International business has always sparked interesting regulations and trade barriers as is the case with Cuba (Lamrani, 2013). Cuba attained global recognition in 1990 for governmental revenues originating from sugar exports. However, after the collapse of this major industry, the island had to make extreme changes to survive challenges resulting from international business. One of the most conspicuous regulations was to ensure that foreign investors dealt with workers only through the government. For reasons not clear, the United States also placed a barrier regarding its trade dealings with Cuba. This paper seeks to answer three questions to enlighten the audience on the Cuban disposition after the collapse of its sugar industry.
A look at the history of Cuba reveals a lot about why the government fails to allow foreign investors to deal directly with workers. Firstly, there is the issue of the government’s need to earn revenue. Having come from glory to grass, the government does not have enough options when it comes to raising revenue. The Fidel Castro era saw the nation rise to its best performance in relation to revenue acquisition (Brenner, 2008). This was because of the country’s ability to produce in abundance one of the most necessary goods in the world, sugar. Evidence has it that Cuba recorded revenues of up to $5 billion in the year 1990 (Lamrani, 2013). During this period, the country was trying to recover from the collapse of its most reliable source of revenue, the Soviet Union. However, revenues from exporting sugar could not be sustained and the government was out again looking for income sources. This is why the government refuses to allow direct dealings between labourers and foreign investors, to create an endless source of income (Brenner, 2008).
The question of ethics. The fact that non-Cuban businesses always have to hire and pay their workers through the government raises a question concerning the ethics involved in such dealings. Nevertheless, Gillespie (2013) argues that the question of ethics becomes irrelevant when investors make good money out of their investments. Although this is mostly the case, the Cuban government dealings with foreign investors call for scrutiny. It is completely ethical for non-Cuban businesses to enter into partnership with the Cuban government. This derives from the point of view that Cuba is a sovereign state and reserves the right to its decisions (Brenner, 2008). This means that non-Cuban investors have no option but to consent to the regulations if they have to do business there. Ricardo Elizondo concurred with this view arguing that foreign investors must realize that Cuba is a socialist state in order to be able to conform to the Cuban regulations (Gillespie, 2013).
According to Gillespie (2013), an economic transition in Cuba is not possible unless preceded by a change of regime. This transition would first involve a lifting of the trade ban placed on the socialist state by the United States since 1960 (Lamrani, 2013). This alone could have a tremendous impact on the economy of Cuba. Since an economy’s success is determined by the ability of citizens to earn reasonable incomes, United States would step to intervene. Consequently, the Cuban government would have to allow non-Cuban businesses to deal with workers directly or pay them their rightful incomes. Increasing the earnings of the citizens would then allow them to invest within their own country. This would mark the beginning of a long awaited uplift to the country’s economy. More importantly, lifting of the trade embargo would allow Cuba to explore new markets for their products. This means an extra source of revenue for the government.
How Cuba’s transition to a market economy would differ from experiences of Russia and China. It is important to admit that even with a transition; Cuba’s market economy would not differ greatly with the experiences of Russia and China. Taking China for example, its approach to an economy playing a global function in exports (Brenner, 2008) helps project how such a transition would affect Cuba. Cuba’s transition could have an almost similar effect due to its nickel endowment. Since Cuba holds about 30% of the worlds nickel (Gillespie, 2013), it can easily become the world’s chief exporter. On the other hand, a similar transition in Russia was almost a success except for the high concentration of wealth in government official’s hands (Brenner, 2008). Cuba would be no different bearing in mind that the end of a regime does not necessarily mean that powerful and wealthy individuals lose their influence. Such individuals would pose a threat to the amendment of laws necessary to sustain the market economy.
It is clear that the United States maintains a hard line against doing business with Cuba. However, scholars have delved in to the issue to find out the chief cause of such a harsh stand. In his findings, Gillespie (2013) reports the United States as self-centered. In support, Lamrani (2013) argues that although the harsh stand is in United States best interest it is a tool to coerce the Cuban government into submitting its mineral rights. United States as one of the world’s superior nations has been using the embargo to lure the Cuban government owing to the islands endowment. This embargo is therefore just an expression of the united States interest in nickel. It is thus an embargo obviously portraying that the United States puts its interests first. A submission by the Cuban government would mean that the united States have total or partial control over 30% of the world’s source of nickel (Lamrani, 2013).
Despite the controversies surrounding the dealings of Cuba with the rest of the world, it is clear that each country deals with foreigners having its best interests at heart. This paper has enlightened on the Cuban situation by answering three questions. The first one dealt with the issue of Cuba restricting non-Cuban businesses from dealing directly with workers and whether or not it is ethical for foreign investors to concede to such regulations. The second projects the Cuban economy under a new regime and compares it to the experiences of China and Russia. Finally the paper handles the issue of the United states embargo determining whether the embargo is in the best interests of the United States. After answering the three questions, it is clear that Cuba became entangled in an economic war long before its government realized (Brenner, 2008).
