What Egypt Tells Us About Cuba

In the days after Egyptian President Hosni Mubarak stepped down, papers around the world filled their front pages and their home pages with the news. But one paper, Granma, relegated the story to the fourth spot on its website, reserving top billing for an article on a large book fair.

Granma is the official newspaper of Cuba’s Communist Party.

Granma’s article on Mubarak’s resignation, which did not appear until long after other papers had thoroughly covered every angle of the story, was brief. It related a tranquil account in which the president “transferred power to the army” and “moved with his family to the area of Sharm el-Sheikh, where he has a vacation house.”

Understandably, the overthrow of a ruler who held onto power for decades through a controlled press, rigged elections and secret police terror is an uncomfortable topic for the official paper of Cuba’s ruling party. After all, for the past 50 years Raúl Castro, president of the Cuban Council of State, and his brother Fidel have run their country through the use of a controlled press, elections that are not even worthy of the name, and, of course, secret police terror.

While the regimes in Cairo and Havana had much in common, the U.S. government’s attitude toward them could hardly have been more different. Egypt under Mubarak was a top strategic partner and ally. Both the corruption-riddled government and the military were showered with American aid. Meanwhile, the U.S. has maintained a near-total embargo against Cuba for almost half a century.

The embargo — known throughout Cuba and most of Latin America as “el bloqueo,” or “the blockade” — restricts both goods and personal travel. While American citizens in Miami were free to make the 6,500-mile jaunt to Mubarak’s Egypt to see the pyramids whenever they wanted, they are prohibited from making the 150-mile trip to Havana, unless they have family on the island or can convince the U.S. government that their reasons for going are unrelated to tourism or commerce.

Yet the Mubarak government we supported for so long fell in a three-week rebellion that Washington neither anticipated nor ever really understood, while the Castro government we dislike so intensely remains intact.

The embargo began in 1960 after the newly installed Cuban government engaged in large-scale expropriation of American companies’ property. (The Cuban version of this story is that Cuba offered to pay for the property using the values declared on the previous year’s tax returns, but that due to widespread tax fraud, these values were ridiculously low, leading companies to instead consider the property stolen.) At that point, economic sanctions made sense. Trade requires trust, which is difficult to establish with a country that has just stolen a great deal of your citizens’ property.

The embargo continued to make sense throughout the Cold War, particularly in the aftermath of the Cuban Missile Crisis of 1962. Trading with a country that poses a potential military threat is clearly counterproductive. Today, this logic justifies our sanctions against Iran, with its ongoing pursuit of an aggressive nuclear program and its tendency to take hostages whenever need and opportunity coincide.

Now, however, neither the trade nor the military rationale applies to Cuba.

Every major U.S. trading partner also trades freely with Cuba. Non-U.S. companies operate freely there. Spain’s Sol Meliá hotel chain, for example, runs several popular hotels in the island nation.

The U.S., meanwhile, is inconsistent. There was no embargo after Hungary’s Communist government nationalized American property in 1947, more than a decade before Fidel Castro took power in Cuba. U.S.-Hungarian relations were strained throughout the ‘50s and ‘60s, but in 1973, the U.S. reached an agreement with Budapest, still under Communist rule, to settle American financial claims. In the late 1980s, with no significant economic pressure from the U.S., Hungary began enacting widespread democratic reforms along with its Warsaw Pact neighbors.

Any military threat is long gone. The Soviet Union no longer exists. Another still-Communist former Cold War adversary, Vietnam, has enjoyed diplomatic relations with Washington since the 1990s, and is increasingly popular with American tourists. China, of course, is likewise Communist and autocratic, and is one of our leading trade partners.

The only remaining justification for continuing the embargo against Cuba is the hope that the embargo will prompt regime change. But, for 50 years, it hasn’t.

The Egyptian revolution demonstrates that regime change happens when a nation’s citizens are moved to action. Sanctions do not accomplish this, but exposure to freedom sometimes does.

The U.S. embargo has perhaps served as the single most powerful tool for the Cuban propaganda machine. It restricts the average Cuban’s contact with prosperous, uninhibited and (importantly) often Spanish-speaking Americans, while it also gives the Castro government an endlessly useful scapegoat.

