Click here to print page

US-Cuba contraction, China-Panama expansion

Sunday, June 18, 2017

In a real sense, all politics is local and President Donald Trump's announcement of changes in US policy towards Cuba has to be understood in terms of domestic politics.

Indeed, Mr Trump did not announce a new policy toward Cuba on Friday, but instead a partial reversal of the policy changes made by his predecessor, President Barack Obama. He cancelled some of the administrative measures and, in so doing, reaffirmed the blockade policy based on the Helms-Burton Act which was never repealed or even challenged.

The policy measures of the Obama Administration were motivated by pragmatism, economics, and humanitarianism. The changes made by Trump catered to local politics because it honoured a campaign promise and it reinforces support among the Cuban-American community in Florida at a time when his presidency is increasingly embattled by legal and investigatory problems.

The new actions seek to support the Cuban private sector while depriving the State sector of economic benefits. At the same time, it attempts to insulate the American economy by continuing to allow US cruise ships and airlines to operate. Unlimited “family” travel and money sent to private Cubans on the island will not be affected. The changes are justified by suggesting that Obama's liberalisation had not promoted improvement in human rights, electoral democracy, and an uncensored press.

The US Chamber of Commerce expresses the concern that it puts US businesses at a disadvantage vis-a-vis the investors and exporters of other countries. It restores restrictions on people-to-people tourism, forcing Americans to travel in groups but allow purchase of unlimited rum and cigars. This will certainly discourage some Americans and thereby lessen the potential competition which other Caribbean destinations were facing from Cuba.

At the same time as the US is taking steps to restrict trade and investment with Cuba, China is expanding trade and investment with Panama, which has now shifted its diplomatic allegiance — dating back to 1949 with — Taiwan to China. The switch to a One China Policy will expand trade and investment and shipping through the Panama Canal. This development could have a domino effect on the other countries of Central America, and if they adopted the One China Policy there would only be a few Caribbean countries supporting Taiwan. In such a scenario, China might lose interest in the Caribbean.

The US action will reduce the competition faced by the tourism sector of Jamaica, but the China-Panama rapprochement will increase the competition for business for the port of Kingston and regarding the possibility of creating a logistics hub. Jamaica must not be complacent about either development.

In the wider global context, the US changes in policy towards Cuba is a triumph of political philosophy over economic opportunity for short-term political gain, in contrast with the decision to withdraw from the Paris Accord, which was short-term economics over long-term global political influence.

The changes made by Panama and China discards of long-term political positions in favour of economic possibilities. The US economic policy is hostage to domestic politics, but China's international policy is not encumbered by domestic policy, thus leaving it free to maximise global economic gains.