Who Benefits from a Repeal of the Cuban Embargo?
The 1960 Cuban Embargo has always been a hot-button issue for activists particularly in the cigar industry. General Cigar’s recent victory over Cubatabaco in regards to the right to use the Cohiba brand name has literally reignited (no pun intended) a decades old debate over the effectiveness and necessity of such an embargo.
I was scouring some online news this afternoon and stumbled upon an interesting opinion piece published by the International Business Times concerning the embargo. The article, written by Palash Ghosh, makes an interesting case that lifting the embargo wouldn’t have much of an effect at all on the Cuban economy and people. The main reason why relates to the infrastructure in Cuba as well as their weak economic system which has been badly hurt in recent years by huge declines in their core economic sectors. Dr. William Trumbull continues,
“Cuba is an utter disaster, their economy is a basket case because of it’s economic system, not because of the embargo. Lifting the embargo might help a bit, of course, but not by much. The real problem [is] with Cuba itself.”
Having said all of this this, let me bring up a few interesting points of my own to add to this discussion. I personally believe that the Cuban embargo needs to be repealed as an antiquated policy of a bygone error but I agree with Ghosh that the likely effect of such a move is minimal at best. From the cigar industry’s perspective, I think I could make a solid case that there are now many more cigar companies based in the Dominican Republic, Nicaragua, Honduras, and others, who’s product quality far exceeds any cigar coming out of Cuba today or in the near future. Which brings up the question – what is fueling cigar sales in Cuba?
My opinion is that a huge demand for Cuban cigars is being created artificially because there is a huge allure surrounding Cuban cigars since they are illegal and hard to come by in the United States (although the latter is quickly becoming a non-issue). In a post-embargo time, this artificial demand creates a problem for Cubatabaco who now find themselves able to legally export their product but not being able to keep demand high for an extended period of time. Coupled with the fact that Cubatabaco has lost some of it’s major brand names in the recent past, a post-embargo Cubatabaco could very well find itself unable to compete against the established players who have been able to use the embargo to effectively make Cuba irrelevant to one of the industry’s largest markets – the United States.
What do you think?