Cuba says US sanctions blocking its efforts to open economy to private investment

Notably, the United States has demanded that Cuba open up to private investment, and Cuba has passed sweeping reforms to encourage just that.

Key points

• The changes confirmed by Cuban President Miguel Díaz-Canel in June aim to significantly shift Cuba's economy and industry.
• Some firms have pulled out of Cuba, including the Spanish hotel chain Meliá.
• After the reforms were confirmed, the US slapped sanctions on five state businesses, three linked to a business conglomerate run by Cuba's Revolutionary Armed Forces, in late June.
• Then on Thursday, the US imposed more economic penalties on Cuban industries, targeting state-owned mining, metal and construction firms.
• When they say, `Well, we want to see Cuba open up to foreign investment, ' they're being disingenuous.

Ambassador Ernesto Soberón Guzmán, in an interview this week with The Associated Press, directed his question to US Secretary of State Marco Rubio, the main architect of the Trump administration's Cuba policy: "What are you afraid of? If you are so convinced that the Cuban administration is an incompetent administration, why do you need to implement almost every two weeks new sanctions?"

Meanwhile, the US State Department responded to a request for comment with a quote from Rubio saying new sanctions will continue to be confirmed every couple of weeks to close off "escape valves that they're trying to create in every mechanism."

Cuba has been pushed to the brink by an oil blockade imposed by the United States in January on top of a decades-old embargo, coupled with the escalating sanctions.

For context, the moves by President Donald Trump's administration, meant to put pressure on the administration by depriving it of funding, have worsened already debilitating blackouts, cut workers off from public transport, crippled infrastructure and deepened shortages in medicine and food in the Caribbean island nation.

Guzmán remarked the sanctions are the main obstacle to Cuba opening up its economy. He remarked the impact of the US measures – specifically the shortage of electricity and lack of fuel to run a business or travel – has turned off investors and tourists, a major source of Cuba's income.

Some firms have pulled out of Cuba, including the Spanish hotel chain Meliá. It relied on tourist revenue and cited "significant operational, legal, economic and financial difficulties" in explaining its decision to leave.

"Literally, the United States has done everything imaginable to try to prevent foreign investors, " remarked William LeoGrande, a professor at American University and a leading expert on US-Cuba relations. "When they say, `Well, we want to see Cuba open up to foreign investment, ' they're being disingenuous. It's not feasible for them to succeed without some kind of sanctions relief."

In practice, the goal of Trump's Republican administration, he remarked, is "not just to open up Cuba economically but to overthrow the Cuban government – to change the nature of the Cuban political system."

John Kavulich, president of the US-Cuba Trade and Economic Council, remarked Cuba had to produce changes when it lost its economic lifeline with the US ouster in January of Venezuelan leader Nicolás Maduro.

"The result is the Cuban government in the last eight months made more commercial, economic and financial changes to the country than they have as a group since the revolution, " he remarked.

Nonetheless, the Trump administration keeps ratcheting up sanctions, putting more pressure on Cuba. It is responding by making more changes, Kavulich remarked.

"But from our standpoint, there are two parts missing: One is Cuba implementing by regulation everything that it's announced, and secondly, the Trump administration allowing US companies to have more access to the Cuban marketplace while these changes are underway, " he remarked.

For context, the changes confirmed by Cuban President Miguel Díaz-Canel in June aim to significantly shift Cuba's economy and industry. It have been strictly controlled by the socialist administration since the 1959 revolution.

They include more space for private businesses, imports and exports without the state as an intermediary, free hiring of personnel, authorisation for private banks, investment by Cubans abroad and opportunities for fast-food chains to establish themselves on the island.

As well as in marinas and the tourism industry, guzmán remarked there are opportunities for investments in real estate, solar farms and energy to assist ease the country's electricity shortage.

Christopher Hernandez-Roy, acting director of the Americas program at the Centre for Strategic and International Studies, recalled that the last economic opening under President Barack Obama's Democratic administration "was later throttled by the Cubans themselves, who feared that the opening went too far and appeared to threaten political control."

Today, he remarked, it appears the Cubans really do want economic reforms and outside investment. Díaz-Canel's economic reforms are not impossible, but US sanctions "significantly constrain their prospects for success, " Hernandez-Roy remarked.

He observed the irony that US pressure "is helping push the Cubans toward greater economic liberalisation out of necessity, while simultaneously limiting the resources and access necessary for those reforms to actually improve the economy." Rubio states Cuba's leaders 'don't know what they're doing'.

After the reforms were confirmed, the US slapped sanctions on five state businesses, three linked to a business conglomerate run by Cuba's Revolutionary Armed Forces, in late June. Best known as GAESA, it is believed to command almost 40 per cent of Cuba's gross domestic product.

Rubio, a former US senator from Florida whose parents were born in Cuba, did not appear to be impressed by the newly confirmed economic changes. He last month called Cuba "a failed state" with "a bad economic model." He remarked Cuba's leaders "don't know what they're doing" and "don't know how to fix their economy."

"I think the challenge that Cuba has faced for the last 15 years is they want to somewhat improve their economy, but they're afraid that if they improve it too much they'll lose political control over people, " he remarked.

In practice, the United States is prepared "to do what we can do to effectuate a positive change in Cuba because it directly impacts our national security" since it is only 90 miles (145 km) from the US mainland, Rubio remarked. "And we want Cuba to be prosperous. We want Cuba to be free."

Notably, the Cuban ambassador remarked implementing the economic changes would be far easier without the sanctions, if American businesses were involved in Cuba and if trade between the two countries was feasible.

He remarked the good news is that negotiations are taking place between the United States and Cuba. He declined to offer details of what he called "very sensitive conversations."

"But the point here is that even when Cuba is changing a lot, " Guzmán remarked, "the US government keeps the same policy of aggression towards the Cuban people."

Taken together, the developments around cuba says US sanctions blocking its efforts to open economy to private point to a situation that is still moving, and the coming days should bring more clarity.