The Caribbean, Cuba and the US

15 May, 2009 - Published 11:56 GMT

David Jessop
Director of the Caribbean Council
The Caribbean, Cuba and the US

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.

A different approach

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, Raul 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 the US Assistant
Secretary State for the Western Hemisphere, Thomas Shannon, holding
meetings with Jorge Bolãnos, 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.

US business interests

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.

Domestic expectations

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.

The effects on the Caribbean

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's 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.

US tourism to Cuba

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 .

Havana too is talking to investors about the need for better
infrastructure and more hotel rooms to accommodate up to 5m 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
UC/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.

It is also unclear 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
polity 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.

http://www.bbc.co.uk/caribbean/news/story/2009/05/090512_jessop_caribbean_cuba_us.shtml