Alex Brewer Bachelor Thesis copy

Bachelor Thesis

How Does the United States’ Trade Embargo Against Cuba Affect the Cuban Healthcare System?

supervised by and submitted to: Mr. Prof. Dr. Bernard Gilroy

due date:July 31, 2015

submitted by:Alex Brewer

Course of studies: WirtschaftswissenschaftenMatriculation number: 6763955

1001 Wisconsin Avenue Mendota, IL 61342 USA

Phone: 1 (815) 539-5863

Appendix

Abbreviations . . . ii.

Abstract . . . 1

I. Background, Data, and Empirical Framework . . . 2

A. Post World War II History of US-Cuban Relations . . . 2

B. Sanctions, Embargoes, and Economic Weapons . . . 4

C. Cuban Healthcare Overview . . . 6

D. Data . . . 7

II. Methodology and Interpretation . . . 9

A. Life Expectancy . . . 11

B. Economic Indicators: GDP and Healthcare Expenditure . . . 13

C. Nutrition . . . 17

D. Possible Outcomes of the Diplomatic Thaw . . . 18

E. Comparison to the Former States of the Soviet Union . . . 21

i. Human Development Indicator . . . 21

ii. Telecommunications . . . 22

iii. Mortality Rates in Transitional Economies . . . 26

III. Policy Recommendations . . . 28

A. “Grass is Greener” Policy . . . 28

B. “Hong Kong” Proposal . . . 29

IV. Conclusion . . . 30

List of Figures . . . iii.

Bibliography . . . iv.

i.

Abbreviations

ASCE Association for the Study of the Cuban EconomyCIA Central Intelligence Agency CMPP Cuban Medical Professional Parole ProgramCSS Caribbean small states FAO United Nations Food and Agriculture Organization GDP Gross domestic product HCE Healthcare expenditure HDI Human Development Index MCS Mobile cellular subscriptions MEDDIC Medical Education Cooperation with CubaNIP National Immunization Program OAS Organization of American States OLS Ordinary Least Squares PSTN Public switched telephone network R Receiver S Sender UNDP United Nation Development ProgrammeUS United States US BLS United States Bureau of Labor StatisticsWHO World Health Organization

ii.

How Does the United States’ Trade Embargo Against Cuba Affect the Cuban Healthcare System?

By Alex Brewer

This paper investigates the effect of the American economic embargo against Cuba on the Cuban healthcare system by the analysis of historical economic data and healthcare statistics. I find that the US embargo does not have a significant negative impact on the healthcare system of Cuba or on the health of the Cuban population. The US embargo makes it extremely difficult for Cuba to invest in modern medical equipment and a sufficient supply of medicine, yet they have been successful in developing a program which provides exceptional healthcare to its citizens. Transitioning to a market economy and political democracy could result in a mortality crisis similar to the ones seen in post-Soviet countries.

The effectiveness of the American economic embargo on Cuba has been a topic of debate since the inception of the Cuban Assets Control Regulations in 1963. Because of its long and controversial history, the embargo has been the subject of numerous studies. However, the state of world affairs has changed considerably over the past half-century and many of these studies have become outdated. Due to recent 1

developments in US-Cuban relations, it is relevant to refresh our view of the United 2

States’ policies regarding Cuba and the effect they have on Cuban civilians. The healthcare system is an appropriate topic to consider, as it affects the population as a whole and has a direct effect on the welfare of the citizens.

Many of the notable works on this subject, particularly Garfield and Santana (1993) and Frank and Reed (1997), 1

were written before the implementation of important legislation, the Helms-Burton Act, was taking place. While much of their historical data is still valid, their conclusions may be outdated.

As of December 17, 2014 President Barack Obama ordered the restoration of full diplomatic relations with Cuba. He 2

also ordered the opening of a US embassy in Havana, the first US embassy in Cuba in more than 50 years. This development was covered in an article by the New York Times titled U.S. to Restore Full Relations With Cuba, Erasing a Last Trace of Cold War Hostility (Baker, 2014).

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I. Background, Data, and Empirical Framework

A. Post World War II History of US-Cuban Relations

The story of US-Cuban relations after World War II is one of strain and tension. In 1959, the authoritarian, US-backed leader of Cuba, President Fulgencio Batista, was overthrown by a group known as the 26th of July Movement. This organization was led by Marxist revolutionaries, namely Fidel Castro. In January of 1959, the United States officially recognized the new Cuban government led by Fidel Castro. After this, relations between the US and Cuba began an even more dramatic downward spiral.

In February of 1960 Cuba and the Soviet Union met to sign a trade agreement. The Soviets agreed to provide Cuba with crude oil as well as buy sugar and other products. In response, the US State Department instructed American refineries in Cuba to refuse to process any crude oil received from the Soviet Union. Cuba countered by nationalizing all three American oil refineries. President Eisenhower cancelled a majority of the annual US sugar imports from Cuba as tensions rose. Cuba expropriated all US property in Cuba and began discriminating against imports of US products. The expropriation of property by Cuba was valued at around $1 billion at the time; a significant $7 billion in current dollars if adjusted for inflation (US BLS, 2014). If it was not clear before, Cuba had now solidified its position as a partner of the Soviet Union. In October, the Eisenhower administration imposed an export embargo on Cuba with exceptions made to food and medicine. The administration severed all diplomatic ties with Cuba in January of 1961 and restricted travel to and from the country. Fidel Castro’s acknowledgement of his Marxist-Leninist affiliation as well as his portrayal of the revolution as socialist and anti-imperialist caused this final stage of separation by the United States.

Anti-Cuban legislation from the US continued in 1962 when imports from Cuba were banned by presidential proclamation. That same year, the Organization of American States (OAS) voted to suspend trade of military goods with Cuba. In August, US Congress passed legislation which barred aid to any country that assisted Cuba or shipped goods to or from Cuba. In 1964, the US Commerce Department revoked the

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general licenses that allowed the export of medicine and food to Cuba. Requests for commercial export licenses were denied and only humanitarian donations were allowed to be sent.

After such strong legislation, President Carter softened the tone in 1977 when he opened a dialogue regarding the possibility of renewing diplomatic involvement with Cuba. In addition, the Foreign Assistance Act of 1961, which banned other countries from trading with Cuba, was lifted. However, the Reagan administration reestablished sanctions in 1981 by imposing even stricter embargo legislation. A comprehensive travel ban between the US and Cuba was reinstated in 1982. This tightening continued until 1989 when Fidel Castro, in an attempt to improve relations with the US, offered to help curb drug trafficking for the mutual benefit of both countries (Hufbauer, Schott, Elliott, and Cosic, 2011).

