John Kavulich, President, US-Cuba Trade and Economic Council
Richard Nuccio, former Special Advisor to the President on Cuba
This text has been professionally transcribed. However, for timely distribution, it has not been edited or proofread against the tape.
JOHN KAVULICH: Many people will say—and I’m one of them—that post-Castro Cuba began in 1993 when he legalized the dollar. Because by legalizing the dollar it was basically an affront to everything that the Revolution stood for.
KEITH PORTER: This week on Common Ground, the ongoing change in the US-Cuban relationship.
RICHARD NUCCIO: In 1998 we are just coming out of the worst period in US-Cuba relations in maybe 10, 20 years.
PORTER: Common Ground is a program on world affairs and the people who shape events. It’s produced by the Stanley Foundation. I’m Keith Porter.
On the surface the hostile relationship between US and Cuba seems to have been stagnant for decades. But just below the surface there is turmoil. This week we begin a two-part series on changes in Cuban policy and changes in the Cuban people.
NUCCIO: The decade of the ’90s has been a huge change for Cuba. Which is one of a number of places that were heavily effected by the collapse of the Soviet Union and the ending of the Soviet Bloc. In Cuba’s case it meant the ending of a $5-6 billion annual subsidy and the loss of more than half of Cuba’s Gross National Product of a period from about 1989 through 1993. Cuba’s made some slight recovery from that huge economic blow, but the predictions are that something like 2020, Cuba will get back to where it’s income was in 1989. So this has been a huge—that’s the principal thing that we’re talking out.
PORTER: We hear first from a man very knowledgeable about the current status of US-Cuban relations. Richard Nuccio served as President Clinton’s Special Advisor on Cuba. He’s now a Visiting Scholar at Harvard University.
NUCCIO: What that change set off was a process of transition in Cuba towards something different than what it has been for the last 30-plus years. The same government is in place, the same leader is in place. And there’s an argument, a discussion about whether Cuba is embarked on a careful, slow, controlled process to go somewhere else, or whether in fact it’s sort of desperately hanging on to the old system, kicking and screaming. But there is a process underway in Cuba that is going to result someday in a very different Cuba from the one we know now. And there are bumps, logical, sort of inevitable bumps along that road that involve the United States. Because we have been the principal nemesis from Cuba’s point of view for—not just the last 40 years, but really since Cuba’s independence in 1898. It struggled for independence in 1898. The United-States Cuba relationship has been a very difficult and problematic one. In 1998 we are just coming out of the worst period in US-Cuba relations in maybe 10, 20 years. Sort of highlighted by the shoot-down in February of 1996 of two aircraft, killing of four people, in international waters. The passing immediately after that of the most restrictive legislation that has ever been passed on US-Cuba policy. And a wave of repression that was unleashed inside Cuba, starting in late 1995 and then extending through most of 1996. We’re sort of recovering now, both the US-Cuban relation and Cuba internally is recovering from the period. The Pope’s visit in early last year—earlier this year—was a very important part of that change. Transitions in the Cuban-American community; people point particularly to the passing away of Jorge Mas Canosa, long-time leader of the Cuban-American National Foundation. But in a way he’s sort of an early symptom of what is happening. The older generation is passing away. Jorge actually wasn’t that old; he died of cancer. But there is a younger generation coming up that’s been raised entirely in the United States, that has no memory of Cuba directly, only what they’ve learned from their parents, and who just don’t have the same passion. At least don’t have the same taboos about how they deal with Cuba and how they see Cuba. So all of that is making for a kind of rich stew as we end this decade in Cuba and in the US-Cuba relationship.
PORTER: There’s also that same generation inside Cuba, isn’t there?
NUCCIO: Yeah. This is a generation inside Cuba that has been raised entirely in the Revolution and has developed something of an attitude of “Well, what’s next?” I think it’s fair to say, it’s very hard to make statements about Cuban attitudes since it’s a closed society and since the United States in particular is denied access to it in many ways. But it certainly seems to be the case that most Cubans have lost hope that the Revolution is their vision for the future. That it’s what’s going to govern their future. And there’s a search on the part of many Cubans—probably a majority of Cubans—to find something to substitute for the ideas and values that have prevailed over the last decades of the Revolution. Some people are looking to religion. The Catholic church is growing tremendously, but not just the Catholic religion. Protestant religions, even the Afro-Cuban religions, are growing. There’s a search for some people in private entrepeneurship, in running their own restaurants or small businesses to try to survive. There’s a search in drugs and sort of rebellious youth activity on the part of some people. And there’s been a, you know—I’m not sure everyone would see it in quite this same way, but I would say that the rafter flows of people trying, literally throwing themselves in an ocean and hoping that their life is better as a result of that—thousands of people, more than 40,000 people over the last several years—have left Cuba that way. And there are now nearly a million Cubans registered for a lottery that the U.S. government runs to provide 15,000 visas every year. So almost a tenth of Cuba’s population has basically made a decision that they want to leave if they can. Which is also I think a symptom of people searching internally for some different future than the one that seems to be offered by the current government in Cuba.