Allowing U.S. tourists to visit Cuba would flood the country with ambassadors of democracy. These ambassadors would share their values and their experiences, while they also would create demand for unfettered access to the outside world through the Internet. A recently leaked video revealed that Cuba’s leaders recognize the threat the Internet could pose to their control by linking Cuban dissidents with dissidents around the world. Yet Cuba already has unblocked several sites critical of the government and plans to increase its Internet capacity.

It can afford these moves because hardly any Cubans currently have access to the Internet, relying instead on the country-wide Intranet. More vacationing Americans, however, would force Cuba to upgrade its capabilities, providing wireless connectivity for mobile devices and laptops. With more access for foreigners, greater access for Cubans would be almost inevitable. An end to the embargo would also force the Cuban government to drop its claim that it would like to increase Internet access for citizens, but hasn’t been able to do so because of its inability to tap into American cables.

Castro’s revolution was itself a rebellion against an autocratic regime favored by the U.S. government. That uprising was co-opted by a clique that has entrenched its own power and privilege for 50 years. An end to the embargo could help give the Cuban people a second chance to liberate themselves. It is time to drop the approach that has not worked, and embrace the one that has, most recently in Egypt.

About Larry M. Elkin 534 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

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3 Comments on What Egypt Tells Us About Cuba

  1. This is a bit of a cheap shot. Cuban TV and the newspaper Granma have given extensive coverage to the Egyptian protests and revolution. In fact if you click on the Granma link (either the Spanish or English language version) there is a piece on the front page by none other than Fidel Castro entitled ‘The Revolutionary Rebellion in Egypt’.

    It begins: “I said several days ago that the die was cast for Mubarak and that not even Obama could save him. The world knows what is taking place in the Middle East. The news is circulating at incredible speed. Politicians barely have time to read the cables coming in by the hour. Everyone is aware of the importance of what is occurring there…”

    This is hardly evidence of a government which is trying to withhold the news from its people!

    There will be no rebellion in Cuba because it already happened 50 years ago and it was the culmination of a centuries old struggle against Spanish colonialism and then US imperialism. Cuba is embargoed by the US because they are scared of other countries following Cuba’s lead and freeing themselves from exploitation. All Cuba needs is to be left alone and allowed to trade like every other country. Then maybe they’d have a better economy as well first class health and education for their people.

  2. Cuba is much different than Egypt but similar in that it is not free.
    The Castro brothers have not run Cuba for 52 years because they good kind administrators.The elections are foregone conclusions with them always retaining real power.
    The Cuban economy is basketcase there coffee,sugar and beef production is dismal haven fallen dramatically.
    The Cuban media is nothing but a propaganda mouthpiece for the regime glorifying past achievements long ago and completely ignoring that sad state of the present.
    Yet the majority of the populace except the dissidents seems simply content to out wait the Castro brothers and hope for changes they want and believe will come.
    The Cuban military controls much of the economy and most of the Council of State posts real change may be very difficult to achieve.

  3. Castro is not Mubarak, and Cuba is not Egypt. Castro wants the U.S. to lift the embargo so that he can then ask for trade credits, buy on credit, and then default on the “onerous and imperialistic” terms imposed by the U.S. on poor little Cuba. He has been playing this game for over 50 years, and he will continue to do so.

    Castro has never made any serious offer to compensate American companies, American citizens, or exiled Cubans in Miami for all the property confiscated by his govt. You cannot negotiate or reason with the Castro one-way monologue. He is more akin to the late Yasir Arafat in Palestine who never really wanted peace with Israel. Castro does not want peace of commercial ties with the U.S. His whole revolution–very similar to Arafat’s PLO with respect to Israel–survives on vilifying the U.S. Once you understand this, you will understand the reason for the 50 year embargo.

    Sadly, the only way for change to take place in Cuba is to restrict the outflow of Cubans from the island and to wait for an overthrow of the govt. by internal forces. The constant outflow of disgruntled Cubans–primarily to the U.S.–allows Castro to rid the country of subversive groups that threaten his rule. Another outflow is likely to occur once more if conditions on the island continue to deteriorate. Miami today is the third most populous Cuban city in the world due to the constant Cuban outflow.

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