The Cuban Economic Embargo: Time for a New Approach?

INTRODUCTION by Dan Griswold, associate director, Cato Center for Trade Policy Studies

Well, Good Morning everybody and welcome to the Cato Institute's F.A. Hayek auditorium. My name is Dan Griswold and I am the Associate Director of the Center for Trade Policy Studies here at Cato. I should also welcome those watching this program on the live web cast on the Cato website which you can do, and we also archive this event. So, you can go back and actually re-experience it, watching it on archives.

Since 1961 the United States has imposed a comprehensive embargo against Americans who want to trade with, travel to, or invest in the island nation of Cuba. The embargo was justified at the time, and I think reasonably so by Fidel Castro's aggressive alliance with the Soviet Union. But after the collapse of the Soviet Communist system almost a decade ago, after the departure of Soviet ships, troops, and advisors, and the withdrawal of Cuban troops from places such as Nicaragua and Angola, the embargo lost it's Cold War rationale. But instead of relaxing the embargo since then, Congress has only turned the screws. In 1992 Congress passed and President Bush signed the Cuban Democracy Act, which tightened the embargo and also changed its focus from national security to promoting political reform within Cuba. Then in 1996 Congress passed and President Clinton signed the Cuban Liberty and Democratic Solidarity or Libertad Act, the so-called Helms Burton Law. This law imposes extra territorial penalties on foreign companies and citizens that quote traffic in property that Castro originally expropriated from U.S. citizens. The Cuban Embargo has now been in place for almost four decades, but Cuba has barely budged from it's socialist, one party state lobby. The citizens of Cuba remain politically and economically repressed with no immediate hope of reform toward democratic capitalism.

Our panel today will shine a critical light on the embargo from three distinct perspectives and recommend alternatives to U.S. policy towards Cuba. Before I introduce our speakers, one programming note. I did make an effort to get somebody here on the panel to make the pro-embargo argument. I actually invited three people, one was willing and unable, and two were able but unwilling. Not sure why, but no one can argue that the pro-embargo position is under-represented in the current debate about this issue. After all, the embargo remains the law of the land and the consensus position in Congress. The purpose of the program today was not to be a self-contained debate, but to be an opening cellblock of what should be a more vigorous debate about this issue here in Washington towards Cuba.

Our first speaker today is Congressman Mark Sanford, a Republican from South Carolina's first district. Congressman Sanford was first elected in 1994 and will be retiring after this session of Congress, unlike some of his classmates from the class of '94; he is keeping his promise to his constituents and will be serving only three terms. During his time in Washington the Congressman has championed term limits, lower spending, and reforming the Social Security system towards a system of private, personal accounts. And I am glad to say he is also a friend of free trade. According to a Cato rating of trade votes in the 105th Congress, he was one of only 25 members in the House to vote a majority of the time, both to reduce trade barriers and cut trade subsidies. Consistent with that record, Congressman Sanford recently introduced a bill that would lift restrictions against travel to or from Cuba by U.S. citizens. He has agreed to join us today to talk about his bill and what led him to introduce it in Congress. Please join me in welcoming Congressman Mark Sanford.

Congressman Mark Sanford (R-SC), Panelist:

Thank you very much. Thanks first of all for a chance to be here and more importantly I would say thank you for what Cato does, because I think there are a few intellectual guardians, if you will, out there and I would put Cato on the absolute forefront on that front, in that you guys don't argue a partisan position one way or the other. It seems to be you simply argue reason and I think that is something we need a lot more of in Washington. I enjoyed working with you all particularly on social security. I talked to Jose Pinera last week, he has become a personal friend, and I just admire your work on social security, and now you are exploring something as controversial, frankly, as the whole Cuba issue.

I would say that my interest in Cuba and on this Cuba travel bill that we have is really driven by a personal story, in that I came to Congress back in 1995. I was in the class of 1994. I had never run for dogcatcher before I ran for Congress, but ran and was elected like a number of my peers who had never held elected office before. And the one thing I had was finance experience. Naturally I thought they would put me on the Ways and Means Committee. I am the only guy who has finance experience in New York and a Masters in Business and a number of other things. Clearly they would put on the Ways and Means. That was not the case. They put me on International Relations. Initially I was frankly disappointed, but it actually proved to be one of the more interesting intellectual committee assignments that I was stuck with. What was interesting was that the first trip that I ever took on the International Relations Committee was a one night trip down to visit the 20,000 troops that were based at that time in Haiti on the afternoon and then to run over to Guantanamo Bay in Cuba that night, and then spend the night at the naval base, and then the next morning to visit with the refugees that you may remember at that time were in Guantannamo Bay. In seeing the plight of these refugees you couldn't help but be struck with their story. Here are people who basically risk their life for freedom, and they risk their life to have a little bit better shot at earning a living for their families. So, I was struck by their story, and I walked away from that experience just wanting to help in any way I could.

The first shot to come along at helping those refugees was with Helms Burton. I voted for Helms Burton because the basic argument that was made to me was that the aid from the Soviet Union is now gone, Castro and his regime are basically tinkering on the edge, and all we needed to do is tighten up the screws a bit, and it will cause enough civil unrest within Cuba to overthrow the government. Basically that was the rationale. It sounded reasonable to me, again I was new to politics, but it sounded like a plausible argument and I supported Helms Burton.

Now, if you will fast forward in time to about two years ago, I was invited by a non-profit group called the Human Right's Project; they invited me to go down to Cuba and I thought, well that would be an interesting thing to do for a couple of days. They invited myself and Governor Tom Campbell from California. We went down and what struck me was rather than the screws being totally tightened on Cuba, what I saw instead was frankly downtown Havana being restored. I saw a lot of investment. I saw new hotels put up by Spaniards, or by Germans, or by Mexicans, in other words I saw a lot of investment. It didn't look to me like the screws were really being tightened down. I think of particular interest was, so one, it struck me in a visceral way that the economic model that says unilateral sanctions have never hit worth in the history of man, was holding just as true in Cuba despite the fact that it is sixty miles from our shores. The other thing that struck me was every conversation I had with somebody, I would wander out from the group, I would go to the corner grocery store, I would go to wherever I could, the little market, I tried to have a conversation that was not one of the set conversations as a part of our curriculum, if you will, but rather just a random conversation. In every one of those conversations with folks basically the person said, this policy isn't working. Every sorry thing that happens in this country basically is blamed on the embargo rather than on faulty policy, and I don't think it is helping. I think it ought to go. That was what was said to me by the man on the street, and what was said as well, I remember one afternoon we went to a guess it is the Charje or whatever, but with the Cuban intersection there, we went to his home and met with independent journalists and we met with political dissidents who I thought would have a bit broader perspective than maybe the man on the street. Even they said in the embargo it is not working. It is Castro's last excuse for everything that goes wrong in this country. I heard that over and over and over again. So that unsettled me, but again I was busy with social security, I was busy with a number of other things, and so it just sort of sat there.

