J. F. Hornbeck
Specialist in International Trade and Finance
In December 2001, following an extended period of economic and political instability, Argentina suffered a severe financial crisis, leading to the largest default on sovereign debt in history. It was widely recognized that Argentina faced an untenable debt situation that was in need of restructuring. In 2005, after prolonged, contentious, and unsuccessful attempts to find a mutually acceptable solution with its creditors, Argentina abandoned the negotiation process and made a one-time unilateral offer on terms highly unfavorable to the creditors. Although 76% of creditors accepted the offer, a diverse group of “holdouts” opted instead for litigation in hopes of achieving a better settlement in the future. Although Argentina succeeded in reducing much of its sovereign debt, its unorthodox methods left it ostracized from international credit markets for a decade and triggered legislative action and sanctions in the United States.
Argentina owed private creditors $20 billion in defaulted debt and $10 billion in past-due interest, as well as $6.2 billion to Paris Club countries. Of the disputed privately held debt, U.S. investors had approximately $3 billion. The more activist investor groups have lobbied Congress to pressure Argentina to reopen debt negotiations. Some Members of Congress have introduced punitive legislation in both the 110th and 111th Congress, but to date it has not received any legislative action. Nearly five years after the original debt workout, however, a confluence of circumstances persuaded Argentina to restructure the holdout debt, particularly the need to secure long-term public financing.
On April 30, 2010, Argentina announced a new $18.3 billion offer to exchange new bonds and cash for defaulted bonds held by the “holdouts.” The exchange ran from May 3 to June 22, 2010. Two distinct offers were made, one for retail (small) investors, the other for institutional (large) investors. At settlement on August 2, 2010, retail investors received replacement bonds for the full face value of the defaulted bonds they held. Past due interest was paid in cash. Institutional investors received a discount bond equal to a 66.3% reduction in the face value of the defaulted debt they held. Past due interest was covered by a separate seven-year “Global” bond. Interest rates vary depending on the bond. Both groups of investors received a GDP-linked security called a warrant that provides for additional payments should the Argentine economy grow at rates higher that anticipated and stipulated in the prospectus.
The 2010 offer drew sufficient support to retire most of the remaining defaulted debt. Analysts estimate 66% of bondholders participated, leading to a total participation rate of 92% for the 2001 default, if the 76% tendered in the 2005 workout is included. Historically, a greater than 90% threshold of participation has allowed countries to eventually return to the international capital markets. So far, this has not been the case for Argentina. The $6.2 billion of bonds not exchanged are held largely by a group of Italian retail investors and various institutional “vulture” funds, which continue to litigate. Court reactions to these holdouts are not easy to predict, but technically any judgments against Argentina remain in place. It remains to be seen, and opinions vary, as to whether Argentina will be able to address these bondholders in some way that will allow for a return to the international capital markets in the near future.
If there is a legacy to the Argentine case, it may be in the changes to bond contracts that seek to improve outcomes for creditors. One option is the use of collective action clauses (CACs), now standard for sovereign debt, which require all creditors to bargain collectively, with a compulsory majority decision applicable to all bondholders. It is no coincidence that both the 2005 and 2010 Argentine exchanges are governed by CACs. .
Date of Report: September 24, 2010
Number of Pages: 19
Order Number: R41029
Price: $29.95
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Wednesday, October 6, 2010
Tuesday, October 5, 2010
Chile: Political and Economic Conditions and U.S. Relations
Peter J. Meyer
Analyst in Latin American Affairs
In the two decades since the country emerged from dictatorship, Chile has consistently maintained friendly relations with the United States. Serving as a reliable—if not always very public—ally, Chile has worked with the United States to advance democracy, human rights, and free trade in the Western Hemisphere. Chile and the United States also maintain strong commercial ties. Trade has more than doubled to over $15 billion since the implementation of a bilateral free trade agreement in 2004, and an income tax treaty designed to boost private sector investment was signed in February 2010 and is awaiting submission to the U.S. Senate for ratification. Additional areas of cooperation between the United States and Chile include renewable energy and regional security issues.
