By Nicholas Partyka
The following is Part Two of a multi-part project entitled, “A Crossroads for Socialism: Cuba in Transition”. This series of analyses, observations, and dispatches of Cuba focuses on the country’s unprecedented, post-Fidel transition. With a heavy reliance on macroeconomic, geopolitical, and foreign policy analysis, Hampton contributor Nicholas Partyka seeks to pinpoint the nuanced economic, political, and social changes that are occurring on the island nation, and how these changes are impacting everyday Cubans.
It is not possible to discuss almost any aspect of life in Cuba without talking about the US blockade of the island. That the US has an ’embargo’ against the island is one of the few things that Americans might know about Cuba. This policy of economic warfare against our hemispheric neighbor has been in place for more than five decades now. In this dispatch, I want to focus on the US blockade policy. We will look briefly at why it exists, its aims, its status under international law, and what its main effects are. Though many Americans may know that there is an “embargo” (though “blockade” is more accurate), few likely know how it works and what its costs are. Attempting to remedy this situation will be the point of this part of the series.
On New Year’s Eve 1958, Fulgencio Batista fled Cuba. The next day, the revolutionary government took control of the country. For the better part of a year, the US foreign policy establishment did not know what to make of Fidel Castro and his revolution. Relations remained cordial until Fidel announced the implementation of a set of Agrarian Reform laws. These laws aimed to put land in the hands of poor farmers who had been largely excluded from land ownership under the old regime. Many of the lands nationalized under Fidel’s measures belonged to US citizens or companies; e.g. King Ranch. Other nations also had property nationalized in Cuba in the wake of the revolution, but only the US refused compensation, which the Cubans offered.
In a somewhat ironic twist, the Cubans offered compensation for nationalized property on the basis of the property’s value as determined by the most recent pre-revolutionary Cuban tax assessments. Now, this would only be a problem for US owners of Cuban property to be nationalized if those owners felt that there was too large a discrepancy between the value of the compensation offered and the market value of that property. This kind of situation would be likely to come about if US owners had massively underreported the value of their Cuban property to Cuban tax officials (perhaps with official blessing of the regime at the time). The response of the US to these compensation matters also has nothing to do with the fact that the then-sitting CIA Director, Allen Dulles, sat on the Board of Directors for at least one large US firm to have property nationalized in Cuba, namely the infamous United Fruit Company.
Before the revolution, underreporting taxable value saved money in taxes and thus put more of it back in the owner’s pocket. After the revolution however, this meant that those owners would lose out in a compensation package offered by the new Cuban government as the value of the compensation offered would be substantially less than what the property would be worth on the market. US owners of Cuban property wanted to both receive the real value of their property, but also not thereby tacitly admit what Castro and the Cuban revolution had accused them of, namely taking advantage of Cuba and Cubans for their own private gain. This is a classic example of one not being able to have one’s cake and eat it too. The refusal of the US to acknowledge this had lead to the lion’s share of the trials and tribulations that have arisen as the US and Cuba attempt to normalize relations.
Quickly, this spat about compensation for nationalized property developed into much more. As is well known, the US was Cuba’s largest market for its most important export, sugar. Thus, the US imposed quota on the import of Cuban sugar provided the Eisenhower and Kennedy Administrations with leverage over Cuba. At first, the US simply lowered the quota. Shortly thereafter, the entire quota was eliminated. It was in response to this move by the US that Cuba had to find a new buyer for its sugar. Here entered the Soviet Union. The Soviets were more than happy to acquire an ally, especially one so close to the US. After all, the US had nuclear missiles stationed in NATO allies very close to Russia, e.g. Turkey. The Soviets offered to buy Cuban sugar for well above market prices, and also to sell them petroleum at well below market price. This was the beginning of the relationship between Cuba and the USSR, the center piece of which was this sugar for oil trade, which was in effect a large annual economic subsidy given to Cuba by the USSR.
The refusal of US owned oil refineries in Cuba – at the behest of the Kennedy administration- to process the Soviet petroleum obtained by the Cubans is what prompted the nationalization of US owned oil refineries in Cuba. US owned property had been nationalized, the sugar quota that had already been suspended for a year was now eliminated entirely, and the trading and commercial sanctions imposed. Then, after the Cuban Missile Crisis, the Kennedy administration imposed the travel restrictions on US citizens.
The point of this set of measures was explicitly formulated in the minds of policy makers to ruin the Cuban economy, to bring enough hardship and suffering to everyday Cubans so as to foment discontent, and ideally to bring about through suffering a revolution ousting the Castro government. The idea was to create conditions of deprivation – ie. starvation, lack of medicine, etc. – in order to motivate the masses of the Cuban people to turn against the new government and back towards leaders seen as more friendly to US interests. One need only to read the words of those directly involved in creating this policy at the highest levels of the US government to understand their intentions.
In the US, this set of economic warfare policies is commonly called the embargo against Cuba. In the rest of the world, and especially in Cuba itself, this same set of policies is called the US blockade of Cuba. This is not simply a semantic quibble. The US specifically chooses to label its policies an embargo to avoid the moral (as well as legal) complications involved in a blockade. The same kind of geo-strategic (as well as domestic policy) considerations go into deciding whether or a nation has a “civil war” or mere “sectarian conflict”. If one looks to technical definitions, an embargo is a full or partial prohibition of trade with a particular country imposed by another country. A blockade, on the other hand, is an attempt to prevent food, medicine, and or other kinds of war materials from entering a particular country. In this light, the US has a policy both of embargo and blockade.