Then last fall, you all may remember the Ashcroft Amendment that came up over on the Senate side, and that was basically a bill that passed the Senate by democratic process, prevailing through the Senate, and that is that farmers should be able to sell their grains to Cuba. Yet by means of sort of communist style tactics, and that is not unusual with Conferees as we know, but the Conferees basically yanked that part out of the bill. For me that was the straw that broke the camel's back. I said, "This is not making any sense. I don't know if this is true or not, I'd heard farmers were offered an additional 700 million dollars in the aid package if they would take out the grain sales component." Again I don't know if that is true, but you heard a lot of things rolling around. All I knew is that you had the prevailing view of the Senate yanked out. And with that I said all right, what is a modest first step measure here. It seems to me that it would be travel-to allow travel. But I wanted to make sure though I was right because prior to going down on the first trip down to Cuba, I talked to Elian and I talked to two people in our Republican Conference who have very strong views on Cuban policy. They encouraged me not to go. They said basically you could get brainwashed if you go down there, don't go. I said, "I went to UVA graduate school, that whole process at Darden was a isocratic method, I like hearing different sides of the story, I won't be brainwashed." But I thought in fairness to Elian and Lincoln, maybe Castro somehow salted each of these different crowds even though I tried to have random conversations. Maybe they weren't random conversations.

So this last fall on my own dime, I bought a ticket to Cuba. I went in essence illegally, if you want to call it that. Turns out I could have gone, so I didn't actually go illegally, as a member of Congress, but I went below the radar screen. I bought my own ticket to Nassau and from there I bought a ticket on Havana Tour I think it was, from Nassau down to Havana. I stayed with a family. You can get a room in somebody's house for $35.00 a night. I'm sure that is gouging, but I paid the thirty-five bucks a night and I stayed in the second floor of a family's house. I went around and I tried to have all the same conversations I had before, and what I heard was an exact repeat of what I heard before. The embargo is not working, it is keeping Castro in place, you need to change it. And these are just random people on the streets with no ax to grind. The other thing that I thought was particularly interesting, in the break between from when I had been there before and the trip this last fall, was the amount of new investment that I continued to see flowing to Cuba. If you go into Jose Martire, I think that is the name of the airport, what you see is a brand new airport terminal facility built by the Canadians. You go into Havana, the old part of town, you will see a new passenger facility that is beginning to be worked on, you will see a lot of the old buildings were in much further progress than I had seen before, and you saw a lot of new hotels and other things.

So, the idea that we were squeezing Castro was made that much more invalid by what I saw with my own eyes here this fall. And what you saw was the beginning of commerce in that the folks that I stayed with, well their cousin had a restaurant so we went to the bottom of their house to eat half of our meals. You would go around to the different people that had sort of these mini pieces of commerce. Tiny little things, but an embryonic start nonetheless.

So where am I? I am dropping this bill on travel because as I said before I think it is a very modest first step measure. If you go back to when this thing started in the wake of the Cuban Missile Crisis our goals were basically three. One, to weaken Castro's regime. Two, to signal that we didn't like their way of doing business, and three to encourage democratic change.

As I have already suggested, I think we are missing the vote on two of those. In fact, basically we have a policy that is in fact doing the reserve on weakening Castro's regime and encouraging democratic change. I would say secondly, I think that the idea of allowing Americans to travel to Cuba is consistent with the policy of engagement that we have offered in all kinds of other places around the world. If you look at what Ronald Reagan did in Eastern Europe, he allowed a bunch of cheeseburger-eating, backpacking, young American kids to backpack their way through Eastern Europe if they chose to do so. It was part of the formula that brought about success in Eastern Europe. The idea of a young kid talking to another young kid saying, "Well this is what it is like in my country", I mean that kind of personal diplomacy I think is very important in bringing down walls. It is something that Ronald Reagan used.

Two, I would say go back to 1972 with Nixon going to China. He normalized relations there; they didn't have a perfect human rights record. They had a communist regime in place. But he normalized the relationship to begin to bring about this conversation that I think needs to take place. In 1977, Carter lifted the travel ban on Vietnam two years after the end of the Vietnam War. Even if you go to Franco's Spain which is often times used as a counterpoint against the idea of travel, or the idea that sanctions work, I would say that if you actually look at travel, travel was never restricted within Spain even in Franco's time. Brits were going down to the south of Spain just as they do today.

Third, I would say it is consistent with travel to other parts of the world. Right now an American can travel to Iran. Now that is the place that has held American hostages for 444 days. That is the place wherein they call America, quote "The Great Satan". An American can travel to Sudan. Not only a place that seems to warehouse terrorists, but a place that frankly that has seen if not genocide, near genocide, particularly of Christians over the last few years wherein millions of people have been killed in that country. I would say in Afghanistan, home of Assama-bin Ladin. You could travel there as an American. In fact, you could travel to North Korea, which we are having a few problems with in terms of them wanting to fire missiles over Japan and other places. You could travel to all these strange places, but you cannot travel to Cuba. That does not seem consistent to me. In fact, if you look at the scale right now, what we are doing is ignoring our own U.S defense intelligence agency report, which came out May 5, 1988, which you basically alluded to, and that is that U.S. defense intelligence agencies said at that point, Cuba is no longer a military threat. And I think that is what we are needing to change the policy.

Fourthly, I would say it is inconsistent. Right now our Cuba policy is inconsistent, and I think inconsistency makes for very faulty policies. If we really want to turn up the screws on Castro to bring him down, then why do we allow 500-800 million dollars a year to flow back annually from Cubans living in South Florida back to their families living in Cuba? That real money helps to keep things alive in Cuba. Or for that matter, imagine if you will, who is going to be the Congressman or Senator that proposes ending aide to Israel because the Israelis are doing business in Cuba for instance, in the citrus production. That is never going to happen. So we have a very inconsistent policy right now.