President Sebastián Piñera of the center-right “Coalition for Change” took office in Chile in March 2010, bringing an end to 20 years of governance by a center-left coalition of parties known as the Concertación. During its time in power, the Concertación enacted constitutional changes to strengthen civilian democracy, took steps to address human rights violations that had occurred during 17 years of military rule under General Augusto Pinochet, and supplemented free market economic policies—which had been implemented during the dictatorship—with moderate social welfare programs. Most analysts credit these policies for fostering the strong economic growth and considerable reductions in poverty that have put Chile on the verge of becoming a “developed country.”
Piñera’s first six months in office have been marked more by continuity than change, as he has largely maintained the Concertación’s economic and social welfare policies while shifting the emphasis from redistribution to economic growth. His primary focus has been dealing with the fallout from the massive earthquake that struck Chile just two weeks before his inauguration. In addition to coordinating humanitarian assistance, Piñera won legislative approval for a $8.4 billion reconstruction plan. Chile weathered the global financial crisis reasonably well as a result of a counter-cyclical stimulus program enacted by the Bachelet Administration; however, the country did suffer a slight economic contraction and increase in the poverty rate. Piñera has pledged to boost economic growth to 6% annually, eliminate extreme poverty, and create one million jobs by the end of his four-year term by attracting increased investment and running government more efficiently. Other issues requiring Piñera’s attention include militant activism by indigenous groups, Pinochet-era human rights abuses, and weaknesses in the education system. According to a September 2010 poll, 56% of Chileans approve of Piñera’s performance.
The 111th Congress has expressed interest in several issues in U.S.-Chile relations. In March 2010, the U.S. Senate and House of Representatives passed resolutions (S.Res. 431 and H.Res. 1144) expressing sympathy for the victims of the country’s February 27 earthquake and solidarity with the people of Chile. The House also passed legislation (H.R. 4783, Levin) to accelerate income tax benefits for charitable cash contributions for earthquake relief in Chile. Other resolutions have been introduced to express support for the Energy and Climate Partnership of the Americas, including clean energy cooperation with Chile (H.Res. 1526), and to honor the bicentennial of the call for independence in Chile and several other Latin American nations (H.Res. 1619).This report provides a brief historical background of Chile, examines recent political and economic developments, and addresses issues in U.S.-Chilean relations.
Date of Report: September 22, 2010
Number of Pages: 24
Order Number: R40126
Price: $29.95
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Analyst in Latin American Affairs
In the two decades since the country emerged from dictatorship, Chile has consistently maintained friendly relations with the United States. Serving as a reliable—if not always very public—ally, Chile has worked with the United States to advance democracy, human rights, and free trade in the Western Hemisphere. Chile and the United States also maintain strong commercial ties. Trade has more than doubled to over $15 billion since the implementation of a bilateral free trade agreement in 2004, and an income tax treaty designed to boost private sector investment was signed in February 2010 and is awaiting submission to the U.S. Senate for ratification. Additional areas of cooperation between the United States and Chile include renewable energy and regional security issues.
President Sebastián Piñera of the center-right “Coalition for Change” took office in Chile in March 2010, bringing an end to 20 years of governance by a center-left coalition of parties known as the Concertación. During its time in power, the Concertación enacted constitutional changes to strengthen civilian democracy, took steps to address human rights violations that had occurred during 17 years of military rule under General Augusto Pinochet, and supplemented free market economic policies—which had been implemented during the dictatorship—with moderate social welfare programs. Most analysts credit these policies for fostering the strong economic growth and considerable reductions in poverty that have put Chile on the verge of becoming a “developed country.”
Piñera’s first six months in office have been marked more by continuity than change, as he has largely maintained the Concertación’s economic and social welfare policies while shifting the emphasis from redistribution to economic growth. His primary focus has been dealing with the fallout from the massive earthquake that struck Chile just two weeks before his inauguration. In addition to coordinating humanitarian assistance, Piñera won legislative approval for a $8.4 billion reconstruction plan. Chile weathered the global financial crisis reasonably well as a result of a counter-cyclical stimulus program enacted by the Bachelet Administration; however, the country did suffer a slight economic contraction and increase in the poverty rate. Piñera has pledged to boost economic growth to 6% annually, eliminate extreme poverty, and create one million jobs by the end of his four-year term by attracting increased investment and running government more efficiently. Other issues requiring Piñera’s attention include militant activism by indigenous groups, Pinochet-era human rights abuses, and weaknesses in the education system. According to a September 2010 poll, 56% of Chileans approve of Piñera’s performance.
