Cuba 2018: What to Expect

Cuba 2018: What to Expect

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Since President Barack Obama opened U.S. relations with Cuba, what has changed on the island?  Panelists discuss the economic situation, the status of human rights, and the political future of Cuba as President Raul Castro prepares to step down, as well as the foreign policy implications of President Trump’s revisions of Obama administration policy. 

LABOTT: Good afternoon, everybody. Thanks for joining us. I’m Elise Labott with CNN, and we have today what is obviously a very timely discussion of the next steps and what we can expect in Cuba. I’ll be presiding over today’s discussion.

And, as you know, this meeting is on the record. It’ll be streamed, as I think you just heard. So let’s get started.

With me today I have Dan Erikson, who is the managing director of Blue Star Strategies, a former special advisor vice president for Western Hemisphere affairs at the White House. Really one of the top analysts of the hemisphere, and certainly has been a real help to me on Cuba policy.

Bill LeoGrande is the professor of government at American University, the author of “Back Channel to Cuba: The Hidden History of Negotiations Between Washington and Havana.”

And Jose Miguel Vivanco is the executive director of the Americas Division of Human Rights Watch.

Now, obviously everyone’s heard by now of the news in Havana that the State Department has pulled out many—more than half of its diplomats and their families because of some what they believe are some type of attacks on the diplomats and their families. So we find ourselves in a very, you know, disturbing trend, I think, right now, given the fact that in addition to that we also have—President Trump has signaled a much tougher line with Cuba. And I know a lot of people are concerned that this will walk back the opening that President Obama instituted last—in the last few years.

So let’s, you know, just kind of start off, guys, with the news and what we saw. We don’t know what happened. Let’s just be clear about that. You know, some officials have said they believe it’s some kind of sonic attack. We don’t know what has happened, but we know that the government of Cuba is cooperating. And yet, you know, there’s no evidence—there’s really not that many leads.

Bill, let’s just talk about whether—you know, we don’t know if it’s a third country. You know, most people say they don’t think that the Cuban government writ large—this isn’t a Cuban government-sponsored operation. Is this something that the Cuban government would have an interest in doing, or some elements of the Cuban regime?

LEOGRANDE: Well, certainly it doesn’t make sense as policy for the Cuban government writ large. The Cubans are very enthusiastic, really, about the possibility of normalizing relations with the United States because of the economic benefit to them. They’re in the process of an economic reform program. And, you know, opening up Cuba to U.S. trade, to U.S. investors, to U.S. tourists benefits their economy. And the process was unfolding pretty effectively, pretty positively. In the last two years of the Obama administration, the two countries signed 23 bilateral agreements on issues of mutual interest.

Now, there are some people in the Cuban leadership who have been skeptical about the opening to the United States. So, you know, one theory, of course, is that perhaps it’s some rogue element inside the regime. It’s not completely implausible. But we just—we don’t have enough evidence at this point to really point a finger at anybody.

LABOTT: But, given what you know about, you know, what goes on in Cuba, is it likely or plausible that there’s nobody—the Cubans have said they have nothing to do with it. They’re cooperating with the investigation. Is it plausible that there’s nobody in the Cuban apparatus that doesn’t have a little bit of knowledge or perhaps involvement of what’s going on?

LEOGRANDE: So it seems implausible because the Cubans keep very close eye on U.S. diplomats. They’re under pretty much constant surveillance. But it probably does depend upon what the mechanism for these attacks was. Certainly if someone has some apparatus that they’re beaming sonic waves or microwaves at U.S. officials, you would expect that that would be hard for the Cubans to miss. But if the mechanism is actually some kind of exposure to toxin or something like that, it might be more difficult for anybody other than the perpetrator to know what was going on.

LABOTT: I mean, we’re going to talk a lot over the next hour about the opening itself. But, I mean, just your initial thoughts of what is this going to do to, you know, the progress that we’ve seen. I mean, Cubans can’t get a visa in Cuba now. If they want one, they have to go to a third country because there’s no—you know, visa services were closed because of the staffing shortages. And now the State Department is warning Americans not to go. So is this going to put a chill on the relationship?

ERIKSON: Well, it’s a great question. Let me just begin by saying it’s a pleasure to be here with you today, and with the Council.

I think Bill kind of has adequately outlined he dialectic that we have going on right now with regard to these incidents in Cuba. On the one hand, it really makes no sense for the Cubans to be behind it. But on the other hand, how could they not know anything about it? You’re not able to be both simultaneously innocent and omniscient. And so, at some—

LABOTT: Unless it’s coming from outer space. (Laughter.)

ERIKSON: Yes. You can never rule that out. (Laughter.)

And so I think, you know, the title of this panel, I believe, is “Cuba in 2018: What to Expect.” I think the answer is to expect the unexpected. We’re already seeing that. And as we go through the next few months, you know, we’re at an extremely important crossroads in Cuba, certainly the most important since Fidel Castro first stepped down from power in 2006, arguably the most important since the end of the Cold War in 1991. And that is for three principal reasons.

The first is that next year, if Raul Castro follows through on his word, he’s going to step down as president of Cuba, which means for the first time in 59 years there will no longer be a Fidel or a Raul Castro at the helm of that country. That’s a political transition that’s been six decades in the making. We’ll see how it pans out. But this is an extremely sensitive political moment in Cuba.

