Trump Should Normalize Relations with Cuba
The case for Trump and Rubio making Cuba their Nixon-to-China moment
Summary
President Donald Trump and Secretary of State Marco Rubio have an opportunity to normalize relations with Cuba. As Florida Republicans, they are not beholden to Cuban emigres. Normalization would wrong-foot Democrats and address an important immigration issue. It would benefit American exporters and counter Chinese and Russian influence in the hemisphere. And even though it is not a goal of US policy, normalization it would be excellent for Cuba.
The United States has had a hostile relationship with Cuba since the Cuban Revolution in 1959. Cuba’s revolution is an inspiring story that began as a horror show, enjoyed a brief moment of promise, and ended as a tragedy. This is why we call them revolutions.
How the US and Cuba became enemies
In 1933, an ambitious 31-year-old Cuban army officer named Fulgencio Batista led the “revolt of the sergeants”. He seized control of a weak Cuban government and controlled it for the next 26 years. His corrupt, US-backed dictatorship did the bidding of American casino, sugar, and real estate interests, and often aligned with the mafia. Amidst growing inequality, Batista violently repressed dissent, using his secret police to kill perhaps 2,000 student and labor activists.
Amidst increasing disenchantment among the middle class and rural poor, a young nationalist lawyer named Fidel Castro organized an armed attack on Batista’s Moncada Barracks in 1953. The assault was militarily shambolic and failed. Defenders captured Fidel and his brother Raul and killed many of their recruits. During his trial, Fidel gave a famous speech that seized the popular imagination when he declared, “History Will Absolve Me.” In 1955, Batista released Castro as part of a general amnesty and exiled him to Mexico. He would regret his leniency.
The Castro brothers immediately began plotting their return to Cuba. Joined by an itinerant revolutionary physician from Argentina named Che Guevara, they crammed 80 fighters into a leaky 12-person boat named Granma. They sailed for Cuba, intending to ignite an armed uprising. The effort was another hapless, Keystone-Cops attack. The Granma ran aground in a mangrove swamp, and Batista’s forces killed or captured most of the seasick and starving fighters. A dozen survivors, including the Castro brothers and Guevara, escaped into the formidable Sierra Maestra mountains and began organizing a guerrilla insurgency. Castro used radio broadcasts on Radio Rebelde and clever international media coverage to build a mythic image of resistance. Batista’s brutality and corruption helped the rebels gain support from peasants, students, and disaffected urban professionals. The US lost confidence in Batista and halted arms sales to his government in 1958.
By late 1958, Castro’s forces gained the upper hand. Che Guevara and Camilo Cienfuegos led successful offensives that captured key cities. On January 1, 1959, Batista took three cargo planes and fled to the Dominican Republic (he needed the aircraft because he carried over $300 million in cash skimmed from American mafia-run casinos). When Castro’s forces entered Havana on January 8, 1959, the city erupted in mass celebrations.
Castro’s revolution enjoyed overwhelming popular support in Cuba and the United States. Nonetheless, US President John Kennedy had good reason to oppose Castro. He had begun his presidency by approving Eisenhower’s plan to invade Cuba using exiles based in Miami and backed by the CIA. The Bay of Pigs was a humiliating fiasco — an operation so sloppy it was worthy of Castro himself. Then Kennedy faced an extraordinary international nuclear challenge when the Soviet Union placed missiles in Cuba in October 1962. Nonetheless, Kennedy sympathized with the goals of the Cuban Revolution. A month before he was assassinated in 1963, he told an interviewer that:
“I believe that there is no country in the world, including any and all the countries under colonial domination, where economic colonization, humiliation, and exploitation were worse than in Cuba, in part owing to my country's policies during the Batista regime.
“I approved the proclamation which Fidel Castro made in the Sierra Maestra, when he justifiably called for justice and especially yearned to rid Cuba of corruption. I will even go further: to some extent, it is as though Batista was the incarnation of a number of sins on the part of the United States. Now we shall have to pay for those sins. In the matter of the Batista regime, I am in agreement with the first Cuban revolutionaries. That is perfectly clear.”