The 111th Congress has expressed interest in several issues in U.S.-Chile relations. In March 2010, the U.S. Senate and House of Representatives passed resolutions (S.Res. 431 and H.Res. 1144) expressing sympathy for the victims of the country’s February 27 earthquake and solidarity with the people of Chile. The House also passed legislation (H.R. 4783, Levin) to accelerate income tax benefits for charitable cash contributions for earthquake relief in Chile. Other resolutions have been introduced to express support for the Energy and Climate Partnership of the Americas, including clean energy cooperation with Chile (H.Res. 1526), and to honor the bicentennial of the call for independence in Chile and several other Latin American nations (H.Res. 1619).This report provides a brief historical background of Chile, examines recent political and economic developments, and addresses issues in U.S.-Chilean relations.
Date of Report: September 22, 2010
Number of Pages: 24
Order Number: R40126
Price: $29.95
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Monday, September 27, 2010
The Mexican Economy After the Global Financial Crisis
M. Angeles Villarreal
Specialist in International Trade and Finance
The state of Mexico’s economy is important for U.S. policymakers for many reasons, most significantly because a prosperous and democratic neighboring country is in the best interest of the United States. The two countries have strong economic, political, and social ties, which have direct policy implications related to bilateral trade, economic competitiveness, migration, and border security. In May 2010, President Barack Obama hosted Mexican President Felipe Calderón at a meeting in the White House in which the two leaders discussed key issues affecting the two countries. They agreed to continue and reinforce cooperation on creating jobs, promoting economic recovery and expansion, and encouraging inclusive prosperity across all levels of society in both countries. The 111th Congress is likely to maintain an active interest in Mexico on issues related to the North American Free Trade Agreement (NAFTA) and other trade issues, economic conditions in Mexico, migration, border security issues, and counter-narcotics.
The global financial crisis that began in 2008 and the U.S. economic downturn had strong adverse effects on the Mexican economy, largely due to its economic ties and dependence on the U.S. market. Mexico’s gross domestic product (GDP) contracted by 6.6% in 2009, the sharpest decline of any Latin American economy. Mexico’s reliance on the United States as an export market and the relative importance of exports to its overall economic performance make it highly susceptible to fluctuations in the U.S. economy. Most other Latin American countries are not as dependent on the United States as an export market. Economic reforms over the past 20 years and the government’s responses to the effects of the global financial crisis have helped Mexico weather the economic downturn and improve conditions in 2010. However, sustained economic recovery will likely depend on the U.S. economic recovery and the ability to sustain this growth.
In addition to the adverse effects from the global financial crisis and the U.S. economic contraction, Mexico’s economy is experiencing numerous other challenges. The escalation of violence since the government’s crackdown on organized crime and drug trafficking has led to investor uncertainty in some regions of the country and, subsequently, a sharp decline in foreign direct investment flows. The impact has been the most severe on the manufacturing industry, which is mostly located along the U.S.-Mexico border and has experienced significant job losses. Increasing unemployment throughout the country has led to a growing trend towards informality and self-employment. This may present a long-term problem for the government because growth in the informal sector can lead to increased poverty levels, diminished productivity, and lower prospects for sustained economic growth. Another issue is the 16% drop in remittances to Mexico in 2009, which has mostly affected the poor. Remittance inflows, which are largely from the United States, are Mexico’s second-highest source of foreign currency after oil.
Numerous analysts have noted that Mexico’s potential to promote economic growth, increase productivity, and lower the poverty rate is very limited without implementing substantial structural reforms. President Calderón has proposed a number of reforms to address these challenges, including proposals to eliminate extreme poverty, overhaul public finances, privatize parts of the state oil company, adopt labor reforms, reform the telecommunications sector, and encourage political reforms. Most of these proposals, however, have deeply rooted political implications and have been strongly opposed by the major political parties in the Mexican Congress. There are some signs that the population may be pushing for change, but the prospects for passing any of the proposals will likely depend on the outcome of the 2012 presidential elections. .
