U.S.-Cuba relations: A year of change

In the year since the U.S.-Cuba rapprochement began, some things have seemed to move at warp speed, but others have smacked into the reality that the two former Cold War enemies still have two very different systems and have barely talked to each other in five decades.

There have been important symbolic changes. An American flag now waves over a U.S. Embassy in Havana, and a Cuban flag flies at the Cuban Embassy in Washington, D.C., after an absence of more than 54 years. President Barack Obama and Cuban leader Raúl Castro have met face-to-face twice and talked by telephone three times, even joking about the famously long speeches of Fidel Castro.

Cuba has been removed from the U.S. black list of state sponsors of terrorism, and there have been talks on prickly issues such as migration, human rights, and claims for confiscated property of U.S. citizens and corporations.

Interactive timeline: A history of modern U.S.-Cuba relations

But because expectations were so high and many U.S. businesses were so eager to engage after a half-century drought, some say Cuba has been slow in taking up the United States on the new business opportunities the Obama administration began outlining in January. Obama also has said he wants to work with Congress to lift the embargo.

Expectations were high among the Cuban people, too, said Domingo Amuchástegui, a former Cuban intelligence officer who left the island in 1994, because “in Cuba’s political culture, when the president says something is going to be done, take his word, it will be done. Cubans who heard Obama thought this is the president’s word.”

But such high hopes have been tamped down. It was apparent after the first round of normalization talks in Havana in January that rapprochement would be a slow process, he said.

Some Americans imagined that U.S. companies with all their technical know-how would rapidly expand Internet access on the island or that Americans would be able to pick up a charger for their cellphone at a U.S. mobile storefront in Havana, soon be visiting Cuba via a ferry from Miami, and pulling out credit cards issued by U.S. banks to pay for their hotel stays and to withdraw cash from ATM machines in Cuba.

All are theoretically possible under new U.S. rules, but it takes two to tango, and Cuba is yet to green-light any of those opportunities.

Even though U.S. companies are free to form partnerships with Cuban government entities to improve the island’s Internet and telecom infrastructure, the only deals announced so far have been a few roaming and direct-connect arrangements. This summer, Cuba began rolling out new public Wi-Fi hotspots that now number 50, but most Cubans don’t have regular access to the Internet and desire for connectivity is huge.

“It’s all about what your benchmark was at the beginning of rapprochement. If you had realistic expectations, then you see gradual progress,” said Richard Feinberg, a professor of international political economy at the University of California-San Diego and a senior fellow at the Brookings Institution. “Both Obama and Raúl Castro say this will be gradual.”

Tangible change

At the Summit of the Americas in April, Castro said that while the two countries still have their differences, “we are willing to discuss everything, but we need to be patient, very patient.”

Castro’s more conciliatory words to Obama in Panama were a watershed event, Feinberg said. “Up until that time, the United States was the implacable enemy and a threat to the security of Cuba. His remarks changed the whole paradigm and atmosphere in Cuba.”

The most tangible change in Cuba since last December has been the parade of U.S. visitors, including Obama Cabinet members and State Department delegations. On Wednesday, many baseball stars who defected, including Los Angeles Dodgers outfielder Yasiel Puig, St. Louis Cardinals catcher Brayan Pena and Chicago White Sox first baseman Jose Abreu, also visited.

For Alana Tummino, who accompanied a U.S. business delegation at a recent international trade fair in Cuba, the realization that things had changed significantly came as she sipped her morning coffee at the Hotel Saratoga in Havana.

“A whole host of business leaders from the United States, including former hard-line Cuban Americans, passed by, and that really signaled to me that we’re in a different era,” said Tummino, who heads the Cuba Working Group at the Americas Society/Council of the Americas.

American travelers have signed up for people-to-people tours in record numbers, helping Cuba set a new record for international visitors this year. There have been sports and cultural exchanges, U.S. governors have toured Havana in vintage automobiles, and countless U.S. business delegations have arrived in Cuba to test the waters.

The Obama administration has outlined an array of commercial activities that U.S. businesses may engage in legally, even though most trade is still prohibited by the embargo and U.S. investors can’t invest in Cuba.

To empower the Cuban people, the opening allows U.S. companies to trade with Cuba’s private entrepreneurial sector. But there has been little progress in that area — other than increased remittances trickling into the hands of Cuban entrepreneurs to start and expand their businesses and the entry into the Cuban market of San Francisco-based Airbnb, which hooks travelers up for stays at private homes.

