A new chapter of US-Cuba relations began a few years ago when Barrack Obama lifted the United States’ embargo on the country. Since then, a US embassy opened in 2015, and Obama visited the island nation in March of that year to meet with the Cuban leader Raul Castro. Now, the Obama Administration has successfully solidified deals between the Cuban government and major US companies such as General Electric, Alphabet Inc., and several cruise lines.
Bringing American industry to Cuba will propel the country’s economic status into that of an emerging market. Both foreign investors and Cuban citizens stand to benefit from the new relationship.
Many Americans reject the notion of restoring relations with the communist regime that once harbored Soviet nuclear warheads within a stone’s throw of our homeland; however, the implications behind restoring relations with Cuba are more complicated than merely lifting a grudge.
One such implication is oil. OPEC, the oil cartel that controls vast quantities of global crude production, has deep roots in Cuba’s neighborhood. The major South American member is Venezuela, a country that has been staunchly anti-United States since Hugo Chavez led the nation in the late 1990’s. Venezuela has cut the US out of its oilfield development projects that total 20% of global reserves.
For decades, Venezuela has provided Cuba with billions of dollars in oil supplies to meet the country’s energy needs. CNN reports that in return, Cuba offers political loyalty, medical supplies, military guidance, and even professional sports trainers to Venezuela.
However, Venezuela is currently facing a severe economic recession. Hunger is a growing problem, and many citizens are calling to impeach the current president, Nicolas Maduro. The United States’ advances with Cuba are forcing Venezuela to improve relations with the US. This will allow Venezuela to remain aligned with Cuba and also receive global assistance with its current crises. In effect, the United States gains more political leverage in the South American region, potentially opening access to oil reserves that were once off-limits.
Another factor complicating US-Cuban relations is the Cuban expropriation, during which Fidel Castro confiscated land and property from Cubans and Americans with businesses in Cuba prior to the regime’s occupation. The New York Times notes that the value of expropriated property is as much as $8 billion; however, depending on how the number is calculated, it could be closer to $2 billion.
Regardless, the Cuban government faces a hard-lined stance from the incoming Trump administration, which recently gave Raul Castro an ultimatum: comply and reform, or the United States will restore the embargo. If Cuba hopes to continue building relations with the US, it will have to return billion of dollars worth of property to both Cuban citizens and American corporations.
The new relationship that the Obama Administration has forged with Cuba will give the United States unprecedented diplomatic leverage and economic development opportunities in the region. However, once commerce between the two countries begins full swing, Trump, Castro, and Maduro will face a new set of problems to maintain a beneficial relationship. Trump will likely have his eye on Venezuela’s oil, Castro will face pressure to ink business deals with other superpowers such as Russia and China, and Maduro must cautiously handle Venezuela’s position in the dynamic while averting impeachment or a coup. Cuba will undoubtedly be front and center for global relations in 2017.