What Will Happen to the Cuba Embargo?

Posted on November 20, 2012 by Farhad Alavi — Leave a comment

There has been some speculation following President Obama’s reelection as to what he will do regarding Cuba. Notably, there have not been any notable changes in the sanctions regime following the first couple years of the President’s first term. A recharged President Obama relieved of having to run for reelection again coupled with limited reforms in Cuba by Raul Castro may mean big changes to the decades long U.S. embargo of Cuba in the President’s second term. But what shape could those reforms take? An article in yesterday’s New York Times may present some insight, talking about a new talk of helping Cuba’s recent move towards more free market economics.

The Cuban Assets Control Regulations, 31 CFR Part 515 (CACR) trace their roots to the early 1960s, when the U.S. first imposed sanctions on Cuba following the rise of Fidel Castro to power in the island country. President Clinton loosened certain regulations which were then tightened again by President Bush, only to be once again reformed somewhat by President Obama.

Certain new initiatives have allowed more generous remittance transfers to Cuba as well as the sale of certain telecommunications equipment by U.S. persons. However, certain stricter aspects of the regulations (such as the blocking of funds transfers) remain in effect. Here are some changes we may see in the coming years:

1. Relaxed travel regulations. Travel to Cuba has become substantially easier in recent years. Eventually the regulations may be removed, and as in the case with Iran, it may be completely free for U.S. persons to travel there. Unlike Iran, however, Cuba’s economy is largely propped up by tourism, and the U.S. may not want to lend a lifeline to the communist island state. That said, we may see more liberal interpretations by the government of the certain travel exceptions and licensing requirements.

2. Eased Exports. There may be a continuation of the gradual “peeling away” of U.S. sanctions on the sale of goods to Cuba. Now that the sale of certain telecommunications equipment is permitted, we may gradually see other classes of products legalized, such as consumer electronics, etc. that could assist in promoting the spread of information. As the Times article reflected and alluded, relieving the embargo could help fuel Cuba’s move towards a capitalist economy. As such it could be sold as a win-win situation.

Whatever happens with the sanctions regime, it is difficult to foresee a scenario whereby sanctions are tightened. Cuba is arguably becoming an ever-more tired subject in the U.S. foreign policy conversation and it would be fair to assume that support for the embargo is waning. It will be interesting to see how such reforms will take form and if they will be in concert with reforms enacted in Cuba. At this point one can only sit back and watch.