Obama bets benefits will convince Congress to lift Cuba embargo

WASHINGTON — President Barack Obama billed opening Cuba as a chance for trade to promote political change, and he's sending Commerce Secretary Penny Pritzker on a trade mission there soon.

He's also wagering that more trade will change the political dynamic in Congress.

Winning over members of Congress is key, since they're the only ones who can lift the five-decade-old economic embargo on Cuba or end the broad travel ban.

“I believe greater engagement will help more and more Americans understand the economic potential of Cuba and the incredible entrepreneurial capacity of their people,” Pritzker said in an -mail. “We will do all we can under these actions to unleash that potential.”

The approach isn't unprecedented for the United States — it's the basis of U.S.-China relations. Still, on Cuba, the U.S. has always insisted political change had to come first, and opponents of the move in Congress, led by Sen. Marco Rubio, a Florida Republican whose parents left Cuba in 1956, said they'd do all they could to thwart the move.

While Americans won't be able to visit as tourists, there will be more exceptions to the travel ban. When they get there, they'll be able to use credit and debit cards, and bring home as much as $100 worth of previously illegal Cuban cigars. U.S. companies will be allowed to export agricultural commodities, construction supplies and telecommunications equipment, and financial institutions can open accounts at local banks. Exports will be limited mainly to Cuba's emerging private sector.

Julia Sweig, director of Latin America Studies at the Council on Foreign Relations, said business, tourism and opening an embassy in Havana can “create the political space for further actions” that can only be taken by Congress.

“But I think we're a while away from that,” Sweig said.

The embargo has been in place by presidential order since President John F. Kennedy's administration, and was codified into law in 1996. The underlying U.S. travel ban is also an act of Congress.

Calling on Congress to act, White House spokesman Josh Earnest said Obama has done what he can. “He's used all the authority he can to take away these restrictions,” Earnest said on Dec. 17. “Some of them remain in place.”

Winning over Congress will mean dealing with other impediments to normal U.S.-Cuban relations, such as the U.S. Foreign Claims Settlement Commission.

The group has certified $1.9 billion in claims against Cuba for expropriations of U.S. citizens' and companies' property made after 1967. Starwood Hotels & Resorts Worldwide Inc., for example, lodged a complaint for $50.7 million against Cuba, the result of property lost in 1968 worth $425,000, plus decades of interest.

U.S.-Cuba trade could eventually reach $12.6 billion in goods and services, up from $300 million to $500 million annually since 2008, according to a May study by Gary Hufbauer and Barbara Kotschwar at the Peterson Institute for International Economics in Washington.

Orbitz Worldwide Inc. collected more than 100,000 signatures on a 2009 petition calling for travel freedom to Cuba. The Chicago-based online booking company embraced the business as soon as Obama announced the changes, which include more visas for U.S. visitors.

“We look forward to the day — hopefully soon — when all Americans have the opportunity to travel to Cuba,” Orbitz Chief Executive Officer Barney Harford said when the move was announced.

Companies such as Western Union and MoneyGram International already let Americans send limited amounts of money to Cuba. More firms will join as Obama's move quadrupled how much money Cuban-Americans will be able to send to relatives still on the island, and eased the risks of running afoul of U.S. sanctions.

“It will increase competition in the corridor as companies get off the sidelines,” said Paul Dwyer, chief executive of Bethesda, Maryland-based Viamericas Corp., a money-transfer firm. “We are looking forward to that.”

Financing of trade with Cuba will also be easier, an angle that could benefit agricultural exports. While a 2000 law allowed U.S. exporters to sell to Cuba, President George W. Bush's administration issued a legal interpretation that complicated financing.

Together, these measures could create a profitable if modest amount of trade between the U.S. and Cuba. And if it eases political tensions, lifting the embargo could be next.

“Congress now has a decision to make,” said Jake Colvin, vice president for global trade at the National Foreign Trade Council, an industry group in Washington. “It can either show that politics stops at the water's edge, or insist that the walls of the Cold War still exist.”