Kennedy’s encomiums notwithstanding, he approved an economic blockade of Cuba in response to Castro’s seizure of US-owned businesses and land. As an anti-imperialist Marxist who overthrew a tyrant backed by the US, Castro was ideologically inclined to build strong ties with the Soviet Union and provoke tension with Washington. Kennedy understood Castro’s nationalism, but was not inclined to accommodate his communism.
Fidel: Not George Washington.
Castro was a charismatic but shambolic leader. He committed every rookie error in the Marxist playbook. During his first decade in power, he nationalized everything, expropriating all US-owned and most Cuban-owned businesses, banks, and land. He built a Soviet-style command economy, with near-total state ownership. He outlawed independent unions and political opposition. His regime combined artificially low wages and elaborate food rationing with robust education and health care. The result was impressive gains in education, health care, and literacy, but severe losses in productivity and efficiency.1
Cuba became a Caribbean subsidiary of the Soviet Union. In exchange for oil, technical, and military support, Cuba granted Moscow preferential sugar purchases. By failing to develop a national economic foundation, Cuba became fragile. Its economy was propped up by geopolitics, not productivity. When the USSR collapsed in 1991, Cuba lost ~80% of its Soviet subsidies. Its economy shrank by a third in three years. Severe fuel, food, and transport shortages led to a humanitarian crisis that forced Fidel to open the economy to limited tourism, overseas remittances, and foreign joint ventures.
Fidel died in 2016. His kid brother Raul succeeded him, legalizing small-scale self-employment and allowing private restaurants, taxis, and rentals (including Airbnb, which is easily the best way to visit today).2 He expanded the use of cooperatives and reorganized failing state enterprises under new management rules, but he kept key sectors like energy, telecom, and agriculture under state control. Under Obama, things thawed a bit, and tourism increased. Trump rolled back the Obama-era detente, whereupon Havana froze reforms, refusing to liberalize deeper and fearing losing control. Capital inflows fell, productivity stalled, and a new generation of Cubans lost faith.
When Raul retired in 2018, communist technocrat Miguel Díaz-Canel took over. He eliminated the dual-currency regime, which led to massive inflation, supply chain chaos, and a collapse of savings.3 Overnight, artificially low wages and pensions collapsed. Tourism collapsed during the Covid pandemic, and over 500,000 Cubans fled the country in 2022-23 alone. Despite tentative moves to allow more private enterprise, food, electricity, and medicine remain scarce. July 2021 saw the largest anti-government protests in decades. The government responded by disconnecting the internet and arresting large numbers of protestors.
US sanctions on Cuba survived due to electoral politics
The sanctions that the US has placed on Cuba since 1962 have several elements. The US combines a traditional trade embargo with financial restrictions that deny Cuba access to the US banking system. We discourage foreign direct investment under the 1996 Helms-Burton Act by allowing US citizens to sue foreign companies “trafficking” in formerly American-owned Cuban property. We have pressured Venezuela and other countries from extending credit or oil shipments, leading to chronic fuel shortages in Cuba. Lines outside gas stations are common and can extend for a mile or more. US citizens face travel restrictions to Cuba, but these are more annoyances than fundamental barriers.4
Supporters of Cuba blame these sanctions for Cuba’s miseries. Likewise, detractors credit sanctions for making life difficult in Cuba. Both sides overstate their case.5 Although measuring the impact of sanctions is difficult, it is helpful to benchmark Cuba to the Dominican Republic. The DR had a similar GDP per capita to Cuba’s in the 1950s, but is now four times richer per person than Cuba and exports three times more. Or compare Cuba with Vietnam, a former centrally planned economy that liberalized and saw 10x growth in GDP per capita since the 1990s. Almost every economic analyst concludes that the lion’s share of Cuba’s economic dysfunction stems from its political and financial mismanagement, centralized control, inefficiency, and ideological rigidity.