Today, US-Cuban relations has lost much of its former hostility and there is an increasing interest in normalizing relations between the two countries. On December 17 2014, President Obama announced steps to normalize relations with Cuba and instructed Secretary of State Kerry to begin discussions with the Cuban government about the possibility of restoring diplomatic relations. He also lifted financial and travel restrictions on Cuba, allowing the use of American credit and debit cards in Cuba as well as family and professional visits. In his speech, President Obama stated his view on US-Cuban relations very clearly when he said:

“Now, where we disagree, we will raise those differences directly -– as we will continue to do on issues related to democracy and human rights in Cuba. But I believe that we can do more to support the Cuban people and promote our values through engagement. After all, these 50 years have shown that isolation has not worked. It’s time for a new approach.” (Obama, 2014)

This shift in attitude toward Cuban policy is not universal, however, and there is still firm opposition from both Republicans and Democrats. High profile politicians like republican Governor Jeb Bush of Florida and democrat Senator Robert Mendez have both been

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open regarding their disagreement with the decision (Baker, 2014). With President Obama leaving office after his second term, the future of US-Cuban relations will depend heavily on the outcome of the US presidential election in 2016.

B. Sanctions, Embargoes, and Economic Weapons

In order to understand the arguments for and against economic sanctions, it is important to understand how they work and what they set out to accomplish. For the purpose of this paper, I define the term economic sanction as non-military actions used by one country, referred to as the sender (S), against another country, referred to as the receiver (R), with the goal of value-deprivation. In his paper Characteristics of 3

Economic Sanctions (1968), Peter Wallensteen provides a list of four categories of “economic weapons” that one country can inflict on another and lists economic sanctions saying, “This includes trade bans between nations where most of the trade between the parties is affected. It presupposes no use of military means” (Wallensteen, 1968). Although the US (S) embargo against Cuba (R) fits this definition, it also overlaps with the definitions of other forms of economic weapons. Wallensteen lists these other weapons as economic warfare, specific economic actions, and tariff wars. Economic 4

warfare between the US and Cuba may not have been used as dramatically as the examples given in Wallensteen’s literature (such as blockades during the Napoleonic Wars or the bombing of North Vietnam) but I would argue that the Bay of Pigs Invasion certainly fits the definition due to its military components. Additionally, the 5

This definition is based on previous definitions found in literature by Wallensteen (1968) and Barber (1979). It is 3

designed to exclude intranational economic pressures as well as international sanctions designed to promote economic wellbeing rather than to inflict damage.

Economic warfare refers to situations where economic sanctions are paired with military involvement in an attempt 4

to destroy the target’s economy. Usually military involvement is the focal point of this economic weapon. Specific economic sanctions, as defined by Wallensteen, include the manipulation of economic aid, arms embargoes, nationalizations, and other forms of less comprehensive economic maneuvers. Tariff wars include export and import restrictions as well as the implementation or manipulation of tariff prices.

The Bay of Pigs Invasion was a covert military operation sponsored by the CIA undertaken by a counter-5

revolutionary paramilitary Cuban exiles known as Brigade 2506. The CIA trained and funded the group in the hopes that they would be able to invade Cuba and overthrow the Castro regime. The invasion took place in April of 1961 and was a complete failure, resulting in the death or capture of the entire Brigade 2506 (National Security Archive, 2001; Castro and Fernandez, 2001).

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nationalization of the American oil refineries in by Cuba (S) would fall under the category of “specific economic sanctions” per the definition set forth by Wallensteen. It 6

is apparent from these instances that the economic weapons being used by the US and Cuba are not limited to one type of weapon and that categorizing their actions may not be as black and white as it first appears.

It is important to point out that in the case of the US and Cuba, economic weapons were implemented by both countries for very different purposes. For example, when Fidel Castro (S) nationalized the three Cuban-based American oil refineries in 1960, his goal was not the same as when President Reagan (S) strengthened the embargo against Cuba (R) and reimposed the travel ban in 1982. Castro most likely chose to nationalize the refineries in an attempt to increase Cuba’s productivity and make use of the oil it was receiving from the Soviet Union, as well as please the Soviet government, while Reagan’s actions were intended to destabilize Cuba’s leadership and encourage a transitional government. The effectiveness of economic weapons is difficult to determine. In the case of Cuba’s (S) nationalization of US (R) refineries, the implied goal was accomplished when the refineries began processing Soviet crude oil. However, in the case of the US (S) trade embargo against Cuba (R), how does one measure the internal instability of a country? It may be possible to survey the population and record the amount of dissension, but this would be incredibly unreliable due to the fear of punishment by the ruling party. Additionally, it is difficult to identify the root of a population’s disapproval. Disease epidemics or food shortages unrelated to the economic sanctions inflicted on the country might skew the data and imply causation when they are in fact merely correlated. Some countries, including Cuba, have even encouraged a mass exodus of dissenters after a regime change which would remove a significant portion of the opposition.

The study of economic sanctions and other weapons is deeply rooted in contemporary international policy. It is important that we understand sanctions in order to assess their implementation and effectiveness appropriately.

“Specific Economic Sanctions. Examples are manipulations with economic aid, arms embargoes, nationalizations, 6

etc. not taking the form of general trade bans. These actions are less comprehensive, and therefore frequently used” (Wallensteen, 1968).

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C. Cuban Healthcare Overview

The Cuban healthcare system operates as a universal system under which all citizens are provided free health care by the government. Hospitals and healthcare facilities are government-run and the Cuban government takes full fiscal and administrative responsibility for all patients. Despite lacking traditional funding structures due to the embargo, the Cuban healthcare system has been very successful at caring for its citizens (see e.g. work by Garfield and Santana, 1997; Chelsea Merz of the Harvard Public Health Review, 2002). One driver of this success is Cuba’s emphasis on preventive care (Frank and Reed, 1997). Due to the shortage of medicine caused by the embargo, Cuba has developed a successful, proactive healthcare program which is more efficient than the alternative reactive model that is practiced in other countries. One of the best examples of this preventative model is Cuba’s National Immunization Program (NIP) which protects 99 percent of children under 16 from polio, diphtheria, tetanus, and hepatitis (Reed and Galindo, 2007).7

Cuba’s healthcare system has been very successful at helping those in need outside of its country’s borders as well. In 2007, a study by Dr. Pol De Vos of the Belgian Department of Health reported that, since Fidel Castro took power in 1960, Cuba has sent over 67,000 health workers abroad to 94 different countries in Latin America, African, and Asia (De Vos, 2007). A number of these health workers participate in a program called the Henry Reeves Contingent. This program is designed to provide fast and effective emergency assistance to victims of international catastrophes and was developed in response to Hurricane Katrina which devastated New Orleans in 2005. Although the US turned down Cuba’s offer of assistance, the contingent was able to deploy to Pakistan just months later to provide post-earthquake relief. The contingent arrived within 48 hours of the disaster and stayed for over six months, providing assistance with more than 2,500 healthcare personnel and 30 field hospitals (De Vos, 2007).