Date of Report: September 16, 2010
Number of Pages: 24
Order Number: R41402
Price: $29.95
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Specialist in International Trade and Finance
The state of Mexico’s economy is important for U.S. policymakers for many reasons, most significantly because a prosperous and democratic neighboring country is in the best interest of the United States. The two countries have strong economic, political, and social ties, which have direct policy implications related to bilateral trade, economic competitiveness, migration, and border security. In May 2010, President Barack Obama hosted Mexican President Felipe Calderón at a meeting in the White House in which the two leaders discussed key issues affecting the two countries. They agreed to continue and reinforce cooperation on creating jobs, promoting economic recovery and expansion, and encouraging inclusive prosperity across all levels of society in both countries. The 111th Congress is likely to maintain an active interest in Mexico on issues related to the North American Free Trade Agreement (NAFTA) and other trade issues, economic conditions in Mexico, migration, border security issues, and counter-narcotics.
The global financial crisis that began in 2008 and the U.S. economic downturn had strong adverse effects on the Mexican economy, largely due to its economic ties and dependence on the U.S. market. Mexico’s gross domestic product (GDP) contracted by 6.6% in 2009, the sharpest decline of any Latin American economy. Mexico’s reliance on the United States as an export market and the relative importance of exports to its overall economic performance make it highly susceptible to fluctuations in the U.S. economy. Most other Latin American countries are not as dependent on the United States as an export market. Economic reforms over the past 20 years and the government’s responses to the effects of the global financial crisis have helped Mexico weather the economic downturn and improve conditions in 2010. However, sustained economic recovery will likely depend on the U.S. economic recovery and the ability to sustain this growth.
In addition to the adverse effects from the global financial crisis and the U.S. economic contraction, Mexico’s economy is experiencing numerous other challenges. The escalation of violence since the government’s crackdown on organized crime and drug trafficking has led to investor uncertainty in some regions of the country and, subsequently, a sharp decline in foreign direct investment flows. The impact has been the most severe on the manufacturing industry, which is mostly located along the U.S.-Mexico border and has experienced significant job losses. Increasing unemployment throughout the country has led to a growing trend towards informality and self-employment. This may present a long-term problem for the government because growth in the informal sector can lead to increased poverty levels, diminished productivity, and lower prospects for sustained economic growth. Another issue is the 16% drop in remittances to Mexico in 2009, which has mostly affected the poor. Remittance inflows, which are largely from the United States, are Mexico’s second-highest source of foreign currency after oil.
Numerous analysts have noted that Mexico’s potential to promote economic growth, increase productivity, and lower the poverty rate is very limited without implementing substantial structural reforms. President Calderón has proposed a number of reforms to address these challenges, including proposals to eliminate extreme poverty, overhaul public finances, privatize parts of the state oil company, adopt labor reforms, reform the telecommunications sector, and encourage political reforms. Most of these proposals, however, have deeply rooted political implications and have been strongly opposed by the major political parties in the Mexican Congress. There are some signs that the population may be pushing for change, but the prospects for passing any of the proposals will likely depend on the outcome of the 2012 presidential elections. .
Date of Report: September 16, 2010
Number of Pages: 24
Order Number: R41402
Price: $29.95
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Thursday, September 23, 2010
Brazil-U.S. Relations
Peter J. Meyer
Analyst in Latin American Affairs
As its economy has grown to be the 10th largest in the world, Brazil has consolidated its power in South America, extended its influence to the broader region, and become increasingly prominent on the world stage. The Obama Administration’s national security strategy regards Brazil as an emerging center of influence, whose leadership it welcomes “to pursue progress on bilateral, hemispheric, and global issues.” In recent years, U.S.-Brazil relations have generally been positive despite Brazil’s prioritization of strengthening relations with neighboring countries and expanding ties with nontraditional partners in the “developing South.” Although some disagreements have emerged over the past two years—such as different policy approaches toward the situations in Honduras and Iran—Brazil and the United States continue to work together on a number of issues, including counternarcotics, counterterrorism, energy security, trade, human rights, HIV/AIDS, and the environment.
