26 June 2019

Will Worsening U.S.-Cuba Relations Undermine Havana’s Economic Reforms?


In April 2018, Cuba experienced a watershed moment when Miguel Diaz-Canel was inaugurated as president. That marked the first time in nearly six decades that a Castro had not led the country. And Diaz-Canel is slowly starting to put his stamp on the nation, beginning with the adoption of a new constitution in April 2019 that includes some structural reforms, including the creation of a prime ministerial position, and some attempts to embed market economics within a socialist state. But worsening U.S.-Cuba relations could jeopardize the effort. 

It is unclear whether those reforms will be enough to jumpstart Cuba’s economy, which continues to sputter. The island enjoyed a surge in tourism when former U.S. President Barack Obama normalized relations between the two countries, but more systemic reforms were necessary even then to unleash the country’s younger generation of entrepreneurs. Since his election, President Donald Trump has reversed many of the steps Obama took to relax U.S. policy on Cuba, tightening restrictions on commerce with military-owned businesses, and more recently on remittances and travel to Cuba by U.S. citizens, meaning economic conditions on the island are likely to become even tougher.


Trump also reversed a long-standing U.S. policy toward Cuba by allowing Cuban Americans whose property was seized during the island’s revolution to sue not only the Cuban government, but also foreign companies operating on that property. The move came over the objection of European countries, who worry that their businesses might be sued, and also the Cuban government, which must now deal with the economic fallout from the decision. But Trump’s policies have delighted Cuba critics, who point to the regime’s ongoing human rights violations as justifying a harder line.

Meanwhile Venezuela’s ongoing disintegration has forced Cuba to seek new options for trade and investment, after having benefitted from long-standing financial support from Caracas since the beginning of Hugo Chavez’s Bolivarian revolution there.

WPR has covered Cuba in detail and continues to examine key questions about what will happen next. What impact will Trump’s reversal on U.S. policy toward Cuba have on the island? Will Cuba’s new constitution help it usher in an economic transformation? Can Cuba’s new leadership meet popular expectations for reform while maintaining their grip on power? Below are some of the highlights of WPR’s coverage.

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