The National Immunization Program began in 1962 and has been extremely effective at reducing the rate of 7

infectious diseases in Cuba. It has completely eliminated 9 major infectious diseases including measles, diphtheria, and rubella. The vaccination rate against preventable diseases BCG, DTP, HepB, and Polio is 99% for children 16 and younger.

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The World Health Organization (WHO) ranked Cuba’s healthcare system as 39th out of 191 countries in The World Health Report 2000 - Health systems: Improving performance. In the same report, WHO also highlighted a problem that is particularly rampant in the Cuban healthcare system; the healthcare black market (WHO, 2000). The healthcare black market in Cuba gained prevalence during the fall of the Soviet Union, one of Cuba’s largest trade partners. In the late 1980s and early 1990s there were enormous shortages of food and medicine. This situation was exasperated by the US tightening its economic embargo to include food and medicine, as well as its implementation of policies which would punish other countries for aiding Cuba. Cuban citizens and expatriated dissidents have been quoted saying that it was, and still is, not uncommon for Cubans to receive medical supplies and medicine from relatives abroad to use or sell on the black market (Newman, 2012). Additionally, there are also stories of doctors taking medication, even basic pills such as Advil or Tylenol, from their hospitals to sell independently for a greater profit (Newman, 2012). Today, there is evidence that the Cuban economic recovery has reduced the presence of the healthcare black market (Nayeri and López-Pardo, 2005), but it would be naive to believe that it is gone entirely.

D. Data

The data used in this paper is derived from three primary data sources: the World Bank, which records both health and economic indicators; the World Health Organization, which specializes in health indicators; and the CIA World Factbook, which focuses on political, economic, government, and infrastructure statistics. In my assessment, I compare major dates in historical US-Cuban relations to Cuban healthcare statistics in an attempt to identify a pattern. I also compare other countries, such as Caribbean small states in the same region, countries with highly ranked healthcare systems, and former-socialist countries, to Cuba in an effort to understand the effects of the US embargo on Cuban healthcare.

The Cuban government is very particular about which statistics it releases to the international community and which it keeps private. Part of this secrecy may be to defend against US economic weapons; if the enemy doesn’t know what you have, they

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can’t take it away from you. Around 1996, Cuba adopted a more open reporting strategy and released statistics on private and public health expenditure rates, statistics regarding external resources for health (such as grants or loans used for health goods and services), and out-of-pocket health expenditure rates. However, the accuracy of this data is sometimes questionable and there are still gaps of unreported statistics, such as foreign direct investment and gross national savings.

Comparing statistical indicators over a span of time as long as the US embargo against Cuba is extremely difficult for a number of reasons. In his paper titled Economic and Social Balance of 50 Years of Cuban Revolution, Carmelo Mesa-Lago provides a list of 12 such complications. The following are the few which apply explicitly to my analysis:

• T h e t y p e s o f i n t e r n a t i o n a l l y standardized indices for economic and social development that we have today did not exist when the US embargo began 1960.

• Cuba has undergone extreme shifts in currency policy since the start of the embargo, which means that the data is most likely inconsistent. 8

• Economic indicators such as GDP are calculated internally by methods that are different from the international standard, making accurate comparison

difficult or impossible. Additional information that might be used to check these indicators’ reliability is not published.

• Cuba’s economic and social history since the overthrow of Batista is split into two clear sections; pre-1989 before the fall of the Soviet Union, and pos t -1989 du r i ng the ensu ing economic crisis known as the “Special Period”. Combining or separating these sections during their evaluation yields very different results (Mesa-Lago, 2009).

Since 1960, the Cuban peso has gone through many changes. Historically, it has been pegged to the Soviet ruble 8

and the US dollar (USD). One of the most interesting changes occurred in 1993 when the USD was made legal tender. This was undone in 2004 in retaliation of US sanctions. Today, Cuba has two legal tenders; the Cuban peso (or national peso, CUP) and the Cuban convertible peso (CUC). In 2014 the CUP was estimated at a conversion rate of 22.57 CUP per 1 USD (CIA, 2013). The CUC is pegged to the USD at par value. State workers are paid in CUP. There is an additional 10% charge on all conversions between CUC and USD, excluding exports from Cuba.

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• In regards to healthcare, reporting on diseases was probably less consistent in the 1960s than in the 2000s.

• As mentioned previously, access to government statistics is limited.

In order to combat these problems, I follow a Mesa-Lago’s example of comparing

Cuba to countries in the same region with similar geographic and demographic characteristics (Mesa-Lago, 2009). The World Bank categorizes these countries as Caribbean Small States (hereafter referred to as CSS). The CSS set is made up of 13 countries: Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, and Suriname.

I also compare the Cuban dataset to a list of 18 key historical events on the US- Cuban timeline (Hufbauer, Schott, Elliott, and Cosic, 2011). Combined with the comparison to the CSS group, it is possible to see which changes in data were common to every country in the region and which were a direct result of US-Cuban policy shifts. Obviously, just because the key events occurred at the same time as the changes in the data does not mean that there is causation. It is, however, a good starting point.

II. Methodology and Interpretation

The focus of this paper is to analyze how the US trade embargo has affected Cuban healthcare. This requires looking at the changes in Cuban healthcare data and comparing them to significant changes in US-Cuban trade policy. Figure 1 shows 18 of the most important moments in the evolution of US-Cuban relations. I chose these by assessing a timeline compiled by Hufbauer, Schott, Elliott, and Cosic in their case study titled Case Studies in Economic Sanctions and Terrorism. I chose events that, from their description, appeared to significantly affect the economy of Cuba or that had a specific impact on the supply of food or medicine to the country (Hufbauer, Schott, Elliott, and Cosic, 2011).

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I use the same key events timeline in each subsequent figure and overlay vertical dotted lines on each graph to make it easier to see the events’ effects on the data. I encourage you to reference Figure 1 as a legend when reading the graphs in later sections.

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Year Event

1959 The US government recognizes Castro's leadership of Cuba.

1960

Cuba and the Soviet Union sign a trade agreement which includes the shipment of crude oil to Cuba. The US orders its refineries in Cuba to refuse to process Soviet oil. Cuba responds by nationalizing the US refineries. The US begins its first export embargo against Cuba, exempting food and medicine. Cuba nationalizes all US property in Cuba, valued at $1 billion.

1961 The US severs diplomatic relations with Cuba. The Bay of Pigs invasion fails to overthrow Castro.

1962 All imports from Cuba are banned in the US. The Foreign Assistance act is implemented, which prohibited any aid to Cuba.

1963 All Cuban assets in the US are frozen.

1964 A license is required to send food or medicine to Cuba.

1977 President Carter suggests a fishing agreement with Cuba, pointing to a thaw in US-Cuban relations.

1981 President Reagan initiates a tighter embargo.

1982 The US bans business and tourism travel to Cuba. Cuba declares its inability to pay off its international debt.

1989 The US invades Panama and takes control of Cuban banking systems there.

1991 The collapse of the Soviet Union means the loss of Cuba's largest trading partner. An economic crisis begins in Cuba as Russia ends aid to Cuba.

