The Cuban Embargo And Everything You Need To Know About It’s Failure
The Council on Foreign Relations explains how since Fidel Castro’s ascent to power in 1959, U.S.-Cuba ties have endured a nuclear crisis, a long Cuban embargo, and political hostilities. The diplomatic relationship remained frozen well beyond the end of the Cold War but moved toward normalization during the administration of U.S. President Barack Obama, whose policies were largely rolled back under President Donald Trump.
The United States embargo against Cuba prevents American businesses and businesses with commercial activities in the United States from conducting trade with Cuban interests. It is the most enduring trade embargo in modern history. The U.S. first imposed an embargo on the sale of arms to Cuba on March 14, 1958, during the Fulgencio Batista regime.
In 1959, Fidel Castro established a revolutionary socialist state in Cuba after he and a group of guerrilla fighters successfully revolted against President Fulgencio Batista. Batista, who had been supported by the U.S. government for his anticommunist stance, fled the country after seven years of dictatorial rule. Castro gradually strengthened relations with the Soviet Union.
By 1960, Castro nationalized all foreign assets in Cuba, hiked taxes on U.S. imports, and established trade deals with the Soviet Union. President Dwight D. Eisenhower retaliated by slashing the import quota for Cuban sugar, freezing Cuban assets in the United States, imposing a near-full trade embargo, and cutting off diplomatic ties with the Castro government. Specifically, almost two years after the Cuban Revolution had led to the deposition of the Batista regime, the U.S. placed an embargo on exports to Cuba except for food and medicine after Cuba nationalized American-owned Cuban oil refineries without compensation.
Bay of Pigs Invasion
On April 17, 1961, executing a plan developed and approved by the Eisenhower administration, President John F. Kennedy deployed a brigade of 1,400 CIA-sponsored Cuban exiles to overthrow Fidel Castro. The Cuban military defeats the force within three days, after several mishaps disadvantage the invaders and reveal U.S. involvement. Despite the failed invasion, U.S. administrations over the next several decades conduct covert operations against Cuba.
Full Cuban Embargo
On February 7, 1962, the Kennedy administration imposes an embargo on Cuba that prohibits all trade. Cuba, whose economy greatly depended on trade with the United States, loses approximately $130 billion over the next nearly sixty years, according to Cuban government and United Nations estimates.
Cuban Missile Crisis
On October 14, 1962, U.S. spy satellites discovered that Cuba had allowed the Soviet Union to build nuclear missile bases on the island. In response, Kennedy demanded the Soviet weapons be removed and ordered a naval quarantine of Cuba, igniting a thirteen-day standoff. With the threat of nuclear war on the horizon, the United States negotiated with the USSR via back channels.
As the crisis nears its third week, Kennedy secretly agrees to withdraw U.S. nuclear missiles from Turkey within a few months if the Soviet Union withdraws its missiles from Cuba. Kennedy also pledges not to invade Cuba. Soviet Premier Nikita Khrushchev accepts the deal and announces that he will order the missiles removed. The following July, Kennedy prohibited U.S. nationals from traveling to Cuba.
As of 2018, the embargo is enforced mainly through the Trading with the Enemy Act of 1917, the Foreign Assistance Act of 1961, the Cuban Assets Control Regulations of 1963, the Cuban Democracy Act of 1992, the Helms–Burton Act of 1996, and the Trade Sanctions Reform and Export Enhancement Act of 2000.
Trading With The Enemy Act of 1917
The Trading with the Enemy Act (TWEA) of 1917 is a United States federal law, enacted on October 6, 1917, that gives the President of the United States the power to oversee or restrict any and all trade between the United States and its enemies in times of war. TWEA was amended in 1933 by the Emergency Banking Act to extend the president’s authority also in peace time. It was amended again in 1977 by the International Emergency Economic Powers Act (IEEPA) to restrict the application of TWEA only in times of war, while the IEEPA was intended to be used in peace time.