Secondly, as you’ve alluded to, there’s been a lot of progress in U.S.-Cuban relations over the last several years through the normalization process that was initiated by President Obama at the end of 2014, in concert with Raul Castro and the Cuban government. Now President Obama is out of the White House, Raul Castro will soon be not in power in Cuba, and I think this is a very fragile moment for U.S.-Cuba normalization. And we’re going to see, as new regulations come out later this fall and then with the changes in Cuba, how much of this normalization process will remain intact.

And then the last point I would just like to underline on a regional level is that there is a major crisis taking place in Venezuela, which is a very close ally of Cuba. For the past 15 years, the destinies of Cuba and Venezuela have been in some way linked. And so there’s a broader regional dimension to this that goes just beyond the U.S.-Cuba bilateral relationship.

So, you know, my overall take is right now the United States needs to remain cool, calm, collected, and strategic in its engagements with Cuba.

LABOTT: All right, we’re going to get further into what was achieved at the end of the Obama administration and where we’re headed. But, Jose Miguel, do you have any thoughts about—I mean, obviously, you follow Cuba. What have you been making of this whole—

VIVANCO: About the mystery?

LABOTT: Of this—no, just of the—of these latest news with the diplomats and what’s happened.

VIVANCO: Well, first of all, thank you very much for inviting me to this panel.

And given the degree of control of the Cuban government to what happened in Cuba, it’s hard, hard to believe that they have no clue about what happened with these—with the American diplomats, and apparently also Canadians. But all of this is incredibly unfortunate, because if the relationship between Washington and Havana is jeopardized, is damaged as a result of this very serious incident, I don’t think it’s likely that we will see progress on human rights in Cuba. Progress on human rights in Cuba depends on the capacity and ability of the U.S. government—by U.S. government I’m not just referring to the executive branch, also the Congress—to gradually dismantle the policy of isolation in order to create conditions for multilateral pressure on the Cuban—on Cuban human rights conditions.

And as a matter of fact, we have seen some interesting developments in human rights in Cuba. According to our information, the number of arbitrary—short-term arbitrary detentions in Cuba during the—up to now in 2017 compared to 2016 is half of the number. It’s a huge number of arbitrary detentions, but it still is half in terms—so it’s a dramatic reduction in the number of arbitrary detentions in Cuba compared to last year, which I believe is an interesting sign.

LABOTT: All right, let’s go a little bit deeper. And I should mention that we have a third panelist. Jodi was not able to join us today. Something came up. But we’re going to talk a little bit about the business climate as much as we can.

Dan, let’s start by talking about what was achieved under the Obama administration with the opening and the restoration of relations. And, you know, given that—President Trump’s announcement signaling a tougher approach, and you know, maybe kind of reimposing a little bit stricter measures, where do you think this is going to lead in terms of closing that opening?

ERIKSON: Sure. Well, the—just to kind of clarify a little bit of the terms, there was a lot of talk at the end of the last administration on normalizing relations with Cuba. But I think anyone that was engaged in that effort realizes that normalization was going to take place over a long time. You know, I was—

LABOTT: Take a lot longer, right. That’s why we say restoration of ties.

ERIKSON: Exactly. Reestablishment of diplomatic relations was a piece of it. Obviously, there were some changes to allow greater freedom of travel for Americans who wished to go to Cuba, also some regulatory changes which really freed up the ability of entrepreneurs and businesses in the United States to engage with entrepreneurs in Cuba. And it’s important to recognize that that really helped to push along a trend that was already underway in Cuba where you have now at least half a million people that are in the self-employed, independent economic sector. So these are people who do not depend on the state for their livelihood, that are—now have additional sources of income, and frankly, just more money in their pockets, which can lead to more economic autonomy and perhaps over time to more political autonomy. And there were more flights going to Cuba. There were any number of exchanges.

What was really fascinating, I think, during that period was just the diversity of engagement from the United States to Cuba. It could be religious groups that were going to Matanzas. It could be people studying museum and cultural issues that are going to Santiago, Camaguey. Clearly, there was also a large rapprochement that took place between the Cuban-American community here in the United States and their family members and friends in Cuba.

And, you know, much of that, as of today, remains intact. While President Trump did make a major announcement on Cuba signaling a much tougher line, you know, the devil’s in the details, and we really still don’t know the details. He said in his speech in June, essentially, that within 30 days there would commence an interagency process engaging Commerce, Treasury and other departments to issue a new set of regulations that would kind of outline his policies, and we’re still awaiting those regulations. And so while you have a very dramatic shift in tone, and I think the recent decision on the removal of diplomats from Cuba adds to that, in fact, there has not been a kind of regulatory set of changes to match it yet, although I expect there will be soon.

LABOTT: And I want to be clear that the State Department and Secretary Tillerson have said that, you know, this was an instance of, you know, safety, and that the State Department felt that it wanted to avoid putting Americans at risk, and does not have any correlation or parallel to the broader relationship. But, of course, you know, as we’re saying, this just can’t help the tone, obviously.