1994 Cuba joins the Association of Caribbean States.

1996 The Helms-Burton Act is passed, strengthening and prolonging the US embargo against Cuba.

2000 President Clinton passes the Trade Sanction Reform and Export Act, allowing certain agricultural goods and medicine to be exported to Cuba.

2004 Fidel Castro announces that USD is banned from all commercial transactions.

2006 Raúl Castro takes temporary control of Cuba while Fidel undergoes surgery.

2008 Raúl officially takes over as leader of Cuba.

2014 Obama announces a huge thaw in US-Cuba relations, loosening banking and travel restrictions.

Source: Hufbauer, Schott, Elliott, and Cosic (2011)

Figure 1 — US-Cuban Relations: Key Events Timeline

A. Life Expectancy

Life expectancy is widely regarded as a good general indicator of the health of a population and is used by many international groups, such as the United Nations Development Programme and the World Health Organization, as a component when ranking the health of countries (UNDP, 2014; WHO, 2000). Figure 2 compares the life expectancy of the Cuban population to the life expectancy of the CSS group. The graph also differentiates between the gender life expectancies of the population. As mentioned before, I have overlaid the key events as vertical dotted lines so that it is easier to see their correlation with the data. At first glance, two facts are very apparent; females in both datasets have a higher life expectancy than males, which is a universal phenomenon (World Bank, 2015), and Cuba has significantly higher life expectancy than the CSS group both on average and with respect to genders.

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Source: World Bank (2015)

Figure 2

In regards to the Cuban life expectancy line in particular, there is a section between 1980 and 1990 where the rate of increase slows down significantly. The CSS group also shares this pattern, although it appears later on the group’s line. This suggests that there were regional issues at the time which were contributing factors in the slow-down of life expectancy growth. One of the largest contributing factors may have been the epidemic level of group B meningococcal disease in Cuba from 1980 to 1984 (Tikhomirov and Hallaj, 1998). Using the vertical key event lines, we can see that this plateau lines up with two events from 1981 and 1982; “President Reagan initiates a tighter embargo” and “The US bans business and tourism travel to Cuba. Cuba declares its inability to pay off its international debt”. It is an especially interesting pattern because it ends around the fall of the Soviet Union in 1991. My interpretation of this portion of the Cuban life expectancy line in Figure 2 is that the key events in 1981 and 1982, when implemented together, created a significant shortage of medicine and health supplies in Cuba. When President Reagan imposed his tight trade restrictions on Cuba, he eliminated legitimate ways of getting medicine. This led many Cubans to seek out black market healthcare supplies. With the travel ban in 1982, a huge portion of the medicine being smuggled into Cuba via America was eliminated. Partnered together, along with the regional epidemic at the time, these events would have drastically decreased the supply of medicine and health care essentials in Cuba during a time of high demand, leading to a slowing of the increase of life expectancy.

During this period, it is also important to note that the female and male life expectancies in Cuba were not affected at the same magnitude. The most significant difference between gender life expectancies can be seen between 1980 and 1990 when male life expectancy decreased for five out the ten years. In contrast, the female life expectancy only slowed its growth and never actually reversed direction. This detail may say more about Cuban healthcare policies than it does about the effects of US trade policy. Rationing is a system Cuba is familiar with and to this day there are rations on essential items such as food and medicine (Hernández-Catá, 2007). In addition, the Cuba rationing system differs based on the gender and age of the citizen. This means that children get a different ration than adults, or that pregnant women will be allowed more rations than adult men. Having more rations usually leads to a higher life

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expectancy. Additionally, vaccines against group B meningococcal disease would have most likely been given to women and children first, not adult men.

A disease epidemic coupled with limited access to healthcare necessities was most likely the cause for the plateau in life expectancy. In 1991, a vaccine against meningococcal BC (VA-MENGOC-BC) was introduced into the National Infant Immunization Program (Acton, 2011). At this time, life rate began to steadily increase as it had prior to the epidemic, despite the collapse of the Soviet Union.

Life expectancy in Cuba has maintained growth despite the economic sanctions imposed by the US. The only time the the sanctions seemed to have any negative effect was between 1980 and 1990, during the decline of the Soviet Union, when they limited Cuba’s access to medicine and medical supplies. The US sanction’s primary goal of a transitional government, however, was not reached.

B. Economic Indicators: GDP and Healthcare Expenditure

Healthcare expenditure is one of the few economic indicators Cuba reports to the international community. This means it is very susceptible to bias by the Cuban government because no other countries or organizations have enough data to confirm the accuracy of their reported statistics. The same is true for GDP; the statistics required to confirm the accuracy of this information is not released by the government (Mesa-Lago, 1969). It is quite possible that the Cuban government has overstated or understated some of its findings. Keeping this in mind, it is the best information available.

Figure 3 compares Cuban GDP to the change in Cuban healthcare expenditure per capita. The graph aims to illustrate Cuban spending patterns in regards to healthcare. It is difficult to get a historic view of Cuba’s GDP because it began reporting in 1990. It did not begin reporting healthcare expenditure per capita until 1995, so there is even less historical data on that subject. Figure 3 clearly shows the impact that the decline and fall of the Soviet Union had on the Cuban economy. This part of Cuban economic history is referred to as the Special Period (Brundenius, 2009). Technically, the Special Period continues to this day and has not been officially ended. Although data in unavailable on

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healthcare expenditures from 1990 to 1993, we might assume that it declined as well given its apparent correlation with Cuban GDP.

Figure 3 indicates that the healthcare expenditure of Cuba as a percent of GDP was fairly consistent from 1995 to 2004. During this time, the percentage of GDP on healthcare hovered around 6 percent. However, after 2004 the percentage increased dramatically, peaking at 11.74 in 2009 (World Bank, 2015). During this time, the CSS group kept their percent of healthcare expenditure consistently around 5.3. The fact that Cuba’s expenditure was still higher than its regional neighbors despite its severe economic downturn shows the Cuban government’s emphasis on healthcare. It also shows that US sanctions did not have a significant negative effect on Cuba’s healthcare spending.

The decline in Cuban healthcare expenditure after 2009 is likely a reflection of the change in leadership coupled with the impact of the international financial crisis at the

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Figure 3

time. Around the time Raúl Castro began leading Cuba, many of their largest trading partners, including Canada, China, and Venezuela, felt the impact of the global finance 9

crisis (Mesa-Lago, 2009). To find out if Cuban GDP and healthcare expenditure had been significantly correlated in the past, I performed a statistical analysis on the two variables.