TWEA is sometimes confused with the IEEPA, which grants somewhat broader powers to the President, and which is invoked during states of emergency when the United States is not at war. The IEEPA was passed in an attempt to rein in perceived abuses by the US President of the TWEA by making the powers subject to the National Emergencies Act (NEA). The NEA included a legislative veto to allow Congress to terminate a national emergency with a concurrent resolution. However, the U.S. Supreme Court found such legislative vetoes unconstitutional in Immigration and Naturalization Service v. Chadha. Following the Court’s decision, Congress amended the NEA to require a joint resolution.
The law set the basis for sanctions by the United States. As of 2018, Cuba is the only country restricted under TWEA. North Korea was removed from the provisions of TWEA in 2008, although restrictions under IEEPA authority remain in effect.
Cuban Assets Control Regulations of 1963
The Cuban Assets Control Regulations are regulations of the United States Department of the Treasury on July 8, 1963, under the Trading with the Enemy Act of 1917, that generally regulate relations between Cuba and the U.S. and are the main mechanism of domestic enforcement of the United States embargo against Cuba. It was recently modified by the Office of Foreign Assets Control.
Foreign Assistance Act of 1961
The Foreign Assistance Act of 1961 reorganized the structure of existing U.S. foreign assistance programs, distinguishing between military from non-military aid, and created a new agency, the United States Agency for International Development (USAID) to administer non-military, economic assistance programs. President John F. Kennedy signed the Act on November 3, 1961, and issued Executive Order 10973, detailing the reorganization.
USAID unified already existing U.S. aid efforts, combining the economic and technical assistance operations of the International Cooperation Administration, the loan activities of the Development Loan Fund, the local currency functions of the Export-Import Bank, and the agricultural surplus distribution activities of the Food for Peace program of the Department of Agriculture.
International Cooperation Administration
The International Cooperation Administration (ICA) was a United States government agency operating from June 30, 1955 until September 4, 1961, responsible for foreign assistance and ‘nonmilitary security’ programs. It was the predecessor of the present-day U.S. Agency for International Development.
Development Loan Fund
The Development Loan Fund (DLF) was the lending arm of the United States International Cooperation Administration. It was established in 1957 as part of a revision of the Mutual Security Act. Its main purpose was extending loans to foreign nations, mostly for capital projects, repayable in the local currency of the borrower. In 1961, it merged into the United States Agency for International Development. At its creation, its legislative mandate ordered that it not “compete” with “private investment capital”, the Export-Import Bank or the International Bank for Reconstruction and Development.
Export-Import Bank of the United States
The Export–Import Bank of the United States (abbreviated as EXIM or known as the Bank) is the official export credit agency (ECA) of the United States federal government. Operating as a wholly owned federal government corporation, the Bank “assists in financing and facilitating U.S. exports of goods and services”. EXIM intervenes when private sector lenders are unable or unwilling to provide financing, equipping American businesses with the financing tools necessary to compete for global sales.
EXIM’s aim is to promote U.S. goods and services at no cost to U.S. taxpayers, protecting “made in America” products against foreign competition in overseas markets and encouraging the creation of American jobs. Founded in 1934, it was established by an executive order organized by President Franklin D. Roosevelt under the name Export–Import Bank of Washington. The stated goal was “to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof.” The Bank’s first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots. Over the years, the Export–Import Bank helped finance several historic projects including the Pan-American Highway, the Burma Road, and post-WWII reconstruction.
The Foreign Assistance Act of 1961 provides that no assistance is to be provided to a government which “engages in a consistent pattern of gross violations of internationally recognized human rights, including torture or cruel, inhuman, or degrading treatment or punishment, prolonged detention without charges, causing the disappearance of persons by the abduction and clandestine detention of those persons, or other flagrant denial of the right to life, liberty, and the security of person, unless such assistance will directly benefit the needy people in such country.”
The Act also provides that no assistance is to be provided to any Communist country. However, the President may waive this prohibition if he determines that such assistance is vital to the national security of the United States, that the country is not controlled by the international Communist conspiracy, and that the assistance will promote the country’s independence from international Communism.