Lastly, I would make the point that I think this is consistent constitutionally. I think that we always got to look straight back at what the Constitution suggests. And I will just make three points on this. One, it was in 1956 in the Kent vs. Dulles decision that the court recognizes the right to travel abroad as a liberty protected by the Fifth Amendment. And in that decision they said this, "An American who has crossed the ocean is not obliged to form his opinion about a foreign policy merely from what he is told by officials of our government or by a few correspondents of the American newspapers, moreover his views on diplomatic questions are at risk by seeing how foreigners are trying to solve similar problems. In many different ways direct contact with other countries contributes to sounder policies at home." I agree with that. In 1965 Supreme Court heard the case of Zemmel(?) vs. Russ, specifically addressing travel to Cuba. And in this decision they came out with the belief that only the wadiest considerations of national security held this in place. With what the U.S. defense intelligence agency has said, I don't believe those wadiest considerations of national security are still in place. Or for that matter go to the 1994 State Department report to the U.N. wherein they said that the U.S. should recognize travel to any place in the world and that should be limited only in the cases of extraordinary circumstances. Again, I don't think extraordinary circumstances exist anymore, and I don't think that wadiest considerations of national security exist anymore to exempt our constitutional right to travel, frankly, anyplace that we want to travel to.

I would call it quits at there; I think my twelve minutes are up. Thanks for letting me be here.

Griswold:

By the way, we will have time for questions after all the speakers are done. Thank you very much. Our next speaker is Thomas J. Donohue. He has been President and Chief Executive of the U.S. Chamber of Commerce since 1997. There are three million members of the chamber, is that right? By far the biggest business organization in the United States. Among the issues he has championed since assuming leadership of the Chamber, are free trade, legal reform, and the looming shortage of workers in the U.S. economy. He has taken a special interest in U.S. economic policy towards Cuba, leading a group of U.S. business owners on a three-day trip there last summer. Please join me in welcoming Tom Donohue.

Thomas Donohue, President, U.S. Chamber of Commerce, Panelist:

Thank you, Dan (Griswold), for that kind introduction. Good afternoon, ladies and gentlemen. It's a great pleasure for me to be here today. Today I'd like to talk about why the American business community believes that it is important to lift unilateral economic sanctions against Cuba. The embargo hurts those American businesses, workers, and farmers, who would benefit from trading with Cuba. It hurts the Cuban people -- the embargo provides the perfect excuse for Fidel Castro to explain away his failed centralized economic policy. And, the embargo shuts off a critical valve that would help fan the spark of private enterprise that is present in Cuba. Finally, unilateral economic sanctions are an affront to the free trade policies that have brought our country and its citizens so much prosperity.

Preface

As many of you know, I led a delegation of business owners to Cuba last summer. So, first I'd like to spend a few moments sharing with you what I learned from that trip, and why the U.S. Chamber is taking a leadership role in the fight to remove America's unilateral trade sanctions and expand free trade worldwide. I spent three days in Havana, Cuba in early July of 1999 discussing Cuba's future with a wide range of voices: street vendors, shopkeepers, religious leaders, university students, and President Fidel Castro himself.

My goals were simple and clear:

· To learn about Cuba's economic condition, and whether a small private sector really does exist;

· To determine what role, if any, the U.S. Chamber of Commerce can play to spur the growth of enterprise in Cuba; and

· To assess the role that American firms could someday play in the economic development of Cuba.

It was an exciting and illuminating trip. Here's what I learned.

1. Time for a New Relationship

The first, and most fundamental, thing I learned was this: it's time for the U.S. to begin a new relationship with Cuba. Starting a new relationship with Cuba does not mean we withdraw our serious and valid disapproval of the political, economic, and human rights policies of the Cuban government.

In fact, I expressed our disapproval repeatedly in Cuba. But it's our responsibility to nurture the strong entrepreneurial spark that is spreading there. We should work hard to fan that flame. Increasing contact now will speed positive developments in the future.

But what about Castro, you ask. How will he allow a free market economy -- or even a limited one -- to flourish?

I had an illuminating six hour meeting with Castro. He has not softened his communist views in the least, and he retains an iron grip on the country.

But all the same, he acknowledges that there are sectors of his economy that are better handled by the private sector, and this is why he has not yet snuffed out the entrepreneurial spirit.

So we have to seize this window of opportunity to help Cuba move forward.

You might ask, why is the Chamber the appropriate institution to undertake this effort? Because we are non-governmental, voluntary, and private sector.

We have a well-established track record with our 87 AmChams around the world.

When I was in Cuba, the authorities wanted me to sign an agreement with the Cuban Chamber of Commerce. I have nothing against the Cuban Chamber -- on the contrary, they are a well-intentioned group. But they represent only the public sector.

Instead, I made it very clear that it would be our goal to create a working group that would both work with government-owned companies, and foster the budding private sector.

We reached an verbal understanding. The U.S. Chamber will help provide training and development programs to nurture the Cuban private sector and help Cuban businesspeople, both private and public, succeed.

Why put so much emphasis on Cuba's tiny private sector? Because change is a two-way street. As much as I would like to do away with the embargo, I know our chances are slim if Cuba does not do its share in changing the relationship.

One thing Cuba must do is allow its private sector to grow. This would help open Cuban society and help the Cuban economy. We want to be the catalyst for this change.

For that reason, we hope Congress will give us a hand and support legislation to exempt food and medical sales from unilateral sanctions as soon as possible.

2. It's Time To Lift the Embargo

The second thing I learned was that it's time to lift the embargo.

It's a tragedy that during one of the most exciting and dynamic periods of global economic expansion and technological innovation, the Cuban people have been left out.

Castro blames the U.S. embargo. No doubt the embargo has contributed to hardship -- but it is the lack of private enterprise more than any other factor that has played the greatest role in holding Cuba back.

When it comes to the Cuban economy, Castro has a perfect excuse -- it's the embargo's fault. In fact, Castro needs the embargo as a scapegoat for the abysmally poor Cuban economy. Lifting the embargo on Cuba would not only remove Castro's excuse for economic failure, but would also help the Cuban people by providing more economic opportunity and freedom.

Even just exempting food and medicine from all restrictions on sales to Cuba would be an improvement. It would also help American businesses, American farmers, and American workers.

