Cuba asks why US tightens sanctions despite sweeping economic reforms

Cuba has challenged Washington over fresh sanctions despite a major reform push. Havana says the pressure is choking investment and blunting the opening the US long demanded.

In Short

• Ernesto Soberon said fuel shortages and blackouts are deterring tourists and investors
• Washington targeted mining, metal and construction firms with fresh economic penalties
• Recent reforms allow private banks, freer hiring and direct imports and exports

Cuba has asked why the United States keeps tightening sanctions even as Havana rolls out major economic reforms that Washington has long demanded. In an interview with The Associated Press at the United Nations this week, Cuba's UN ambassador Ernesto Soberon Guzman said the sanctions were hurting the very opening that Cuba is trying to pursue.

Soberon directed his question to US Secretary of State Marco Rubio, a key architect of the Trump administration's Cuba policy. "What are you afraid of? If you are so convinced that the Cuban government is an incompetent government, why do you need to implement almost every two weeks new sanctions?" he asked. The US State Department, responding to a request for comment, cited Rubio as saying new sanctions would continue to be announced every couple of weeks to close off "escape valves that they're trying to create in every mechanism."

On Thursday, the US imposed more economic penalties on Cuban industries, targeting state-owned mining, metal and construction companies. Cuba has already been pushed to the brink by an oil blockade imposed by the United States in January, on top of the decades-old embargo and a growing list of sanctions. The Trump administration's measures, aimed at putting pressure on the government by cutting off funding, have worsened blackouts, reduced access to public transport, damaged infrastructure and deepened shortages of medicines and food.

Soberon said the sanctions were the main obstacle to opening up Cuba's economy. He said electricity shortages and a lack of fuel to run businesses or travel had discouraged investors and tourists, a major source of income for the island. Some companies have already left, including Spanish hotel chain Melia, which cited "significant operational, legal, economic and financial difficulties" in explaining its exit. William LeoGrande, a professor at American University and an expert on US-Cuba relations, said, "Literally, the United States has done everything imaginable to try to prevent foreign investors." He added, "When they say, 'Well, we want to see Cuba open up to foreign investment,' they're being disingenuous. ... It's not possible for them to succeed without some kind of sanctions relief." He said the goal of Trump's Republican administration was "not just to open up Cuba economically but to overthrow the Cuban government - to change the nature of the Cuban political system."

According to John Kavulich, president of the US-Cuba Trade and Economic Council, Cuba was forced to make changes after losing its economic lifeline with the US ouster in January of Venezuelan leader Nicolas Maduro. "The result is the Cuban government in the last eight months made more commercial, economic and financial changes to the country than they have as a group since the revolution," he said. Still, he said, the Trump administration has kept increasing pressure while Cuba responds by making more changes. "But from our standpoint, there are two parts missing: One is Cuba implementing by regulation everything that it's announced, and secondly, the Trump administration allowing US companies to have more access to the Cuban marketplace while these changes are underway," he said.

The reforms announced by Cuban President Miguel Diaz-Canel in June mark a major shift in an economy that has been tightly controlled by the socialist government since the 1959 revolution. The measures include more room for private businesses, imports and exports without the state acting as an intermediary, free hiring of personnel, permission for private banks, investment by Cubans living abroad and opportunities for fast-food chains to set up on the island. Soberon said there were investment openings in real estate, solar farms, energy projects to ease the electricity shortage, marinas and tourism. Christopher Hernandez-Roy, acting director of the Americas programme at the Centre for Strategic and International Studies, said the last opening under Barack Obama "was later throttled by the Cubans themselves, who feared that the opening went too far and appeared to threaten political control." He said it now appeared that Cuba did want reforms and outside investment, but US sanctions "significantly constrain their prospects for success." He also noted the irony that US pressure "is helping push the Cubans toward greater economic liberalisation out of necessity, while simultaneously limiting the resources and access necessary for those reforms to actually improve the economy."

In late June, soon after the reforms were announced, the US imposed sanctions on five state companies, including three linked to GAESA, a business conglomerate run by Cuba's Revolutionary Armed Forces that is believed to control nearly 40 per cent of the country's gross domestic product. Rubio, whose parents were born in Cuba, dismissed the economic changes last month, calling Cuba "a failed state" with "a bad economic model." He said Cuba's leaders "don't know what they're doing" and "don't know how to fix their economy." "I think the challenge that Cuba has faced for the last 15 years is they want to somewhat improve their economy, but they're afraid that if they improve it too much they'll lose political control over people," he said. Rubio added that the United States was prepared "to do what we can do to effectuate a positive change in Cuba because it directly impacts our national security" as the island lies only 90 miles from the US mainland. "And we want Cuba to be prosperous. We want Cuba to be free," he said.

Soberon said Cuba would find it much easier to implement the reforms without sanctions, with American companies involved and with trade between the two countries possible. He said talks were taking place between the US and Cuba, though he declined to give details of what he called "very sensitive conversations." Summing up Havana's position, he said, "But the point here is that even when Cuba is changing a lot, the US government keeps the same policy of aggression towards the Cuban people."

With PTI Inputs

- Ends