What will be the long-term impact of a changed economic relationship between Cuba and the United States on the Caribbean? How might the region develop and its relationship change if the US were ever to restore full diplomatic relations with Havana? These are questions that are beginning to be considered informally outside of the region in a quiet recognition that the mood in Washington towards Cuba has changed fundamentally and with it, most probably, the likely stance of Europe and other developed nations.
At and before the Summit of the Americas, President Obama made clear that his administration’s approach towards Cuba will be very different from that of all of his predecessors. For his part Cuba’s President, Raúl Castro, has said that it will be possible for there to be an exchange of views on “everything”; which is to say, on any issue as long as discussion proceeds from a position of moral equity between the US and Cuba as and that its sovereignty, political and social systems, and the right to self-determination of its domestic affairs are respected.
As a first step in a complex dance that still needs to be choreographed, the US President announced that he was lifting restrictions on family travel and remittances from Cuban Americans. More recently it became clear that talks about talks have begun to establish formal channels of communication, with US Assistant Secretary State for the Western Hemisphere Thomas Shannon, holding meetings with Jorge Bolaños, the very senior diplomat who heads the Cuban Interests Section in Washington.
There are also other initiatives underway in the US Congress and in the administration. At the same time pressure continues to build from US business interests ranging from oil and energy, through foodstuffs to tourism. In a further recent indication that after fifty years of trying to isolate Cuba that this is the moment of a change in US thinking, the Cuban American Foundation recognised the need for a new US policy leaving at least one far right Cuban American Congressman inferring in a recent op-ed piece in a South Florida newspaper that that he was now politically isolated.
What is clear in all of this is that despite the continuing public rhetoric in Washington about democracy and human rights, the US will not delay taking forward the first part of a process of progressive engagement by waiting for public signals from Havana. Indeed, there is a sense that there is a need to rapidly find a way to talk in private if the process is not to be derailed.
This change in approach is long overdue. While it will be up to both sides to find a mutually understood and common language of respect and trust, just as important will be the creation of a mechanism that will enable both sides to talk privately.
In this both the US and Cuba appear to be struggling to know how to limit domestic expectations of what is likely to be a very slow process involving only at the very end the settling of claims and the Congressional lifting of the embargo. This process could take a decade or more during which time popular sentiment, particularly in Cuba, will be for more rapid change. This is why, it seems, Cuba’s former President continues to manage domestic expectation downwards in his officially endorsed and frequent reflexiones that focus on the continuing threat that the US poses to the Cuban system.
But what of the rest of the Caribbean, which after having moments of anxiety about the longer term implications of change in the Cuba-US relationship during a caucus before the Summit of the Americas, have publicly welcomed President Obama’s desire to re-engage?
The probability that any dialogue between Washington and Havana will be difficult and slow, but will in its outcome present a significant short to medium term economic challenge for all of Cuba’s neighbours in the region. In economic terms a changed Cuba/US relationship will affect both existing and new investment; trade; air and sea routes; the viability of some regional ports; the present use of offshore financial centres used as locations for joint ventures with Cuban enterprises; the location and routing of cruise ships; regional telecommunications; and much more, which is to say nothing of tourism.
While the free movement of all US citizens between the US and Cuba may be some way off, there is a surprising amount of well informed debate in Washington about the possibility of a policy change in the next two years that could free all US tourism to Cuba. Havana too is talking to investors about the need for better infrastructure and more hotel rooms to accommodate up to 5 million additional visitors, and are exploring whether cruising using home porting might offer the best way to first open its market to US visitors.
An indication of the implications for the Caribbean is contained in a recent IMF econometrically-driven working paper. It suggests a seismic shift for the Caribbean’s tourism industry if all restrictions were lifted on US visitors entering Cuba. The paper argues that this would not only cause neighbouring destinations to lose the implicit protection of current US travel restrictions causing Cuba to gain market share, but would also affect the overall distribution of non-US tourists to the region.
It is of course conceivable that after a decade or so, a more normal US/Cuba economic relationship could emerge, leading to an economically stronger and more productive Cuba lifting positively the regional economy, especially if the Dominican Republic and Jamaica significantly strengthen their economic ties with Havana.
What is less certain is the effect on the regional and hemispheric balance of power in regional institutions or the Caribbean’s voice in organisations that presently provide multilateral funding to the region. Nor is it clear how significant a diversionary effect that a Cuba able to trade freely with the US might have on Cariforum’s existing trade and investment relationship with the US, the region’s major market.
No Cariforum politician in office has known anything other than US pressure to isolate Cuba. As a consequence the regional economy and policy has developed with an unfortunate vacuum at its heart. Change will be slow but eventually dramatic. For this reason there is need for everyone in the region and with an interest beyond, to consider what the eventual normalisation of economic relations between Cuba and the US or even the full restoration of diplomatic relations may mean for the rest of the Caribbean.
Previous columns can be found at www.caribbean-council.org