In Figure 4, I calculated a linear trendline between the two variables, GDP and healthcare expenditure, in order to provide an easier visual representation of the data. Afterwards, I calculated the correlation coefficient (r) and the coefficient of determination (R-squared); the r value was 0.89614 while the R-squared was 0.80307. From here, I calculated the equation for the linear trendline using the ordinary least squares (OLS)

Cuba’s five largest export partners are as follows; Canada 16%, China 15.2%, Venezuela 14.2%, Spain 7.5%, and 9

the Netherlands 5.6%. Its biggest exports are medical products, nickel, sugar, and tobacco. Its biggest import partners are made up of the same countries as its export partners; Venezuela 37.4%, China 12.3%, Spain 9.4%, Brazil 4.7%, Canada 4.1%. Cuba mainly imports petroleum, food, and chemicals. (CIA, 2013)

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Figure 4

method. I modeled healthcare expenditure as a percent of GDP (HCE) as a function of GDP. In this equation, I use ‘u’ as an error term since the model does not fully capture the relationship between the independent and dependent variable:

HCE = B0 + B1 GDP + uHCE = 4E-11 GDP + 0.5854

Due to the limited data, I would not say that the correlation between GDP and percent of GDP spent on healthcare in Cuba is statistically significant. I would, however, point out that it is economically relevant due to the correlation between the two variables. To find out if this pattern was common among other countries with highly ranked healthcare systems, I chose five countries with some of the highest ranked healthcare systems in the world and performed the same analysis (WHO, 2000). This analysis can be seen in Figure 5. I did not include the comparison graph between Cuba to the CSS group in this case because the CSS groups healthcare expenditure was so low, but is interesting to

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Figure 5


note that the CSS group followed the same pattern as Cuba, albeit at a much smaller magnitude.

The five countries I chose for the analysis were Austria, Belgium, Denmark, Norway, and Sweden. Each have a type of national healthcare system similar to the one found in Cuba, although some of the are more liberalized. In the analysis I found that each of the countries also had a positive OLS regression line, linking an increase in GDP to an increase in healthcare expenditure. Cuba’s OLS regression appears to be one of the most elastic trendlines in the set which means that a change of GDP in Cuba will have a larger effect on its healthcare expenditure than a change in Norwegian GDP on its respective healthcare expenditure.

To reiterate, this is not a statistically significant conclusion. As Figure 4 and Figure 5 illustrate however, it is something that should be at least considered when formulating trade policy and legislation. The US embargo stifles the Cuban economy which, in turn, weakens the Cuban government’s healthcare expenditure. Since the goal of the US embargo is to encourage a transitional government and encourage democracy, policy makers may have intended for the embargo to make it appear as though the Cuban government was unable to care for its people due to financial shortcomings. This would, theoretically, encourage dissent among Cuban citizens and encourage them to protest for change. In practice, it does not seem as though this strategy worked.

C. Nutrition

The US embargo has had a large impact on the diet and nutrition of the Cuban population. Since Fidel Castro gained power, Cuba has used a government-subsidized ration system to distribute food staples among its people. The following section examines the US embargo’s effect on Cuban nutrition.

After the fall of the Soviet Union, Cuba felt the brunt of the trade embargo when epidemic-levels of neuropathy affected around 50,000 of its citizens (Kirkpatrick, 1996; Pérez, 2009). Neuropathy is a disease caused by malnutrition. Neuropathy affects the peripheral nerves resulting in weakness or numbness in the body, particularly in the extremities (Mayo Clinic Staff, 2014). If the trade embargo had not been in effect, it is

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possible that food imports from the US could have prevented the neuropathy epidemic. Today, Cuba imports an estimated 80 percent of its food (WFP, 2015). However, during the Reagan administration’s tight embargo policy this was not the case.

Another major nutrition crisis occurred between 2006 and 2008 when the United Nations Food and Agriculture Organization (FAO) Price Index rose 28 percent (FAO, 2008). This price rise peaked in tandem with the landfalls of three major hurricanes; Ike, Gustav, and Paloma (NOAA, 2012). The hurricanes decimated agricultural production while the price index made it difficult to sell their limited production on the international market. In a country with an already struggling food market (Barclay, 2014), this posed a significant threat to the lives of the Cuban population. The US trade embargo exasperated this negative effect by limiting Cuba’s ability to acquire food internationally; countries that may have imported food or sent aid to Cuba were fearful of the economic consequences the US would inflict upon them as a result of their actions, including Russia which had taken the place of Cuba’s former ally, the Soviet Union (Hufbauer, Schott, Elliott, and Cosic, 2011).

Nutrition plays an important role in the health of a population. Historically, the Cuban government has used rationing to control its food supply. People who don’t receive enough from the rations often go to the black market for extra or more diverse foods (Barclay, 2014). This system can be inefficient and expensive. The US embargo has limited Cuba’s ability to feed its people.

D. Possible Outcomes of the Diplomatic Thaw

If Cuba and the US continue to thaw their relationship, it could mean a drastic change within Cuba. The biggest changes would come if the US and Cuba both loosened trade restrictions on each other, allowing imports and exports between the two countries. The viability of liberalizing Cuba’s economy is a topic of hot debate, but the outcomes are generally agreed upon (Mesa-Lago, 2006; Hernández-Catá 2007). A liberalization of the economy would likely lead to a privatization of industry as well as the development of Cuban financial markets. The tourism industry would certainly expand as more and more people rush to see the once-closed country before it becomes modernized and

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gentrified. This would have a negative impact on other small-island nations in the region, such as Jamaica, which rely on tourism as a large part of their economy (WTTC, 2014). For the healthcare industry, the end of restrictions could mean private hospitals, more abundant medicine, and superior, imported medical equipment for healthcare professionals. A liberalization might also mean a rise in healthcare prices if the Cuban government decides to abandon its fixed-price medicine rationing system, but the principles of supply and demand dictate that the cost of medicine on the black market, which is very limited in supply, already exceeds what the price would be in a market economy.

The boost that the Cuban economy would receive from liberalizing its economy and opening its borders might even end Cuba’s decades-long Special Period. If liberalizing the economy affected the country’s GDP significantly, it could even bring about a rise in healthcare expenditure. However, there is also a possibility that Cuba would feel a large negative effect if it liberalized its economy, particularly the liberalization was in tandem with that of its travel policy. Currently, Cuban citizens are not allowed to immigrate to the US. In fact, this was the center of an intense international legal battle in 1999 over the custody of a young boy named Elián González.10

If Cuba decided to open its borders and allow its citizens to emigrate it could lead to a mass exodus of healthcare professionals, a phenomenon colloquially known as “brain drain”. A mass exodus is extremely likely considering the astonishingly large pay gap 11

between American and Cuban doctors; US physicians make an average of $230,000 annually while Cuban physicians make around $840 annually (OECD, 2011; MEDICC,

In 1999, a young Cuban boy named Elián González was rescued by fisherman off the coast of Miami, Florida. His 10

mother had drowned while they were attempting to make it to the United States and he was all alone. What followed was a bitter custody battle over the young boy, pitting the US and Cuba against each other in Cold-War-like hostilities. The Elián’s father was still in Cuba, and there was a large debate over what should be done with the boy. The US paroled Elián and sent him to live with his family members living in Miami. This act angered the Cuban government; Fidel Castro labeled the act as a “kidnapping” and called for the boy to be returned home to Cuba. Cuban exiles in the US were in strong disagreement, however, and fought to keep the boy stateside. After a lengthy court process, US courts decided that Elián would be returned to Cuba. His relatives refused to give him up and in April of 2000, 151 federal agents battered down the door of their Miami home and removed the child from their custody (Londoño, 2015; de la Cova, 2010).