When Castro finally passes from the scene, and Cuba finally opens up, European and Latin American companies that have already gained a foothold there will be positioned to grow. American companies will have missed a great opportunity.

And let's face the facts: unilateral sanctions almost never work.

The story is the same all around the world. Time and time again, the U.S. imposes unilateral sanctions that only end up hurting our own people -- while providing ammunition to unfriendly regimes.

Right now, America imposes unilateral sanctions on more than 70 countries across the world, covering almost 70% of the world's population. America has imposed unilateral sanctions more than 120 times in the past 80 years, with over half in just the last six years. And there are currently over two dozen proposals pending in Congress that would clamp more restrictions on American companies trading abroad.

This is a failed policy.

Study after study has shown that unilateral sanctions hurt American workers and do nothing to help achieve American foreign policy goals. That's why the U.S. Chamber of Commerce is committed to leading the fight to remove unilateral trade sanctions.

We understand that change isn't going to be a sprint -- it's going to be a marathon. But that's even more reason to keep the pressure on, and that's exactly what we're going to do.

3. Trade Education Is Critical

Finally, the situation in Cuba reminded us how critical education efforts are in promoting and expanding free trade.

Unfortunately -- for a variety of reasons -- many people are unwilling or unable to recognize the tremendous benefits brought by free and fair trade. It's our responsibility to educate them, and the sooner the better.

The forces of isolationism and protectionism are gaining ground. That's why we are kicking our trade education program -- called "TradeRoots" -- into high gear:

We're building free trade coalitions in 66 Congressional districts in 27 states,

Developing a campaign to use pro-trade governors as spokesmen,

Establishing a pro-trade information center at the Chamber and at certain state chambers,

Developing a "grasstops" program in those 27 districts; and

Arming local media with local and state pro-trade statistics and facts.

Our trade education program is just one of many aggressive activities the Chamber is engaged in to promote free trade and open new markets.

CONCLUSION: JOIN WITH US

In sum I would say this: when it comes to expanding international trade, the U.S. Chamber of Commerce is looking after the future needs of American business -- and the needs of people around the world whose standards of living will certainly be raised by more trade.

When it comes to Cuba in particular, we know that Chamber and American business involvement will bring about positive change over time.

The century long debate of freedom versus state control is ending, and freedom is winning. Even countries with systems more like Cuba's have added market elements to their economies -- like China, Russia, and Vietnam.

But we have nourish these efforts, or they will die.

Throughout the years, the ability for American companies to trade freely with companies in other countries, for American consumers to benefit from the extra choices and lower inflation that trade brings, and for American workers to participate in a dynamic market has made our country the freest and most prosperous in the world.

The freedom to trade is a fundamental freedom -- and we ought to treat it as such.

That's why we invite you to work together with us so that we may spread freedom, opportunity, and dynamism not only to Cuba, but to everywhere else in the world that it is in short supply.

Ladies and gentlemen, thank you very much.

Griswold:

Thank you very much. Philip Peters is Vice President of the Lexington Institute, a non-profit research institution here in Washington, D.C. Before joining the institute, Mr. Peters served as a state department appointee in the Reagan and Bush administrations. He has traveled widely inside Cuba, and has written and testified extensively on the state of civil society and market-based changes in the island. Please join me in welcoming Phil Peters.

Philip Peters, vice president, Lexington Institute, Panelist:

Thank you very much. I want to thank Cato for having this discussion. I think my point of view is going to seem very equivocal after Donohue's presentation. I think I have a pretty straight-forward point of view that the policy doesn't serve our national interest, but I think that our debate on Cuba is far too acrimonious and bitter, and for those of us who care about Cuba, and I think that we all should, and about getting our relations right with Cuba, I think this pot needs to be stirred a lot more, so I appreciate this chance to talk about it, and I am honored to be with Mr. Donohue and Congressman Sanford who have taken terrific leadership roles in our debate.

Let me talk about some of the things that are going on in Cuba that are not the result of any particularly sophisticated analysis. Let me talk to you about some of the people that I have met there. You often hear about private restaurants in Cuba as the, you hear about the economic change in Cuba as described in terms of the private restaurants. There certainly are, but there's a lot more than that. You can meet, in one provincial capitol I was in, a former soldier who was just discharged and he said he didn't want to work in an office and he's got a little pizza stand. He is out there yelling and screaming, selling pizzas and making them, and he is the production force and sales force all at once and doing very well at it. There is a guy in a little corrugated shack in the neighborhood of [sp], which is his office and his locksmith shop. A few years ago he worked in the transportation industry. When it became legal to have your little business he decided to take a chance on that. On the day that I went to see him he was alone, but he had just had one of his first experiences with customer relations. He was bewildered to me that sometimes people came and took it all out on you if they were having a bad day. And he is trying to manage getting sick but keeping his business going, and getting his supplies and keeping his business going, but he is doing all right.

I met a single mother in Havana who runs a little lunch stand and she is doing a lot better than she used to when she worked as a secretary in the government. She makes a lot more money; she is able to put meat in her kid's diet, where she didn't before. She is not wasting an hour and a half going to work every day and coming back from work every day. I met farmers who were growing a lot more and making a lot more money because they are now able to sell their surplus produce in an open market; whereas they couldn't do that before. And there are farmers markets now where there weren't ten years ago that sell that surplus produce. I met one vendor who on the very first day these markets opened up, went to this big market near a train station in Havana. He went there because when he was kid, when there was capitalism he said to me, when he was a kid his father used to work at that market. So on the very first day he went there and on the second day he had a job there and he is still working there that day, selling produce and earning a good living.

