Cuba country brief

Overview

Australia and Cuba have long enjoyed friendly relations based on trade and cooperation on a range of international issues. Formal diplomatic relations were established in 1989.

Australia has non-resident diplomatic accreditation to Cuba through the Australian Embassy in Mexico City. Cuba opened an embassy in Canberra in 2008.

The Republic of Cuba consists of the island of Cuba (westernmost of the Greater Antilles), the Isla de la Juventud (Isle of Youth) and 1,600 small offshore islands. Cuba is the largest island in the West Indies, lying at the entrance to the Gulf of Mexico (to the north-west) and bounded by the Caribbean Sea (to the south and west) and the Atlantic Ocean (to the north-east). Cuba lies around 145 km north of Jamaica and a similar distance south of Key West in Florida in the United States. Cuba also has a 29 km land border in the south-east where the United States has a leased area at Guantánamo Bay, but Cuba retains sovereignty. Cuba, the largest country of the insular Caribbean, in terms of both extent and population, covers 109,886 sq. km or about 45% of the total surface area of the Antilles.

Cuba's population is approximately 11.4 million (2016). Just over 64 per cent is defined as white, 27 per cent mulatto or mixed-race ethnicity (mainly Spanish and African descent), and 9 per cent black. Numerous waves of migration have influenced Cuba and its culture, notably Spanish settlement, slaves from West Africa, French fleeing from the Haitian revolution (early 19th century) and most recently Jamaican settlers.

Political overview

Background

Mesoamerican peoples first occupied Cuba around 4000 BC, but their numbers declined after European discovery and colonisation of the islands by Christopher Columbus in 1492. Large numbers of African slaves were imported to work Cuban coffee and sugar plantations over the next several centuries. United States intervention during the 1898 Spanish-American War assisted the Cubans in overthrowing Spanish rule and the 1901 Platt Amendment to the Cuban constitution authorised the United States to intervene in Cuba in the event of instability. The Treaty of Paris established Cuban independence from the United States in 1902 after which the island experienced a string of governments mostly dominated by corrupt politicians and the military.  

On 1 January 1959, after a three-year guerrilla campaign led by Fidel Castro, Ernesto 'Che' Guevara and Camilo Cienfuegos, the dictatorship of General Fulgencio Batista was overthrown. Castro declared Cuba a socialist state on 16 April 1961, his iron rule holding the subsequent regime together for nearly five decades. Cuba's close relationship with the Soviet Union provided substantial economic and military assistance from the USSR, estimated at US$5.6 billion annually, which kept Cuba's economy afloat and enabled it to maintain a large military establishment. Cuba's communist revolution, with Soviet support, was exported throughout Latin America and Africa during the 1960s, 1970s, and 1980s, and relations between Cuba and the West, especially the United States, deteriorated.

System of Government

Cuba is a socialist state with a civil law system based on the Spanish civil code. The Communist Party of Cuba is the leading force of society and the State.

Executive power is exercised by the Cuban Government, which is represented by the Council of State and the Council of Ministers. Legislative power is exercised through the unicameral National Assembly of People's Power (612 members, elected every five years) which is constituted as the maximum authority of the state. Raúl Castro is President of the Council of State, President of the Council of Ministers, First Secretary of the Communist Party, and Commander-in-Chief of the Revolutionary Armed Forces. Esteban Lazo Hernández is President of the National Assembly.

Recent Developments

President Fidel Castro stepped down in February 2008 in favour of his younger brother, Raúl Castro. Fidel Castro had governed Cuba for 47 years, firstly as Prime Minister from 1959 to 1976 and then as President from 1976 to 2006 (de jure until 2008). Castro passed away on Friday 25 November 2016 at the age of 90.  He had been in declining health for a number of years. After a period of official mourning, his ashes were laid to rest in the former capital, the south-eastern city of Santiago.

In 2013, the Cuban National Assembly elected Miguel Diaz-Canel as First Vice President. President Raúl Castro has signalled his intention to stand down when his term expires in 2018, however, there is no guarantee that Diaz-Canel will succeed him and become President in 2018.

United States-Cuba relations

The United States maintains a trade embargo against Cuba which affects Australian companies with operations in the United States. While Australia does not have any trade or economic legislation or measure which restricts or discourages trade or investment to or from Cuba, the embargo remains an impediment to trade between Australia and Cuba.

The embargo in its current form consists of three main pieces of United States legislation - the 1992 Cuban Democracy Act (Torricelli Act), the 1996 Cuban Liberty and Democratic Solidarity Act (Helm-Burton Act) and the 2000 Trade Sanctions Reform and Export Enhancement Act. Since 1996, Australia has voted in favour of Cuba's annual resolution in the United Nations General Assembly calling for an end to the US trade embargo of Cuba.