The term “brain drain”, also known as human capital flight, was coined by the British Royal Society to describe the 11

flight of scientists to the US and Canada from post-World War II Europe (Cervantes and Guellec, 2002). It applies to any situation in which a skilled worker migrates away from their original location in pursuit of better living standards. This can apply to international migration as well as migrations between regions within a country.

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2014; Barbieri-Low, 2014). This salary does not directly translate into standard of living due to the extreme differences between the US and Cuban economic system, but the gap is so vast that it is simply impossible to ignore.

The migration of Cuban healthcare professionals to the US is not a new concept in US-Cuban relations. In 2006, the US Department of Homeland Security, with the assistance of the Department of State, announced a program called the Cuban Medical Professional Parole Program (CMPP). CMPP allows Cuban medical professionals who are working in other countries to defect to the US at American embassies (US Department of State, 2006). This program is specifically designed to encourage brain drain from Cuba and has been the target of much criticism. In an article titled A Cuban Brain Drain, Courtesy of the U.S., The New York Times asserts that the US is “going too far” with the CMPP and that the program does nothing but undermine Cuba’s ability to send aid in international catastrophe situations (NYT Editorial Board, 2014). This is a political maneuver based more in socioeconomics than financial economics. It is one of two laws built to encourage and enable Cuban civilians to defect to the US. The other is called the Cuban Migration Agreement of 1996, and was a large part of the controversy revolving around the 1999 Elián González case (Wasem, 2009). The agreement states that any Cuban national that is able to set foot on land in the US, discounting those found on boats or swimming in US waters, will be granted the opportunity to become an American citizen. This policy is sometimes called the “wet foot, dry foot” policy (Wasem, 2009). In a sense, the US grants multiple ways for Cuban citizens to escape an economically crippled country, a situation the US had a large role in creating. This is not meant to reflect on the morality of the embargo, but it is an interesting geopolitical conundrum.

A thaw in US-Cuban relations would have extremely large effects on the Cuban healthcare system, both negative and positive. It would stimulate the economy and improve access to medicine. However, it would also allow healthcare professionals to leave Cuba in search of better salaries. It is difficult to compare Cuban and American salaries for healthcare professionals due to the difference in social services provided by each government, but the current salary gap seems incompatible with Cuba allowing its citizens free immigration abroad for fear of brain drain.

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E. Comparison to the Former States of the Soviet Union

In order to predict what might happen in the event that the US trade embargo on Cuba is removed, it is helpful to compare Cuba to other countries in similar situations. Some of the most apt are former socialist countries that made up the Soviet Union such as Estonia, Latvia, and Lithuania. These countries serve as reasonable comparisons because they represent a shift from the socialist government to a democratic government, the exact goal that the US embargo against Cuba was meant to accomplish. Latvia and Lithuania both declared independence from the Soviet Union in 1990. Estonia followed in 1991 (CIA, 2013).

i. Human Development Indicator

I chose to compare Cuba with Estonia, Latvia, and Lithuania due to their similar Human Development Indicators (HDI). The HDI is an indicator is a “summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living” (UNDP, 2014). The HDI of a country is calculated using four key components; life expectancy at birth, mean years of schooling, expected years of schooling, and gross national income (GNI) per capita. Each country has an HDI ranking similar to Cuba; Cuba ranked 44th, Estonia 33rd, Latvia 48th, and Lithuania 35th (UNDP, 2014). By choosing countries with similar HDIs it is easier to identify which components of the indicator differ the most between the countries. For example, although they may all have nearly the same HDI, one country ’s indicator may rely primarily on life expectancy while another’s may rely on GNI.

As you can see in Figure 6, all four countries followed the same HDI growth pattern; rising significantly from 1990 to 2000, even more so between 2000 and 2008, and then decreasing or plateauing during the global financial crisis between 2008 and 2011. After 2011 they appear to recover some of their previous vigor and begin increasing again. From this graph, it appears that Cuba is neither better nor worse off in terms of HDI

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compared to its post-Soviet Union peer group. This is could be explained by Cuba’s exceptional healthcare system which was discussed previously.

ii. Telecommunications

The biggest difference I found between Cuba and the formerly Soviet countries was the adoption rate of cellular telephone adoption as measured by mobile cellular subscriptions (displayed in Figure 7). Cellular telephone penetration is particularly interesting in this case because it is a very recent technology. In 1990, there were hardly any cellular telephones anywhere in the world. Within a matter of years, they had become the world’s primary form of communication. Coincidentally, the popularization of cellular telephones coincided with the fall of the Soviet Union. By comparing the cellular telephone adoption rates of Cuba, Estonia, Latvia, and Lithuania, it is possible to get an idea of the effect that different types of markets have on a country’s telecommunication

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Figure 6

Source: UNDP (2014)

system. Moreover, it can give us an general idea of the consumer freedom and technological modernization within a country, including healthcare technologies.

The graph begins in 1990, the year Latvia and Lithuania declared independence. To prepare the graph, I downloaded historical population data and mobile cellular subscription data from each country (World Bank, 2015). Mobile cellular subscriptions (MCS), as defined by World Bank, are “subscriptions to a public mobile telephone service that provide access to the PSTN using cellular technology… The indicator applies to all mobile cellular subscriptions that offer voice communications” (World Bank, 2015). I then decided that graphing the percent of the population with MCS would be the best way of visualizing mobile telecommunications penetration, rather than graphing the crude number of MCS. To do this, I simply divided the crude number of MCS in a country by the population of the country.

From Figure 7, it is immediately apparent that all three formerly-Soviet countries, Estonia, Latvia, and Lithuania, experienced an exponential growth in MCS adoption

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Figure 7


from 1994 until around 2004. In this period, these countries went from nearly 0 percent MCS to over 100 percent. This means that the average person in Estonia, Latvia, and Lithuania has more than one MCS. Around 2005, the adoption rate begins to slow (or in Estonia’s case, reverse). This could be caused by cost changes in the telecommunications market or as a result of market saturation.

