Report — From the July 2016 issue

El Bloqueo

The Cuban embargo continues

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For all this, most components of the embargo remain well in place. U.S. statutes still require officials to actively block Cuba’s membership in or access to the major international financial institutions — including the International Monetary Fund, the World Bank, and the Inter-American Development Bank. The United States continues to withhold part of its dues to the United Nations in order to compromise funding for U.N. programs operating in Cuba. And any medical export to Cuba’s public-health system still requires on-site verification of its proper use, making medical sales virtually impossible.

But one of the most significant difficulties is the chilling effect of the Treasury Department’s enforcement, which has continued to be very aggressive this year. Two foreign subsidiaries of Halliburton paid penalties for their oil-drilling work with Cuba Petróleo in 2011. CGG Services, a French company, paid a $600,000 penalty for providing equipment in 2011 to vessels that were operating in Cuban territorial waters. A British company paid $140,000 in fines for providing design services in 2010 for a hotel project on a small resort island off the Cuban coast. Even though President Obama has announced a new era of increased openness and trade, the recent prosecutions — for relatively small violations that took place years ago — make international companies wary of doing business with Cuba.

Meanwhile, Cuba is doing what it can to strengthen its economy. In 2014, the government approved a law to dramatically reduce taxes for foreign investors and streamline the approval process for new projects. In 2014 and 2015, the Ministry of Foreign Trade and Investment announced more than 350 new investment opportunities, totaling some $8 billion, in areas ranging from tourism and construction to health care and renewable energy. Brazil has been a major investor in the development of the port of Mariel as a shipping hub and economic-development zone. Last December, Cuba reached an agreement with fourteen creditor countries in the Paris Club to forgive $8.5 billion of its $11.1 billion debt. In March, after two years of negotiations, the European Union adopted a common position to normalize relations with Cuba and lay the groundwork for expanded trade.

Cuba’s economy, however, is still struggling. Runaway inflation has led to the return of price controls on some staples. Cuba has seen an average annual growth of less than 3 percent for the past five years. Venezuela, which had been a major trading partner and investor, is facing its own political and economic difficulties, and is unlikely to continue offering Cuba aid. None of the changes introduced by President Obama can reverse the congressional legislation that prohibits the direct or indirect sale of most Cuban products to U.S. buyers and prohibits the sale of most goods to Cuban state enterprises. While Cuban Americans send more funds to their families on the island, and there are some circumstances under which it is possible for Americans to invest in small private businesses, these will not generate direct revenue for the government, which still employs 75 percent of the workforce and provides education, medical care, and most of the population’s housing.

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is the Ignacio Ellacuria, S.J., Chair in Social Ethics in the philosophy department at Loyola University Chicago.

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