In recent years, Cubans have been forced to endure one of their worst shortages of basic necessities, such as food, medical supplies, and fuel. The fuel shortage has been particularly devastating, as it causes regular power outages, which makes it extremely difficult to work and engage in production, and obstructs the transport and distribution of goods across the island. A number factors have contributed to the current economic crisis in Cuba, including a slow recovery of the tourism industry from covid restrictions and the elimination of the dual currency system, which has resulted in persistently high inflation. However, it is ultimately the American financial and economic blockade that is, by far, the biggest contributing factor to the recent economic crisis, as well as the main issue holding back the economic growth and development of Cuba, more broadly.
When it comes to Cuba, the Democratic and Republican parties support nearly identical policies, which are not intended to further the interests of ordinary Cubans, or Americans for that matter. Neither political party is genuinely interested in establishing free-trade ties with Cuba, nor are they committed to any humanitarian causes. Instead, US policies have focused on ensuring that Cuba is a closed commercial state, with the intent of bringing about its eventual collapse. In that event, the US will be able to reestablish the control that it previously exerted over the island before the Cuban Socialist Revolution prevailed on January 1, 1959.
During the period of American domination over Cuba—from 1898 to 1959—the US government dictated the domestic and foreign policies of the island nation. In so doing, it used its authority to further the interests of American companies, which ended up owning the best agricultural land, mines and other natural resources on the island, and controlling all of its economic sectors, often through corrupt means. Prior to the Socialist Revolution, “American companies controlled 40 per cent of the island’s sugar lands, 80 per cent of its public utilities, 90 per cent of the mines and cattle ranches, and, in combination with Shell, substantially all the oil business.” Furthermore, the American mafia controlled all of the casinos on the island, in addition to operating many brothels in Havana. As a result, Cuba became a popular destination for foreigners, particularly Americans, looking to indulge in gambling and prostitution.
Murray Rothbard pointed out that, prior to the Socialist Revolution, the US “virtually” installed “the dictator Batista in Cuba,” who transformed the country into a police state from 1952 to 1959. During that time, any person opposed to his dictatorship had to “choose between silence and prison, exile or execution.” This was evidenced by the fact that “hundreds of mangled bodies were left hanging from lamp posts or dumped in the streets in a grotesque variation of the Spanish colonial practice of public executions.”
After successfully toppling the US-backed Batista regime, Cuban revolutionaries shut down all casinos and brothels on the island, marginalized the influence of the mafia, and curtailed international tourism to Cuba. They also instituted a number of land and agrarian reforms, which involved confiscating all of the land owned and operated by Americans businesses, limiting land ownership, and barring foreigners from purchasing or possessing land in the country. Additionally, the Castro government undertook a significant nationalization process, which targeted foreign enterprises, utilities, banks, and telephone companies. As a result, refineries that were previously controlled by American corporations, such as Shell and Esso, were nationalized, while Cuba signed a trade agreement to purchase oil from the Soviet Union. Furthermore, education and healthcare were made universally accessible to all citizens, while large investments were directed towards housing construction and infrastructure improvements.
President Dwight Eisenhower (1890-1969) was infuriated by Castro’s anti-imperialist policies, which not only curtailed American political and economic power in Cuba, but also prevented American businessmen and the mafia from owning and exploiting the island’s inhabitants and natural resources. As a result, he broke off diplomatic relations on January 3, 1961. Eisenhower also retaliated by approving Central Intelligence Agency (CIA) efforts to overthrow Cuba’s socialist government, which came to be known as the Program of Covert Action Against Castro. Essentially, the already-strained relations between the US and Cuba worsened the moment that Castro declared Cuba to be a socialist state on April 16, 1961. Subsequently, as Cuba strengthened its ties with the Soviet Union, the US increasingly justified its embargo as a measure aimed at avoiding the spread of communism in America’s backyard.
