Blockade on Cuba Costs U.S. Economy More

By Margot Pepper
Berkeley Daily Planet,February 2009
Scoop Independent News, January 2009

 

Cartoon by Matt WuerkerThe U.S. blockade is causing more economic damage to the United States than it is to Cuba. A December letter signed by a dozen leading U.S. business organizations, including the U.S. Chamber of Commerce, urged then-President-elect Barack Obama to initiate the process of scrapping the 47-year old embargo. The letter pegs the cost to the US economy at $1.2 billion per year. Other sources project up to $4.84 billion annually in lost sales and exports.

Running a blockade is costly. Beside lost trade opportunities, there are increased distribution expenses to trade with more distant counties, not to mention the millions spent by the Treasury Department to enforce its rules. In addition to the 4.84 billion estimate of losses, the United States spends $27 million each year to broadcast Radio and TV Martí to what critics have termed a black hole, since the television signals are effectively blocked by the Cuban government. This fruitless propaganda enterprise has cost U.S. tax payers half a billion dollars for the period spanning the last twenty years, according to the Council on Hemispheric Affairs.

According to the non-profit Cuba Policy Foundation (CPF), run by a former U.S. ambassador, the blockade is causing the U.S. economy to lose up to $1.24 billion a year in agricultural exports alone, and up to $3.6 billion more a year in associated economic output for a total loss of $4.84 billion. The American Society of Travel Agents illustrates one of these losses, claiming that if the United States were to lift its travel restrictions to Cuba, nearly 1.8 million Americans would visit the country by 2010. This could add to U.S. gross domestic product by as much as $1.6 billion, the society says. Citing a comparable estimate, the CPF elaborates: “Within five years of eliminating the embargo, 12,000 jobs would be created in the U.S. tourism sector, with revenue to U.S. airlines, cruise-ship companies and tour operators reaching $1.97 billion.”

In 2002 the Cuban government estimated the loss to the Cubans at about $685 million annually. Employing the CPF’s figure for that year, the blockade has cost the United States up to $4.155 billion more a year than the Cubans.

Over the last twenty years, the difference in losses for each country has widened considerably. By 1992, for the period spanning thirty years of blockade, U.S. businesses had lost over $30 billion in trade, according to Johns Hopkins University. At that time, Cuba’s loss for the same period was smaller, but not by that much: $28.6 billion, according to a 1992 study published by the Cuban Central Planning Board’s Institute of Economic Research. Subsequently, the rough average cost of the blockade of $1 billion a year to each party has multiplied. Following the dissolution of the Soviet Union in 1991, Cuba’s diversification and increased trade with other countries has lead to greater losses for the United States.

Neither country can afford such losses. For although the dollar cost to the United States is higher, Cuba takes a much greater economic hit relative to its size and resources. Even so, Cuba has managed to provide its inhabitants with what the most affluent country in the world has been unable to achieve thus far: free top-notch health care, free university and graduate school education, and subsidized food, utilities and housing which has virtually eliminated homelessness.

The fact that a poor, colonized country can meet the basic needs of all its citizens, underscores how inexpensive such an undertaking really is and could prove instructive as well to President Obama.

In addition to dealing the United States an economic blow, the blockade has deprived U.S. citizens of Cuba’s medical breakthroughs such as the production of the first meningitis B vaccine; cures for retinitis pigmentosa; a preservative for un-refrigerated milk; and PPG, a cholesterol-reducing drug gobbled up by foreigners for its side effect: increased sexual potency. And last summer Cuba released CimaVax EGF, the first therapeutic vaccine for lung cancer.

The CPF found that 52 percent of Americans nationwide say the blockade should be scrapped, and that 67 per cent of Americans want to lift the U.S. ban on travel to Cuba immediately. Recent polls have also shown a shifting in support of a majority of Miami Cubans toward lifting the blockade.

The origins of the blockade date back to Cuba’s expropriation of U.S. companies. According the U.S. Foreign Claims Settlement Commission, Cuba “nationalized some $1.8 billion worth of U.S. owned property.” At 5% compounded interest over the last 50 years, some argue that the United States has more than $20 billion pending in 5,911 separate claims against the government of Cuba.

Cubans argue that early in the century, the United States had appropriated 70% of Cuban land, three quarters of Cuba’s primary industry. They say the ensuing life-threatening colonial conditions left them no recourse but to expel the “Yanquis,” just as the “Yankees” here had once expelled the British. If we are to hold Cubans accountable for $20 billion, one can only gasp at what we owe the British after 233 years including accrued interest.

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Sources:
AFL-CIO website
Brendan Sainsbury, “Cuba – Health Without Wealth.” Ecologist, January 6, 2005
Bureau of Labor Statistics, January 9, 2009, http://www.bls.gov/news.release/empsit.nr0.htm
Central Intelligence Agency website
CATO Institute website: http://www.freetrade.org/node/433
Chris Sturr, “The Penal Welfare State,” Dollars & Sense, Jan/Feb 2006
http://www.housingfinance.org/pdfstorage/Caribbean_Cuba_HousinginCastrosCuba.pdf/
http://www.cubavsbloqueo.cu/Default.aspx?tabid=283
Jill Hamberg, “Cuban Housing Policy,” Transformation and Struggle: Cuba Faces the 1990s, ed. Sandor Halebsky and John M. Kirk, New York, 1990, p. 235 – 250.
Larry Luxner, “Sally Cowal: from ambassador to anti-embargo activist,” BNET Business Network, September. 2002 http://findarticles.com/p/articles/mi_hb5140/is_/ai_n28945511
Marc Lallanilla, ABC news report, November 1, 2005
Michalowski, Ray, “World Factbook of Criminal Justice Systems: Cuba,” http://www.ojp.usdoj.gov/bjs/pub/ascii/wfbcjcub.txt
New York Times, April 24, 2003
Patricia, Grogg, “Health-Cuba: Lung Cancer Vaccine Available,” IPS, June 26, 2008 http://ipsnews.net/news.asp?idnews=42965
Prensa Latina, Jan 2, 2009
Rory Carroll, “Cuba approves first therapeutic vaccine for lung cancer, ” The Guardian, June 26, 2008 http://www.guardian.co.uk/science/2008/jun/26/cancer.cuba
Sarah Irani, Ecosalon November 6, 2008
Sinan Koont, “The Urban Agriculture of Havana,” Monthly Review, January 2009
Teddy Kapur and Alastair Smith, Housing Policy in Castro’s Cuba, May 16, 2002,
U.S. Department of Agriculture (USDA) Report, 2007
U.S. International Trade Commission (ITC) Report, 2007
United Nations Development Programme Report 2008 and 2005 http://hdrstats.undp.org/2008/countries/country_fact_sheets/cty_fs_CUB.html

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Margot Pepper is a Mexican-born journalist whose memoir about her year working in Cuba, Through the Wall: A Year in Havana, was nominated for the 2006 American Book Award. Her work has appeared in Utne Reader, Monthly Review, Z-net, Counterpunch, the San Francisco Bay Guardian, City Lights, Hampton Brown, Rethinking School and elsewhere, and can be found at http://www.margotpepper.com and http://freedomvoices.org/new/node/93

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