What is noticeably absent is an MCS adoption in Cuba. According to the World Bank database, Cuba had only 17.71 percent MCS penetration in 2013. This is remarkably low, a level only above the countries of Kiribati, Myanmar, North Korea, and Eritrea (World Bank, 2015). This slow adoption is primarily caused by the Cuban government’s reluctance to let citizens have access to means of international communication, as well as the cost of obtaining and using a cellular device. Cuba only allowed its private citizens to purchase cell phones in 2008, meaning any adoption before that was by government officials, special license, or the black market. The cell phones that exist in Cuba cost more to use than the average Cuban makes in a day. This is mainly because mobile phones are only available for purchase using the Cuban Convertible Peso (CUC), making them very expensive (Frank, 2011).

Internet penetration also differs greatly between Cuba and the former-Soviet states. Figure 8 shows internet usage in Cuba, Estonia, Latvia, and Lithuania from the year 1990 to 2013. A pattern appears in the data similar to the one seen in Figure 7. Estonia, Latvia, and Lithuania’s Internet usage increase exponentially and then begins to slow, most likely do to market saturation. Estonia’s percentage of internet users rises especially fast, reaching 31.53 percent in 2001 while Latvia and Lithuania both only had 7.22 and 7.18 percent respectively. Cuba’s internet adoption rate, however, lags far behind. In 2013, only 25.71 percent of the Cuban population had access to the internet. To put that statistic in perspective, this is the approximate equivalent to the internet usage in Estonia in 2000 and Latvia and Lithuania in 2003.

The explanation for Cuba’s extremely slow internet adoption growth is a mix of US economic hostilities and Cuban internal policy. As stated before, the Cuban government is reluctant to allow its people access to the internet (CIA, 2013). However, even if it did allow its citizens unlimited access it may not make much of a difference. The internet used in Cuba is currently an Intranet, meaning it is strictly controlled by the government

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and rife with firewalls. There is also no broadband access in Cuba which severely limits the speed of service. This is partly due to the US denying Cuba access to underwater cables as part of its economic embargo, forcing it to use limited satellite services instead (Frank, 2011).

In 2011, one of Cuba’s largest trade partners, Venezuela, laid fiberoptic cables to Cuba. Reports say that these cables, when fully operational, will provide download speeds nearly 3,000 times faster than currently available (Frank, 2011). In Figure 8, we observe a spike in internet usage from 2011 to 2012. However, this increase is not sustained and usage increase by only a fraction of a percent over the next year.

Modern telecommunications enable individuals to participate in a globalized marketplace via the internet, allowing them to build wealth and increase their standard of living. If US-Cuban relations continue to thaw and the trade embargo is partially or completely lifted, I predict a massive surge in MCS and internet adoption, much like the ones seen in Estonia, Latvia, and Lithuania. This adoption will be driven primarily by

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Figure 8


new access to inexpensive electronics and faster internet and will lead to a higher standard of living for the Cuban people.

iii. Mortality Rates in Transitional Economies

In order to learn more about how the health of a population is affected by transitioning from a command economy, such as the one present in Cuba or the former Soviet Union, to a market-oriented economy and political democracy, I graphed the life expectancy of Estonia, Latvia, and Lithuania in comparison with Cuba (Figure 9). Instead of thriving in the absence of communism, the life expectancy of the former-Soviet states plummeted, bottoming out around 1994.

In their book, The Mortality Crisis in Transitional Economies, Cornia and Paniccià discuss the upsurge in mortality that is present in many of the formerly socialist countries of Europe. They quantify the link between mortality and life expectancy in

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Figure 9


Latvia saying, “About 80 per cent of the total life expectancy decrease for both men and women over the period 1988-95 is caused by a mortality increase among the working age population, particularly those in the age brackets 25-64 years” (Cornia and Paniccià, 2004). The life expectancy declines in former-Soviet countries are unique to other historical declines in Europe in that they take place during peace time, and they are not accompanied by widespread starvation or disease. It is particularly curious since the period of life expectancy decline was, at first, generally expected to be a time of growth for living standards (Cornia and Paniccià, 2004). The absence of the Soviet Union made it necessary for former-Soviet countries to rebuild their political and economic systems.

One explanation for this massive decline in life expectancy is the rapid loss of GDP following the fall of the Soviet Union coupled with the psychological stress of transitioning to a market economy and political democracy. For example, the GDP of Latvia entered a severe downward spiral following the collapse of the Soviet Union, accelerating to nearly -35 percent in 1992 (Krumins and Usackis, 2000). There was a slight recovery in 1994 and 1995, yet GDP per capita only reached 54 percent of its previous 1989 level. As the market was liberalized and consumer price controls were removed, the income level in Latvia dropped by 33 percent (Krumins and Usackis, 2000). This increased the level of poverty in the country, adding to the psychological stress of the population. Additionally, the rapid decline in GDP would have negatively affected Latvia’s ability to fund its healthcare system, inhibiting the ability of healthcare professionals to save lives.

If Cuba were to transition to a market economy as a result of a thaw in US-Cuban relations, it is possible that it might undergo the same mortality crisis seen in former-command economy countries like Latvia after the fall of the Soviet Union. Additionally, if the US sanctions succeeded in their goal of promoting a transitional government in Cuba while concurrently liberalizing its market, the mortality crisis might even be more dramatic. However, unlike the former-Soviet countries of Estonia, Latvia, and Lithuania, Cuba does not rely significantly on external entities for healthcare.

Given Cuba’s superior healthcare system compared to those of former-Soviet during their transitional mortality crises, Cuba is more prepared to deal with strain on its

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mortality and life expectancy rates. Additionally, the US would have an incentive to provide aid and assist Cuba greatly in their transition to a market economy and political democracy considering that it was the stated goal of their economic sanctions all along. After punishing Cuba economically for decades, it would seem unwise to abandon them immediately after the primary goals of the sanctions were reached.

III. Policy Recommendations

These policy recommendations operate under the assumption that a market-oriented economy and democratic government in Cuba would benefit healthcare within the country by providing better access to medicine and modern healthcare technologies as well as promoting better salaries for healthcare professionals. This assumption is supported by the data in Figure 3 which shows that GDP and healthcare expenditure are positively correlated. Each recommendation is presented as an alternative to comprehensive US sanctions on Cuba.

A. “Grass is Greener” Policy

If the US intends to encourage a transitional government in Cuba, its best option would be to reduce the economic sanctions on Cuba and open trade between the two countries. As stated in the previous section, Telecommunications, many Cuban citizens do not have access to modern technologies such as cell phones and or access to the internet. Internet-enabled devices let their users to learn about the outside world and encourage them to draw comparisons between their way of life and the outside world. Seeing how other more technologically developed countries live would create a demand for a more liberalized economy and a less oppressive political system. I have nicknamed this the “Grass is Greener” policy after the popular English proverb “the grass is always greener”. This proverb refers to wishing for new circumstances and seemed appropriate in this context. In this case, it is intended that the Cuban people wish for a less-oppressive political system and open market.

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By providing the island country with less expensive electronics and faster internet speeds, the US can passively encourage Cuban citizens to critically examine their government and economy, thus encouraging dissent. If a transitional government did arise, the US would be responsible for providing much of the financial and organizational support and non-military aid.