Since the end of the Cold War, US policy towards Cuba has been dictated not by US economic interests but by presidential politics. After Castro’s rise, hundreds of thousands of Cubans fled to the US, many settling in South Florida. Cuban exiles, especially those arriving before the 1980s, became influential, Republican, anti-communist, and politically active. By the 1990s, Cuban Americans were a swing constituency in Florida, a crucial presidential battleground state. Groups like the Cuban American National Foundation (CANF) became essential to presidential aspirants.
CANF successfully lobbied Bill Clinton to sign the 1996 Helms-Burton Act, which codified the embargo into law (meaning only Congress, not the President, can fully lift it). Clinton had expressed support for re-engaging with Cuba, but he signed the bill to shore up political support in Florida. Clinton had narrowly lost Florida in 1992, but carried it comfortably in 1996 after signing the bill.
Three years later, Al Gore learned how Cuban-Americans can swing Florida politics. As Vice President and the 2000 Democratic nominee, Gore was forced to defend the Clinton administration's order to deport Elián González. González was a 6-year-old Cuban boy rescued at sea after his mother drowned. The feds ordered him returned to his father in Cuba.
The plight of González triggered mass protests in Miami and hardened exile sentiment against Democrats. Gore tried but failed to distance himself from Clinton’s handling of the affair, and it severely damaged his reputation in Florida. George W. Bush famously won the presidency when he carried Florida by 537 votes. He rightly credited strong Cuban-American backing for his victory and no doubt thanked his lucky stars for Elián González. (The boy was welcomed home by Castro and grew up to become an engineer in Cuba.)
After that, nobody wanted to touch Cuba. George W. Bush tightened restrictions, limited remittances, and expanded anti-Castro propaganda as payback to the loyal Florida constituency that put him in the White House. Obama restored diplomatic relations, expanded travel and remittances, relaxed business restrictions, and tried to court younger Cuban-Americans, who were increasingly open to engagement. He faced bipartisan criticism from Florida politicians, led by a young Cuban-American Senator from Florida, Marco Rubio. Yet by 2016, polls showed over 50% of Cuban Americans under 40 supported re-engagement with Havana.
A Trump-to-Havana moment?
There is now a strong economic and geopolitical case for Donald Trump and Marco Rubio to leverage their hardline reputations to normalize relations with Cuba. The evolving political landscape in Florida and the shifting dynamics in Latin America make such a move especially timely.
Florida is less of a swing state. For restoring relations with Cuba, it helps that most people no longer regard Florida as a swing state.6 Trump won Florida by 3.3% in 2016 and 3.4% in 2020, improving his showing among Cuban-American and Latino voters. He made Marco Rubio his Secretary of State. Nobody is accusing him of being soft on Cuba.
Republicans dominate Florida’s state government, so normalizing with Cuba won’t cost them Florida anymore. If the polls are correct, it might expand GOP appeal with younger Latino voters nationwide as younger Cuban-Americans, especially second and third generation Cuban-Americans, favor more economic engagement and family connection. Rubio can easily frame normalization as “a strategy to defeat communism with markets, not isolation.”
It’s a deal made for Trump. This is the sort of unpredictable dealmaking that Trump loves. He can cast normalizing relations with Cuba as a bold, America-first move to undercut China and Russia, create new export markets for US agriculture and energy, and advance religious freedom and economic liberty through capitalism, not embargoes. American farmers in the red Midwest and Gulf states are eager to sell rice, corn, wheat, and poultry to Cuba. A normalized relationship could unlock a $1–2 billion annual market in food exports alone.
US-Cuba travel surged under Obama. Restoring legal travel and flights would revive dormant revenue streams for American firms (e.g., Airbnb, Delta, Carnival). US companies could provide internet, telecoms, and mobile banking, building blocks for increased economic freedom and US influence. Elon Musk’s Starlink and large software companies, from Microsoft to Oracle, would all benefit.
It’s smart domestically and geopolitically. Trump can undo the cause of the greatest nuclear standoff in the twentieth century: the Cuban Missile Crisis. He would no doubt place Cuba alongside Canada and Greenland in his (mostly fanciful) US sphere of influence.
