Should U.S. normalize relations with Cuba?; Island's economy is smaller than Baltimore's; Outlook


NEW OVERTURES to Cuba announced last week by President Clinton are considered the most significant change in foreign policy toward the island in many years.

Clinton has authorized more charter passenger flights to and from Cuba, fewer restrictions on payments to Cubans by U.S. residents, direct mail service with the island and the sale of U.S. food and agricultural supplies to nongovernmental entities. He also authorized increased exchanges of athletes, scientists and others.

Some are encouraged by a change in U.S. relations with Cuba. But many, including a strong contingent of Cuban Americans, believe that any economic help the United States gives ultimately strengthens President Fidel Castro's government.

Is it time to normalize relations with Cuba? What are the implications of such a move? How long would it take to see positive results from such a change in policy?

Mark P. Vitner

Vice president and economist, First Union Corp., Charlotte, N.C.

Florida is definitely the point of impact because that's where most of the expatriates live.

I imagine there are mixed emotions. It will allow more money to be passed to relatives, but I doubt they'll think that it's going to mean a free Cuba.

Personally, I think that the baseball diplomacy may be the most successful part of this whole deal. From a business standpoint, I don't think it will mean much to the U.S. economy at all. You're talking about a country that isn't even the size of Baltimore's economy. Their economy just isn't very large.

They won't have much purchasing power in the United States. They are a $16 billion economy to the United States $8 trillion. They are smaller than Greensville, South Carolina's. Baltimore's is $62 billion.

If Clinton's initiatives will help anyone, it will be the people of Cuba. But there will not be any immediate impact to the U.S. economy.

Sung Won Sohn

Senior vice president and chief economist, Wells Fargo & Co., Minneapolis

Increasing economic ties with any nation, especially for a country at our doorstep, would be mutually beneficial economically. Cuba has a lot to offer the U.S. They produce a lot of sugar. Perhaps an increase in [Cuban] exports would decrease our prices here.

Cuba would be a very attractive place for tourists. Today, many tourists are not looking for a fancy, built-up resort. People are looking for a relatively unspoiled, relaxed atmosphere. That's what Cuba has. If Cuba opens up, I think a lot of Americans would go there.

Some people have argued that the best way to attack communism or an authoritarian regime is with capitalism. Allow capitalism to infiltrate and penetrate the economic and political systems, and gradually the regime may fall.

I think aside from the political issue, economists are for any opening. We're always for free trade. The added benefit is that it might gnaw at or tear down the regime.

Right now, Cuba cannot borrow money to buy things. I could see Spain and South America and European banks would be willing to loan them money. I think this would have broad-reaching, positive implications for the Cuban economy.

James L. Hughes

Director, Office of International Business, Maryland Department of Business and Economic Development

We're looking at what's going on at the federal level. If the sanctions are lifted, there are a number of things that we would explore doing to encourage trade.

We try to help Maryland companies export to countries around the world. There are people in the tourism industry who have talked to us about being interested in developing hotels or vacations to Cuba.

We're very careful in targeting markets around the world. We focus on markets where we see considerable opportunities for products and services and also in places where the state can play a role in making Maryland companies successful.

We don't do a lot with the Caribbean. We're focusing on the larger markets in Latin America, the more mature markets.

The per capita income in Cuba is anywhere from $1,500 to $3,000 a year. Mexico's per capita is $8,500, Argentina's is $5,600.

Maryland sells mostly sophisticated products, higher end. You need a rather sophisticated market. It's a fairly diverse group, but for the most part, Maryland products have a higher technology component than most states. If the sanctions were lifted, these are all factors we would look at in determining how much emphasis to put on Cuba.

There was a lot of enthusiasm when the wall came down in Eastern Europe and a lot of countries rushed in to do business.

Some companies did well, but a lot have pulled back.

We try to be longer term and more strategic, rather than rushing into the hot new country.

Terry McCoy

Professor of Latin American studies and political science, University of Florida, Gainesville, Fla.

I'm glad to see anything, but I don't think it makes much difference substantively. It's more in the realm of humanitarianism than economics. I think the United States has been under pressure since the pope's [Cuban] visit.

You can hardly argue that the current policy has been successful, and we bear the moral burden in the eyes of most of the rest of the world of picking on a small country, a country of 11 million people.

There's a feeling that a lot of the suffering of the Cuban people is attributable to the embargo.

As bad as things are in Cuba, there's no evidence that the government is going to fall. When the government does change there, it's in our interest to have some relations with them.

Even recognizing that what we're doing may not provoke a positive response from the Cuban government, it's still the right thing to do. It's the right thing morally and strategically.

Pub Date: 1/10/99

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