You can meet a supply manager out in another provincial capitol who works for a Canadian company, and he earns ten times the average Cuban salary working for the Canadians. You go out to the end of the earth to a city called Moah, way out in eastern Cuba where the nickel mining is done, and the Canadian company Share-it has a nickel plant there. The workers earn production bonuses up to sixty to seventy dollars a month, which is seven times the average Cuban salary. In that same town there is a state nickel plant where the workers in the state nickel plant earn not quite as much as the ones that work at Share-it do, but they earn significantly more than the average salary because what the Cuban government is doing is in industries where the business earns foreign exchange they are starting to pay some portion of the salaries in dollars and it is often tied to production. So each of these people is working in a setting that didn't exist ten years ago in Cuba. They are all the results of reforms that were taken in 1993 and 1994. Now these reforms that I am talking about in my opinion they are incomplete, they are not enough and the results are therefore limited. I think Cuba could be doing a lot better economically if they would continue and go a lot further down the road they started to go on. But what it all adds up to is the beginning of an economic transition, and I think we have to recognize that. It is not advertised as such, it is a country where they say they are building socialism or they are protecting the gains of socialism. It is not a fundamental change of political or human right's practices by any means. And it is not a move to a full free-market economy. Can't kid ourselves, but it is the beginning. And it is a very significant change. We've got tens of thousands of Cubans working in an economy that didn't exist before. They've escaped from a sort of Sovietized economy that used to be their only option. They are earning higher pay. More importantly they are earning pay that is connected to their output which I think for us should be a fairly significant change. And they are learning to work in market settings. From that guy I told you about trying to figure out dealing with customers, to the Share-it workers who are learning how to work on new high-tech equipment that the Canadians brought in, or to the workers in the phone companies who now have to work on or install lines in two days instead of two months.

Now, what would happen if we opened up or changed our policies? And forget about dropping the embargo all together. Not that that is entirely a bad idea, but just for the sake of discussion. What if we just allowed free travel as the Congressman proposes and opened up say one sector, or food and medicine completely? Not just to our sales but to full trade and investment. Well, first of all if we allowed free travel I think it has to be said that we would be treating the American citizens the right way. We would be replacing a system whereby Americans now need a license from the federal government to go to Cuba. It is just something that just doesn't make a lot of since when you consider that there is no Soviet Union anymore and there is no national security threat anymore. In Cuba, more importantly, it will spread American ideas if Americans travel there. And if Americans are traveling to Cuba it will make a difference in this entrepreneurial sector I am talking about. Right now the growth of that sector is held back by taxes, by regulations, and of course by the amount of demand that there is in the economy for these people's services.

But if Americans travel there, it will increase the amount of demand for those services and it is very simple. It is not an abstract idea. If an American tourist goes to Havana and spends money in one of those private restaurants or goes to the arts market and buys a painting for $80. That money is going to go into that entrepreneurial economy. It will go to the painter that earns the money; it is going to pay his suppliers. He is going to use the services in some neighborhood where there are no tourists to pay a tailor who is self-employed or a carpenter to fix up his house. There is a multiplier effect there as there is anywhere on earth. If we opened up food and medicine we would stop sending the signal that the U.S. wants to promote misery in Cuba. Or that we want to use economic deprivation to promote political change. Depending on how the Cubans would react, they might improve their food supply. We would also give American companies an opportunity to connect with the private farmers in Cuba in a way that President Clinton's initiative, which I think was well intentioned-his initiative in January, but it failed. So it would give American companies a way to connect with those private farmers and help them out in a way that the President's initiative has failed to do.

Now, why would we consider change in our policy? I think the first reason is just humility. We should admit to ourselves that most of us expected that everything would change in Cuba. That the system would change as a result of the Soviet Union changing; and that didn't happen. And many expected that when we tightened the embargo in 1992 and then again in 1996 that that would do it, but that didn't happen. So maybe we should think about the chess game that we are playing and see if there is something different that we should do.

Secondly, our biggest grievance with Cuba is gone. Not to say that we don't have anymore, but the Soviet Union no longer exists, and Cuba is no longer the satellite of anybody. Cuba is no longer supporting the insurgencies that used to trouble our hemisphere and that I think is something that most of the time we take into account when something as big as that changes in our relationship with another country. If we were to change our policy we wouldn't be abandoning the cause of human rights as Mr. Donohue pointed out. We would press that as much as we want as we did in the case of the Soviet Union. We wouldn't be abandoning the Cuban people. I have never met a Cuban in Cuba who speaks, and I have talked to hundreds in private settings, and I have never heard one say that they want to be isolated from America, or if they think of any good that comes out of being isolated from America. The Dissidence, all oppose the embargo, they call for change in the U.S. policy. The most prominent Dissidents, Elisardo Sanchez, says the embargo hurts the people, not the regime. It is an odd way of demonstrating support for human rights. One of the Dissidents, independent journalists, whatever you want to call them, talking about the travel issue, he said, he told the Chicago Tribune this earlier this year, he said if you have a million Americans walking on the streets of Havana you will have something like the Pope's visit multiplied by ten.

And then finally, the Catholic Church of Cuba has also opposed our policy. You can look up the pastoral letters that the Bishops have written. They call it cruel. If we changed our policy we wouldn't be abandoning the Cuban-American community, because that community is deeply divided. There are people on both sides. And we wouldn't be abandoning a policy, I think it is very important to point this out; we don't have a policy in place right now that is pristine and that allows no transfer of foreign currency to Cuba. That is not the case; we do. There are, and it occurs selectively. Remittances bring a huge amount of money to Cuba every year. Phone calls, settlement payments between phone companies was legalized back in 1994. And if you add up using very conservative estimates, just the phone calls that are mostly made by Cuban-Americans, and the remittances that are sent, leaving all the other sources out, it is at least 40 million dollars a month. So, we have lost our virginity on that issue. On travel, Cuban-Americans can travel feely right now, so it is just the rest of us who need a license.

Fundamentally though, and I am going to stop right here, I think that any opening, whether it is travel or trade, whether it is the full opening or some modified experiment in opening a few sectors and allowing American citizens to travel, it would shift to a policy that would have confidence, that would express confidence in America's ability to influence another country. Confidence we have had in every dealing we have had with Eastern Europe and the Soviet Union when communism prevailed there. A faith and a confidence in our ability, in our society's ability to influence another society through private initiative, through private flows of people, commerce, and ideas, that are not directed by the government, that are not licensed by the government but are just an outgrowth of American curiosity, and American's interest in foreign countries, and American's belief in themselves, and in our own ideas. I think that really confidence is what is missing from our policy, and I am at my time limit here so I will just leave it at that. If we switch to a policy like that we will much better serve our national interest. We will much better connect with the transition that is actually beginning in Cuba right now. Thank you.

Q&A:

Griswold:

Well, let me start the question time with a question of my own. Just playing, pretending I am an advocate of the embargo for a minute, one of the arguments made, and I think Senator Toracellis made this is that, if we were starting from scratch we wouldn't impose the embargo now, but it is in place and you can't remove the embargo or modify it in a significant way without in some way rewarding Castro and sending a signal that all of a sudden his oppression and his communist dictatorship are acceptable to us. How do you get around the issue of sending a signal that we somehow approve of Castro regime? I'll just open it up to the speakers.

