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Ines Muiz, 57, holds the front page of the Miami Herald outside of the Versailles Restaurant in Miami's Little Havana on Saturday, Nov. 26, 2016, following the announcement of former Cuban leader Fidel Castro's death. The resumption of relations between Cuba and the U.S. has been welcomed by most Cubans in America because they can see their relatives more easily. (Matias J. Ocner/Miami Herald via AP) (Matias J. Ocner/AP)
Ines Muiz, 57, holds the front page of the Miami Herald outside of the Versailles Restaurant in Miami's Little Havana on Saturday, Nov. 26, 2016, following the announcement of former Cuban leader Fidel Castro's death. The resumption of relations between Cuba and the U.S. has been welcomed by most Cubans in America because they can see their relatives more easily. (Matias J. Ocner/Miami Herald via AP) (Matias J. Ocner/AP)

U.S.-Cuba relations up in the air as Trump threatens to reintroduce sanctions Add to ...

Fidel Castro is gone, but the economic thaw between the United States and Cuba remains tenuous amid threats by Donald Trump to roll back Barack Obama’s efforts to normalize relations with the Communist regime.

The president-elect is warning he may reimpose some sanctions and reverse last year’s historic reopening of the U.S. embassy in Havana after 54 years unless Cuba agrees to major political and economic reforms.

“We’re not going to have a unilateral deal coming from Cuba back to the United States without some changes in their government – [on] repression, open markets, freedom of religion, political prisoners. These things need to change in order to have open and free relationships,” Reince Priebus, Mr. Trump’s chief of staff, told Fox News on Sunday. “And that’s what president-elect Trump believes and that’s where he is going to head.”

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Many Republicans in Congress have long opposed the détente with Cuba without a full dismantling of the regime. Florida Senator Marco Rubio vowed on Sunday to try to reverse much of Mr. Obama’s legacy on Cuba. “We want to take a look at all the changes that were made,” he told NBC.

Since 2014, Mr. Obama has used his executive powers to re-establish diplomatic relations, resume direct flights, liberalize banking links and drop restrictions on imports of Cuban cigars and rum. He had planned to go much further, eventually lifting the broader trade and investment sanctions, a step that would require Congress to rewrite laws.

Mr. Trump would likely face a backlash from the business community. And if the Cuban economy falters, the United States could also face a renewed exodus of boat people from the island.

U.S. companies have embraced the easing of sanctions, rushing in after the United States resumed diplomatic ties and loosened some economic sanctions two years ago. Airlines now offer direct flights from U.S. cities, Airbnb is doing business there, telecom companies have roaming coverage, Marriott International Inc. has a joint venture to manage some Cuban hotels and a Miami cruise-ship line now sails to Havana. Many other U.S. companies are actively exploring potential deals.

The resumption of relations has also been welcomed by most Cubans, who can see their relatives more easily and could improve economic prospects.

Cuba’s economy is relatively small at less than one-tenth the size of Canada’s, and the country has struggled to gain traction since the former Soviet Union stopped propping it up in the 1990s. Its rich agricultural land, beaches and proximity to the United States make it a draw for investors and major trading partners, which include Canada, Venezuela, China and Spain.

Mark Entwistle, who was Canada’s ambassador to Cuba from 1993 to ’97 and helps businesses set up there, said the regime will likely “shrug off” any crackdown by Mr. Trump – the 12th U.S. president since the revolution. “I predict business as usual,” he said.

Likewise, Canadians doing business in Cuba say Mr. Castro’s death won’t dramatically alter the slow pace of economic liberalization.

“I don’t think his passing will have a huge impact on economic reform or Cuba opening up for foreign investment,” Gregory Biniowsky, Canadian law firm Gowling WLG’s lead lawyer in Cuba, said from Havana. Mr. Biniowsky said while Gowling has attracted an array of U.S. clients hoping to establish operations on the communist island, its clients are in for the long haul. “They have to be ready for a very slow process forward,” he said.

Mr. Trump has sent mixed signals on what he wants from Cuba. After initially suggesting he supported easing of sanctions, Mr. Trump later attacked normalization of relations as too weak. And last week, he named Cuba hard-liner and sanctions advocate Mauricio Claver-Carone to lead his transition team at the Treasury department.

As a businessman, Mr. Trump actively explored opportunities for golf courses and other ventures in the late 1990s and again more recently – in apparent defiance of the U.S. economic trade and investment embargo.

A Trump administration will slow down the rapprochement with Cuba, and may reverse some of what Mr. Obama has done, said Pedro Freyre, head of international practice at law firm Akerman LLP in Miami. “There is an internal struggle going on. People are tugging from all directions,” he said.

A resumption of tough sanctions could easily backfire on the United States. Undoing the past two years would undermine U.S. commercial interests throughout the Americas and won’t likely succeed in prodding the Cuban government any further toward economic or political reforms, argued Allan Culham, a former Canadian diplomat and ambassador to the Organization of American States from 2010-2014. “If Trump chooses to reimpose the isolationist policies of the past, the recent goodwill generated in the Americas would be lost,” Mr. Culham said.

More effective in pushing Cuban President Raul Castro to change, Mr. Culham said, will be the end of subsidized oil it gets from Venezuela – something that is probably inevitable given Venezuela’s faltering economy.

A hard line by Mr. Trump could also trigger a new wave of boat people, particularly if he tightens the economic screws on Cuba and clamps down on the legal flow of immigrants to the United States, according to Julia Sagebien, an associate business professor at Dalhousie University and an expert on Cuban economic reforms. “Keeping Cuba afloat is in the national interest of the United States,” Ms. Sagebien pointed out.

With a report by Rachelle Younglai

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