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Trumping Cuba: Back to the Future

It comes as no surprise to those who attempt to follow the tracks laid down by Donald Trump in matters of foreign policy and national security policy that he has decided to reverse most, although not all, of the normalization efforts of the Obama administration and restore most, if not all, of the policy known as The Embargo. There were two broad hints of this change provided by Mr. Trump in the few months he has been in office. The first is that he cares not a fig for Latin America, so that the enormously positive impact in the rest of the hemisphere of Obama’s policy toward Cuba, and the powerful buttress to U.S. security in the region that such support represents, is of no moment to the current administration. In terms of national security, Latin America is little more than a bunch of countries that must be made to cooperate with U.S. efforts to uncover and contain international networks of criminal activity that might become linked to terrorist groups. In other words, national security policy in the hemisphere has become the handmaiden of the Department of Homeland Security.

The second reason Trump’s decision was foretold is the enormous influence the cabal of reactionary Cuban-American legislators has had in the transition and in the early months of the new government. 9 out of 10 advisers on Latin American affairs in the transition team across the entire range of cabinet offices were Cuban Americans, and all of these, without exception were acolytes of the Big Three in Congress – Diaz Balart, Ros Lehtinen, and Rubio. Trump had played up to this group during the campaign and has followed their advice since his inauguration. He announced the policy reversal in a speech in Miami on June 16.

What might be considered a bit surprising is that despite his harsh rhetoric about Obama’s policy, Trump actually left in place many of the key elements of that policy.

In doing so, Trump appears to have bowed to the demands of his national security team and his economic advisers. With regard to the first, the opening to Cuba immediately increased communication between the two countries concerning drug trafficking and other threats to U.S security in the Caribbean. As a result of that improved cooperation, Cuba was a positive factor in the eyes of Homeland Security. On the economic side, a complete rollback of the opening would have cost more than US$8billion and 14,500 jobs. That was a powerful argument in the White House debate over how to change the Obama policy.

Finally, the politics of Cuban policy have changed. While it is true that Trump values the loyalty of the Cuban-American members of congress, the political clout of that small cohort is not what it once was and is diminishing each year. Even among Cuban-Americans , more than 60% want to end the embargo. Curiously, that is not much different from the general population among which 65% support Obama’s opening, with those voting Republican actually a few points more favorable than those voting Democrat. Bills submitted for consideration this year in congress that deal with expanding travel and or trade with Cuba have broad bipartisan support, most notably the Flake-Leahy bill removing all travel restrictions to Cuba has 55 sponsors.

Given the way Trump deals with foreign policy issues, it may be irrelevant to point out that the embargo which he now claims to have restored, has failed completely and utterly over a 50 year period. Trump and supporters of the embargo claim that the Obama opening led to increased violations of human rights and a diminution of the space for public discussion in Cuba. In fact, the reverse is true. Over the past 25 years, Cuban state repression has spiked each time the U.S. government has ramped up its restrictions on Cuba, as if such repression were a demonstration by the Cuban government that U.S. pressure would not work. While the Cuban gerentocracy continues to restrict political freedom, there is no question that the period of opening, however brief, has brought a significant increase in entrepreneurial activity among Cubans and an increase in communication between Cuban citizens and counterparts overseas. What is most interesting is that pressure on the Cuban government to ease restrictions on its citizens is now coming from democratic governments in Latin America. Now, that is a major change and a change that must be credited to the Obama “deal” with Cuba.

New Report: Argentina’s Macri in the Crosshairs

President Mauricio Macri of Argentina was a successful businessman for many years before becoming the Mayor of Buenos Aires then the President of the country in 2015. He proposed plans to guarantee economic stability, but thus far the success has been moderate. Changes in the coming months, like increased prices for utilities and gasoline, will exacerbate the rising public discontent, and the position of the dissident Peronists will likely strengthen. Unrest is growing particularly quickly among particular sectors, like farmers, who were waiting for Macri to cut the tax on soy as promised. Now, there is no sign Macri will cut the tax, and this example illustrates a larger trend in the implementation of Macri’s economic plans. Read more in my recent report for the Geopolitical Intelligence Services, “Argentina’s Macri in the Crosshairs.”

Prat-Gay Fired and President Macri’s Economic Plans Falter

Macri’s promise to revive the Argentine economy appears is late in coming to fruition. The first to go is the Economics Minister, Prat-Gay. Surprisingly, given his success in the Federal Capital, Macri is coming up short in gestion, the art of public administration at the national level.

Venezuela at an Impasse

Venezuela seems stuck at the edge of the precipice. The press and many leaders in the region have been predicting disaster for months. As the deadlock between government and opposition continues, only the government appears capable of action as it continues to attack the opposition and to add to its power. Neither the opposition nor the international community has demonstrated the capacity to act.

What Latin Americans Think of Trump

The comments throughout Latin America make it clear that most of the people in the region are terrified by the possibility that he might become president of the U.S. Anyone on the left, naturally enough, dislikes his harsh economic views and find lamentable his threats to discriminate against Hispanics and other minorities.  But it is people in the center-right countries of the region who have rushed to condemn the Trump candidacy.  The principal reason for their hostility is that Trump to them represents the authoritarian populism that has been a part of their recent past – and they do not like it.  Commentators in Argentina, Chile, and Peru have been especially severe in their criticism.  Some think a Trump presidency will set back democracy in Latin America.  What do they think it will do to democracy in the United States?

The Cuban Optimist

     A new definition of an optimist: a Cuban who believes that democracy will arrive on the island sooner rather than later and that friends outside the country should not slow the process by insisting that the Cuban government respect the human rights of its citizens.  To an outsider, it appears as if the current hierarchy of Cuban leaders is unwilling to leave power gracefully, or in any other way. 

    When I first visited Cuba not long after the collapse of the Soviet Union, the same optimists were confident that Fidel was organizing a transition to a new generation of leaders who would be able to maintain the gains of the revolution in a post-Cold War world. Today, despite all the changes and the promises of more change to come, the state bureaucracy is larger than ever and the island cannot produce enough food to feed the population.

     Can the infusion of tourist dollars make a difference the Cubans in the short run? My hope is that the transition in Cuba comes soon and in a peaceful manner.

Argentina Rejoins the World

    Argentina has made it back into the international capital markets thanks to having reached a deal with the holdouts who had been demanding payment on the defaulted bonds they held. The Government of Argentina already has borrowed nearly $15billion, in part to payoff the holdouts and in part to cover some temporary financial needs.

    The irony of the situation is that the holdouts used the so-called “pari passu” clause (that all holders shall be treated equally) which is the result of work by Carlos Calvo, an Argentine jurist in the 19th century who wanted to prevent powerful countries from using their superior force to demand payment on debts before other creditors.

    Now, the international community realizes that this clause makes it more difficult to re-financing the sovereign debt of countries in financial trouble. So, to meet today’s needs, bond contracts should drop the pari passu clause and add a clause that requires all holders to accept refinancing deals negotiated with a debtor in default. And, so, the evolution of the international financial community attempts to meet its current needs.

    We shall see if the Argentine experience facilitates that evolution.