It counters Russia and China. At a time when Cuba is once again leaning towards Beijing and Moscow, normalizing relations makes geopolitical sense. Trump can stop China from providing credit, training technocrats, and surveillance systems. He can block Russia’s effort to court Cuba militarily. (Russia recently forgave the $30+ billion bar tab the Castros had run up over the years.)
It appeals to new voters. Trump and Rubio could frame normalization as a hard-nosed, pro-American, anti-communist strategy: “We tried punishing the Cuban people for 60 years—it didn’t work. Let’s flood the island with capitalism, freedom, and opportunity and watch the regime choke on its incompetence.” This framing appeals to younger Latinos, business interests, and even some Cuban-Americans. It shows independence from old Cold War tropes. It also undercuts Democrats, who often appear timid or trapped by interest group politics.
It enhances border security. Cuba was the number two source of migrants at the US-Mexico border in 2022–23. As a result, Trump can frame rapprochement as a border security issue. Normalizing relations gives Trump new tools to coordinate immigration and prevent drug smuggling. Without a relationship, there’s no operational intelligence or cooperation.
A Cuba policy that serves America’s interests, counters Beijing and Moscow, and respects the aspirations of Cuban families isn’t appeasement. It’s a Cuba strategy, something America has not had since 1959.
Musical Coda: Only the Lonely
Only Roy Orbison could gather this backup band. See if you can spot an impossibly young Bruce Springsteen, Elvis Costello, T Bone Burnett, JD Souther, Jackson Browne, Bonnie Raitt, and k.d. lang. (Tom Waits played organ and acoustic guitar in some Black & White Night sessions, but I didn’t spot him here.)
Cuba spends more of its GDP on education than any other country. Education is fully funded, free, and compulsory through grade 9. In almost every country, however, there is a direct, strong, and positive relationship between education and income. The only exception is Cuba, which has a well-educated population with state-managed incomes. Physicians earn only slightly more than bike mechanics, so nobody enters the field just for the money, and many leave the country.
Raul married Vilma Espín, a former MIT chemical engineering student and the daughter of a wealthy lawyer for the Bacardi rum company, who played an active and high-risk leadership role in the Cuban Revolution. Their daughter, Mariela Castro, currently heads the Cuban National Center for Sex Education and is an outspoken advocate for gay and lesbian Cubans. She is almost single-handedly responsible for a resurgence of gay and lesbian culture in Cuba, which her uncle Fidel had violently repressed.
For over two decades, Cuba operated a dual currency system. It issued the Cuban Peso (CUP) for paying state wages and most domestic transactions and the Cuban Convertible Peso (CUC). The CUC was pegged to the US dollar, and used mainly for foreign transactions, tourism, and purchasing imported goods. Cuba issued the CUC after the collapse of the Soviet Union, which left it in an economic crisis and in need of hard currency.
The CUP remained weak and was not convertible on international markets, while the CUC was valued much higher. This created a two-tiered economy. Those with access to CUCs (mainly in tourism or foreign business) could afford imported goods and luxuries, while state workers paid in CUPs had limited purchasing power. This fostered enormous social inequality, contrary to Cuba’s socialist ideals.
President Miguel Díaz-Canel ended the dual currency system in 2021, with the CUP as the sole legal tender pegged to the US dollar. The unification was necessary to make Cuba’s economy more transparent and efficient and to create a level playing field for all Cubans, regardless of their employment sector. A single currency and unified exchange rate were expected to make Cuba more attractive to foreign investors and facilitate international trade.
Visitors must choose an authorized travel category; “Support for the Cuban People” is widely used. Visitors must keep certain records for five years. Exchanging currency is not smooth. Internet access is intermittent and controlled. However, American, JetBlue, Southwest, United, and Delta all fly nonstop to Cuba from seven US cities, and Airbnb lists more than a thousand homes that will host guests. It is a wonderful place to visit, even if it is tragically screwed up politically.
Trying to sort out the effect of sanctions is not straightforward. The Cuban government (via the UN) estimates they do $3.8 billion/year in damage, or less than 3% of GDP. The US International Trade Commission estimates less than $1 billion in lost trade based on 1990s data. Petersen has general sanctions models estimating 5% of GDP.