On 17 December 2014, former President Obama and President Castro announced a move towards normalisation in United States-Cuba relations – the most significant development since diplomatic relations were severed in 1961. President Obama announced measures to re-establish diplomatic relations, including opening a United States embassy in Havana, reviewing Cuba's designation as a state sponsor of terrorism, as well as steps aimed toward authorising expanded commercial sales and exports from the United States. The new measures also allowed US citizens to import additional goods from Cuba, authorised transactions between the United States and Cuba (such as allowing United States-issued credit and debit cards to work for tourists in Cuba) and increased Cuban access to communication technology items. 

However, the most significant moment came in March 2016, when former President Obama visited Havana, becoming the first US President to visit Cuba since 1928. 

On Friday 16 June, the Trump Administration announced a new United States policy toward Cuba, citing the need to support human rights and express solidarity with the Cuban people. The Administration stated that "the primary obstacle to the Cuban people's prosperity and economic freedom is the Cuban military's practice of controlling virtually every profitable sector of the economy." The new policy will strictly enforce the embargo according to United States laws, particularly relating to American tourism to Cuba, as well as limiting direct financial transactions with Cuban military, intelligence and security services.

Australian travelers to Cuba are unaffected by the announced changes and access to Cuba from the United States by non-American citizens has been unaffected by the announcement.

Bilateral relations

Australia and Cuba have long enjoyed friendly relations. Formal diplomatic relations were established in 1989 and the relationship has enjoyed renewed momentum in recent years. Cuba opened an embassy in Canberra in October 2008.

Australian Foreign Minister Julie Bishop visited Cuba in June/July 2017. 

In February 2016 Special Envoy for Trade Andrew Robb AO led Australia's first business mission to Cuba. Former Foreign Minister Stephen Smith visited Cuba in November 2009, with a reciprocal visit by Cuban Minister for Foreign Affairs, Bruno Rodriguez, in June 2010. 

In June 2017, Australia and Cuba signed a Memorandum of Understanding to enhance diplomatic engagement between the two countries.

A sports cooperation MoU was signed in February 2016 which promotes exchanges between athletes, teams and coaches and cooperation in education, sport science, anti-doping and sports technology.  In October 2015 the Australia Olympic Committee signed a cooperation agreement with the Cuban Olympic Committee that aims to share experiences in the development of Olympic athletes and coaches. 

Australia and Cuba have worked together to support the integration of Cuban-trained doctors into Pacific Island health systems. Funding for the project has now ended, although Cuba continues to train a significant number of doctors from Pacific Island nations.  In 2013, the Cuban Yes I Can (Yo! Si Puedo) literacy model was piloted in three far western NSW communities (Wilcannia, Bourke and Enngonia) as part of a national Aboriginal adult Literacy for Life campaign, supported by a combination of Commonwealth, State and private funding, including funding from construction contractor Brookfield Multiplex. The program was expanded to three new Aboriginal communities in western NSW in 2016.

A bilateral Memorandum of Understand (MOU) signed in 2009 identified a number of areas in which enhanced cooperation might be pursued: expanding people-to-people links, aid cooperation, science and technology, sport and culture.

People to People Links

The Australia Cuba Business Council, founded in 2015, is a strong link between the two countries. 

In 2015/16, the Council on Australian Latin America Relations, in conjunction with the National Archives of Australia, provided funding for the restoration and preservation of Havana City Council historic documents.

Cuban citizens are eligible to apply for Australia's Endeavour Awards Scholarships and Fellowships. The program opens annually in April and closes in June.

There are around 700 Cubans living in Australia.

The Australian and Cuban Baseball Associations have announced an annual Australia-Cuba baseball series, potentially starting in 2018.

2016 marked the 150th anniversary of the arrival of the first Cuban, William Sanguily, to Australia.

Development Assistance

Since 2010, Cuba has been eligible to receive Australia Award Fellowships and five awards have been granted to date.

The Australian Embassy in Mexico City manages a Direct Aid Program (DAP), which provides financial support to a broad range of activities across Central America and Cuba, including community development projects and projects designed to address challenges in vulnerable communities. In 2016-17, DAP funding was provided to support a youth centre to preserve agrarian and rural traditions in the area of Banao, Sancti Spiritus.

Economic and trade policy overview

For latest economic data refer to Cuba [PDF]

Since taking office in 2008, President Castro has pursued incremental economic reform. In 2011 the government launched a series of liberalising market reforms (known as the lineamientos). These reforms included cuts to public sector employment, moves to make state enterprises more efficient, an increased role for small business, expansion of small cooperatives, and a focus on attracting foreign investment into mining, energy, agriculture, and tourism. The government aimed to have the private sector employing 40 per cent of the population by 2016 (from 10 per cent in 2010). It has allowed Cubans to buy electronic appliances and cell phones, stay in hotels and buy and sell used cars. The government also opened up some retail and other services to "self-employment" leading to the rise of so-called "cuentapropistas" or entrepreneurs. Recent moves include permitting the private ownership and sale of real estate and new vehicles, allowing private farmers to sell agricultural goods directly to hotels, and expanding categories of self-employment. Despite these reforms, however, the average Cuban's standard of living remains at a lower level than before the collapse of the Soviet Union and the resulting Cuban economic downturn of the 1990s. 