B. “Hong Kong” Proposal

This strategy would be exceptionally difficult to accomplish given the bitter history of US-Cuban relations. It relies on the US and Cuban governments negotiating an agreement under which a Cuban city would adopt a market-economy and limited political autonomy, much like the ones seen in modern Hong Kong. Although the history of Hong Kong’s economic and political development varies greatly from the type suggested in this policy, it serves as a good reference model (CMAB, 2005).12

Although at first it may seem unlikely that Cuba would agree to the presence of such a liberalized city in their country, it is not impossible. The fact that there is a US naval base, Guantanamo Bay, on the island is equally surprising given the historical hostilities between the US and Cuba (BBC, 2001). This is not to say that the US presence in Cuba is without tension, but its presence illustrates the possibility of US-Cuban coexistence.

In order for this policy to succeed, there would need to be compromises from both sides. Much like Britain in regards to Hong Kong, the US may need to relinquish power over Cuban land. I propose that the US relinquish Guantanamo Bay back to the Cuban government in exchange to work jointly at liberalizing one Cuban city’s economy. Guantanamo Bay’s reputation suffered immensely during the US War on Terror, making

Modern Hong Kong was formed in 1984 when the British and Chinese governments signed Sino-British Joint 12

Declaration which facilitated the transfer of Hong Kong from British to Chinese rule. The full transfer did not occur until June 30th, 1997 as stated in the declaration. Hong Kong had been a British colony since the end of the First Opium War in 1842. The joint declaration ensured that legal, social, and economic systems in Hong Kong would remain unchanged. Hong Kong has a market-economy, in contrast to the rest of mainland China’s socialist market economy.

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it unpopular in the American public’s eye (Shane, 2013). President Obama has even 13

stated that “Guantanamo is not necessary to keep Americans safe” (Fisher, 2013). By returning the land to Cuba, the US government would be eliminating a public relations nightmare and utilizing an excellent bargaining chip. If this policy was successful, the US would lose a strategic naval position, but gain valuable economic influence in Cuba.

Ideally, the liberalized Cuban city would serve as a hub for foreign direct investment and a means of supplying foreign goods to the rest of Cuba, much like Hong Kong and mainland China. It would maintain economic autonomy from Cuba, but would still be under direct authority from the Cuban government. The long-term goal of this proposal would be to display the benefits of a market-based economy to the Cuban people.

IV. Conclusion

The US embargo against Cuba only had a measurable negative effect on the Cuban healthcare system in the years immediately following the collapse of the Soviet Union (World Bank, 2015). Despite the US embargo, Cuba has developed a unique, successful healthcare system focusing on preemptive care for its patients (Frank and Reed, 1997). When compared to other Caribbean small states in the region, Cuba has exceptionally high life expectancy, GDP, and health expenditure per capita (World Bank, 2015). Nutrition is likely the category which is most negatively impacted by the US embargo. The trade embargo makes it difficult for Cubans to receive a diversity of foods necessary to maintain exceptional nutrition (Pérez, 2009).

A diplomatic thaw between the US and Cuba could result in a number of outcomes. Some of these outcomes, such as the growth of GDP and increase in consumer freedom, could be beneficial to the country. Others, such as brain drain, could negatively affect Cuba (Mesa-Lago, 2006; NYT Editorial Board, 2014; Hernández-Catá 2007).

Guantanamo Bay received scalding criticism after it was discovered that the CIA had been torturing prisoners there 13

in the years after the September 11th terrorist attacks in New York City. CIA interrogators used waterboarding and stress positions on detainees, actions that were deemed unjustifiable in a report by the Constitution Project, an unpartisan third party (Shane, 2013).

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It is possible to compare the market liberalization of former Soviet Union countries like Estonia, Latvia, and Lithuania to gain an idea of the effects of transitioning to a market-economy would have on Cuba. When comparing the data, we see that there was not a dramatic increase in HDI after the fall of the Soviet Union as might be expected. However, the technology adoption rates in regards to cellular phones and the internet was significantly higher in the former Soviet Union countries than Cuba (World Bank, 2015).

Immediately following the fall of the Soviet Union, Estonia, Latvia, and Lithuania all entered a mortality crisis. It is hypothesized that this crisis was caused by the stress of transition to a market economy from a command economy coupled with the transition from socialist to democratic government (World Bank, 2015; Cornia and Paniccià, 2004). It is possible that Cuba would experience a similar increase in mortality and decrease in life expectancy growth, yet it is less likely due to Cuba’s exceptional healthcare system.

After completing my analysis of the US embargo and its effect on the Cuban healthcare system, I have two policy recommendations that serve as alternatives to the embargo, yet have the same goal. The recommendations are not mutually exclusive. My first, nicknamed the “Grass is Greener” policy, relies on US-Cuban relations thawing to the point at which trade opens between the two countries. US influence in Cuba is then gained through promotion of inexpensive technologies and better access to the internet. The goal of this policy is to passively show the benefits of a market economy and democratic government with the intent of inspiring the demand for a transitional government among the Cuban population. The second policy recommendation is nicknamed the “Hong Kong” proposal. This policy involves the US and Cuban governments negotiating the trade of Guantanamo Bay to Cuba in exchange for the market liberalization and economic autonomy of one Cuban city. Both of these policies encourage market liberalization and a transitional government under the assumption that they will benefit the population and healthcare of Cuba.

We should note that the topics discussed in this paper refer to the very specific and unique geo-political and economic climate of Cuba and are likely to change greatly in the context of other countries.

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List of Figures

Figure 1 US-Cuban Relations: Key Events Timeline . . . 10

Figure 2 Life Expectancy (1960-2013) - Cuba and Caribbean Small States . . . 11

Figure 3 GDP, PPP (1990-2013) and Health Expenditure as Percent of . . . 14GDP (1995-2013) - Cuba and Caribbean Small States

Figure 4 Relationship Between GDP and Healthcare Expenditure . . . 15(1995-2013) - Cuba

Figure 5 Relationship Between GDP and Healthcare Expenditure . . . 17(1995-2013) - Selected Countries

Figure 6 Human Development Indicators (1990-2013) - Cuba and . . . 22Former Soviet Union Countries

Figure 7 Population and Mobile Cellular Subscriptions (MCS) . . . 23(1990-2013) - Cuba and Former Soviet Union Countries

Figure 8 History of Internet Usage (1990-2013) - Cuba and Former . . . 25Soviet Union Countries

Figure 9 Life Expectancy (1985-2013) - Cuba and Former Soviet . . . 26Union Countries

iii.

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Statutory declarationI hereby affirm that I, Alex Brewer, have authored this thesis independently, that I have not used other than the declared sources, and that I have explicitly marked all material which has been quoted either literally or by content from the used sources.This thesis has not been submitted or published either in whole or part, for a degree at this or any other university or institution.

Paderborn, Germany - July 14, 2015

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