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Michael E. Ranneberger Coordinator for the Office of Cuban Affairs Remarks to Equity International Washington, DC, March 15, 1999

I would like to express my thanks to Equity International for the invitation to speak to you today. This is a particularly timely opportunity to discuss U.S. policy with respect to Cuba and the situation on that troubled island.

Human Rights

While I know most of you have a business focus, I think it is important to set the context by discussing the deplorable human rights situation in Cuba, which has taken a disturbing turn in recent days. Just 2 weeks ago today, the Cuban Government conducted one of the premier show-trials in its history against the leaders of the Dissident Working Group leaders -- Martha Beatriz Roque, Vladimiro Roca, Felix Bonne, and Rene Gomez Manzano. The United States strongly condemns the Cuban Government's treatment of these four courageous individuals who, for 19 months, have been held in cells with common criminals and denied adequate medical care. The government charged them with sedition merely because they exercised their right to free speech by criticizing Cuba's one-party system and calling for democratic change.

The Cuban Government went to extraordinary lengths to avoid public scrutiny of its justice system. It barred the foreign media and diplomatic representatives from the trial, and it detained dozens of dissidents to prevent a public show of support for the four outside the courthouse. We call on the Cuban authorities to immediately release the Dissident Working Group leaders.

The trial has been accompanied by a campaign against all forms of dissent, again demonstrating the Cuban Government's paranoia about independent activities. The Cuban Government has just passed a new law, which criminalizes a broad range of activities as undermining state security, particularly those of independent journalists on the island.

Cuban Economy

At the same time, the Cuban economic situation is increasingly desperate. Cuba is barely sustaining the modest economic recovery that began in 1994 following a severe downturn caused by the cutoff of Soviet assistance in 1990. GDP growth slowed to just 1.2% in 1998 because of low prices for sugar and nickel and a disastrous sugar harvest. The reduced value of most exports worsened Cuba's chronic foreign exchange shortage. Prospects in 1999 look equally poor.

Under Cuba's own best-case scenarios, future economic growth will remain modest. We estimate that $1.7 billion has been invested in Cuba since 1990. The largest sectors are telecommunications, with $650 million; mining, with $350 million; and tourism, with $200 million.

Most of the money Cuba receives, either as loans or investment, goes into just a few export sectors -- principally tourism, sugar, and nickel. The profits from these industries -- all fairly volatile -- have allowed Havana to make only minor improvements in its internal economy, which is hamstrung by the government's apparent determination to maintain a tightly run state-controlled economy and to resist substantial economic reform.

The legalization of the dollar in 1993 and other economic reforms have caused a two-tier society to develop, creating social tensions. The opening of well-stocked stores that accept dollars has allowed the roughly one-quarter of Cubans with significant dollar incomes to live much better than the rest of the population. This, coupled with government restrictions on the small legal private sector -- which accounts for just 3% of the labor force -- have caused Cubans to expand their underground economic activities to make ends meet.

U.S. Policy -- Seeking Peaceful Democratic Transition

Our policy is grounded in this Cuban reality. As our Human Rights Report documents, the Cuban Government is a very repressive regime. Since the visit of the Pope in January 1998, the Cuban Government has intimidated, detained, and arrested dozens of dissidents and human rights activists. Hundreds of political prisoners remain in Cuban jails.

When the traditional security threat posed by Cuba as a proxy of the Soviet Union ceased with the end of the Cold War, our overriding objective of promoting a peaceful democratic transition in Cuba and respect for human rights took on paramount importance. The expansion of democratic and free market values in the rest of the Americas is leading to unprecedented stability and prosperity. Cuba, on the other hand, faces a dire economic situation as a result of the end of Soviet subsidies and, more fundamentally, economic mismanagement. At the same time, the Cuban Government remains intransigent against political change.

Not only is the current situation in Cuba incompatible with the interests and hopes of the U.S. and the entire hemisphere, but the failure to undertake fundamental change also has troubling implications for the future. The situation raises prospects for potential instability and chaotic transition, which would negatively affect our interests. And that -- apart from the simple fact that it is the right thing to do -- is why we consider it so important to press for fundamental, systemic change now. Cuba needs to have an internal dialogue now about how to develop a process to carry it into the post-Castro future.