Luis Inácio Lula da Silva, known as Lula, of the center-left Workers’ Party (PT) has served as Brazil’s president since 2003. During his two terms, President Lula has largely maintained orthodox economic policies while expanding the Brazilian state’s role in development. Although occasional corruption scandals and inter-party rivalries within his governing coalition have made it difficult to advance portions of his agenda, President Lula has been successful in passing some social security and tax reforms, implementing and expanding a number of social welfare programs, and encouraging public-private partnerships to invest in infrastructure and boost economic growth. He is currently seeking legislative approval for a new regulatory framework to govern the development of the country’s substantial offshore oil reserves, but portions of the new framework have been deferred by Congress until after the October 3, 2010 presidential and legislative elections. Lula has maintained high approval ratings (78% in late August 2010) throughout his administration as Brazil has experienced strong economic growth and considerable reductions in poverty.
Brazil’s recent economic success and Lula’s popularity have benefitted his designated successor, Dilma Rousseff of the Workers’ Party. According to recent polls, Rousseff leads José Serra of the centrist Brazilian Social Democratic Party by a substantial margin. While analysts believe that both candidates would largely maintain the Lula Administration’s economic and social welfare policies, most believe that Serra’s foreign policy would be more likely to align with that of the United States.
The 111th Congress has demonstrated interest in several issues in U.S.-Brazil relations. Both houses passed resolutions concerning an international child custody case involving Brazil (H.Res. 125 and S.Res. 37), and legislation related to the case (H.R. 2702) was introduced in the House. Other pieces of legislation concerning Brazil include S.Res. 74, to recognize the importance of the U.S.-Brazil partnership and pursue a bilateral tax treaty; S. 587, to provide $6 million to expand U.S.-Brazil biofuels cooperation; and H.R. 5439, to offset U.S. contributions to a fund for Brazilian cotton farmers, which was agreed to as a result of a World Trade Organization dispute, by reducing subsidy payments for U.S. cotton farmers.
This report analyzes Brazil’s political, economic, and social conditions, and how those conditions affect its role in the region and its relationship with the United States.
Date of Report: September 7, 2010
Number of Pages: 33
Order Number: RL33456
Price: $29.95
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Analyst in Latin American Affairs
As its economy has grown to be the 10th largest in the world, Brazil has consolidated its power in South America, extended its influence to the broader region, and become increasingly prominent on the world stage. The Obama Administration’s national security strategy regards Brazil as an emerging center of influence, whose leadership it welcomes “to pursue progress on bilateral, hemispheric, and global issues.” In recent years, U.S.-Brazil relations have generally been positive despite Brazil’s prioritization of strengthening relations with neighboring countries and expanding ties with nontraditional partners in the “developing South.” Although some disagreements have emerged over the past two years—such as different policy approaches toward the situations in Honduras and Iran—Brazil and the United States continue to work together on a number of issues, including counternarcotics, counterterrorism, energy security, trade, human rights, HIV/AIDS, and the environment.
Luis Inácio Lula da Silva, known as Lula, of the center-left Workers’ Party (PT) has served as Brazil’s president since 2003. During his two terms, President Lula has largely maintained orthodox economic policies while expanding the Brazilian state’s role in development. Although occasional corruption scandals and inter-party rivalries within his governing coalition have made it difficult to advance portions of his agenda, President Lula has been successful in passing some social security and tax reforms, implementing and expanding a number of social welfare programs, and encouraging public-private partnerships to invest in infrastructure and boost economic growth. He is currently seeking legislative approval for a new regulatory framework to govern the development of the country’s substantial offshore oil reserves, but portions of the new framework have been deferred by Congress until after the October 3, 2010 presidential and legislative elections. Lula has maintained high approval ratings (78% in late August 2010) throughout his administration as Brazil has experienced strong economic growth and considerable reductions in poverty.