PORTER: In that stew that you mentioned—I’m not sure if you mentioned it or not—the, did you mention the legalization of the dollar in ’93.
NUCCIO: No, I didn’t, but one of the ironies of the US-Cuban relationship is that even though we’re officially enemies of governments the United States is now the principal external source of capital for Cuba. Mostly from the Cuban-American community but not only from them. Every year there flows hundreds of millions of dollars to Cuba. And Cuba, one of its adaptations, was to dollarize it’s economy. To make the dollar not illegal as it used to be. Not a crime to hold, but in fact basically the shadow currency that governs many economic relationships in Cuba now.
PORTER: Well, given this stew, what does it mean? If we’ve gone through this big change what are the new possibilities, perhaps, that are available to us now that weren’t available before the change of the last 8-10 years.
NUCCIO: Well, I guess I want to start on a pessimistic note rather than end there. I served as President Clinton’s Special Advisor for Cuba for a year. I’ve been very actively involved in US-Cuba policy since 1991 in the Congress and in the executive branch. And I’m very worried. I would even say frightened of what the future holds for the United States and Cuba. I think there is a huge potential for armed conflict of some kind between the two countries. A huge possibility of Cuba developing in a direction that there is a struggle, social conflict on the island and that people in the United States are drawn into that from the Cuban-American community, or even from our own armed forces are encouraged to take one side or the other. And so I have a certain sense of urgency, almost desperation, that we need to be doing things today to try to change the relationship between the United States and Cuba. From one of hostility to one of friendship. And that’s not going to be easy. Because of the differences between our two governments, because of the legacies, historical legacies, that we share. So I’m worried. I’m, I’m, it’s hard for me to be too dramatic about this. I know a lot about what has happened and about what could happen and I’m very exercised about it.
But there, we are coming out of one of these darker periods. The Pope’s visit was a very important moment of psychological change that allowed both the US government and the Cuban government and the Cuban-American community to try to reassess where we are. The pace of change in Cuba is accelerating again, again in part because of the Pope’s visit. And I think that there’s a re-examination. Part of what we’re here today talking about our, the possibility of reassessing US-Cuban relations. And I think in lots of different places. In the business community in the United States, among foreign policy elites, certainly within the Catholic church and within the Cuban-American community, there’s a searching, an unease about where we find ourselves and a willingness to reexamine current policy and try to struggle to find something, some sort of new consensus. Or at least some new initiative we could take to try to prepare for what we feel is coming. This transition in Cuba. So we’re at a turning point I think. And we’re not very well prepared.
PORTER: I read recently something you wrote about President Clinton’s relationship to US policy toward Cuba. Can you expand on that?
NUCCIO: Well, I’m, I served President Clinton. I was honored to do that. But I have to say that I was disappointed in the President much before the Monica Lewinsky scandal. And it has to deal with the issue of leadership. The President, on some bad advice from some of his closes advisors, signed Helms-Burton when I don’t think he needed to or should have. Just even without regard to Cuba. Just from the standpoint of maintaining his own prerogatives as President and the need to manage our foreign policy that the Constitution gives him. And it’s, some of the criticisms that are made of the President today I could see in his handling of foreign policy and particularly in the issue of Cuba several years ago. A concern about popularity and opinion polls rather than about the long-term good of the country. An unwillingness to use his popularity for something. To take risks, not of a personal kind, but to take risks in the national interest. To do things that might be unpopular or that might cost him votes, but which he knew were in the long-term interests of the United States. And I think in fact had he made some of those decisions, taken some of those risks, on Cuban policy—as he has done recently on the Middle East—and I give him credit for that—we would be in a different situation on Cuba. We missed some opportunities because he was unwilling or unable to provide that leadership. And until we have someone in the White House—and I hope it’s this President or the next one—who puts the long-run interests of the United States in seeing a peaceful democratic transition in Cuba, and trying to position the United States to be helpful to that process, not a hindrance to it—until that happens we are in a very dangerous situation vis-à-vis Cuba. And I hope that this President or the next one will pay more attention to the issue.
PORTER: I just have a couple of minutes left and you’ve already touched on this, but I want to ask you to reiterate what you think the goals of US policy toward Cuba should be.
