Saturday, May 2, 2009

Cuba & the U.S. (10 of 11): Why would Cuba consider closer relations with the U.S.?

If you prefer, you can read the whole Cuba report as a PDF by clicking here.

Summary:  Improved relations with the U.S. would give Cuba more hard currency and the prestige of having “forced” the U.S. to back off a long-standing policy.

Socialist policies lead to weak economies. Increased trade with the U.S. would bring Cuba much-needed hard currency. Easing the restrictions on remittances would have the same effect, except that the Cuban government would not need to produce any goods in exchange. Remittances are estimated at $600 million to $1 billion per year, even though President Bush reduced the maximum permissible amount from $3,000 to $300. The government takes 10% of the remittance amount when converting it to pesos. If the dollars are spent in “dollar stores,” the prices of goods are often at least doubled. Again, the extra money goes to the government.

On a moral level, getting concessions from the United States would give Cuba the chance to boast of having made the United States back off. The Castro brothers are certain to put this spin on any rapprochement between the U.S. and Cuba. If Cuba is reinstated as a full participant in the Organization of American States, the same spin will be applied.

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