President Obama had tried to make some of these things irreversible, and that was at least the intention. I think if he had a little bit more time maybe he would have, you know, gone further in trying—you know, I kept hearing the word “irreversible.” How much of it is irreversible?

ERIKSON: I think it’s hard to judge. You know, I always take—I mean, I appreciate the sentiment behind irreversibility. But as someone who’s worked on Cuba for a while—(laughter)—this is a relationship that zigs and zags. It flips, it flops. And so I think that, you know, trying to track out a kind of straight line can be—can be very, very difficult.

I think that one thing that has happened in the United States is there’s just a much broader set of actors that have interests in Cuba. It includes members of the—of the business sector, of civil society, of church, and so forth. And so while the government-to-government relationship, you know, can become more engaged or go through periods of withdrawal, I do think you do have a broader set of actors engaged.

LABOTT: Yeah. Bill, expand on that. I mean, how much did this change the situation on the ground? You know, even before this happened, you know, there are rumblings of certainly economic shifts. But, you know, there was talk about whether there would be a political shift. So was there a political shift with the American opening? And what do you—what do you think, you know, Trump’s hint of a tougher policy could do to that political space?

LEOGRANDE: Right. So the Cuban economic reform program started well before the normalization of relations. Started in 2011 with the outlining of a set of economic reforms that look a lot like the early stages of economic reform in China and in Vietnam: More utilization of markets, more openness to foreign investment, more engagement with the global economy in general, more of a role for the domestic private sector. And that’s been unfolding, but slowly. And I think one of the reasons that it’s been slow is that there is some internal resistance from bureaucracies.

The issue of political space is interesting. And I think— although I defer to Jose Miguel on this— but my sense is that in the two-and-a-half years now since the normalization of relations, the political space available not for dissidents, but for people that you might call independent critical voices calling—

LABOTT: Civil society.

LEOGRANDE: —broadly, civil society—calling for reforms in the socialist system, and sometimes dramatic ones, but not calling for its replacement, that political space for those people, in my judgment got wider after the normalization of relations. And I think—though in recent months it’s begun to contract. And that may be partly because of the change in the relationship with the United States, and it may also be partly because of the impending transition in leadership, because I think some of the debates inside the Cuban elite that we could see sort of as shadows on the wall of the cave are now breaking into the open over the economic reform process, over relations with the United States, over how much space to allow to critical voices.

LABOTT: How fierce is the debate within Cuba about improving the—improving relations with the United States? Because you said, you know, this is—it’s already constricting because of the change in relations, but the change hasn’t really taken place yet, as Dan said. I mean, it seems like some people are just getting into a crouched position protectively. But, I mean, how widespread is the desire for closer relations versus, you know, wanting to stay at an arm’s—

LEOGRANDE: Right. Well, among ordinary Cubans, the desire for a better relationship with the United States is almost universal. But within the leadership, there’s clearly a group that thinks that a normalization of relations with the United States was just one more strategy on the U.S. side, a kind of Trojan horse to use soft power to subvert the revolution. And it was Fidel Castro himself who essentially said that shortly after President Obama’s trip, and then there were echoes of that from other people in the leadership. And the person—Miguel Díaz-Canel, who’s currently first vice president and in line to become president in February when Raul Castro steps down, recently—earlier this year gave a speech to Communist Party officials in Havana in which he made this argument, along with a number of other conservative arguments. So there’s clearly a group in the leadership that is fearful of relations with the United States. And in—and in an odd way, President Trump is easier for them to deal with because they’ve—50 years, they spent 50 years dealing with hostility from the United States, and they sort of have a set of responses that they can refer to.

LABOTT: It feels comfortable.

LEOGRANDE: It feels comfortable, they know how to respond to it, and they survived it for 50 years. But the process of opening was causing real tensions for them.

LABOTT: Jose Miguel, you know, obviously, the hope of the Obama administration is that opening and—you know, opening the political space, opening the economic space, closer relations would improve the human rights climate. And you mentioned that there was, you know, a dip in short-term detentions.

VIVANCO: Short-term detentions.

LABOTT: But talk about the larger climate in the last two years, and what’s changed and what hasn’t.

VIVANCO: Well, what we have seen in Cuba is, interestingly enough, some improvements in human rights conditions that are not—that are not related to the new diplomatic approach of the Obama administration. As a matter of fact, with the election of Raul Castro or designation of Raul Castro as the leader of Cuba, you know—

LABOTT: You mean “election” in quotes.

VIVANCO: Well.

LABOTT: (Laughs.)

VIVANCO: And, well, what we were able to document was a pretty interesting change in tactics of repression. Fidel Castro used to sentence dissidents to very, very long-term detention, prison sentence, and—15 years for nothing, 12 years, 20 years. And the—and Raul Castro reduced dramatically those prison terms, and even you can see an effort of the security system to use the prison and detention as the last resort, but always in the numbers of four to—three, four, five years. The number of political prisoners have decreased significantly. Dissidents are able to travel in and out.

LABOTT: Do you attribute that to the Obama—

VIVANCO: No. No, no, no, no, no, has nothing to do with this. This is—this new pattern in Cuba came along with the leadership of Raul Castro, who has showed to be incredibly more pragmatic and receptive to international perception. I think that was what made possible the reestablishing diplomatic relations with Washington.