Reaching Out to the Cuban People

That is why we will continue efforts to reach out to and support the Cuban people as a central focus of U.S. policy, which was spelled out in the bipartisan Cuban Democracy Act in 1992. We believe that change in Cuba must come from within, led by Cubans on the island who recognize the problems and injustices of the current system and seek peaceful, democratic change. Increasing the flow of information to, from, and within Cuba, fostering people-to-people contacts, and facilitating outside support for independent groups increases the chances that the inevitable transition will be peaceful and take democratic directions.

President Clinton announced a series of measures on January 5 to reach out to the Cuban people. They build on earlier measures announced in October 1995 and March 1998. These efforts are designed to make the lives of Cubans more tolerable, to encourage the development of an independent civil society, and to help promote peaceful democratic change. The new measures are not about doing business, not about tourism, and not about normalizing government-to-government relations.

We are moving forward in the following areas:

First, we are seeking to encourage additional religious, scientific, educational, cultural, and athletic and other exchanges between our two peoples. We will do this by streamlining visa and licensing procedures for travel between Cuba by qualified persons other than senior Cuban Government officials. The exhibition baseball game between the Baltimore Orioles and the Cuban national team that will be held in Havana on March 28 is part of those efforts to pursue people-to-people ties.

Second, we are expanding direct licensed passenger flights to Cuba by authorizing flights from cities other than Miami and to destinations in Cuba other than Havana. We recently approved charter flights from Miami to Holguin and Camaguey.

Third, we are allowing all U.S. residents, not just those with family in Cuba, to send up to $300 to individual Cubans. We will allow larger amounts to be sent to Cuban organizations independent of the government.

Fourth, we are authorizing the sale of food and agricultural inputs to independent entities in Cuba. The Commerce Department will soon publish regulations laying out procedures for licensing these sales.

Finally, we have proposed restoring direct mail service between the United States and Cuba as well as the establishment of postal money order service.

Maintaining Pressure

Maintaining pressure is an essential part of any effort to bring about change in the behavior and transition of non-democratic regimes.

Especially since the ending of Soviet subsidies, the embargo on the Cuban Government has had a significant impact on the Cuban Government, while our licensed humanitarian assistance of over $2.5 billion since 1992 has helped to offset the direct impact on the Cuban people. Our objective is to pressure the government to make democratic changes, not to punish the Cuban people. The Libertad Act increases pressure on the Cuban Government by discouraging investment in confiscated properties.

As the President has stated, the American people and government would like to have a more normal relationship with Cuba but, as the President has also stated, there must be a basis for that through fundamental democratic change and respect for human rights in Cuba. "What we do not accept, and can never accept," the President has stated, "is an undemocratic Cuba." In other words, and consistent with the Libertad Act, the embargo on the Cuban Government will only be lifted in the context of democratic transition. Promoting that, the President has stated, "is the overarching goal of American policy." The President and other senior officials have indicated that we are prepared to respond on a reciprocal basis to fundamental, systemic change in Cuba. This is not an all or nothing at all proposition. Our hope is that pressure coupled with the incentive of relieving it and replacing it with a more cooperative relationship will give those who seek serious change in Cuba the argument they need to pursue it.

Forging a Multilateral Approach

Soon after he signed the Libertad Act in 1996, the President launched an effort to reach out to our friends and allies, who reacted quite negatively to some provisions of the law, in order to forge a multilateral approach to promote a peaceful democratic transition in Cuba.

The President allowed Title III of the Act, which permits lawsuits in U.S. courts against those who traffic in confiscated property, to enter into effect, but suspended the right to file such suits, as permitted by the Act. In doing this, the President called on our friends and allies to step up efforts to promote a transition to democracy and respect for human rights in Cuba.

The European Union's Common Position, adopted at the end of 1996 and renewed every 6 months since then, links improved relations with Cuba to fundamental democratic change. The EU nations have created a Human Rights Working Group among their embassies in Havana to increase contact with dissidents, human rights groups, and independent elements of civil society. While European officials continue to visit Cuba, an important pattern has emerged, with those officials meeting with dissidents, pressing the Cuban government on human rights, and speaking out on human rights while on the island.