The President may also remove a country from the application of this provision for a certain time which the President determines. In order to remove a country from the application of this provision, the President must determine and report to Congress that such action is important to the national security of the United States.
The Act was amended in 2004 specific to the treatment of orphans and other vulnerable children. This amendment allows the president to provide aid to the peoples of other countries to look after children in cases of HIV/AIDS and to set up schools and other programs for the advancement of child treatment.
Food for Peace Program
In different administrative and organizational forms, the Food for Peace program of the United States has provided food assistance around the world for more than 50 years. Approximately 3 billion people in 150 countries have benefited directly from U.S. food assistance.
The Office of Food for Peace within the United States Agency for International Development (USAID) is the U.S. Government’s largest provider of overseas food assistance. The food assistance programming is funded primarily through the Food for Peace Act. The Office of Food for Peace also receives International Disaster Assistance Funds through the Foreign Assistance Act (FAA) that can be used in emergency settings.
While U.S. food aid started out in the 1950s as a means to donate surplus U.S. commodities, the U.S. government moved away from this decades ago, and now purchases food from American farmers through a competitive process. The Office of Food for Peace donates food based on an identified need, in close consultation with the host government requesting the assistance.
Cuban Democracy Act of 1992
The Cuban Democracy Act was a bill presented by U.S. Congressman Robert Torricelli and passed in 1992 during Cuba’s Special Period of economic depression which prohibited foreign-based subsidiaries of U.S. companies from trading with Cuba, travel to Cuba by U.S. citizens, and family remittances to Cuba. The act was passed as “A bill to promote U. S intervention through the application of sanctions directed at the Castro government and support for the Cuban people.” Congressman Torricelli stated that the act was intended to “wreak havoc on that island
Helms-Burton Act of 1996
The Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Helms–Burton Act) strengthens and continues the United States embargo against Cuba. The act extended the territorial application of the initial embargo to apply to foreign companies trading with Cuba, and penalized foreign companies allegedly “trafficking” in property formerly owned by U.S. citizens but confiscated by Cuba after the Cuban revolution. The act also covers property formerly owned by Cubans who have since become U.S. citizens.
The bill, which had been tabled in late 1995 after Senator Helms was unable to overcome several Democratic filibusters, was reintroduced prompted by an episode that had happened a month earlier. On February 24, 1996, Cuban fighter jets shot down two private planes operated by a Miami-based humanitarian international Search and Rescue support group called Brothers to the Rescue, which had been on a search and locate mission over international waters. Whether they were shot down over Cuban territory or international airspace is a matter of debate.
Trade Sanctions Reform and Export Enhancement Act of 2000.
The Trade Sanction Reform and Export Enhancement Act (Title IX) was enacted by the United States Congress and signed by President Bill Clinton in 2000. The act altered regulations in regards to U.S. trade with Cuba. Under the act, the trade of certain agricultural commodities (defined and listed under section 102 of the Agricultural Trade Act of 1978) and medicine/medical devices (defined and listed under section 201 of the Federal Food, Drug, and Cosmetic Act) became permitted. This act does not change any legislation in terms of receiving U.S. imports from Cuba. In addition, the act is not comprehensive and still heavily regulates what goods are exported to Cuba.
Trade of any commodities must follow strict regulations. Exports to Cuba can only be paid in cash only sales that are paid in advance and must be financed by third country financial institutions (www.fas.usda.gov). Credit and debit transactions are not authorized, but foreign banking institutions may finance transactions and U.S. banks may confirm or advise such foreign bank letters or credit.
In terms of traveling to trade, travel to and from Cuba can be permitted under this act with special approval for individuals trading any of the commercial goods permitted under the terms of the act. Leisure travel and travel related transactions are still not allowed.
