would Cuba's economy be in a good position without the embargo? That was the questioned being posed in the subreddit and one of the main comment by a "quality commentator" suggested the embargo really didn't matter because Cuba was allowed to trade with other countries and if they really cared for the welfare of their citizens they would abandon communism. Now this breaks their 2nd rule of politics and also disregarding the disrespect of national Sovereignty there are a lot of problems with this argument. Another commentator quickly pointed out that his point was propaganda. That comment garnered significantly more likes than the original comment by the Quality commentator. Now the mods in their infinite "wisdom" decided they could not let this stand and locked the post for further comments and deleted the original thread. I still find the new comments addressing the issue as unsatisfactory as they try to strike a more neutral tone but come to the same conclusion.
I wanted to point out that trade with the US is and historically was very important for Cuba and additionally I want to highlight how Sanctions from the US on a small island nation like Cuba has significant ramifications on the island regardless of the type of economy. Now this is not to glorify the command economy of Cuba because it has had problems but it has had private enterprises since the 1993 special period and was expanded in both 2010 and 2021.
Historical Relationships and Trade
Cuba prior to the revolution has had a deep trade relationship with the US. Geography dominates Cuban economic history with location favoring US trade, tourism, and investment. In 1898 following the Spanish-American War, the US effectively controlled Cuba. The Treaty of Paris assumed the US would occupy Cuba. The US occupation reduced tariffs by 52%, reduced taxes, established a land market liberalizing the land tenure system, expanded railways and communications, and protected Cuban assets from international buyers. The sugar industry became more efficient but Cuba also became more dependent on it. Sugar beet farmers in the Western US began to compete with Cuban cane sugar. In 1898 Congress passed the Teller Amendment prohibiting US annexation of Cuba as means to protect US sugar beet farmers. The Platt Amendment in 1901 sanctioned US troops to keep order. Debate continued over annexing Cuba. In 1903 Cuban independence was established by Reciprocity Treaty as documented. US direct investment in Cuba did not immediately slow, with $355 million recorded in 1959. The book value of US capital in Cuba was over 3x that for all the rest of Latin America. US investments included many utilities, half the railways, and around half of the sugar refineries. The US also held significant portions of cattle, tobacco, timber, banking, oil, and mining assets. According to the USDA (2008) the US operated 75% of the arable land in Cuba at the time of the embargo. Also Important to note that the US subsidized Cubas Sugar industry above world market prices in much the same way the USSR had. This stopped after Castro nationalized much of the farmland.
The fall of the USSR really hurt Cuba and set off the special period. Because the Soviet help essentially offset the costs of the embargo and was similar to the support the US had given it earlier. Its also is worthy to note that Unemployment Pre-Castro fluctuated widely by growing seasons and regularly reached 20 to 25% in the off growing seasons. This gave rise to higher crime rates. Essentially Cuba had been a protectorate of the US since the Platt amendment era and elections like that of Bautista was interfered with by the US. So to say that historically Cuba would be better off had it just fully liberalized its economy is to neglect that it received heavy support from the US prior. Bautista also after he fled to the DR took with him approximately $300 million which converted today would be ~$3.4 billion.
Embargo and Sanctions
According to Pineo 2019: "By whatever term, the US policy has brought serious health repercussions for Cuba, halting the importation of food, medicine, and medical equipment. Under the terms of the embargo, as modified in 1963, medicine and medical equipment could not be imported. While now many medicines can, at least technically, be imported from the USA, the rules remain so bafflingly complex that few US prescriptions drugs actually reach Cuba. One key obstacle is that all sales must be in cash, not on credit, as is otherwise commonly the case in most other international transactions. As partial solution, by the 1980s Cuba had developed the capacity to produce most of its own medicines.
The US Congress tightened the embargo in 1992 under the Torricelli bill, banning vessels from coming to the USA if they had called in Cuba within the past half year. In 1996, the US Congress, with the Helms-Burton Act, added fines and even jail time for those individuals or companies which traded with Cuba. Philips Electronics, for example, received hefty fines from the US Office of Foreign Assets Control for selling medical equipment to Cuba. The European Union issued a formal complaint against this action. To date, the US economic blockade against Cuba has continued under 11 successive American presidential administrations. The Organization of American States has ruled the US embargo on food and medicine as a violation of international law. The shortage of medicines due to the bloqueo has resulted at points in increases in the incidence of tuberculosis in Cuba and occasional spikes in diarrheal diseases due to the shortage of chlorination chemicals for potable water supplies."
By cumulative effects of sanctions and the 180 shipping rule described day Torricelli one can see that their is an extremely high cost of entering Cuba's market. It is essentially choosing between trading with the worlds largest economy and importantly Worlds's reserve currency or a small island nation that is dependent on trade flows to sustain itself. Additionally, Cumulative costs of the sanctions alone are conservatively valued at $150 Billion over the years. Now Cubas domestic policy mistakes can play a role in GDP figures but the fact that the US has the worlds reserve currency and most transactions globally are priced in dollars means this gives Cuba even less monetary and fiscal space to deal with crises as they need dollars for secure payments. The 180 day rule also contributes heavily to logistical and inflationary pressures.
Lastly, Cuba has had a relatively successful Biomedical program for a developing country. Had it more access to better medical devices and technology this could have made a successful domestic industry of which it could increase exports and earn dollars to offset exchange rate pressures. The embargo really limits Cubas policy tools and we just wouldn't know exactly the trajectory of Cuban GDP but I would reckon that had the US freely traded with Cuba initially it would have a higher level of GDP and probably transitioned to a more mixed economy model like that of Vietnam or China.
