May 13, 2019

Cubans and Americans Caught in the Political Crossfire

Anne Hobson Visiting Dissertation Fellow , Stefanie Haeffele Senior Program and Operations Director, Academic and Student Programs

Last week, President Trump threatened to impose a complete embargo and stricter sanctions on Cuba. This comes on the heels of a policy shift that introduced new restrictions on remittances and non-family travel. Citing Cuba’s military support of Venezuelan President Nicolás Maduro, the Trump administration restricted remittances to $1,000 per person per quarter.

These policies are a blunt economic sledgehammer aimed at political ends. They would be a mistake. The Cuban government will not bear the brunt of the costs. Rather, the Cuban people, American travelers, and the nascent Cuban private sector will be hit hardest.

Remittances are money or in-kind goods sent from workers abroad back to their home country. This private aid provides the direct funds or goods needed to survive crises and establish a level of stability and connection.

Remittances play a key role in alleviating the economic uncertainty of living in Cuba. As a 35-year-old male we interviewed in 2016 told us:

"Cuba is a place of disasters. We don’t have earthquakes or volcanoes, but we have a chaotic economic system that makes us live in a constant state of alert due to any upcoming crisis. We can have two or three months of higher income for something that happened, but we always worry that in any moment the situation can turn around and then you have to figure things out."

The data reinforce this story. More than 62 percent of Cuban households were impacted by remittances in 2016. Families in Cuba use money to purchase food, fix household items like refrigerators and fans, or pay for internet or phone connectivity. The primary goods sent via remittances include clothing, medicine and appliances.

In 2013, the Havana Consulting Group found that remittances fund 70 percent of cell phones in use on the island. Remittances are also a source of funding for internet access, priced at $2 an hour. Expanded access to other people both in and outside Cuba builds community, exposes Cubans to new types of goods and services, and inspires Cubans to innovate. Indeed, remittances are linked to the rise of the “cuentapropista” or Cuban entrepreneur, and in 2013, the government authorized occupations including taxi drivers, food vendors, restaurant or “paladar” owners, and bed and breakfast operators. Remittances serve as the venture capital for new businesses.

A majority of remittances in Cuba originate in the United States. In 2013, relatives and citizens in the US provided 90 percent of remittances to Cuba.

For the past decade, the US government’s posture towards remittances to Cuba was one of liberalization. A 2009 amendment to the Cuban Assets Control Regulations permitted unlimited remittances (in amount and frequency) to “close relatives” and expanded the list of goods Cuban-Americans can send to their families—notably allowing personal hygiene items, clothing, and fishing gear. In 2011, another amendment allowed any US citizen to send remittances to nonfamily members in Cuba.

While the Cuban government benefits from taxing formal remittance flows, remittances expose Cubans to values and relationships that can undermine state control. Sociologist Susan Eckstein and political scientist Lorena Barberia argue that remittance flows have contributed to transnational ties and liberalizing dynamics that reduce Cubans’ reliance on the government. Remittances expose Cubans to people living under more liberal government, market, and civil institutions, connecting them to others around the globe and giving them models for alternative economic and political arrangements.

Remittance restrictions harm citizens by cutting off aid, hampering relationships, and hindering innovation. Such policies, although aimed at indirectly hurting the Cuban government, only further burden the citizens living under state control. Ultimately, cutting off remittances would stunt private sector growth, incomes, and the liberalizing effects of international exchange.

Policymakers should encourage private sector entrepreneurs in Cuba, who are agents of change, rather than cutting off needed sources of aid. Remittances are a liberalizing force worth preserving.

Photo credit: Sven Creutzmann/Getty Images

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