rights ought to be in its thrall. With each side having so little invested in the other, neither has much to lose when conflict over something like Venezuela challenges the relationship. The motivations behind the longstanding Cuban embargo are clear and laudable. It simply hasn’t accomplished much in the past, and it is unlikely to accomplish anything now.

Contrast Cuba’s reaction with Mexico’s when President Trump recently threatened to impose steadily increasing tariffs unless the country took action to slow the flood of Central American migrants to the U.S. southern border. With nearly 80% of the country’s exports vulnerable to these tariffs, the Mexicans practically tripped over themselves in a rush to send top diplomats to Washington to resolve the dispute. It worked, at least to the extent that Mexico is deploying a newly established National Guard to get control of its own southern frontier and is taking steps to accommodate more migrants while their requests for American asylum are pending.

Mexico does not want to see itself as subservient to American policy or vulnerable to U.S. economic pressure. But to some extent, it is. We likewise have no rational choice but to at least consider the political and economic needs of our trade partners, although the extent to which those considerations should drive our policy is open to debate. Such political trade-offs are a fact of life when two countries engage with one another.

Our long-standing lack of engagement with Cuba has not changed Cuba, and it is not furthering our own policy objectives. We want to encourage Cuba to build a better version of itself, but you can’t draw a very good blueprint when your only tool is a hammer. Pounding more nails into the existing structure will not change its shape in any meaningful way.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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