Cuba Gains Symbolic Win, But Don’t Expect Supply Chains to Follow

Increased U.S. engagement with Cuba may boost trade and investment, but democratic political system reform remains unlikely, according to new analysis from Diego Moya-Ocampos, senior analyst at IHS Country Risk located in London.

Although Obama’s visit to Cuba is unprecedented and hugely symbolic, of greater significance were the latest round of measures to ease the U.S. embargo he announced before departing for Havana.

Moya-Ocampos says the measures cemented the U.S.‘s new foreign policy stance on Cuba, scaling back the U.S. embargo and sharply undercutting the five-decades-old policy. Although retaining the formal ban on tourist travel, the U.S. administration removed towards a certain extent the restrictions on licensed tourist visits, effectively putting a Cuban vacation within reach for US citizens.

“The sweeping changes also eased restrictions on dollar transactions with Cuba, opening up the scope for Foreign Direct Investment from third countries,” said Moya-Ocampos. “The U.S. also effectively removed penalties for ships visiting Cuba…thereby facilitating trade.”

But despite the advances proposed by the U.S. the response from the Cuban government to implement clarifying policy changes has been relatively modest.

Thus, while it is increasingly possible for U.S. firms to conduct business in Cuba from the U.S. under the terms allowed by the U.S. Treasury and the Department of Commerce, businesses separately aiming to engage directly with the island authorities on Cuban soil have not been given any clarity.

Related: What Free Trade Could Mean For The United States and Cuba

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