At the most recent Communist Party Congress in April 2016, the government did not introduce any new major reforms, instead focussing on the challenges of an eventual transition to a new generation of leaders, rapprochement with the US and the desire to retain firm political control. 

China is an important market for Cuban commodities, and Venezuela barters oil in exchange for Cuban health services. However, a deepening economic crisis in Venezuela has led Cuba to seek to hedge against a negative spill-over into its own economy through diversification of trade and investment partnerships. 

In July 2014, Russia agreed to write off 90 percent of the island's US$35.2 billion debt to the former Soviet Union, with Havana still having to repay ten percent, some US$3.5 billion over a ten-year term. Russia also agreed to expand cooperation with Cuba in key areas such as energy, health, oil, and rescue/firefighting training. Also in July 2014, Cuba and China agreed on a range of initiatives during a visit by Chinese President Xi Jinping, aimed at further strengthening economic and cultural relations. These included collaboration on oil sector participation, cyberspace, education, transfer of technology, development of renewable energies, biotechnology, environment monitoring, as well as the granting by China of a line of credit to build a multi-purpose terminal at the Santiago de Cuba harbour and an interest-free credit line. 

Foreign investment laws, which came into effect in June 2014, offer tax incentives for foreign companies, with taxes on profits generated on non-mining ventures reduced from 30 to 15 percent. Profits from mining, oil and other raw material ventures will be taxed at 22.5 per cent (reduced from 45 per cent). An 8-year tax exemption applies from commencement of operations in Cuba. Foreigners are exempt from paying personal income tax. The laws allow for 100 per cent foreign ownership but deny those companies the same tax benefits afforded to joint ventures with the Cuban state. 

Inaugurated two years ago, the Mariel Special Economic Development Zone is promoted as the main zone for foreign investment. Companies investing in this zone receive additional tax benefits, and streamlined approvals processes. Foreign investors have been slow to establish operations in the zone, but a joint venture agreement signed in January 2016 between Cuba and Unilever to build a US$35 million plant may act as a catalyst for further investment in the zone. 

Economic growth is expected to average 5.2 per cent over the next four years, spurred by the gradual normalisation of relations with the US. Tourism, energy, and nickel exports will continue to contribute strongly to the Cuban economy. Remittances also play a large role in Cuba's economy, open source estimates range from US$800 million to US$1.5 billion per year, with most coming from families in the United States.

Trade and Investment

Economic and trade relationship

Australia's merchandise trade relationship with Cuba is modest. In 2015-16 total merchandise trade was approximately AUD$13 million. Australian exports to Cuba totalled AUD$1 million, primarily comprised of electrical circuit equipment, ships and boats, heating and cooling equipment, and additives for mineral oils. Cuban exports to Australia were valued at AUD $12 million, with tobacco, crustaceans, edible products and preparations and alcoholic beverages of greatest value. In 2015-16, two-way trade in services was worth AUD $36 million.  Services exports to Cuba were valued at AUD $2 million and services imports, dominated by tourism, were worth AUD $34 million. Trade is constrained by distance and Cuba's small domestic market (11.4 million people). 

In the 1980s, Australia's Export Finance and Insurance Corporation (EFIC) provided two loans to the Cuban government for sugar cultivation and harvesting equipment exports. However, Cuba defaulted on debt repayments and was unable to agree a repayment schedule with EFIC.  In May 2016 Cuba reached a bilateral debt rescheduling agreement with EFIC to resolve this debt. The agreement ensures a sustainable and definitive solution to Cuba's debt arrears with Australia.

Interest among Australian companies in the Cuban market is now growing as knowledge spreads of the Cuban Government's economic reform agenda and the opportunities these reforms have created. A number of companies have astutely identified opportunities in niche areas of Australian expertise that coincide with Cuban priorities. These include agribusiness, mining and energy, METS, biotechnology, infrastructure and tourism. The 2015 creation of the Australia-Cuba Business Council and the February 2016 business delegation visit, led by Special Envoy Andrew Robb, is indicative of the new opportunities and profile that Cuba represents to Australian business.  

Given the ongoing crisis in Venezuela, pressure to diversify the Cuban economy has become acute. There are extensive opportunities for Australian companies in Cuba's resources, skills, pharmaceutical, tourism and agricultural sectors. Opportunities for Australian investment are expected to increase as further reforms are introduced.

High level visits

June 2017: Australian Foreign Minister Julie Bishop visited Cuba.

February 2016: The Special Envoy for Trade, Andrew Robb AO MP, led a delegation of Australian businesses to Cuba.

July 2011: Then Parliamentary Secretary for Foreign Affairs, the Hon Richard Marles, visited Cuba.

October 2011: Cuban Deputy Minister for Foreign Affairs Ana Teresita Gonzalez visited Australia for the Commonwealth and Developing States Meeting in Perth.

June 2010: Cuban Minister for Foreign Affairs, Bruno Rodriguez, visited Australia as a guest of government.

November 2009: Then Foreign Minister Stephen Smith visited Cuba.

Last Updated: 19 July 2017