NUCCIO: Well, our interest is easy to state, which is that we’d like to see a free and democratic Cuba, a Cuba that is focused on the benefit and well-being of its own population. And that, and we recommend, because we’ve seen it work for us and many other countries, that the best way to do that is some kind of competitive democratic system. Whether it has a president or a prime minister, whether it has a dozen parties or two, are things everybody can argue about and find their own way. Whether it should have a totally open free economy like we do or whether it should have one that’s much more tightly controlled like the Japanese or others of our European partners, we can also debate. But there’s a pretty widely shared consensus around those general ideas of freedom, democracy, and open markets. We have an interest, therefore, in trying to help Cuba move towards that, in making arguments, in offering our ideas about why that would be a good idea.
We have to be careful not to pressure and right now we’re doing a lot of pressure and not much persuasion. And we have to be careful to do our pressure, our persuasion, in a way that doesn’t threaten our interest in seeing Cuba hold together as a society. Some of our policy now is trying to make Cuba poorer. Some of our policy now is trying to make the Cuban population suffer. In a misguided idea that if Cuba suffers enough somehow it’s population will rise up. I think that’s a very dangerous idea. Aside from the fact that I think it’s immoral to conduct an experiment on another people as to what level of pain will produce change in their society, I don’t think that’s the business that the United States should be in with regard to Cuba.
So we have a long-term objective that’s the same as we have for the rest of the region. And which in fact, amazingly in the ’90s has been achieved in much of the rest of the region. Democracy, human rights, open markets, working together on joint problems like illegal migration and stemming the flow of narcotics. Trying to shape a future where the environment that we share, all of us, will be there for our children and our grandchildren, as close to what we go or even better than it is right now. And those are all activities that Cuba has a very important role in. In part because it’s so close to us. It’s one of the largest islands in the Caribbean, a population of almost 12 million people. And how Cuba goes will have an important affect on the rest of those values in the region. If Cuba has a successful transition to democracy, freedom, and a prosperous economy, a lot of other struggling countries around the region are going to say, “Well, if they made it surely we can.” If Cuba has a disastrous transition, and in particular if the United States government gets involved and contributes to that disaster rather than to its success, I also think a lot of other governments are going to question whether they really should be as close to the United States as they have become over the last few years.
PORTER: Richard Nuccio, a Visiting Scholar at Harvard University, served as President Clinton’s Special Advisor on Cuba. In a moment we’ll hear from another expert on the evolving relationship between businesses in the US and Cuba.
KAVULICH: You’ll see some assembly, small high-tech assembly that will be in their free trade zones. The number, the cash cow, and the engine that’s going to be driving the Cuban economy, and it already is, is tourism.
PORTER: This is the first of a two-part Common Ground series on changes in Cuba and in the US-Cuban relationship. Printed transcripts and audio cassettes of this program are available. Listen at the end of the broadcast for details. Common Ground is a service of the Stanley Foundation, a non-profit, non-partisan organization that conducts a wide a range of programs meant to provoke thought and encourage dialogue on world affairs.
PORTER: What is the scope of the trade and economic relationship between the US and Cuba at this moment?
KAVULICH: Well merely the fact that it does exist is often a surprise for a lot of people. Because there is the feeling that they hear the word embargo and they think that means prohibitions.
PORTER: John Kavulich is President of the US-Cuba Trade and Economic Council.
KAVULICH: The word embargo actually means restrictions. And that’s what there are. US companies in a whole host of areas can do commercial transactions in Cuba today. Everything from artwork to entertainment to communications to telecommunications, to publishing to companies have non-controlling investments to travel and transportation, to healthcare. All of those types of companies can do business in Cuba today legally.
PORTER: How does that work?
KAVULICH: Well, most of the companies have to have licenses either from the Treasury Department and/or from the Commerce Department. And the US government specifically authorizes a number of areas. Some of these areas were included in the Cuban Democracy Act which was signed into law by President Bush in October of 1992. And others have been a part of existing regulatory or statutory policy since 1960.
PORTER: How would you compare this US relationship with the relationship say of some of our European allies? And the economic position they have in Cuba?
KAVULICH: Well, its, the US component is negligible. Companies in other countries are doing business with Cuba without restriction. They’re providing financing to Cuban companies. They’re involved in import and export, providing services, etc. US companies are basically limited to either importing or exporting And in some cases companies can have a non-controlling investment in a third-country company that does business in Cuba.
PORTER: You used the word “embargo” earlier and I’ve talked to lots of Cuban experts, I’ve been in Cuba. And when you talk to a Cuban they don’t use the word “embargo,” they use the word “blockade.”
KAVULICH: That’s correct.
PORTER: So are they supportive of what you’re trying to do?
