Making Cuba Safe for Capitalism

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from Bloomberg BusinessWeek,

A U.S. delegation heads to Havana today to start negotiations on the normalization of ties with Cuba. Don’t expect immediate progress. Despite President Barack Obama’s bold shift in U.S. policy, the earliest President Raul Castro is likely to embrace democracy or capitalism is in the afterlife.

Still, the give and take of diplomacy offers a chance for U.S. officials to start pushing Cuba for meaningful changes to the thicket of socialist regulations that have held back its economy and its people for the last 50 years.

For a nation of only 11.2 million people, Cuba is an extraordinarily appealing market. Compared with its neighbors, Cuba has high life expectancy and per capita income, and its people are well educated, with nearly 100 percent literacy and a high proportion of the college-age population in college or graduate school. Its plentiful doctors and scientists could make it a hub for medical tourism and pharmaceutical development. If the U.S. embargo were lifted, U.S. sales to Cuba could rise more than tenfold, to as much as $6 billion a year.

Moreover, it’s possible that Cuba’s offshore waters hold up to 4.6 billion barrels of oil and nearly 10 trillion feet of natural gas. And as the ex-leader in global sugar exports, Cuba could also be an important provider of biofuels.

Right now, though, the Castros still have the economy under lock and key. Halfhearted economic reforms have slowed Cuba’s growth.

For starters, the U.S. should go ahead and …
– take Cuba off its list of state sponsors of terrorism, not merely review its status.
– The U.S. also has a strong interest in quickly settling the trademark disputes and 6,000 expropriation cases dating back to the 1960s
– start talks with Cuba on a trade and investment framework agreement that would help secure protections for U.S. investors, settle regulatory issues, and promote intellectual property rights and technology standards.

The Castros’ most die-hard opponents in Congress will resist such initiatives, let alone an end to the embargo. And it’s true that Cuban socialism and its repressive apparatus remain largely intact. But isn’t it time for those who believe in the transformative power of capitalism to demonstrate the courage of their convictions?

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