In order to travel to Cuba for agricultural or medical trade, a license must be obtained through the Treasury Departments Office and Foreign Assets Control. Any person who violates the terms of the Trade Sanction Reform and Export Enhancement Act will be punished with the terms following the Trading with the Enemy Act (www.fas.usda.gov). As a result of this act, Cuba has received many goods from the United States. In 2006, Cuba was ranked the 33rd largest market for U.S. agricultural exports.
The Cuban Embargo Today
Daniel Funke of USA Today writes how recently thousands of Cubans have protested in what has been called the biggest anti-government demonstration in 30 years. The demonstrations come amid Cuba’s worst economic crisis in decades, spurred in part by the Trump administration’s sanctions on the country.
The embargo against Cuba is not a blockade nor does it prevent the island nation from trading with other countries or non-American companies. The sanctions do not force other countries and non-U.S. companies to cut ties with Cuba, but the U.S. has instituted various economic sanctions that make that trade and investment riskier and more costly, creating serious disincentives. Companies that engage in transactions in U.S. dollars could also be subject to provisions of the embargo, but those provisions are disincentives for non-U.S. companies – not a legally binding prohibition on foreign trade with Cuba.
According to Lillian Guerra, a professor who specializes in Cuban and Caribbean history at the University of Florida, only in the 1960s and 1980s was the U.S. able to demand and enforce a unilateral trade embargo against Cuba from its own trading partners in the world/
As of 2019, Spain, China and Italy were among Cuba’s top trading partners. Even some American companies, including Marriott and United Airlines, have done business in Cuba over the past few years, although the Trump administration unraveled several components of the detente pursued by the Obama administration.
The Cuban Embargo Has Failed
Writing for Al Jazeera, Christopher Rhodes highlights how the Obama administration, with then-Vice President Biden’s support, sought to rethink the policy and pursue re-engagement with Cuba relaxing sanctions, allowing direct flights between the two countries, and easing restrictions on Americans doing business in Cuba. Donald Trump reversed Obama’s strategy placing Cuba back on the US list of state sponsors of international terrorism, cutting off travel between Cuba and the US, and barring Americans from sending remittances to their relatives in Cuba, cutting off a major economic lifeline for many Cubans.
The US Chamber of Commerce estimates that the embargo costs the US economy billions of dollars each year, as well. The human toll is significant though harder to quantify. UN human rights experts urged the US to ease sanctions during the COVID-19 pandemic, arguing that such a change will save lives by allowing Cuba greater access to medical supplies and equipment.
Cuba-policy hardliners have implicitly accepted the human and economic costs of the embargo as acceptable in order to achieve the goal of undermining the communist regime. They will point towards the unprecedented level of protests currently going on in Cuba as evidence that the embargo is working. It’s not. Yes, Cubans are angry at the economic hardships and pandemic suffering happening amongst their population. But as Cuban President Miguel Díaz-Canel uses repression and anti-US rhetoric to contain the protests, there’s little indication that the regime is in immediate danger.
The communist regime has already survived the fall of its Soviet sponsor, the death of Fidel Castro, and the handover of power from his younger brother Raul to Díaz-Canel, who is not a Castro and was born after the Revolution took power. Sixty years of sanctions have only created hardships for the Cuban people while providing the regime with a convenient scapegoat to blame for all of their country’s economic woes and societal discontent.
While easing the embargo will lessen the pressure on the Cuban government by lessening societal desperation leading to the collective outrage, spontaneous protests against authoritarian regimes usually end in renewed repression rather than regime change. Movements for social change are most effective when people and organizations gain the resources that are necessary for sustained political and social activism. Loosening the economic vice grip on Cuba will help to empower its citizens and civil society to stand up to their government
The United States doesn’t need to eliminate the policy all at once, nor should it relent on pressuring Cuba when it comes to democracy or human rights. The politics of this are fraught with danger as Florida is a purple state trending red and Democrats are underperforming among Latino voters. and a radical change in policy towards Cuba could risk alienating parts of the Cuban American population in the state.
Principles and effectiveness should be put ahead of red baiting politics. It’s time to end the six decades of US failure and Cuban suffering.