KAVULICH: Well, I think it’s somewhat a semantical, politicalization of the term. That accurate way to describe US policy toward Cuba is there are commercial, economic and political restrictions. Does that meet the definition of embargo? Yes. Does it meet the definition of blockade? No. If there were a blockade of Cuba everyone in Cuba would be dead. That is what a traditional blockade means. They use the word, I think, as a loose translation, but also because it has more of a political bite to it. You’ll find some of the activist groups in the United States use the word as well. But we don’t and the Cubans have no problem with us. At the beginning there was some tension because since we don’t get involved in politics and we don’t take political positions, that can, historically had been the modus operandi for organizations that have any kind of relationship with the Cuban government. You are always pro seeking a unilateral change in US policy. Well, in our particular arena, since we’re supported by US companies, US companies wanted an honest broker. They wanted information. And the areas we focus on are basically what US companies can do, what US companies cannot do, what the US competitors are doing, and then what’s actually happening in Cuba. And companies basically from us want to know what they can and can’t do. They’ll decide what they should and shouldn’t do. So there’s a clear distinction there.
PORTER: Okay. What are the biggest economic opportunities in Cuba?
KAVULICH: Number one, if we’re talking either today or we’re talking without any commercial restrictions, is going to be tourism. No question about. The next are going to be probably agricultural products, in terms of exporting from Cuba, whether it’s citrus products and fruits and vegetables and even a little bit of sugar. And then we’ll go down the list, you’ll see probably healthcare in terms of pharmaceutical and biotech. You’ll see some assembly, small high-tech assembly that will be in their free trade zones. The number, the cash cow, and the engine that’s going to be driving the Cuban economy, and it already is, is tourism.
PORTER: There has long been the feeling that there will be a change in Cuba some day. And it may be a soft landing or a hard landing are the terms that get used. Do you help your clients prepare for either of those situations?
KAVULICH: Well, they’re not clients, they’re members.
PORTER: Members, okay.
KAVULICH: We’re a 501(c)(6), so we’re not-for-profit and our members pay dues based on the size of their company on an annual basis. So. We do assist our members in, when they want to go to Cuba to meet the people they want to meet. We provide information for them. Market information. We have a lot of people on the ground in Cuba that provide us with information. And we’ve a lot of people going in and out. And we have our members going in and out. Some companies want to do whatever they can do immediately. Other companies were in the Cuban market before the Revolution and they haven’t been since, so they just want to know what’s going on. Others have been in Cuba at one point, post-Revolution and they would like to see what else they can do. And some have never been in the market and they just want to know what’s going on. They want to know what their competitors are doing. So it’s a broad range and we deal with general counsels on the legal aspects. Probably our most visible role has been as the lead on opening a lot of doors for the US business community during the past 4½ years, virtually every single initiative that the Clinton administration has taken vis-à-vis the business community, our organization either initiated it or was the first beneficiary of it.
PORTER: But I’m sure you must have members who say to you, “I am leery of investing much time or money in this because there’s going to be a change in Cuba and my time and money invested now may be wasted, because we don’t know what’s going to happen in the big change.”
KAVULICH: What you find mostly is that companies that are members of the US-Cuba Trade and Economic Council, are the type of companies that were the first into China, the first into the USSR, and then were there during its—I guess the best word is implosion—they were the first into China—or the first into India. They’re, they look for new markets and they know the risks. So they don’t really look to us and say, “Well, we’re nervous about when that moment is going to come.” Because many people will say—and I’m one of them—that post-Castro Cuba began in 1993 when he legalized the dollar. Because by legalizing the dollar it was basically an affront to everything that the Revolution stood for. The Revolution had as it’s base ridding Cuban society of the influences of the United States: what we stood for commercially, economically, politically, philosophically, societally. And by allowing the dollar to once again recirculate that was basically the beginning of the post-Castro era. President Castro happens to be presiding over the post-Castro era, which I think is unique. Some might say, you know, somewhat stabilizing. I don’t know about that.
PORTER: Because of US policy, what are some of the biggest economic opportunities we may have already missed out on in Cuba?
KAVULICH: Number one, in terms of the tourism industry, a lot of it is location, location, location. So when someone builds a hotel on a particular piece of property, unless you level it when you go in you’ve lost that opportunity. There are some other types of businesses in terms of licensing Cuban products, working in the biotech industry and that. But for the most part, the US business community is such that because of its globalization in terms of its ties with companies throughout the world, it really doesn’t matter when we go into Cuba. Within two years time, whenever the US business community again enters the Cuban market with no restrictions, the US will be probably a 70-80% component of the Cuban GDP. Now that’s great for us because It will mean exports, it will mean the creation of US jobs. At the same time though it scares the hell out of the Cuban government. Because in many respects they see that what they tried to get away from is now coming back. Meaning that the relationship that they have with the United States, who’s going to absolutely be the most significant relation they have commercially, economically, and politically. And that would scare any government.
PORTER: That is John Kavulich, President of the US-Cuba Trade and Economic Council. Next week on Common Ground, we’ll talk with two Americans who have a deep understanding of how all this change is affecting ordinary Cuban citizens. For Common Ground, I’m Keith Porter.
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