Now, the fact that we have seen a dramatic decrease in short-term detentions in the last eight, nine months, frankly speaking, nobody really knows what explained this dramatic drop on detentions. It could be that Cubans are less active and there is—so you see less resistance and demonstrations against the government, which obviously that means that there is less repression. Or it could be, maybe, that the Cuban government feel like for once it’s much more exposed to international attention with regard to their own deplorable human rights record because the pretext, the distraction of the isolation policy from Washington is no longer—I mean, it’s still part of the equation, but it’s not as pronounced as it used to be thanks to the reestablishment of diplomatic relations with Cuba under the Obama administration.

LABOTT: OK. So Jodi isn’t here, so we’re going to pick up her slack in terms of speaking a little bit more about the economy and the business community. How much—I mean, obviously, Raul Castro, you know, had introduced economic reforms of his own before, you know, the opening even started. But, you know, how much has this opening impacted the economy and, you know, the kind of—because, obviously, Cuba has two economies. They have the tourist economy and they have the local economy. So talk a little bit about—Bill, why don’t you start by talking a little bit about that.

LEOGRANDE: Sure. So the economy right now rests upon, I would say, sort of three pillars. One is remittances from Cuban-Americans and Cubans in other countries, but primarily Cuban-Americans, at the rate of about $3 billion a year. The tourist economy, which generates revenues of over 2 (billion dollars), close to $3 billion a year. And then the subsidized oil that they receive from Venezuela.

Well, of course, the subsidized oil from Venezuela is declining as production in Venezuela declines because of the crisis there. It’s down 13 percent this year and 37 percent since 2008.

The tourist sector is sort of the most dynamic and most rapidly growing sector of the economy. But the private sector—the cuentapropistas in particular but also the private agricultural sector, which is now most of agriculture—is also a kind of engine of growth; small, but expanding, or at least until recently expanding, and a very important component of economic growth.

Right now the economy, though, is facing some very tough challenges. One is the decline in oil shipments from Venezuela, which has forced them to impose really strict energy conservation measures. Another is the damage done by Hurricane Irma, which did enormous damage along the north coast of the country, and particularly to the electrical grid and to some of the tourist sites. And finally, the travel advisory which has been put into place here by State, which could impact significantly—we have to wait and see—could impact significantly the number of U.S. travelers, which has been significant. Last year, over 600,000 Americans, both Cuban-Americans and non-Cuban-Americans, traveled to Cuba. So if that’s reduced in a significant way, that could have a blow to the tourist economy.

LABOTT: What do you think in terms of the climate for investment and of U.S. businesses that were, like, dying to get in at the opening, the combination of, you know, what’s happened recently but also, you know, Trump’s rumblings of tightening the relaxing of regulations? How do you think that’s going to affect U.S. businesses that were really eager to, you know, get in there? You know, and it was anything from, like, huge hotels and chains to, like, small business and agriculture. Where were the—where were the openings? And where do you think they remain?

ERIKSON: Well, it’s a great question. Cuba has always been a very tricky place for any business. It could be European, Canada, Asian, and certainly it’s doubly true for the United States. Every other investor has to deal with kind of the arbitrary nature of the Cubans, but then we also have our own regulatory challenges that are produced here in Washington, which may sometimes be more flexible or scaled back. But it makes it a little bit hard to do.

I would say, just as someone who’s worked on Cuba for a while and saw, like, the huge level of interest that came about in December of 2014, and then now the cooling off, that the—it seems like the American businesses that have done the best have managed to break away from the herd mentality and find a sector or an angle that really works for them. And so, you know, one case that maybe has been a little challenging is the airlines, where there’s—every airline wanted to add a route to Cuba. You know, and the rap on Cuba is everyone wants to go once, no one wants to do twice. And so you don’t sometimes have the—you know, the repeat tourism that they were anticipating. But there are other U.S. companies that remain engaged there, that are compliant with U.S. regulations, that are making a difference.

LABOTT: OK. Jose Miguel, Bill talked a little bit about the elections. Raul Castro said he won’t run for—you know, won’t run for reelection, and the first process is municipal elections next month. And you have these opposition groups that are mounting, you know, kind of serious efforts to try and win those council seats. Is democracy going to be possible in Cuba? And, like, anybody feel free to weigh in before we open it up to questions about, you know—talk about challenges the new regime is going to face in terms of this new challenge from an opposition. Jose—(inaudible).

VIVANCO: Look, I’m very—I’m very skeptical that we will see tangible progress with regard to democracy, human rights, fundamental freedoms in Cuba without international pressure. So these elections that you’re mentioning, we are getting reports—reliable reports—of already harassment against candidates on local level that are not fully endorsed by the—by the Communist Party. So I don’t think—I don’t—I think it’s unrealistic to assume that, as a result of engagement with Washington, the nature of the regime will change. I don’t think so.

LABOTT: But you argue that if you don’t have—if you get away of the distraction of the embargo, then there could be real international pressure on human rights.

VIVANCO: That’s right.

LABOTT: Right.