“There is the feeling that Obama freed up a lot restrictions [on doing business with Cuba] with the new regulations and now it’s on the Cubans to show their willingness to work in various sectors,” Tummino said.

She said one reason for the seemingly slow uptake on the part of the Cuban government is a difference in priorities.

U.S policy puts a lot of emphasis on empowering and engaging the non-state sector, she said. “But from the Cuban government’s viewpoint, that’s a small percentage of the overall economy. They are very focused on large projects in energy, biotechnology and tourism and those projects are largely off the table in terms of American investment.

“We’re seeing the Cubans taking their time to see what the opportunities really are. For them, that requires a longer time of trust-building,” Tummino said. “Hopefully we’ll see all the business meetings and collaborations start coming to fruition over the next few months.”

The opportunities are there under the new regulations, said Saul Cimbler, a Cuban-American who is president of U.S.-Cuba Business Advisory. “Not withstanding the political rhetoric, there is forward motion.”

“Most people going to Cuba these days are looking to hit a home run but that is putting the cart before the horse. You need to assess what is really practical,” said Cimbler, who said lately he has been spending 10 to 12 days a month in Cuba on business trips.

To get business deals done in Cuba, he said, requires a lot of work and creativity. Another important thing to remember, Cimbler said, is business isn’t and won’t be conducted the way it was before the 1959 Cuban Revolution.

It’s not just business people interested in engagement with the island. A supporter of such efforts is Alan Gross, the USAID subcontractor the Cubans accused of smuggling military-grade equipment into the country. He said recently that “while I served as an involuntary catalyst for this change, I hope now to help foster continued good relations between our countries and our citizens.”

But not everyone is in favor of engagement, and over the past year, members of the Cuban-American delegation in Congress have introduced legislation that seeks to limit the Obama opening. Congressional supporters of engagement, meanwhile, have been busy trying to line up co-sponsors for bills lifting the travel ban and the embargo.

South Florida Republican Rep. Ileana Ros-Lehtinen said the opening hasn’t worked and that the progress the Obama administration sees “is not reflected in the mass arrests and the increase in Cubans fleeing that has marked this year.”

Human rights is among the more contentious issues between the two countries. While the United States has criticized the jailing of dissidents and insisted on the importance of respecting basic civil rights, such as freedom of speech, press and assembly, Cuba views human rights through a somewhat different prism of social well-being, emphasizing its free healthcare as an example of respect for human rights.

Although the number of political prisoners has fallen sharply in the past year, the number of political arrests is way up. Through November, the Cuban Commission for Human Rights and National Reconciliation has documented 7,686 political arrests, most resulting in short-term detentions of a few hours or days.

In its November report, the commission said the Castro regime was reacting with “ever greater repressive fury” against those who only want freedom for political prisoners and respect for civil and other basic rights.

Not only has there been “disappointment by the naive view of the White House regarding its misguided policies toward communist Cuba,” Ros-Lehtinen said, but “little has changed for the average Cuban while the Castro brothers continue to rejoice that they have an ally on Pennsylvania Avenue.”

Ros-Lehtinen said in the coming year she expects Obama to offer more concessions to the Cuban government, including possibly the release and pardon of Ana Belen Montes, a former senior analyst at the U.S. Defense Intelligence Agency who pleaded guilty and was sentenced to 25 years in October 2002 for spying for the Cuban government.

Financial front

Francisco “Pepe” Hernández, president of the Cuban American National Foundation and a Bay of Pigs veteran, said he has mixed feelings.

Although he regards the resumption of diplomatic ties as positive and says it has created tremendous interest in all things Cuban, he worries that along with it has come “an acceptance by the international community of the political and economic system in Cuba such as it is.”

Cuba, he said, needs an economic transformation and improvement in human rights but “now there seems to be this acceptance that Cuba is owned by the extended Castro family — and they are preparing to maintain their political and economic power.”

Even Cuban-Americans, he said, are starting to lose touch with what is happening inside Cuba. “The American people think everything is going to be OK and there will be no bad consequences but the Cuban people don’t believe it. Let’s see what happens when Raúl surrenders his official powers,” Hernández said. Castro has said he plans to retire on Feb. 24, 2018. He has named First Vice President Miguel Díaz-Canel as his successor.

In Cuba, there’s a lot of talk about economic and even political reforms floating around, said Amuchástegui, “but I don’t know if they will show up at the Communist Party Congress.” It’s tentatively set for April. During the last Congress, a series of limited market-economy reforms emerged.