Efforts to overthrow Cuba’s socialist government culminated in the invasion at the Bay of Pigs, which commenced on April 17, 1961, when approximately 1,400 Cuban exiles—trained, armed and funded by the CIA—engaged in a direct attack on Cuba. Although this failed invasion was executed during the Kennedy presidency, as he was inaugurated on January 20, 1961, the CIA actually began planning the operation in March 1959, while Eisenhower was still in office. On May 2, 1961, Fidel Castro addressed Kennedy’s hostile policies when he stated:
The US government says that a socialist regime here threatens US security. But what threatens the security of the US people is the aggressive policy of the warmongers of the US. What threatens the security of the North American family and the US people is the violent, aggressive policy that ignores the sovereignty and the rights of other peoples… We do not endanger the life or security of a single US family. We are making cooperatives, agrarian reform, people’s farms, houses, schools, literacy campaigns, and sending thousands and thousands of teachers to the interior of Cuba, building hospitals, sending doctors, giving scholarships, building factories, converting fortresses into schools.
On February 3, 1962, President Kennedy proclaimed that “the present Government of Cuba is incompatible with the principles and objectives of the Inter-American system”; consequently, he imposed a full commercial, economic, and financial blockade, which suspended all trade with Cuba and prevented US citizens from travelling to the island. He further elaborated that “the United States, in accordance with its international obligations, is prepared to take all necessary actions to promote national and hemispheric security by isolating the present Government of Cuba and thereby reducing the threat posed by its alignment with the communist powers.”
From the 1960s to the 1980s, Washington continued its efforts to destroy Cuba’s socialist regime on the pretext of preventing the spread of communism to other countries in the Caribbean and Latin America. However, one of the more extreme measures was established during the Reagan administration. In 1982, President Ronald Reagan (1911-2004) placed Cuba on the US list of State Sponsors of Terrorism (SST) for its support of leftist groups in Central America and Africa. This prevented Cuba from accessing credit and loans in international financial markets, including financial assistance from the World Bank, the International Monetary Fund, and other international financial institutions. Reagan also imposed additional travel restrictions and banned the import of any products containing Cuban goods from third countries.
Cuba was hit particularly hard by the dissolution of the Soviet Union, which produced what came to be known as the “special period” from 1989 to 1995. During this time, the Cuban economy essentially collapsed and ordinary Cubans experienced significant shortages of basic supplies, including food and medicine. Meanwhile, the US government seized on this opportunity by enacting various measures to strengthen its embargo against Cuba in the 1990s. Specifically, President George H.W. Bush signed the Cuba Democracy Act (also known as Torricelli Act) in 1992, which declares that “the President should encourage countries that conduct trade with Cuba to restrict their trade and credit relations with Cuba.” It also stipulates that the American government does not “authorize any transaction between a U.S.-owned or -controlled firm in a third country and Cuba.” That means foreign subsidiaries of US companies are not allowed to “export from a third country to Cuba foreign-manufactured items.” This act also authorizes the American president to impose sanctions against “countries that provide assistance to Cuba.” Moreover, the Cuba Democracy Act also prohibits:
…vessels which enter Cuba to engage in trade from loading or unloading any freight in the United States within 180 days after departure from Cuba. This restriction is applied even if a vessel has stopped in Cuba solely to purchase services unrelated to the trade of goods, such as planned ship maintenance.
The blockade was further strengthened under the Clinton administration. In 1994, President Bill Clinton forbade family remittances and stopped flights between the US and Cuba. Then, in 1996, the Clinton government enacted the Helms-Burton Act, which declares “the acts of the Castro government, including systematic human rights violations, are a threat to international peace.” The Helms-Burton Act consists of four specific titles designed to extend the original commercial, economic, and financial embargo against Cuba in an effort to discourage non-US companies from investing in the country. The most controversial among them is Title III, which permits American citizens, including naturalized Cuban-Americans, to sue any foreign company conducting business that involves properties that they owned before being confiscated by the Cuban socialist government after the 1959 Revolution. In fact, President Bill Clinton initially suspended Title III after the Helms-Burton Act was passed in 1996, and this suspension was renewed on a six-month basis by every sitting president ever since, including President Trump during his first two years in office.
