The Independent Market Observer

Some Geopolitical Thoughts About Cuba and the U.S.

Posted by Brad McMillan, CFA®, CFP®

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This entry was posted on Dec 19, 2014 11:21:48 AM

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Cuba and the U.S.As I discussed yesterday, the ongoing realignment of many countries is driven fundamentally by economics, rather than by geopolitics, but that doesn’t mean the realignment is geopolitically unimportant. Quite the contrary: What we see here is an accelerating trend that is reinforcing the predominance of the U.S. in the global system, with each piece of the puzzle supporting the others. Cuba is a perfect example.

Benefiting from a lack of alternatives

To get to a place where Cuba and the U.S., after decades of confrontation, have finally agreed to restore relations, the world had to change enough that Cuba had no other options. After the Soviet Union collapsed, Cuba tightened its belt until it found another patron in Venezuela. With Venezuela now collapsing, Cuba needed to look for another patron, and it found . . . no one. The turn to the U.S. was born more from a lack of alternatives than a real desire to play nice with us.

Which brings us back to the trend I referred to at the start. The U.S. is increasingly standing alone as the global power. China is powerful in its own region, but it can’t project that power to the Western Hemisphere. Europe has forsworn power projection, as member countries either don’t want to—or can’t—pay for it. Russia would love to step back into the Caribbean, but it can’t afford to either. With only one place to turn, Cuba essentially had to come back to the United States—back to a relationship it left last century.

Regardless of the motivation, this is a huge win for the U.S. The major reason why the Soviet Union valued Cuba, and was willing to subsidize it for so long, was due to the island’s dominant position in the Caribbean Sea, particularly with regard to access to Florida and New Orleans. Cuba was, and is, an unsinkable aircraft carrier that can be used to threaten the heart of the U.S. By controlling it, any foreign power can take aim right at Washington, DC. There was a reason we had a Cuban missile crisis and not, say, a Venezuelan missile crisis. Cuba is too large and too critically located to ignore.

So now, or at least soon, Cuba will no longer be a threat. Absent the embargo, the U.S. will soon dominate the island economically. Not so much politically, of course, but economic dominance should give sufficient leverage to ensure that no substantial threat can develop. By taking this piece off the board, the U.S. is much more secure in a geopolitical sense, which frees us to be more adventurous elsewhere, should the need arise.

This story will play out over time, but the real impact will be a more secure U.S., a much greater U.S. influence in the Americas—remember, Cuba was one of the centers of anti-U.S. sentiment—and a general reinforcement of the fact of American dominance, not only in its own backyard but in the world as a whole. It’s one more very significant piece of good news for the U.S.

And now some housekeeping . . .

I am spending the next two weeks with my family, so posts will be either prewritten or reruns. I hope everyone out there has a wonderful holiday season with family and friends, and I will next write to you in the New Year.

Happy Holidays!


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