VIVANCO: I mean, our thesis, you know, is that what you need in Cuba is effective pressuring coming from Europe and coming from Latin America—from democracies in the world. And that pressure is not going to happen if—unfortunately. But it’s a reality. And this has been the reality for several decades—as long as the perception in the rest of the world is that the Cuban people is subject of widespread and indiscriminate sanctions coming from Washington. But to insist on a policy of isolation I think is a mistake. That policy’s every year rejected almost unanimously at the U.N. level. It’s incredibly unpopular.

So what you were asking before, specifically to Daniel, which was what were the results of the policy of—in terms of human rights and, you know, in Cuba—of the policy of President Obama, I believe that what President Obama did was a serious contribution to create a new environment, especially in Latin American, assess human rights and to press human rights conditions in Cuba, for the first time looking at conditions like, for instance, labor rights or free speech or civil society and, you know, fundamental, basic rights that are enjoyed in the rest of the region, but unfortunately are not in Cuba.

LEOGRANDE: I think the local elections, though, are interesting in another way. Not tied, necessarily, to U.S. policy. But two and a half years ago, in the local elections, three opposition candidates managed to get nominated in their neighborhood and run the municipals councils. All three of them were defeated, of course. This year, over 170 candidates are trying to get nominated at the local level, which is an extraordinary expansion of the effort by opposition elements. We will have to wait and see how many of them are able to get nominated, then if any of them are able to win election.

But in the video that—of Díaz-Canel— of Díaz-Canel’s speech to party cadre, he expressed real concern about this surge of opposition, and said the Communist Party was going to do everything it could behind the scenes to see to it that none of these counterrevolutionaries were actually able to be elected. But it’s a significant enough expression of people’s effort to work within the rules of the system itself, but to pose an alternative. And I think that’s new, in some ways, and fascinating.

ERIKSON: I would just say finally that there has been, I think, some movement in Cuba in terms of individual autonomy, but it has just not translated yet to representative democracy.

LABOTT: Right. OK, we’re going to open it up for questions. Please keep your question to a question and keep it short so we can have as many questions as we can. Please identify yourself, wait for the microphone, speak directly into it, and stand, and your name and affiliation. And let’s—if you have a question, please raise your hand. To the dear Gardiner Harris in the back.

Q: Sorry. We sort of know each other. My name is Gardiner Harris from The New York Times.

I think I’m curious about—obviously, we are news hounds. I’m most interested in what’s going on right now. Do you—are you skeptical that there were attacks, each one of you? Do you—do you buy the notion that there were attacks, that the Cuban government—what’s your guess? They were involved, weren’t involved? Each one of you, again, sort of expressed skepticism that if there are attacks on Cuban soil they don’t know about it. And finally, what do you think the immediate economic effects of this? You know, I quoted in my story a fellow who said, look, if the insurance companies suddenly decide that it’s too risky to be in Cuba, then it’s not just an effect on American tourism. It’s an effect broadly because the Europeans won’t be able to get insurance. The whole place kind of shuts down in terms of the Cuban growing tourist economy. So I just—in sort of the immediate to mid-term, I was just wondering what you think is sort of really going on there, your guess is?

LABOTT: Any effects? That’s a good question.

ERIKSON: So you’re asking us to speculate on a mystery. (Laughter.) You know, I’ll just say from my vantage point—

LABOTT: And you’re not a government official anymore. You can speculate.

ERICKSON: Yes. I am allowed, because no one— yeah. Anyway— (laughter)—

LABOTT: No consequences.

ERIKSON: But what I would say is I don’t have any reason to doubt that these instances occurred. And I would just add that several of the affected diplomats also met with the American Foreign Service Association, who issued a statement following that meeting outlining some of the symptoms and so forth.

LABOTT: And that they—and just to be clear, that they did not—the position of the American Foreign Service Association is that they did not want to leave because they felt that the mission was very important and that they felt that, you know, diplomats take risks all over the world and this was another risk they were willing to face because this is such a crucial time, as they were saying.

ERIKSON: Yeah, absolutely. It is a critical time. And so—you know, so on that point, I don’t have any doubt that this occurred. In terms of figuring out kind of who did it, it’s an ongoing investigation. You know, and we haven’t included yet, but probably should, the fact that Canada has also been affected by this, that there’s between five and 10 Canadian diplomats—as has been reported in the press—who have been affected. Given the size of the Canadian embassy in Havana, that would be about a proportionate amount of diplomats to the number of American diplomats that were affected at that embassy. And Canada has had a really radically different interpretation of the threat, in the sense that they are not pulling out diplomats, nor have they issued a travel advisory for the 1.2 million Canadians that head to Cuba each year.

And then, in terms of the insurance piece of it, I guess I’ll let you take that.

LEOGRANDE: (Laughs.) Well, I’m not going to talk about insurance. But it does seem to me possible that some of these reports are false positives, but not all of them. I mean, there’s just—there’s too many, they’re too concentrated, and there’s already been some investigation, it seems, to indicate something is going on. Whether it’s an attack versus some unintentional exposure is uncertain, although the fact—the recent report we’ve seen that some of the most effected diplomats—

LABOTT: Were CIA.

LEOGRANDE: —were intelligence officers suggests an intentionality behind whatever it is that’s going on.

