U.S.-Cuba: You Can’t Get There from Here

By William M. LeoGrande

ventas en cuba

Small Business in Cuba / Alberto Yoan Arego Pulido / https://www.flickr.com/photos/albertoyoan/8775169259

U.S. President Donald Trump’s new economic sanctions against Cuba, imposed earlier this week, include limits on travel and family remittances aimed at crippling the Cuban economy and causing regime collapse, but the biggest losers are the small entrepreneurs, intellectuals, and artists who have been agents of change on the island. Senior administration officials, foremost among them National Security Adviser John Bolton, have been explicit that the goal is to rid the hemisphere of “socialism,” starting with the government of Venezuela and proceeding to Cuba and Nicaragua. Bolton previewed the new sanctions in Miami on April 17  – the anniversary of the failed Bay of Pigs invasion. Now we know the details.

  • Remittances, which were unlimited under President Barack Obama, will be limited to $1,000 per recipient household every quarter – enough to supplement a family’s meager state salary, but not enough to start and sustain a business. The new limits will hit Cuba’s nascent private sector hardest because funds from the United States were the start-up capital for many small businesses, and their supply chains reach back through Miami.
  • Trump has eliminated the people-to-people category of educational travel, which Bolton denounced as “veiled tourism.” This category covered educational tours not involving academic credit – tours run by organizations like National Geographic, the National Trust for Historic Preservation, and the Smithsonian. Authorized originally by President Bill Clinton in the 1990s, people-to-people travel was eliminated by President George W. Bush in 2003, in response to complaints from conservative Cuban-Americans in South Florida. President Obama restored it in 2011. Trump, like Bush, appears to be pandering to the Cuban American Republican base in Miami in the run-up to the next presidential election. Last year, 638,000 U.S. residents who were not Cuban Americans traveled to Cuba – at least two-thirds if not more under a people-to-people license, mostly on cruises, which Trump also banned. These new travel restrictions will cost Cuba upwards of $300 million dollars annually in lost revenue.

Cuba’s private sector will suffer disproportionately from these measures. In addition to losing start-up capital and access to supplies, these businesses will lose their principal client base. U.S. travelers arriving by air are more likely stay in Airbnb rentals and eat at private restaurants than the Canadians and Europeans who come on tourist vacation packages and stay at the big hotels on the beach. Trump’s first restriction on people-to-people travel in 2017, banning individuals from designing their own people-to-people trips, caused a 44 percent slump in private B&B occupancy. The new restrictions will wipe out many of them.

  • U.S. business and people will take a hit too. In 2017, Engage Cuba, a coalition of business groups favoring trade, released an analysis concluding that U.S. visitors to Cuba generated $1.65 billion in revenue annually for U.S. businesses and accounted for more than 12,000 U.S. jobs in the hospitality sector, most of which would be lost if Trump cut off travel. Most importantly, the new restrictions deprive most U.S. citizens of their constitutional right to travel, a right affirmed by the Supreme Court in 1958 in Kent v Dulles. The Court said the right should be limited only in cases of dire threats to national security.

As usual, tougher economic sanctions will make life tougher for ordinary Cubans, but sanctions won’t bring down the Cuban government, which has survived the U.S. embargo for half a century. Economic hardship and U.S. hostility will heighten Cuban leaders’ sense of being besieged, making them less likely to reform the economy or allow any expansion of free expression. Economic, professional, educational, and cultural ties between people in the United States and their counterparts in Cuba will be harder to sustain, impoverishing both. Cuba’s private entrepreneurs, who could be an engine for economic transformation and who Trump claims to support, will suffer from the loss of business from American travelers. U.S. travel companies will lose access to one of the biggest and fastest-growing tourism markets in the Caribbean. But maybe, just maybe, this latest assault on the liberties of Americans by the Trump administration will motivate Congress to finally pass a “Freedom to Travel” bill, assuring that no president can take away the constitutional right to travel just because he thinks it will help him win re-election.  

June 6, 2019

* William M. LeoGrande is Professor of Government at American University.

Cuba: Can Official Labor Meet the Needs of Private Workers?

By Geoff Thale*

Alberto Yoan Arego Pulido / Flickr / CC BY-NC 2.0

Alberto Yoan Arego Pulido / Flickr / CC BY-NC 2.0

As Cuba embraces a new but still undefined economic model, it’s unclear whether or how the country’s old labor laws and regulatory systems will be adapted to accommodate the interests of employees in the growing private and cooperative sectors, or in the newly autonomous state enterprises.  The trade union structure cannot play the social role it played in the past with the emergence of businesses owned by both individuals and cooperatives, a growing role for foreign investment, and increasingly decentralized state enterprises.  During a recent trip to Cuba, our research team met with representatives and staff from a range of officially recognized trade unions.  We met with the national labor federation – the Central de Trabajadores de Cuba (CTC) – and with national and local officials from some member unions, including the national president of the health care workers’ union; local trade union officials in the hotel and restaurant workers union in the tourist sector in Old Havana; and local officials representing self-employed and small-business owners who have joined the union for retail and commercial workers.  A Labor Code approved by the National Assembly in December 2013 changed some aspects of the legal framework for labor relations.  It continued to privilege the CTC as the sole labor federation, while also taking some steps to recognize the new issues that confront workers in the emerging sectors of the economy.  It established a maximum number of hours of work (44) for private-sector employees, required the self-employed or small-business owners to pay into a social security fund and ensure social protections – health care, pensions, etc. – for employees.  And it guaranteed private-sector employees seven days paid vacation per year (though less than the one month given to state-sector workers).

Our interviews, however, turned up more questions than answers.  Newly autonomous state enterprises have greater latitude in setting wages, incentives and working conditions, but it remains unclear how these decentralized enterprises will handle labor relations issues, and what kind of negotiations might take place on compliance with regulations on workplace safety and protection, wage requirements and employment opportunities.  Indeed, it is unclear how the current worker organizations will represent workers in these decentralized enterprises.  The growth of the private sector presents another challenge.  The CTC has sought to organize the self-employed into the unions in the industries in which they are functioning – the food service and restaurant union, the retail and commercial sector union, and so on – but it is unclear how the union will represent the interests of both owners of independent small businesses – cuentapropistas – and the 15 percent of “self-employed” who are actually employees in those enterprises.  Similar queries are popping up in the cooperative sector and in enterprises run as joint ventures with foreign corporations or as wholly foreign-owned companies.

Cuba’s new labor policies are clearly a work in progress, but they signal recognition that there is an emerging stratum of non-state sector employees – and that they need social protections.  It also reflects a balancing act between ensuring stable employment and benefiting from the flexibility that private sector employment models provide.  The new Labor Code requires, for example, that employers sign year-long contracts with employees while guaranteeing them access to health care, parental leave and other benefits during that period.  New challenges will emerge, especially in terms of the structures that represent the interests of these groups and advocate for them.  But for now, there appears to be progress in establishing a system of social protections for the self-employed and for their employees under the new labor code.  Concerns about the burden of compliance appear likely to be muted for at least the near term because, as it was clear to us during our visit, the self-employed and their employees are earning substantially higher incomes than are workers in the state sector.

*Geoff Thale, program director at the Washington Office on Latin America (WOLA), in October led the research team’s fifth visit to Cuba examining the impact of economic change on workers.

December 9, 2014