The Havana turning point
Anya Landau French, US News & World Report
American business ties and travel to Cuba reached their highest point in decades between 2015 and 2017. Last year, the Trump administration issued rules to limit some, but not all, of that travel and trade. In 2018, as Cuba prepares for a historic leadership change, Ambassador Philip Goldberg, the newly arrived, interim charge d'affaires at the U.S. embassy in Havana, has taken charge of a strangely quiet mission.
Last September, Secretary of State Rex Tillerson ordered the departure of all non-essential U.S. embassy personnel in Havana, in an abundance of caution over stated concerns regarding possible "sonic attacks" associated with incidents of hearing loss and other unexplained symptoms affecting some two dozen diplomats between November 2016 and April 2017, and again in August 2017. Since then, investigations by the FBI and State Department have been inconclusive, and a report published in the Journal of the American Medical Association from a team at the University of Pennsylvania who evaluated 21 of the U.S. diplomats noted that a cause could not be determined. The journal, in its own supplementary report, could only conclude that "the similarities among the 21 cases merit consideration of a common medical, environmental, or psychological event as the potential cause."
When the ordered departure ends on March 4, Tillerson must decide whether to resume normal staffing at the embassy. Assuming the State Department concludes that the health incidents have ceased, there are two key reasons he should be eager to fully staff up the embassy in Havana again: Cuba's impending presidential transition and his own stated interest in limiting growing Chinese and Russian influence in the Hemisphere.
In April, Raul Castro is expected to step down from the Cuban presidency. Though the 86-year-old will remain as head of the Cuban Communist Party, this will be the first time in decades that we have not seen Fidel or Raul Castro as Cuba's head of state and government, and in view of his expressed desire to impose term- and age-limits for top posts, we are likely to see a new generation of leaders taking the helm. This is a historic moment and a rare and important opportunity in U.S.-Cuban bilateral relations.
Delivering a speech ahead of his recent tour of the Americas, Tillerson pointedly warned against increasing Russian and Chinese engagement throughout the hemisphere: "Our region must be diligent to guard against faraway powers who do not reflect the fundamental values shared in this region." But how diligent will the Trump administration be in Cuba, where Russian and Chinese engagement is steadily increasing?
By August 2017, Russian trade with Cuba was up 80 percent last year, with locomotives, trucks, cars and, most crucially, Russian oil exported to Cuba for the first time in two decades. One Russian official, predicting that trade would reach as high as $400 million in 2018, noted, "We can call this period a renaissance." Russian state-owned oil company Rosneft chief Igor Sechin recently met with Raul Castro, reportedly to discuss favorable terms for continued oil shipments to Cuba and Rosneft's possibly taking over Venezuela's PDVSA's share in a Cienfuegos oil refinery.
As Venezuela's economic footprint in Cuba shrinks, China has become the island nation's biggest trading partner, with imports reaching $2.5 billion in 2016. Chinese exports include buses, trucks, tractors and cars, as well as telecommunications equipment for Cuba's growing number of Wi-Fi hotspots. Chinese companies are partnering on numerous Cuban hotel projects, including a planned Cuban golf resort. And with direct Beijing-Havana flights aloft, Chinese tourist travel to Cuba increased 17 percent last year.
Meanwhile, though U.S. trade and investment had been limited largely to agricultural exports (about $220 million in 2017) subject to continuing U.S. restrictions, the Obama administration's opening with Cuba fueled development of broader business ties that could provide a counter-weight to Russian and Chinese influence – if continued. U.S. economic engagement in Cuba has been complicated, but not eliminated, by the Trump administration's new sanctions policy that imposes new limitations on investments that involve Cuban military, intelligence and security services-tied companies, which mainly impact the tourism sector and potential future projects in the Mariel development zone.
The Trump administration has stated it does not intend to harm U.S. businesses engaged in the Cuban market and included grandfathering protections in its new sanctions policy for companies with established business engagement in Cuba. But it is very difficult for the U.S. embassy to provide the kind of normal support and assistance to U.S. companies that they generally need in foreign markets if its reduced team isn't able to build robust contacts, knowledge and influence.
If there were ever a time for the United States to have diplomatic and business contacts, knowledge and influence on an island nation 90 miles away, undergoing historic change and attracting significant trade and investment from Russia and China, whose influence Tillerson hopes to counterbalance in the Americas, it is now. As American Foreign Service Association President Barbara Stephenson put it following the embassy draw-down last September, "American diplomats need to remain on the field and in the game."
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