January 16, 2015

CNAS Commentary: Smart Sanctions on Cuba

As President Obama’s already announced policy changes on Cuba take effect today, emotions and rhetoric are again running hot. His critics fear that Cuba is getting something for nothing in this expansion of diplomatic ties, travel, and commerce. However, it is far too soon to pass judgment on the success of the new policy. The president is making important modernizations to a decades-old, ineffective embargo that will keep U.S. sanctions relevant. After over fifty years of the embargo, these changes will require time to have an impact.

In seeking to change behavior in Cuba, U.S. sanctions not only targeted the Castro regime but historically have penalized the Cuban people and alienated allies. Such damaging consequences lay bare the fact that U.S. leverage has been misapplied. The old Cuba embargo is blunt, unsophisticated, and totally outdated. It originated in 1963 under a legal authority, now almost a century old, designed to sever all commerce between the United States and its enemies in times of war. This is the maximalist approach to economic warfare: all transactions with Cuba or Cubans are off limits everywhere. U.S. citizens and companies anywhere in the world, and everyone in the United States, must obey. Any travel or trade that is permitted with Cuba is an exception to the rule. This blanket policy has exacted massive collateral damage on Cuban citizens, who are treated the same as their government by the embargo.

Moreover, no other sanctions program so thoroughly restricts the ability of Americans to travel. Recognizing that this is a bridge too far, Congress more recently limited the president’s authority to ban commerce or travel in this way with any other country. Although it may now seem absurd that keeping families apart would be an acceptable cost of sanctions, under President George W.Bush, Cuban Americans needed to apply for a license just to visit their spouses, children, parents, grandparents, or siblings in Cuba, and those visits were limited to no more than two weeks once every three years.

The extraterritorial reach of the Cuba embargo has also proved a serious problem with U.S. allies. A McDonald’s restaurant in London or Mexico City cannot legally serve a Cuban customer. And an American buying a Cuban cigar to smoke while abroad? Forget it; also prohibited. Such rules are impossible to enforce and attempts to do so have devolved into conflicts with local antidiscrimination laws, provoking more embarrassment for the U.S. companies involved than concern from Cuba. Such severe rules also erode the goodwill necessary to work with our allies that share the goal of increasing freedom in Cuba.

This is not how modern “smart” sanctions work. Instead of wholesale embargoes that indiscriminately capture everyone and everything, today’s sanctions target specific regimes and actors. They have evolved to more effectively and efficiently achieve U.S. foreign policy goals while avoiding harm to the innocent. Over the last year, to apply pressure on Russia, they’ve even become “micro-targeted,” focusing on an incredibly narrow set of financial instruments. Recent Congressional actions support this trajectory – the Ukraine Freedom Support Act of 2014 imposed targeted sanctions against the Russian defense, energy, and financial sectors, and the Venezuela Defense of Human Rights and Civil Society Act of 2014 narrowly targets those responsible for violence or human rights abuses following antigovernment protests there.

The Cuba sanctions were completely outmoded when President Obama took office in 2009. Since then, he has persistently whittled away at unnecessary regulatory constraints, and promoted greater contact, information flow, and remittances between Cuba and the United States – all in support of the Cuban people. With Obama’s newest steps to normalize relations and roll back certain restrictions, the Cuba embargo will function in a narrower, more refined manner to advance U.S. goals in Cuba. For Americans, dealing with the Cuban Government and Communist Party remains illegal, as does tourism to Cuba and U.S. investment. However, the change in policy marks an important shift toward permitting vastly more people-to-people contact while appropriately narrowing the impact of Cuba sanctions.

The Cuban Government is still repressive and we should hold them accountable. No one should be under the impression that these changes to U.S. sanctions on Cuba are a “gift” to the Castro regime. Not unlike when President George W. Bush updated sanctions on North Korea in 2008, President Obama’s new Cuba policy does not lift sanctions. Rather, it brings them more in line with modern conventions for how to employ coercive economic tools. It is far too soon to condemn this pivot – particularly before the changes are legally implemented in the coming months. Given time, these steps will refocus U.S. sanctions to advance policy goals with Cuba more effectively.