Brazil’s recent economic success and Lula’s popularity have benefitted his designated successor, Dilma Rousseff of the Workers’ Party. According to recent polls, Rousseff leads José Serra of the centrist Brazilian Social Democratic Party by a substantial margin. While analysts believe that both candidates would largely maintain the Lula Administration’s economic and social welfare policies, most believe that Serra’s foreign policy would be more likely to align with that of the United States.
The 111th Congress has demonstrated interest in several issues in U.S.-Brazil relations. Both houses passed resolutions concerning an international child custody case involving Brazil (H.Res. 125 and S.Res. 37), and legislation related to the case (H.R. 2702) was introduced in the House. Other pieces of legislation concerning Brazil include S.Res. 74, to recognize the importance of the U.S.-Brazil partnership and pursue a bilateral tax treaty; S. 587, to provide $6 million to expand U.S.-Brazil biofuels cooperation; and H.R. 5439, to offset U.S. contributions to a fund for Brazilian cotton farmers, which was agreed to as a result of a World Trade Organization dispute, by reducing subsidy payments for U.S. cotton farmers.
This report analyzes Brazil’s political, economic, and social conditions, and how those conditions affect its role in the region and its relationship with the United States.
Date of Report: September 7, 2010
Number of Pages: 33
Order Number: RL33456
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
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Cuba: Issues for the 111th Congress
Mark P. Sullivan
Specialist in Latin American Affairs
Cuba remains a hard-line communist state with a poor record on human rights. The country’s political succession in 2006 from the long-ruling Fidel Castro to his brother Raúl was characterized by a remarkable degree of stability. The government of Raúl Castro has implemented limited economic policy changes, but there has been disappointment that further reforms have not been forthcoming. The economy was hard hit by storms in 2008, and the global financial crisis has caused further strains. Few observers expect the government to ease its tight control over the political system, although it did agree in July 2010 to release 52 political prisoners after talks with the Cuban Catholic Church.
Since the early 1960s, U.S. policy has consisted largely of isolating Cuba through economic sanctions. A second policy component has consisted of support measures for the Cuban people, including U.S.-sponsored broadcasting and support for human rights activists. In light of Fidel Castro’s departure as head of government, many observers have called for a re-examination of policy with two broad approaches advanced: an approach that would maintain the dual-track policy of isolating the Cuban government while providing support to the Cuban people; and an approach aimed at changing attitudes in the Cuban government and society through increased engagement. The Obama Administration has lifted restrictions on family travel and remittances; eased restrictions on telecommunications links with Cuba; and restarted migration talks. The Administration has criticized the government’s repression of dissidents, but it welcomed Cuba’s July 2010 announcement of a prisoner release as a positive sign. The Administration also has called for the release of a U.S. government subcontractor imprisoned since December 2009.
The 111th Congress approved three provisions in the FY2009 omnibus appropriations measure (P.L. 111-8) in March 2009 that eased sanctions on family travel, travel for the marketing of agricultural and medical goods, and payment terms for U.S. agricultural exports. In December 2009, Congress included a provision in the FY2010 omnibus appropriations legislation (P.L. 111- 117) that eased payment terms for U.S. agricultural exports to Cuba during FY2010 by defining the term “payment of cash in advance.” In May 2009, the Senate approved S.Res. 149, related to freedom of the press, and in March 2010 it approved S.Con.Res. 54, recognizing the death of a Cuban hunger striker. Pending legislation with Cuba provisions include: the Senate version of the FY2011 Financial Services appropriations bill, S. 3677, which extends the definition of “payment of cash in advance” for another year; the Senate version of the FY2011 Foreign Operations appropriations bill, S. 3676, which would fund democracy projects and Radio and TV Martí; and the Senate version of the defense authorization bill, S. 3454, which requires a Cuba report.