Rep. Sanford:

I would simply say that Castro is not Cuba. In other words I think we have it locked in our mind, at least policy wise, that Castro is Cuba. There are eleven million people in Cuba. Castro is a problem, but in other words I think we need to stay focused on what are we actually doing to the Cuban people, A. B, Castro is not the whole of Cuba. I want to see Castro go, I don't like Castro, but I think let's look at how the policy is actually affecting eleven million people in America. Two, I would say right now, you can travel to Serbia. We just got through bombing the heck out of the place. What signal are we sending to Milosevic? You can travel there right now. So I think you can come up with a lot of fairly convoluted arguments if you go down that reason.

Donohue:

My view is that the Senator's logic is somewhat tortured because of the large Cuban population that he has in a part of his state. Never had an interest in that until such time as he ran on a statewide basis, and I think his logic suffers. I mean there are a lot of things we have done for forty years that we decided to get rid of in spite of what the perception cost may have been. What is the right thing to do for eleven million people? What is the right thing to do about economic sanctions in general and in just a few short miles off our own coast? What is the right thing to do for people who are far more informed and living in a totally different world then they were forty years ago? I don't think the Senator is making an argument that carries a lot of weight with most people I know.

Peters:

I'll just say briefly that it bewilders me that if you have an anti-Castro policy, then why do you put him at the center of it? Why do you make him the issue on which all of your decisions depend? It seems to me to me that if we are against Mr. Castro, we should make our decision based on our interest, based on what we think we need to do for our interests, and not put him right in the middle of every decision. That elevates him. The politics of it seem backwards. And I also think that there have been a lot of times in our history where we have shifted from one posture to another. A lot of times when leaders in our country have seen an opportunity through their own actions move us from one chapter in our history to another. And I'm thinking of President Lincoln when the Civil War wasn't even over and he saw that we needed to reconcile with the South. Or President Nixon when he opened up to China and sent Governor Reagan to Taiwan to explain it to them. Or President Reagan when before I certainly saw any wisp of change, he decided to start engaging there. Or President Clinton opening to Vietnam, although in his usual fashion he only did it when Senator McCain gave him cover to do so. But in none of those cases did we say we were wrong before. It's just that our interest dictated a different course.

Griswold:

Now we welcome questions. If you could raise your hand and then when I point to you wait for the microphone to come down so that everyone can hear the question. Then if you would, state your name and affiliation, and then direct the question up here. And do try to hold the pre-oratory remarks to a minimum as far as, get right to the question and not make it a long statement. So, go ahead. We have one down here.

Question:

My name is Ed Rable. I am a board member of The Alliance for Responsible (Cuba?) Policy. If one looks at the United States and the American people in terms of surveys that have been taken recently, and Congressman I will pose this question to you. Overwhelmingly those people surveyed say that the child Elian Gonzalez should go back to Cuba. Overwhelmingly it seems to me, the American people are saying this policy of ours, the economic embargo and so on, are wrong. How is it then that our foreign policy doesn't reflect what the majority of the people in this country want? How is that a handful of people, a very vocal handful of people, can in the Congress sustain this failed policy? What is it that happens? What are the kinds of pressures that are brought to there? Why is it that we can't get over this quickly and move on?

Rep. Sanford:

I would say the members of Congress are like everybody else in the world, in that they basically want to have a good day. And you could boil it down to simply the good day policy. And you represent 600,000 people from somewhere out in the middle of Iowa or Oklahoma or who knows where, and you don't have any Cubans in your district. It doesn't matter to you one way or another. It's not a political issue; nobody is going to badger you back home about it. With every program that exists in Washington you essentially have diffused costs and concentrated benefit, if you were to break it down. Take for example sugar subsidy. You could say it doesn't make common sense but it stays in place, and in part because people that have feelings about it have very intense feelings about it, and it is a wash with everybody else. Including the taxpayer or the consumer, even though it costs consumers another billion dollars a year in the form of higher sugar prices. But what that means is, that member of Congress who is just wanting to have a good day, if he goes out on a limb on the Cuba issue he is going to hear it from Toraselli, from Elian, from Lincoln. It is one of those issues where there is intense intensity of feeling on behalf of the folks that it matters to, and there is frankly ambivalence from the rest of us. It just doesn't impact us one-way or the other. It is one of those where politics is trade off. You give them one on this one and I'll pick up on something else.

Donohue:

If I could just make one comment about that, I would not want to do our foreign policy based on operating under a pure democracy and running a poll. If you look at our trade policy, if you took a poll amongst people from all over the country who are not really familiar with all the implications of the China vote you might well get more of them to vote against it then would vote for it. If you had the time and you educated them on the implication for themselves, for their own jobs and their community and their children, and stability around the world, they may take a different vote. I am very concerned about polls. I do want to associate myself however with your point of how can a few communities in this country keep us from having a more reasoned policy about this. And my only answer to that is our move towards a reasoned policy is going very, very quickly. We are going to find that the sentiment and the education on the issue is at a higher level then we are going to adopt a more reasoned policy. And sooner than folks think.

Question:

My name is H.P. Goldfield. I am with the law firm of Switler Berlin (name?) and this is a question for Tom and for Mark. It is widely understood that the House Republican leadership does not want to see progress on either the food and medicine bills as it applies to Cuba or on a travel bill as it applies to Cuba. If that is the case how do you hope to get across the goal line for either of those two pieces of legislation, and when?

Donohue:

Well Congressman, you should go first because you get to vote and I only get to talk. H.P., I believe there is a growing recognition in this country that our policy towards Cuba is different towards Cuba is different than our policy towards other people that used to be our adversaries. I think there is a growing recognition that we need to adopt an approach that is based more on humanitarian and common sense relationships with Cuba than that which we have carried on through the Cold War. And I am seeing more and more interest groups from the Chamber, for example, think tanks and other such as Cato, people in different industries that are beginning to ask the fundamental questions. Why do we stand aside while all of our trading partners go there? Why do we make a major issue over one young, little boy when there are tens and tens of thousands of them that could use our attention? Why don't we take a more enlightened position? Will we get a vote before the election? I don't know, everybody is worried about Florida. Everybody is worried about New Jersey. Those are two swing states in a presidential election. I think that it may very well be after the election that you get it done. But are we just going to bang on the door until they let us in?

