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China Spy Station Revelation Is a Wake-Up Call to Rethink US Embargo on Cuba

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China Spy Station Revelation Is a Wake-Up Call to Rethink US Embargo on Cuba

The knee-jerk reaction might be to further punish and isolate Cuba. Such a move would simply drive the nation further into China’s arms.

China Spy Station Revelation Is a Wake-Up Call to Rethink US Embargo on Cuba
Credit: Depositphotos

In early June, the Biden administration revealed that China has operated an electronic eavesdropping station in Cuba since 2019 and has spent several billion dollars to upgrade it. The revelation sparked a bipartisan uproar, as a Chinese intelligence facility only 90 miles from the Florida coast could intercept commercial and military communications from several southeastern U.S. states.

The incident evoked memories of the 1962 Cuban Missile Crisis, but China poses a different challenge than the Soviet Union did – one predicated on increasing its economic clout in the Western hemisphere. Washington’s policy of economically isolating Cuba, unchanged since the 1960s, has left a vacuum that China emphatically filled in exchange for diplomatic and potential military support.

Instead of ceding Cuba’s economy to China, the United States should scrap the economic embargo and foster strong economic ties with the island, thereby lessening its dependency on Chinese investment. Cuba’s proximity and cultural ties to major business centers in Florida and Texas means U.S. investment and tourism dollars could become a large share of the local economy absent the current restrictions on U.S. capital.

Since the fall of the Soviet Union, which cost Cuba its main economic ally, China and Cuba have enjoyed close trade relations. China is Cuba’s largest trading partner, with $1 billion in trade in 2021. Cuba signed on to China’s Belt and Road Initiative in 2018, and China has invested in major projects in Cuba, including oil wells, a shipping port, biotech and pharmaceutical joint ventures, and an artificial intelligence center. China is not exporting Soviet-style Communism, but rather TVs and SUVs. Its strategy is based on Cuban economic dependence; in exchange for yuan, China receives a diplomatic ally near vital sea lanes running to and from southeastern U.S. ports.

At the same time, U.S. policy toward Cuba remains where it was in 1962 and does not recognize the new economic reality. Instead of matching Chinese economic investment, the United States maintains a ban on almost all trade and financial transactions between Cuban and U.S. businesses and individuals.

At the end of Barack Obama’s presidency, the United States began to normalize relations with Cuba, reopening the Havana embassy and loosening trade and travel restrictions for the first time in over 50 years. This thaw proved to be brief, as President Donald Trump reversed most of Obama’s normalization policies, and many of the limits remain in place under President Joe Biden. Most significantly, the Trump administration put Cuba back on the State Sponsors of Terrorism (SSOT) list shortly before Biden took office. This action curtails the ability of Cuban businesses to trade with U.S. companies, severely limiting access to foreign investment.

Even with such severe constraints, U.S. exports to Cuba in 2021 totaled $323.5 million, one-third of the total Chinese investment that year. If the United States were to ease trade restrictions, Cuba-U.S. trade could greatly surpass Cuba’s trade with China. In justifying his administration’s push to normalize Cuba-U.S. relations, Obama argued that loosening restrictions would not only open economic opportunities but also create a better chance to liberalize Cuban politics. Now, increased strategic competition with China provides a national security imperative to the case for normalizing trade relations, which could prevent China from establishing a stronger presence on the island.

Although the knee-jerk reaction to the discovery of the spy station might be to further punish and isolate Cuba, such a move would be counterproductive to long term U.S. national security by driving Cuba further into China’s arms. The worst-case scenario sees China developing ports and other facilities that could be used for training or hosting military assets, allowing China to project hard power into the Caribbean.

Supporters of the embargo on both sides of the aisle claim that removing it would only benefit a dictatorial regime, and that the embargo is needed to pressure the Cuban Communist Party and drive political change. After over 60 years of regime continuity under the embargo, however, it is hard to see how the status quo will lead to a more democratic Cuba. On the contrary, the embargo harms everyday Cubans by limiting access to humanitarian aid and entrepreneurial tools, and it leaves the Cuban state with few choices but to turn to Chinese firms for needed investment.

Instead, the United States should pursue the opposite approach: bring Cuba into its economic fold by drastically loosening the current investment and tourism restrictions, if not scrapping the embargo altogether. The Petersen Institute for International Economics estimated that annual Cuba-U.S. trade could reach $13 billion under normal trade conditions. A Cuba whose trade with the United States is 13 times that of its trade with China is a Cuba that is less willing to fully align itself with the Chinese government.

The United States should not seek to turn Cuba into a client state. The ideal scenario is one where Cuba sees its national interest best served by hedging between the two economic superpowers – the same as the rest of Latin America. Cuban neutrality is a diplomatic loss for China.

Furthermore, by normalizing economic relations with Cuba, the United States will bolster its own image as a good neighbor in the Western Hemisphere. Everyday Cubans will benefit from increased access to consumer goods and job creation from a stronger tourist industry, increasing U.S. soft power. Most importantly, reintegrating Cuba into the North American market bolsters the U.S. vision for a rules- and market-based international order.

The Biden administration should not only return to the Obama era normalization policies but look to expand upon them. Most importantly, Biden should remove Cuba from the SSOT list, thereby removing a significant obstacle for Cubans to access international financing. Though completely lifting the embargo is unlikely to pass Congress, the administration can take executive action to loosen trade restrictions. These actions should further relax limits on individual travel, remove the current constraint on importing cigars and rum to the United States, and revise regulations to streamline U.S. foreign direct investment. In the long term, the administration should work to build bipartisan agreement with members of Congress and business leaders who support lifting the embargo.

The United States’ current Cuba policy is calibrated for a drastically different geopolitical reality than what it faces in Chinese strategic competition. The U.S. embargo has not only failed to achieve its primary goal, but it is now counterproductive to U.S. interests vis-à-vis China in Latin America. Those interests are best served by reducing the scope of or eliminating the embargo. While this action may prove politically difficult in the short term, an engaged Cuba – and in the long term, a more neutral Cuba – will better position the United States to compete with China.