Cuba politics: Waiting for Obama

January 5th 2009   

  FROM THE ECONOMIST INTELLIGENCE UNIT

In the wake of the 50th anniversary of the Cuban Revolution on January 1st, President Raśl Castro has made overtures to the USpresident-elect, Barack Obama. Seizing on Mr Obama's statements on the campaign trail that he would be willing to meet with Cuban officials and consider loosening sanctions, Mr Castro has repeated a recent offer to meet on "neutral ground". However, though Mr Obama is likely to ease some of the restrictions on US-Cuba economic and family ties, a more substantial revamping of the US's trade and investment embargo on the island is not likely in the short term.

Cuba's dealings with the US have been on hold during the transition between the outgoing presidency of George W Bush and Mr Obama's inauguration on January 20th. In one of his regular press "Reflections", Fidel Castro-who, though ailing, remains an intellectual force influencing Cuba's political life-welcomed Mr Obama's election, describing him as "decent". Yet the former president's language has been cautious. Raśl, who took over from his brother in July 2006 and was officially named president in February 2008, has also suggested that expectations of a change in US policy may be too high.

Still, in a speech on January 2nd President Castro again stated that he would be willing to engage in talks if Mr Obama fulfils his campaign promise to favour engagement over confrontation. Yet Cuba's insistence on non-conditionality could prove a stumbling block. Mr Obama said during the campaign that a scaling back of the embargo itself would require concrete steps by Havana toward democracy, including the freeing of political prisoners.

Gradual change, for now

Instead, Mr Obama is apt to take incremental steps, first relaxing some of the restrictions on travel, remittances and US farm exports to Cuba that were tightened by the Bush administration, and which could be reversed by presidential order. Under changes made by Mr Bush, for instance, Cubans living in the US are only allowed to visit the island once every three years, and can send back a maximum of US$300 per household, quarterly, to immediate family members.

Besides family members seeking relaxation, there is a strong business lobby in the US in favour of ending most trade and investment sanctions. The lobby includes associations such as the American Farm Bureau Federation, the Business Roundtable, the National Retail Federation and the US Chamber of Commerce. However, the lifting of most elements of the trade embargo, which is part of a law (the Helms-Burton Act) that could only be changed by the US Congress, would require negotiations and concessions