Rep. Sanford:

I would agree with the last part of what Tom was saying, in that I don't think anything will happen unfortunately prior to the presidential election because the ticket to heaven is through Florida and everybody is going to pander to the south Florida, Cuban community. So, A, I don't think anything will happen before the presidential election. B, I would say things will be slow in Congress. I had a senior Republican, this really surprised me, conversation with this person. This person was a free-trader, will you help me on this? They said absolutely not. I said, why? They said what you need to recognize is that of all the different Hispanic groups out there, the only ones that financially support Republicans are basically Cubans. And therefore based on funding flows, I don't think we will touch it anytime soon.

Question:

Al Miliken with Washington Writers. I was on a mission trip to Cuba in November in 1999, and frankly I was very surprised with religious liberty that I personally experienced and then what I noticed first hand from my own witness, what was happening spiritually among the Cuban people were churches overflowing not able to hold everyone that was coming. And then with the recognition of celebrating Christmas a year ago, almost every apartment and home I went to had a Christmas tree in it. I was wondering if any of you, how you would view the economic freedom that would go along with lifting the economic embargo? How you would compare or contrast that with freedom in other ways as far as religious freedom? As far as freedom of speech, the freedom to assemble?

Donohue:

Let me just take a quick crack at that. You know the Pope visited Cuba and it was very emotional and I believe policy-changing visit. Following the Pope's visit, Castro himself took some efforts to liberalize the celebrations of the various different religious groups and when he allowed for the celebration of Christmas he visited all the Jewish communities and others. You know sometimes we find in the study of history that governments have to scamper to keep up with realities of what is happening in the society in which they govern. And that is why, H.P., I think if you look at these types of changes that are happening you are going to find some changing sentiments in the Cuban community here as we get to the next generation there is really a different view and there is a changing view. I was in Florida yesterday as I said talking to leaders in the community; I think where the government is going to have to scamper to keep up here. And I would like to tell you one little interesting story. When I was there I visited the Jewish community and I met with a woman, I'm from New York so I am allowed to tell this story, and I think she was in her late 50's or early 60's, and she was the religious educator as well as the person who ran the synagogue and so on. And they don't have a Rabbi there but the Rabbi visits from Argentina and the synagogue is run by a 74 year old plastic surgeon who stopped practicing after his heart bypass. But she told me her real problem is that she likes to do Kosher food because she was raised that way. And she looked at me and she told me that the only time they got kosher food is when the Rabbi brought it from Argentina; he brought big shopping bags. And she looked with sort of a smile or tear, I'm not sure, and she said, "You know how long since I have had a Kosher hot dog?" And I promised that woman I was going to get her a kosher hot dog and I am.

Peters:

I'm not going to pretend to be an expert on this, Sir, but the general impression that I have is that the situation of religious freedom is moving in a positive direction but slowly. There is not a restriction in Cuba on people's ability to worship. It was impossible to be a member of the Communist party and to be a believer but that was dropped a few years ago back in '92 or '93. In the course of the past decade the Catholic Church and perhaps the Protestant Churches as well, but certainly the Catholic Church has been able to do a lot more in charitable missions. Its charitable organization (?) has grown tremendously and is working all over the island in a lot of different projects. Catholic lay activities are also expanding. Attendance in church is expanding. But the changes that the Catholic Church hope for, and I wish I could address the familiarity with the situation of other churches to answer you in that regard too, but I just don't. But the changes that the Catholic church had hoped for in terms of being able to build it's seminaries and expand it's educational activities and branch out beyond the charitable activities it is undertaking now. Those hopes have not been fulfilled. They have been fulfilled in very small measures.

Question:

Hi, I'm Anna Radalat and I work for Cuban News and other publications. And my question is directed at Congressman Sanford. I haven't seen your legislation, but I assume it deals with the ban on spending money to travel to Cuba because there is no ban on travel. There is a ban on spending money unless you are licensed to do so. The administration came out critical of the food and medicine legislation because they felt it took away the President's authority regarding Cuba sanctions regarding his licensing authority. Has the administration said anything about your travel ban? I would assume they might have the same problem. That is my first question and I have a follow-up.

Rep. Sanford:

No they have not in part because we have not actually dropped the bill yet. We are waiting for the storm with young Elian to die off before we drop the bill. (His beeper goes off now and he is going to leave.) And I am going to have to go. We think that if there is any shot of a bill that stands a chance of passage, it is travel. Simply because the argument that the administration or frankly others could make would be that food and medicine can be centrally warehoused to the benefit of the Cuban government. The idea of centrally warehousing young kids with backpacks is just not exactly what I have seen them do in any part of the world. So we think that at least hypothetically there ought to be a very different argument that the administration would use should they take a negative viewpoint.

Question:

Okay, my follow-up is the President has indicated a willingness to broaden travel using his licensing authority. Would that be amenable to you if he broadened travel to allow a wide variety of categories of Americans to travel more than he is allowing now and….

Rep. Sanford:

I think it is a step in the right direction but the issue I think is a Constitutional question. The reason the travel limitation had been placed originally was because Cuba was a threat to us. In 1998 that changed when our own defense intelligence agency report. So I think that has changed and now it is a Constitutional question which is Americans ought to be traveling. Again, you can travel to Syria, you can travel to Iran, you can travel to North Korea, you can travel to Serbia. It doesn't make since that Cuba is not on that list to me. Thank you.

Question: Jerry Brito from the Cato Institute. This question is for all of the panelists. Along with wanting to drop the embargo would we also not want guarantees from the government to investments or feelers within Cuba?

Mr. Donohue:

Excuse me, investments or…

Jerry Brito: Investments or if we have American investments in Cuba that fail or are confiscated by the Cuban government we also would not want government guarantees for those investments would we?