Under Secretary Stuart Eizenstat negotiated with the EU an "Understanding" in May 1998 which commits the EU to take concrete steps to inhibit and deter investment in confiscated property if we obtain presidential authority to suspend the provisions of Title IV of the Libertad Act, which require the exclusion from the U.S. of traffickers in confiscated properties. We are committed to this effort, but will continue to vigorously enforce Title IV until and unless waiver authority is granted.

We believe that political and economic freedom are truly inseparable. Property rights are not safe in a country that blatantly violates human rights, nor are human rights safe in a country that blatantly disregards property rights.

Non-governmental organizations are increasing their efforts to encourage peaceful, democratic change on the island. Pax Christi, the Dutch human rights organization, is leading a coalition of European NGOs to focus on the deplorable human rights situation in Cuba, and has held two major conferences. As a result of these efforts -- the rhetoric of the Cuban regime notwithstanding -- Cuba is hearing a concerted message on the need for fundamental, democratic, systemic change.

A significant element of the multilateral effort to promote democracy is growing movement to promote "best business practices" in Cuba. The U.S. opposes investment in Cuba. Virtually the only opportunities for investment are in joint ventures with the government, which therefore supports and prolongs the current oppressive government. Nevertheless, we recognize that some foreign companies have chosen to invest in Cuba, and those companies should be urged to pursue best business practices. These include insisting on the right of workers to be hired and paid directly, and to form independent unions, among others, which can help create the basis for political change. The North American Committee, consisting of business, labor, and academic representatives from the U.S., Canada, and Mexico; Pax Christi; the AFL-CIO; and Dutch and British employers associations are, we understand, involved in an effort to foster best business practices, and efforts are underway to form an international working group. Conferences in Europe will be taking place. The Transatlantic Business Dialogue, consisting of CEOs of leading American and European corporations, has strongly endorsed best business practices.

The U.S. Private Sector and a Democratic Cuba

When democracy and the free market do return to Cuba, the U.S. business community will have an important role to play in the transition. In January 1997, the State Department estimated that Cuba would receive some $4-8 billion in external financial assistance from private and public sources during the first 6 years of the transition. Cuba will likely receive generous funding after it rejoins multilateral institutions like the IMF, World Bank, and Inter-American Development Bank. But the experience of other Latin American countries -- and of post-Communist countries of Eastern Europe -- has taught us that private investment is crucial to sustained development and economic growth.

We expect the American business community will find Cuba attractive for several reasons. Besides its proximity to the U.S., the country is rich in physical and human resources. In addition, the pent-up demand for U.S. tourism to the island offers opportunities for growth.

There will be additional opportunities in rebuilding Cuba's decaying infrastructure. After 40 years of neglect, the island's highways, railroads, and ports will need millions of dollars in repairs and improvements. But it will not be possible to promote foreign investment in a free Cuba if property rights are clouded by disputes with other major sources of foreign investment. That is one more reason why we must implement the U.S.-EU Understanding now.

Toward the Future

Everyone outside of Cuba -- and even most Cubans -- recognizes that change on the island is inevitable. If we want the process to be peaceful and the result to be democratic, we must redouble efforts now to assist the development of civil society on the island and to press the government to initiate fundamental change. Our efforts to foster independent civil society can only help lay the groundwork for a "smooth landing" and rational civil process. We can provide a degree of reassurance. Two years ago, pursuant to Title II of the Libertad Act, we issued a "Report on Support for a Democratic Transition in Cuba," and more than 10,000 copies have been distributed throughout the island. We are following up on this in various ways including, for example, in sponsoring seminars on the role the U.S. private sector could play in a transition.

We must also send a message to members of the Cuban ruling elite as well as to ordinary Cubans that they have a role to play in a future democratic Cuba if they help to bring that about and adhere to democratic processes. Popular pressure for a better way of life is inexorably growing as contact with the outside world increases. The Cuban Government's repressive system has begun to fray at the edges. The vast black market economy, rampant prostitution, increasing corruption, and a burgeoning crime problem are all symptomatic of this. The vast majority in Cuba, including the ruling elite, undoubtedly knows that the regime's recalcitrance now increases the risks of confrontation later. They and we have a strong interest in avoiding that scenario.

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