Don’t let New York Gov. Andrew Cuomo’s trade mission to Cuba fool you: The U.S. embargo on Cuba is still very much alive.
President Barack Obama was able to ease sanctions on Cuba and reignite diplomatic ties between the two countries through executive actions even though the embargo, which can only be lifted by Congress, continues to keep American companies from storming the Cuban market.
That didn’t stop Cuomo from leading a delegation of nearly a dozen New York-based businesses – including giants like MasterCard, JetBlue and Pfizer – to visit the country Monday and meet with top Cuban government officials. The trip was coordinated with the State Department, which briefed him before he left.
So with the embargo still in place, what can these companies get out of this trip?
Though the embargo hasn’t been lifted, a lot of these companies should actually be able to do business in Cuba (or more business) thanks to the Cuba policy changes Obama announced in December.
The problem is the Cuban government still needs to green light some of them.
JetBlue, for instance, should be able to offer American consumers flights to Cuba without going through a charter company, but the airline needs to strike a deal with Cuban aviation officials.
American companies still can’t export most goods to government-owned businesses (the majority in Cuba), but the Obama policy changes now give U.S. companies leeway to export most goods to privately owned Cuban enterprises. Cuban officials have yet to okay that, too.
“To a large extent the ball is in the Cuban court,” said Richard Feinberg, a political economy professor at U.C. San Diego. “The administration has opened up some opportunities and the Cubans have to decide if they want to open those channels.”
Many of the companies joining Cuomo on the Cuba trip will likely be looking to lobby government officials there, or at least make a positive impression on a government split over how much to open their country to the U.S.
Either way, the companies are signaling that their products and services would be a boon to the Cuban economy. The message is clearly, “We’re in,” but it’s unclear whether the Cubans are as well.
What’s the hold up on the Cuban side?
Cuba experts say it’s one part political will, another part divisions within Cuban politics and the remaining part bureaucracy.
“There’s huge red tape,” explained Ted Piccone, a senior fellow at the Brookings Institution. “This is an economy that is state-controlled, and Cubans complain about it all the time – how hard it is to do business or even get services.”
While some are calling the trade mission premature, with most trade still blocked by the embargo or hard-to-remove sanctions, Piccone said a lot of American companies are flocking to Cuba to build contacts and figure out “how to do business in Cuba.”
“You’re seeing a lot of companies wanting to figure out how to position themselves for the day when the embargo is gone,” he said.
Why did Cuomo lead the delegation?
Cuomo on Monday became the first governor to visit the country since Obama announced the policy changes – and it’s a badge he’ll continue to wear if he decides to move onto the national political stage, as many expect he will.
The Democratic governor said he wanted New York’s businesses to be “first in line” to enter the Cuban market, and New York could see a benefit from that.
He also got a chance to enjoy a Cuban cigar handed to him by Cuba’s trade minister, which he said was his first.
“I want to thank the minister for my first Cuban cigar, which I intend to enjoy right after this meeting so if I speak quickly, please forgive me,” Cuomo said at a meeting with Cuban officials.
But Cuomo also raised some more substantive policy points — ones that bolster Obama’s controversial decision to change course on the island nation after a more-than-five-decade standstill in diplomatic relations.
“Isolation has not worked,” Cuomo said Monday. “We have had 50 years of isolation and it has not worked. Engagement and full relationships is the best way on the issues that we agree with and the issues that we disagree with.”
So is Congress going to lift the embargo?
It doesn’t appear like that will happen anytime soon – but the pressure is ratcheting up.
Republicans control Congress and most remain opposed to Obama’s policy shift. And some Democrats, like Cuban-American Sen. Robert Menendez of New Jersey, also oppose weakening the U.S. policy of isolating Cuba.
With those numbers, it’s unlikely Congress would repeal the legislation that originally set up the embargo.
But the business community, led by groups like the Chamber of Commerce, which typically support Republican candidates, is looking to change those numbers and is calling on legislators to open up trade completely.
Some Democratic members of Congress have already visited Cuba, but Cuomo, flanked by top business representatives could send a more powerful message on the benefits of lifting the Cuban embargo.
CORRECTION: An earlier version of this article misstated the reason that some credit card use has been stalled in Cuba.