I just don’t think the Cuban government is behind it. Who benefits from this? Not the Cuban government. So I don’t see this—it seems extremely unlikely to me that this is a matter of Cuban government policy for a wide variety of reasons. And the Canadian connection is one of them, because Cuba and Canada have very good relations, have had or a long time. And Canada is the source of more tourists going to Cuba than any other country. So it would really be shooting themselves in the foot to be doing this to Canadians.

In terms of the economic effects, I don’t know enough about insurance to give you an answer about that. But I would point out that U.S. visitors are only about 7 percent of the total number of foreign visitors that go to Cuba every year. So even if the travel advisory has a big effect on U.S. visitors, it will hurt the Cuban economy for sure, but it’s not—you know, it’s not going to be crippling to the—to the tourist industry.

LABOTT: any other questions. Yes, we’ll go right here, and then we’ll go to this gentleman over here.

Q: Thank you very much. I’m Michael Shifter with the Inter-American Dialogue.

Thank you for your great comments. Just on the same point, what would you have done? Has the Trump administration responded appropriately? You mentioned the statement of the diplomatic association, you’ve heard some statements from Senator Rubio, Senator Leahy. But was this the right response? Could they have just done nothing? Should they have just reduced 40 percent instead of 60 percent, not issue a travel advisory? What is your sense of how this could have been handled better or differently by the administration?

ERIKSON: Well, I’ll start there. As I said, I’m not going to kind of second-guess the decision to pull the diplomats out because I don’t have the basis of information to do that. There are a couple of things, I think, could have gone better or could still be done now. The first is, as I noted, there’s another country engaged in this, which is Canada, which also has a good relationship with Cuba, that’s also investigating this. And I think, you know, one approach would be to set up a U.S.-Canadian taskforce to look at this issue, perhaps even a U.S.-Canadian-Cuban taskforce to focus on the investigations, depending on whether that’s a useful avenue for all to be involved. But it seems to me that the interests of the three countries—

LABOTT: Well, the FBI—and the FBI has been down there, and the Rocky Mountain—

ERIKSON: Yeah, the mounted police.

LABOTT: Yeah.

ERIKSON: The mounted police. But in my sense right now—and these are two investigations that are kind of going on a parallel track. And it would be useful to kind of bring this together and, I think, have a more comprehensive approach.

On the piece of the travel advisory that went out, I have concerns. I think it’s too broad. I think that the notion that the United States should say that no American should travel to Cuba because of these incidents is almost too broad an advisory to be helpful. You know, I noted—as I was just kind of looking at the advisory—there was one published the day before on Turkey, that cited a variety of violent incidents and said that there’s real risks in Turkey. And then said any—in essence, any American traveling to Turkey should deeply consider this context, right, which is different from saying Americans should not travel to Turkey.

LABOTT: Do you think it’s political?

ERIKSON: I don’t know if it’s political, but I do think that the—that the travel advisory as written, I think, does not do the job in terms of providing the information to Americans that they need to make decisions. You know, there are many Americans that are going to go down to places that aren’t Havana, that they’re not going to stay in hotels. They’re going to be visiting family. They’re going to be engaged in other parts of the country. And so I think that there could be a way to have written the advisory that would notify Americans of the risks without, you know, casting such a wide net.

LABOTT: Jose Miguel.

VIVANCO: Let me go back to the first question, but I don’t think it’s in the—let me phrase it this way: This type of incident, I don’t think it helps to improve the image of the Cuban government elsewhere. In other words, it creates no sympathy for the Cuban government in—let’s say, in the rest of Latin America. So it’s hard to imagine that this was deliberately done by the Cuban government because—for the reasons that my colleagues just highlighted. But, on the other hand, it’s really hard to believe that the Cuban government has not clue about the cause of this attack.

LEOGRANDE: Let me, if I can just real quickly—

LABOTT: Just real quick, we want to—

LEOGRANDE: Real quickly. I think the travel advisory is political because it’s as broad as it is. And I think it’s an effort to try to placate some of the critics in Congress. And secondly, we haven’t talked about it, and that’s the ending the visa processing.

LABOTT: Well, I mean, to be clear, they are still issuing visas to Cubans. They’re just closing visa services because they’re drawing down the staff. So it’s not that a Cuban who applies in Mexico—obviously, it would be harder for them to go to another place and get a visa, but they’re not saying that we are not giving Cubans visas.

LEOGRANDE: Right. But here’s the problem. We’re committed by the 1994 migration accord with Cuba to issue a minimum of 20,000 immigrant visas a year to Cubans. And those are not going to be 20,000 people that can fly off to Mexico in order to get their visas processed.

LABOTT: Well, we don’t know how long it’s going to last, right? This—

LEOGRANDE: That’s true. That’s true.

LABOTT: Yeah. Right.

Q: So I’m Jim Nathan from American University.

And I’d like some speculation as well about—(laughter)—

LABOTT: I love speculation.

Q: —what we can expect and why, in terms of the new regulations to punish Cuba.

LEOGRANDE: So we know from the national security presidential memorandum that Trump signed on June 16th that there are two major sanctions being imposed. One is in the—in the people-to-people travel category. You will no longer be able to go on your own. You can’t design your own program. You have to go with an organized group. And that rolls back a decision that Obama made to allow individual people-to-people travel back in 2016. The other is a brand-new sanction which is that no U.S. business or visitor will be able to engage in financial transactions with any enterprise or any—yeah, any enterprise entity linked to the Cuban armed forces. And that’s important because the Cuban armed forces operates about 40 percent of the tourist sector of the economy. So that’s very important.