Numerous other initiatives have been introduced that would ease sanctions: H.R. 188, H.R. 1530, and H.R. 2272 (overall sanctions); H.R. 874/S. 428 and H.R. 1528 (travel); H.R. 332 (educational travel); H.R. 1531/S. 1089 and H.R. 4645/S. 3112 (agricultural exports and travel); H.R. 1737 (agricultural exports); and S. 774, H.R. 1918, and S. 1517 (hydrocarbon resources). H.R. 1103/S. 1234 would modify a trademark sanctions, while several bills cited above would repeal the sanction. S. 1808 would eliminate Radio and TV Martí. Measures that would increase sanctions are H.R. 2005 (related to fugitives), H.R. 2687 (OAS participation), and H.R. 5620 (Cuba’s oil development). H.Con.Res. 132 calls for the fulfillment of certain democratic conditions before the United States increases trade and tourism to Cuba. Also see CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances.
Date of Report: September 3, 2010
Number of Pages: 81
Order Number: R40193
Price: $29.95
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Specialist in Latin American Affairs
Cuba remains a hard-line communist state with a poor record on human rights. The country’s political succession in 2006 from the long-ruling Fidel Castro to his brother Raúl was characterized by a remarkable degree of stability. The government of Raúl Castro has implemented limited economic policy changes, but there has been disappointment that further reforms have not been forthcoming. The economy was hard hit by storms in 2008, and the global financial crisis has caused further strains. Few observers expect the government to ease its tight control over the political system, although it did agree in July 2010 to release 52 political prisoners after talks with the Cuban Catholic Church.
Since the early 1960s, U.S. policy has consisted largely of isolating Cuba through economic sanctions. A second policy component has consisted of support measures for the Cuban people, including U.S.-sponsored broadcasting and support for human rights activists. In light of Fidel Castro’s departure as head of government, many observers have called for a re-examination of policy with two broad approaches advanced: an approach that would maintain the dual-track policy of isolating the Cuban government while providing support to the Cuban people; and an approach aimed at changing attitudes in the Cuban government and society through increased engagement. The Obama Administration has lifted restrictions on family travel and remittances; eased restrictions on telecommunications links with Cuba; and restarted migration talks. The Administration has criticized the government’s repression of dissidents, but it welcomed Cuba’s July 2010 announcement of a prisoner release as a positive sign. The Administration also has called for the release of a U.S. government subcontractor imprisoned since December 2009.
The 111th Congress approved three provisions in the FY2009 omnibus appropriations measure (P.L. 111-8) in March 2009 that eased sanctions on family travel, travel for the marketing of agricultural and medical goods, and payment terms for U.S. agricultural exports. In December 2009, Congress included a provision in the FY2010 omnibus appropriations legislation (P.L. 111- 117) that eased payment terms for U.S. agricultural exports to Cuba during FY2010 by defining the term “payment of cash in advance.” In May 2009, the Senate approved S.Res. 149, related to freedom of the press, and in March 2010 it approved S.Con.Res. 54, recognizing the death of a Cuban hunger striker. Pending legislation with Cuba provisions include: the Senate version of the FY2011 Financial Services appropriations bill, S. 3677, which extends the definition of “payment of cash in advance” for another year; the Senate version of the FY2011 Foreign Operations appropriations bill, S. 3676, which would fund democracy projects and Radio and TV Martí; and the Senate version of the defense authorization bill, S. 3454, which requires a Cuba report.
Numerous other initiatives have been introduced that would ease sanctions: H.R. 188, H.R. 1530, and H.R. 2272 (overall sanctions); H.R. 874/S. 428 and H.R. 1528 (travel); H.R. 332 (educational travel); H.R. 1531/S. 1089 and H.R. 4645/S. 3112 (agricultural exports and travel); H.R. 1737 (agricultural exports); and S. 774, H.R. 1918, and S. 1517 (hydrocarbon resources). H.R. 1103/S. 1234 would modify a trademark sanctions, while several bills cited above would repeal the sanction. S. 1808 would eliminate Radio and TV Martí. Measures that would increase sanctions are H.R. 2005 (related to fugitives), H.R. 2687 (OAS participation), and H.R. 5620 (Cuba’s oil development). H.Con.Res. 132 calls for the fulfillment of certain democratic conditions before the United States increases trade and tourism to Cuba. Also see CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances.
Date of Report: September 3, 2010
Number of Pages: 81
Order Number: R40193
Price: $29.95
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