In 2003, during the Bush administration, the Office of Foreign Assets Control (OFAC) took action against any “Cuban online travel agency targeting American tourists.” Even though these travel agencies were “located in Argentina, the Bahamas, Canada, Chile, the Netherlands, and England,” OFAC deemed it illegal for them to offer their services to American citizens. According to the US Department of the Treasury, travel companies advertising and selling Cuban holidays to American citizens from foreign countries “provide easy access to Cuba to those U.S. individuals who choose to break the law.” The immediate effect of these OFAC actions was to “choke off dollars streaming to the Castro regime” by restricting American citizens from purchasing Cuban Holiday packages from international companies. However, the broader objective was “to strengthen enforcement of U.S. laws prohibiting transactions related to travel to Cuba and to hasten the arrival of a new, free, democratic Cuba.”
Subsequently, in 2004, the George W. Bush administration implemented measures to fine foreign banks for allowing Cuba to transfer money in order to pay for its imports. These measures effectively prevented “Cuba from using the dollar as currency for trading with the rest of the world, and any Cuban charges or payments in that currency were confiscated.” Prohibiting the use of “the U.S. dollar as payment currency compels Cuban institutions to use the euro and other currencies in their international transactions. This generates additional expenses in currency exchange and commissions that must be paid to banks for these operations.”
In response to this approach to tightening the embargo, which was intended to block “the Cuban external financial flow of funds, the Central Bank of Cuba issued the Resolution 80 from October 23, 2004, aiming to discourage the USD cash entrance to the bank and financial system of Cuba.” Later that same year, Fidel Castro announced that US dollars would no longer circulate in Cuba. More specifically, he mandated that “U.S. dollars be exchanged for ‘convertible pesos’--a local currency that can be used in special shops on the island but has no value internationally--for a 10% charge.” Consequently, the US Department of the Treasury responded that:
The announcement by the Castro government to pull U.S. dollars from circulation is an act of economic desperation and a clear signal that President Bush’s strengthened policies towards Cuba have hurt the Castro regime…
Things began to look up for Cuba on December 17, 2014, nearly 55 years after the US initially imposed its commercial and financial blockade against the island, as President Barack Obama entered into negotiations aimed at reestablishing diplomatic relations. This led him to visit the island nation, marking the first trip by a sitting US president since Calvin Coolidge (1872-1933) in 1928. Obama ultimately agreed to reduce restrictions on remittances from Cuban Americans and allow Americans to travel to Cuba for religious and educational purposes, which resulted in a 60 percent increase in American tourism to the island between 2014 and 2016. His administration also removed Cuba from the US list of SST. Additionally, a number of trade agreements were signed between the two countries, including contracts for business deals between Havana and 60 American companies.
Subsequently, the election of Donald Trump brought an end to any rapprochement between the two nations. The Trump administration not only reversed the efforts undertaken by the Obama administration aimed at establishing formal diplomatic relations with Cuba, but it also strengthened the economic blockade by introducing more than 240 new sanctions. These included banning cruises, curtailing direct flights, imposing sanctions on shipping firms and vessels transporting Venezuelan oil to Cuba, placing strict limits on remittances from the US, and implementing restrictions on Cuban imports of life-saving medicines.
In November 2017, the US Department of State webpage listed 180 “entities” in Cuba with whom financial business would be immediately forbidden. Approximately twelve months later, on November 14, 2018, 26 new entries were added to the list. Then, on April 17, 2019, the Trump administration announced that the US would no longer be suspending Title III of the Helms-Burton Act, which would permit lawsuits against companies that benefit from cooperating with Cuban state-owned businesses. This move was condemned by Canada and the European Union on the grounds that it was a violation of international law, and they promised to protect their companies. The impacts of Title III were felt quickly, as 407 Western Union offices were closed across Cuba in 2020, which basically halted the remittances from family members in the US and other countries that many Cubans depend on. Since July 2023, Western Union has been “resuming its money transfer service between the U.S. and Cuba,” but only for close relatives, such as an “individual related to the sender by blood, marriage, or adoption who is no more than three generations removed from that person or from a common ancestor with that person.”