It’s also extraordinarily difficult to administer because the State Department is tasked with giving us a list of all the enterprises we can’t do business with. And some of the—some of—these are holding companies that have lots of retail outlets where you might stop and buy a coke or buy a bottle of water on the street. So State has to give us a comprehensive list of places we can’t do business when we’re traveling in Cuba. And that’s why it’s taking so long for these regulations to come up. State is in the process of trying to compile this list. And the Cubans, as you can imagine, are not being helpful.

 LABOTT: Well, and also, the State Department has very kind of small staff right now. It’s still staffing up. And so let’s go over here and then over here and then to the back.

Q: Thank you. My name is Mark Feldman. Long ago I spent a lot of time at State on Cuban issues.

And I’d like to ask a question which doesn’t reflect any particular paranoia and it may or may not have a bearing on these attacks. But certainly, there are other actors, nation-states, who have an interest and concerns about the policy that President Obama initiated. So let me ask you what you know, if anything, about the Russian and Venezuelan response to the changes in Cuba, including the U.S., if you want to call it, opening to Cuba, but also loosening of the—changes in the Communist Party’s activity or policies in Cuba. Are these governments doing anything that we know about?

LEOGRANDE: Well, the Venezuelan government was clearly concerned on December 17th, 2014 when you had the joint announcement about normalization of relations, because that was a period when our relations with Venezuela were deteriorating. And so the Venezuelans felt like the Cubans might abandon them, in effect. So the Venezuelans are certainly concerned about it. The Russians nominally have not expressed concern about it. But we are rivals in a certain sense, or we were during the Obama administration, with the Russians, who are trying to reestablish their influence in Cuba under Putin. And then the Chinese—just to add another country—the Chinese have generally be very positive toward the economic changes in Cuba, but feel like the Cubans are actually not moving fast enough down the road that the Chinese themselves have moved. So I don’t see that the Chinese would necessarily have a problem with Cuba reaching out and normalizing relations with the United States.

LABOTT: Did we say—we said right here and then to our friend in the back.

Q: Mike Van Dusen, the Wilson Center.

I’m just curious to take the previous question in a slightly deeper area, which is Venezuelan-Cuban relations, and what’s happened to them as oil shipments have gone down? Have the doctors and teachers that have been going there for the start of their careers, et cetera, has that number gone down? Any significant changes in that?

ERIKSON: Again, it’s a great question. I mean, the real alliance between Cuba and Venezuela was started between Fidel Castro and Hugo Chavez, who are now both gone from the scene. And it was really for many, many years essentially an oil for doctors swap, where the Cubans were sending medical personnel and some other personnel down to Venezuela in exchange for about 100,000 barrels a day of oil. Now, as Bill has said, some of those shipments have declined in recent years. I think one of the reasons that the Cubans, who are really in many ways still fundamentally ambivalent about better relations with the U.S. decided to take that approach in 2014 was because they saw that Venezuela was really headed for a crash. And so they wanted to diversify some of their international relationships as well, and not be so reliant on the Venezuelans.

Now, the Cubans also have had an outsized role in Venezuela in terms of providing advice to the now-president, Nicolas Maduro. And so I think that sort of political linkage remains intact. Maduro’s been to Cuba probably a dozen times in the last three or four years. And so there’s still, I think, a very tight political relationship there. But the economic side is fraying.

Q: Barry Wood, RTHK in Hong Kong.

Could you speak about the distorting effects of the dual exchange rate? There had been speculation that this would be ended. It goes on. And what about the International Monetary Fund? Have there been any talks, informally, about normalizing relations and getting back in the good graces of the international financial community?

LEOGRANDE: So there have been some informal talks with the IMF. But the Cubans have not yet shown a willingness to want to rejoin the IMF. And of course, the United States would have some say in that. And under the Helms-Burton law passed back in 1996, obligates the United States to vote against Cuba rejoining international financial institutions. We don’t have enough votes per se by ourselves to block it, but that’s an obvious obstacle. So the dual exchange rate, of course, is that there are two different currencies that circulate in Cuba. There’s the national money or national peso, which is only worth about four cents on the dollar. And then there’s the convertible peso, which is worth a dollar. And the tourist sector tends to be run in convertible pesos. And if you work for the state, then you’re going to get paid in national pesos.

And it has an incredibly distorting effect on the labor market, because it means that highly trained, skilled professionals can make more money tending bar or driving gypsy taxis for tourists than they can working as a scientist or a teacher or whatever. And so it’s created incredible distortions in the labor market, which are an enormous—and enormous problem, and one of the drivers, actually, for younger professionals wanting to leave the country and go somewhere else.

LABOTT: Yeah, because—I mean, when I was down there, I also thought, Jose Miguel, that it’s a human rights issue, because the people that are working for the national dollar are just kind of stuck in this cycle of poverty. If you don’t have, like, a kind of side job or a, you know, job in the tourist sector or your own little thing, you’re kind of destined to live in a certain—in a certain way.

