A Middle-Ground Approach to Help Cuba's "Self-Employment" Sector

Tuesday, April 29, 2014
Frustrated by the broad bipartisan support in Congress for current U.S. sanctions towards Cuba, opponents of the policy want President Obama to violate the clear mandates of the law.

For those unaware, Article I of the U.S. Constitution grants Congress the sole authority to enact legislation. Meanwhile, under Article II, the President is responsible for the execution and enforcement of the laws created by Congress.

U.S. sanctions towards Cuba, as codified into law in 1996 (trade) and 2000 (travel), is not an issue where Congress was ambiguous.

For example, as regards travel, a provision in the Trade Sanctions Reform and Export Enhancement Act of 2000 (§910(b) of P.L. 106-387, Title IX) codified the ban on tourist activities, which are defined as any activity not expressly authorized in the 12 categories of travel set forth in the regulations. It further specified, "as such regulations were in effect on June 1, 2000."

In other words, if the license and category of travel didn't exist on June 1, 2000, then it's considered tourism and strictly prohibited. Only Congress can create new travel categories or lift the sanction altogether.

But that doesn't stop U.S. policy foes from calling on the President to do so anyway. After all, it's only the law.

The latest siren song is that lifting U.S. sanctions would help Cuba's "self-employment" sector (despite the Castro regime's monopoly over all of the island's foreign commerce).

Facts and history prove that lifting sanctions is the worst way to help Cuba's "self-employment" sector.

We recently explained why in The Huffington Post.  Click on this link to read, "In Cuba Policy Debate, Theories Don't Cut It."

Here's an excerpt:

"Cuba's military and intelligence services control and run the conglomerates of Cuba. The 'self-employment' sector represents a very small part of the island's economy and it is important, in the debate over sanctions, to understand its nature and limits. During economic crises, the Castro regime typically authorizes a host of services that Cubans can be licensed to provide, keeping at least a portion of what they may be paid. The world's news media refers to these jobs as 'private enterprise,' which implies 'private ownership.' Yet Cuba's 'self-employed' licensees have no ownership rights whatsoever - be it to their artistic or 'intellectual' outputs, commodity they produce, or personal service they offer. Licensees have no legal entity (hence business) to transfer, sell or leverage. They don't even own the equipment essential to their self-employment. More to the point, licensees have no right to engage in foreign trade, seek or receive foreign investments. Effectually licensees continue to work for the state -- and when the state decides such jobs are no longer needed, licensees are shut down without recourse.

A central tenet of capitalism is recognition of property rights and it's precisely such rights that the Castro regime avoids through its distorted, licensing model. It's also why, despite these 'self-employment' licenses, Cuba remains ranked 177 out of 178 nations in the world in the Index of Economic Freedom, a yearly joint compilation of The Wall Street Journal and The Heritage Foundation. Only North Korea is considered less economically free.

Based on the lessons of history, those who still believe 'self-employment' licenses are 'a step in the right direction' toward capitalism, actually have all the more reason to support U.S. sanctions. Self-employment was a temporary reaction to loss of Soviet subsidies, and with the remnants of the Chavez regime in Venezuela now imploding, Cuba will likely continue allowing it. Yet the historic lesson is clear: The Castro regime only responds when it is economically pressed. Once the Cuban economy stabilizes or begins to 'bounce back,' the Castro government reverses itself to freeze or revoke self-employment licenses. Lift U.S. sanctions and Cuba's government will solely focus on strengthening its state conglomerates and the repression required to suppress change. Thus, U.S. sanctions are the best friends that 'cuentapropistas' now have."

So we propose a middle-ground approach.

It's an approach that would: 1. help Cuba's "self-employment" sector; 2. not violate U.S. law; 3. not entail any new stream of capital entering the island; and 4. deny funds to Castro's monopolies.

It's a win-win all around.

It stems from a floor speech earlier this month by U.S. Senator Bob Menendez (D-NJ), Chairman of the Foreign Relations Committee, who made the important point:

"On the economic front, I think it's important to make the point that when people argue for trade and travel with Cuba, they are arguing to do so with Castro's monopolies. Let’s be clear, regular Cubans are prohibited from engaging in foreign trade and commerce. So we want to trade with Castro's monopolies? Do we? Do we want to reward the regime?

The U.S. government’s own report of agricultural sales to Cuba states how every single transaction with Cuba, by hundreds of American agricultural companies, have only had one counter-part: Castro's food monopoly, through a company named Alimport that hasn't helped the people one bit. So do we really want to unleash billions to Castro's monopolies?

Also, every single foreign 'people-to-people' traveler currently stays at a hotel or resort owned by the Cuban military (GAESA). No exceptions!

So, M. President, how does that promote the 'independence of the Cuban people from the regime?' as President Obama's policy statement upon releasing these regulations states?"

At the very least, they should be compelled to stay at a 'casa particular' – a private home – but staying at the military's facilities contravenes the President's own policy statement. This hardly constitutes an economic opening for the people of Cuba."

There you have it.

We propose a simple requirement whereby all U.S. "people-to-people" travelers to Cuba -- better yet, every category of U.S. travelers to Cuba -- must stay exclusively at "casa particulares" and dine only at "paladares."

No more stays at the Castro regime's fancy Hotel Nacional and Hotel Saratoga, or parties at La Bodeguita del Medio, El Floridita and Tropicana.

And if the "casa particular" or "paladar" is a front for the Cuban military -- it's also a no-go.

Let's do it. For the "self-employment" sector.