Donohue:

I'm not exactly sure, you know we invest all over the world and worry about some of those investments very clearly particularly in Russia, China, and other places. There aren't per se guarantees. There are places where there are understandings where we invest where there is some leverage created with the financial institutions and with other investment. But we have had problems for years with government interference and investments. That is sort of…You know one great thing about investments is sometimes you lose and sometimes you win and you want your government to protect you to the extent that it can. But I think that it is so far south of what I think people first worry about with Cuba. And I should tell you the Chamber's view. You know I'm not standing out doing this because American business thinks they are going to go out and make a big killing. Our economy is in the trillions and trillions and trillions of dollars and with the eleven million people in Cuba this is not about economics alone or even singularly. It is about economic foreign policy. It is about unilateral sanctions and it is about the absolute stupidity of treating Cuba differently than we treat everybody else. But then maybe that is because of the size of the investment. Maybe that is because of the interest groups representing the various different folks. Or maybe it is because of the pressures that are developing in those nations that we are trying to force on them. Why did we ever trade with North Vietnam? Is it because they are walking around with a missile that can reach San Francisco? We don't want to put anything on top of it. I think we just have a logic problem. We told all of our children we would pay for them to go to school but they have to take a logic course. And I think the way we approach the Cuba issue, with all the legitimate losses of people that lost family and property and status there and the legitimate anger about the things that Castro has done over a long period of time, and legitimate concerns about what he still does. It doesn't pass the logic test. Why do we treat them differently than everybody else? We've got to get on the game, and by the way there are some really good humanitarian reasons to do that.

Peters:

If you are asking whether the U.S. government or whether the tax payers should in any way have to cover or subsidize the insurance cost of Americans that will take the risk of investing in Cuba or anywhere for that matter, I'm not advocating that. (Mr. Donohue: "Neither am I.") But I think, is that answering your question. If you don't mind, I would, you are opening up the question of U.S. investment in Cuba and I think it is worth speculating a little bit. My personal impression is that if we opened up our laws completely and allowed any kind of investment in Cuba that Americans would want to undertake, there would be a lot of interest. And I think there would also be a lot who would not invest there. Cuba's system for foreign investment right now is not a, the door is not wide open to invest. They choose projects and sectors in which they want to have investments and if somebody comes from France or anywhere and says, "I want to invest", they are going to have opportunities to invest given those sectors that have been chosen. But not just anywhere at all. And there are other aspects of the Cuban system that I think would not make it the most attractive place for Americans to invest. So I think we would have a phenomena of a lot of interest and a lot of people pulling back. If the door were open to American investment, I think the prospect of American investment would also have an influence in Cuba even if a lot of those prospects are not consummated because I think it would make it very clear to people in Cuba that we are trying to improve the economy and manage investment that there is something there that is holding these people back. Maybe there are some things we can examine here, and without sacrificing our own principles make some changes and make it a more attractive place to invest.

Question:

My question to the panel is, is it fair to say that the current policy that has been in place pretty much for forty years in Cuba, that the Cuban exile community in Miami, that basically lets the policy of the United States to Cuba, if that is the case then there is a small percentage indeed of the United States, let's say borders, how can this small a minority continue to maintain the hold on foreign policy in Cuba?

Peters:

You are referring to the so-called hardliners and I disagree with them, but I don't begrudge them at all the influence they have gotten. They have gotten it because they work and they organize and they hustle more than anybody. So I don't begrudge them at all the influence they have gotten. I don't particularly like the policy. I think it is entirely counter-productive to American interest, so I think it will change when the rest of us engage in a debate with those folks, a respectful debate I hope, and prevail in the argument.

Donohue:

You know there are numerous examples of minorities, vocal, well-organized, passionate, minorities that have influenced American policy not only in foreign policy but in domestic policy as well. The other thing I would say in all fairness to the people that have very, very strong views about Castro and a lot of these issues, remember he used to have nuclear weapons sitting down there on the beach. At that point, certainly we'd have a very different view and might even be more radical than some of the people who have strong opinions now. We went through times where he was financing revolution around other places; help to finance revolution in other places in Latin and South America. We are past that. We are in an evolution of time. That same thing by the way remember we used to do in Vietnam and Russia and China and all that sort of thing. So I just think what we want to do is focus on the reality of the year 2000. Not on the reality of 1970.

Question:

Ken Volecky with Kiplinger Washington Editors. There is a lot of speculation of what will happen in Cuba when Castro passes from the scene. Would you give us your scenario of what is likely to happen?

Peters:

I really don't have a clue. If I had to bet money, and I wouldn't bet money, but if I had to bet money, and had no choice but to bet money on all the possibilities, I would assume there would be some gradual change. Not that there would be a sudden collapse. I think there would be some gradual change based on the current system. It is very hard to figure out. There is one thing that I feel fairly sure of is that when you talk to people in Cuba, you get a sense regardless of what their views are on the big political issues, I get a sense there is a strong support for what we call a social safety net and I would expect that the political center in Cuba probably favors a fairly large state, a fairly large state health care system, and things of that nature.

Donohue:

I think that is a fairly accurate view. I think if Castro, let's assume that at some time Castro passes from the scene, I think you are going to have a lot of anxiety in Cuba because there will be lot of folks that have been tippy-toeing around the deal that will all of a sudden will have an interest in politics and leadership. And there will be some struggle; how struggle happens I am not really sure. Here we are having a struggle right now right now. We are all holding our breaths to see what will happen in the next primary. The big question of who is going to win the House you know, so there is political struggle. I think at the same time there will be as much angst and political and emotional struggle here in the United States as the strong Cuban contingent that wants to have a role in what happens there or wants fundamental change there and some may want to go back and claim their legacy which I think historically we find generally that doesn't happen. I think there will be a lot of confusion and a lot of angst here as well and it will be very interesting to watch. I think that is a time where the government has to decide what role they are going to play. Probably a minimum role is better than a large one. Our government.

Peters:

One thing I would like to add I didn't say that I would place my bet on everything collapsing and everyone in Cuba immediately welcoming back some expedition from Miami to change everything. The reason I say that is because the message that gets through in Cuba from Miami, a lot of the signals that are sent to Cuba from the community in Miami, I'm not suggesting these are representative signals, that they represent the community of Miami as a whole, but what gets through is often fairly intimidating. They hear radio broadcasts where people have made lists of properties that they are going to come back and get. They hear messages that are fairly (?). They hear a discourse in Miami that blames people in Cuba for the government that they've got in place. They hear that basically all the good Cubans left and that everybody back there is to blame and they are going to have to get out of the way. We are going to pass the check. We are going to pass the bill when the time comes. And so to sum up what I am saying is that a lot of the messages from Miami really are the source of the cohesion that you have in Cuba. And even the cohesion of people who don't agree with the government, with the government.

Griswold:

I think we will end on that note. I invite you all to join us upstairs for lunch on Cato and let's please give our speakers a round of applause. Thank you.