VIVANCO: Yeah. I mean, if there is any concept of social mobility with those kind of—under those conditions, it’s virtually impossible. But not only that, the average salary in Cuba is $20, $25?

LEOGRANDE: Almost 30 (dollars).

VIVANCO: Thirty (dollars)?

LEOGRANDE: Almost 30 (dollars). (Laughs.)

VIVANCO: OK. And if you want to have access to internet, which is heavily censored by the government, I don’t recall exactly how much you pay per hour, but I believe it’s something like $20.

LEOGRANDE: No, no. It’s like two—$2 or $3 an hour now. The cost has come way down. But still an ordinary Cuban, that’s still a fortune.

LABOTT: I read—just one more point on the internet. I read that, you know, they’re doing more home—more home internet. But what you’re saying is you can’t really—it’s still a fortune to afford it.

VIVANCO: It is. It is. And, again, heavily censored. And you have a—for instance, a case of Yoani Sanchez, who is an extremely talented writer, who I believe is very well-known outside Cuba. But not in Cuba, because the—you know, whatever the publish or try to publish on 14 ½— catorce y medio—is barred, is prohibited in Cuba.

ERIKSON: Just briefing, I was going to add that this issue of currency exchange has been on the Cuban to-do list for about 25 years. And it keeps coming back to something they haven’t been able to resolve. It’s expensive. They’d need substantial international reserves to do so. And right now they don’t. If anything, the economy’s hitting the skids again. And so I think it will be difficult to pull off. However, if whoever takes power after Raoul Castro wanted to do one thing where they could get national acclaim and stay in power for a longer period, it would be to work on that currency issue, because it’s a grievance that every Cuban has.

LEOGRANDE: Unless it has unintended economic consequences, right?

ERIKSON: Fair.

LEOGRANDE: And causes even a deepening of the economic problems. And that’s, I think, one of the reasons that they’re reluctant to do it, because of that fear.

LABOTT: OK, we have just a couple of minutes left. We’re going to take two last questions. This woman right here and this woman in the back. Why don’t you start?

Q: Thanks. I’m Alka Pradhan. I’m from the Military Commissions Defense Organization at the Department of Defense.

And perhaps not surprisingly, I’d like to ask—shift a little bit and ask about Guantanamo. We’ve seen for almost 16 years now the sort of standing objection of the Cubans to our operations at Guantanamo Bay, but it’s never really moved past that. And I wanted to ask, given what Mr. Vivanco was saying about the—their own shift in human rights observance, whether you see that changing at all.

LABOTT: And we’ll just take you question too and we’ll wrap up.

Q: Yes. I’m Nancy Bearg. I teach leadership at George Washington University.

My question is on the private sector. I was there in May. And there was some emphasis on entrepreneurs and on the private sector, and starting to grow that. And they, of course, make a little more money. And they were anticipating a new law that was going to come out. And they were anticipating greater freedoms and opportunities. And I wonder whether that has advanced. Thank you.

LABOTT: Do you want to start with the Guantanamo question?

VIVANCO: If the question is whether the Cuban government is—shows some evidence of changing their claims—historical claims over Guantanamo, as far as I know there have been no change in that position. That remains a serious request by them. But if you mention Guantanamo, and if I—you know, you happened to ask a question to a human rights guy—I have to argue that Guantanamo has a very—also symbolize practice of abuse of power and I think is a serious factor that damaged the credibility of the U.S. as a credible or serious player on human rights all over the world.

LABOTT: You want to take the private sector question?

LEOGRANDE: Yeah. So the law that people were talking about was one that would actually give private enterprises a legal identity. What exists so far actually is simply a license to be self-employed. So that doesn’t really cover if you’re actually building a private enterprise. And that was a—the idea of that was approved by the Communist Party Congress in 2016. But it hasn’t yet come out in a law. And in fact, just a couple of weeks ago, things seem to be moving in the opposite direction when the government issued a temporary suspension of issuing new licenses in some categories of self-employment, most importantly private restaurants and private bed and breakfasts, which are actually the two largest categories in which the cuentapropistas fall.

LABOTT: Dan, I’m just going to go to you for the last word, kind of wrap us up.

ERIKSON: OK, great. Thank you. Well, it’s been a great conversation. I think it’s really outlined how much there is at stake right now in the U.S.-Cuba relationship on almost all levels, in terms of their political transition, our own engagement with them, the economic changes that are coming, and also just the ability of the average American citizens or constituent to engage with Cuban on issues of interest. You know, as, Elise, you may know, about 10 years ago I wrote a book called “The Cuba Wars,” it was even before a backchannel to Cuba.

LEOGRANDE: It was. It was. (Laughter.)

ERIKSON: You know, and the thesis was that U.S.-Cuban relations should really change, but probably won’t. And then for about two and a half years, I was wrong on that last part. And so my question right now, is this going to come back into date? Are we headed back essentially into the Cuba wars, or are we going to find some new foundation for this relationship that can survive the political transition that’s taking place here and there.

LABOTT: Well, hopefully we can. We have one rule here at the Council and that’s that we end on time, so unfortunately that’s all we have time for. But thank you for a wonderful discussion and thank you for joining us. (Applause.)

(END)

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