The following year, on October 9, 2019, the Trump administration decided that “banking institutions subject to U.S. jurisdiction are not permitted to process ‘U-turn’ transactions, i.e., funds transfers originating and terminating outside the United States, where neither the originator nor the beneficiary is a person subject to U.S. jurisdiction.” That means the U.S. did not allow transactions with Cuba even if the transfer was initiated by a non-Cuban bank and passed through the US system (the U-turn) on the way to another non-Cuban bank.
In January 2021, the Trump administration placed Cuba back on the US list of SST, along with “the Taliban or the territory of Afghanistan controlled by the Taliban.” The rationale provided for this move was that Cuba threatens international peace and security by engaging in armed acts, international violence, and terrorism. As a result, “the export of agricultural commodities, medicine, or medical devices to Cuba…has been determined by the Secretary of State.” Accordingly:
…no United States person may provide payment or financing terms for sales of agricultural commodities or products to Cuba or any person in Cuba, except in accordance with the following terms… (A) Payment of cash in advance. (B) Financing by third country financial institutions (excluding United States persons or Government of Cuba entities), except that such financing may be confirmed or advised by a United States financial institution. Nothing in this paragraph authorizes payment terms or trade financing involving a debit or credit to an account of a person located in Cuba or of the Government of Cuba maintained on the books of a United States depository institution.
A few weeks after Cuba was returned to the SST, international banks and financial institutions stopped conducting business with the island nation out of fear of facing fines, sanctions, and legal proceedings. Basically, they refused to transfer money to Cuba and did not allow Cuba to deposit US dollars. Moreover, the bank accounts of many Cuban businessmen were closed in the US, which made financial transactions with the island extremely difficult. In fact, “several payment and e-commerce platforms such as PayPal and Airbnb” refused “to provide their services to these businessmen.”
Cuba experienced little relief during the presidency of Joe Biden, as “the economic, commercial and financial blockade against Cuba has remained the backbone of U.S. policy towards the island, and has been opportunistically intensified at unprecedented levels.” Although Biden promised to remove Cuba from the list of SST in 2021, his administration did not do so until its final week in office. This turned out to be little more than an empty gesture, as President Trump “acted on his first day in office to keep Cuba” on the list of SST. Since then, his administration has continued implementing new measures aimed at strengthening the economic blockade, so that it could be used as a weapon to weaken Cuba’s Socialist regime.
The American government has always acted as an aggressor towards Cuba and its citizens since the Revolution prevailed in 1959, employing a wide variety of tactics in an effort to destabilize and destroy its socialist regime. During that time, no American president was receptive to the idea that Cubans are merely seeking a peaceful co-existence, free of any hostility, with the US. Consequently, Cuban companies in every sector of the economy have been forced to endure a crippling economic blockade, which prevents them from accessing raw materials and importing parts from the US. Instead, they have to import such products from distant places in Latin America, Europe, or Asia, which significantly raises costs. Moreover, Cuban companies are further limited by the fact that many foreign firms are US subsidiaries, which cannot supply any products to Cuban institutions or companies according to the stipulations of the American embargo.
The UN General Assembly has overwhelmingly passed a resolution criticizing the impacts of the embargo and calling for it to be lifted on 33 separate occasions. In the most recent vote, 187 countries supported this non-binding resolution, with only the United States and Israel voting against it, while Ukraine abstained. Libertarian philosophy supports lifting the embargo against Cuba, because it opposes any form of embargo against any country in the world, regardless of the ideology of its regime. Accordingly, Murray Rothbard argued that the US government should recognize the sovereignty of Socialist Cuba and lift the embargo. He believed that recognizing the self-determination of Cuba “simply means recognizing the physical existence of a state—it is an act of sanity, not an act of praise.” His support for the “reestablishment of free and unhampered trade” between Cuba and the US is consistent with his views pertaining to the relationship between the US and communist nations. During the Cold War Era, Rothbard argued that “free world trade would not only help break down the iron curtain, but would benefit anti-Communist nations as well as Communist.” He believed that “nothing could be more inane than the present program of ‘helping other nations to help themselves’ while at the same time coercively restricting their opportunities to engage in profitable commerce.”