From the point of view of international law, the US blockade policy is illegal. The terms of the so-called embargo run entirely contrary to explicitly stated clauses of several of the most foundational documents establishing modern international legal norms. For much of the history of the US blockade, the US government has prohibited sales of food and medicine to Cuba; this is expressly declared illegal in the Geneva Convention. It was only towards the end of the Clinton administration that the ban on US food exports to Cuba was partially lifted. The Bush administration tried to reverse this decision, but was not successful.
According to international law, a blockade is illegal in peace time. Unless war is declared between two nations, it is illegal for one to blockade the other. This much is made very clear in documents to which the US is signatory. That such a policy is illegal, or at least to be frowned upon, can also be seen in the legal wrangling that occurred within the US during the initial enforcement of the blockade. The only way President Kennedy was able to legally impose the provisions of the blockade policy in the first place was by invoking the Trading with the Enemy Act of 1917. This law allowed the government to prohibit US citizens from doing business with citizen or firms of nations with which the US is at war. The legal structure of the blockade policy applied to this law through a technicality. The Kennedy administration made use of the fact that the Korean War was not technically over, and so there was still a state of emergency in effect. The fighting in the Korean War was terminated with an Armistice, and not a Peace Treaty, and thus the two nations were still technically at war.
Rather strikingly, the voice of the international community is clear and highly united on its view of the blockade. Every year, for the last twenty years, the UN general assembly has voted to pass a resolution condemning the US blockade (not “embargo” mind you) of Cuba. For the majority of these two decades of votes, the outcome has been rather lopsided against the US. This is to the point now that, for many years in a row, 185 or more countries have voted to condemn the US blockade policy. The only nation consistently voting with the US is Israel. This should not be surprising since the Israelis are the only other nation in the world currently imposing a blockade on another nation, i.e. the Palestinians.
The blockade policy is not just enforced against Cuba, but it is also enforced against ‘third-party’ nations that trade with Cuba. For decades, each successive US administration has applied strong arm tactics to foreign governments, foreign firms and banks, and foreign subsidiaries of US firms and banks in order to get them to cease commercial relations with Cuba. Over the years, and continuing on today, this is a very expensive practice; both in terms of real money expended on enforcing compliance, etc., and in diplomatic capital. It is an accepted norm of international law that foreign-owned subsidiaries are subject to the law of the country that hosts them. This is seen as an important component of national sovereignty. It is thus perceived as an affront to the desired national sovereignty of many nations when the US government uses coercive methods to impose compliance with its blockade policy on those governments, domestic firms and banks, and foreign-owned subsidiary firms and banks.
In one typical instance of how the US imposes its blockade on third parties, the US uses access to its markets in order to force foreign firms and US-owned subsidiaries to comply with its embargo. French and Italian firms that export metal goods to the US market must be able to prove to the Office of Foreign Assets Control (OFAC) that none of the items they want to import contain more than 10% of Cuban-made products. In the case of the metal suppliers this product is typically Cuban nickel. Cuba has rich nickel deposits, and in a different world, would make good money exporting this resource. Technically, these exporting firms are free to buy whatever inputs they desire, and no one is going to force them to buy from this supplier or that. However, in order to import the goods made with those raw materials, they must meet the conditions set forth – which each sovereign nation can lawfully impose – that the US dictates. So, if you are a metal products exporter in Europe, your choices are as follows: Buy Cuban nickel and try to prove to the satisfaction of the US that none of the things you’re exporting to the US contain any of that Cuban nickel. Or, as is what usually happens, stop buying Cuban nickel, because if you don’t use it in production, then the US won’t give you a hard time when you try to export your products to the US market.
Many foreign governments see this kind of policy as infringing on their national sovereignty as it forces companies that do business within its borders to comply with a law made elsewhere, a law over which the host country has had no input and can have no input since it is a law made by another sovereign nation. This kind of practice, in effect, allows US law to supersede the duly enacted laws of independent democratic nations. This is understandably grating on the foreign governments to which these policies have been and continue to be employed. Additionally, due to US laws, ships that dock in Cuban ports must wait sixty or ninety days before they can then enter a US port. This makes doing business with Cuba even more difficult and more costly than it is worth for many companies since they do a lot more business with the US and are more concerned with potentially losing access to the US market. In shipping especially, with fuel prices what they are globally, time and money are tightly correlated, and thus both tightly compressed.
All these kinds of maneuvers take time and money, and generate ill will on the part of foreign governments. And such policies are sometimes taken to ridiculous extremes. For example, recently, 2006-2007, US officials refused to allow a thirteen-year-old Cuban hemophiliac to be awarded the grand prize at a UN-sponsored art competition for sick children. Why? Because the grand prize was a very nice Nikon camera, which happened to contain more than 10% of US-made components. So, in compliance with its laws, the US refused to allow the child to receive the prize. Moreover, there are no non-US owned companies that make heart stents. Thus, Cuba must buy them from third-parties on the black market for inflated prices. The terms of the blockade also prevent the exporting of certain kinds of medical technologies which could greatly enhance the welfare of Cuban people, children especially. The same is true of certain medical drugs that are only made in certain US laboratories. These are the kinds of tactics and results that help make the now annual UN votes so lopsided.