Amuchástegui said that until 2018, he thinks the Cuban leadership will be cautious, slow and seek to avoid tensions and conflicts. “Nothing much will be happening until after 2018,” he said.

“Raúl Castro is increasingly a lame duck. Whether his administration has the energy to accelerate change, we’ll have to see,” said Feinberg. “He may think that he’s done enough.”

The coming year is pivotal, said Ted Piccone, a senior fellow at the Brookings Institution, because there’s quite a bit of uncertainty when it comes to U.S. politics. Some Republican presidential hopefuls have said they will reverse the Obama opening.

Obama may feel he needs to do as much as possible, using his executive authority, to further the relationship with Cuba and enhance his legacy in his remaining time in office, say some analysts.

The president has said he wants to visit Cuba, but there is a sense in Washington that he wants to see more compromise and deliverables on the part of Cuba before scheduling a trip.

“I think the idea now is that it would be good for Obama to go just before his presidency is over to cement his legacy,” said Tummino. “After the 2016 elections might make the most sense.”

Several analysts said they expect to see progress soon on agreements on civil aviation and counter-narcotics. Feinberg said it’s also possible Cuba will give approval for the first U.S.-based ferry and cruise service to Cuba in 2016.

Just in time for the Christmas season, the United States and Cuba reached agreement Dec. 10 on a pilot program for direct-mail service that will take mail directly from the United States to Cuba several times a week, rather than through third countries. And Wednesday, both sides said they had reached an understanding to restore regularly scheduled commercial flights between the two countries.

There have already been two environmental agreements — one that establishes sister relationships between marine sanctuaries in Cuban waters and the Florida Keys and a more far-reaching accord that will make it easier for U.S. and Cuban scientists to work together to protect the environmental resources of both nations.

“Even if the next president does not share President Obama’s desire to go forward with normalized relations with Cuba, the agreement puts bilateral environmental cooperation on a secure and lasting footing,” said Elizabeth Newhouse, director of the Center for International Policy’s Cuba Project. The Center has been a long-time advocate of easing restrictions on scientific exchanges with Cuba.

On the financial front, there has been both progress and frustration. Pompano Beach-based Stonegate Bank became the first U.S. bank to establish a correspondent relationship with a Cuban financial institution and recently announced that its debit cards would work to pay bills at government hotels, restaurants and other card-accepting merchants on the island. But other banks have remained wary and have exercised extreme caution when dealing with any Cuban-related business, sometimes holding up payments that are completely legal.

Many challenges remain. One immediate one is the more than 3,000 Cubans stranded in Costa Rica because Nicaragua, an ally of Cuba’s, won’t let them pass through its territory on their route north to the United States.

Preferential U.S. migration policies, such as the Cuban Adjustment Act and wet foot/dry foot, which allows Cubans who arrive on U.S. soil — even without a visa — to stay while those interdicted at sea are generally sent back, have acted as a magnet for Cubans migrants.

“The Central American crisis is part of a much bigger migration problem. The route through South and Central America [often taken by Cuban migrants] is like a highway to the United States where everyone is dry-foot,” said William LeoGrande, a government professor at American University.

Unless the United States ends the wet foot/dry foot policy, he said, Cubans will continue to find alternative routes to the U.S. through the Caribbean and Latin America.

Cuba also wants to engage on sensitive issues. Castro has said he wants the lifting of the embargo, the return of the U.S. Navy base at Guantánamo Bay, and the end to Radio and TV Martí and other acts of hostility against Cuba by the United States. Cuba also wants reparations for human damage caused by U.S. incursions against the island, as well as economic damages due because of the embargo.

The United States, meanwhile, would like to see meaningful progress on compensation for $1.9 billion ($8 billion, including interest) in claims by U.S. citizens and corporations who had their Cuban property seized.

Feinberg, who released a Brookings white paper on claims earlier this month, said it’s possible there could be an agreement — even within the next year — if both countries decide settlement of property issues would serve their national security interests.

For the United States, a satisfactory agreement would encourage Congress to lift the embargo, he said. “In Cuba, it could be a good deal, too, because it would result in increased investment flows and more access to international capital markets.”

A settlement could turn a conflictive problem into a win-win situation, he said.

“I think the Cubans would be wise to do some big deals [with U.S. companies] that make people think this is really going to pay off,” said LeoGrande. “But you’ve got the embargo still in place, and I think it’s part of the reason the Cuban response has been slow. They know it is not going away until at least 2017 and maybe after.”

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