This document summarizes and analyzes Cuba's level of economic and political freedom based on various institutional reports. It finds that Cuba has very low economic freedom due to communist rule, with the government controlling most industries and imposing high tariffs. Cuba ranks near last in global economic freedom indices. While the US embargo aims to promote human rights, prolonged isolation may not be the best strategy and increased economic engagement could help Cuba transition to greater freedom over time. Lifting the embargo may boost Cuba's economy and expose its people to democratic ideals.

1. The Journey to Economic & Political Freedom in Cuba
Therese Gratia
IWP 634: Geography and Srategy
October 20, 2015

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An Introduction to Economic and Political Freedom
While the connotation of economic freedom is clearly positive, what exactly does
economic freedom mean? According to the Fraser Institute, the widely accepted, formal
definition is as follows:
Individuals have economic freedom when property they acquire without the use
of force, fraud, or theft is protected from physical invasions by others and they are
free to use, exchange, or give their property as long as their actions do not violate
the identical rights of others. An index of economic freedom should measure the
extent to which rightly acquired property is protected and individuals are engaged
in voluntary transactions.i
This definition is a good introduction to the subject, but is still too vague to grasp the meaning
fully without putting the term into context. Building up to their first publication in 1996, the
members of the Economic Freedom of the World project worked to identify the bases of
economic freedom, namely “personal choice, voluntary exchange, freedom to enter markets and
compete, and security of the person and privately owned property.”ii Furthermore, these criteria
are measured with consideration of the size of government relative to the economy, private
property and the rule of law, access to sound money, trade regulation and tariffs, and regulation
of business, labor, and capital markets. The data collected from this research amounts to the
annual Economic Freedom of the World index, which is then used to analyze the “impact of
economic freedom on investment, economic growth, income levels, and poverty rates.”iii
Expectedly, economic freedom invariably aligns with higher investment rates and income, rapid
economic growth, and rapidly declining poverty rates.iv On another note, how economic
freedom aligns with political freedom is a bit less understood.
First, let us briefly define political freedom. According to Capitalism.org, having
political freedom “means to live in a social system based on individual rights.”v In the
influential book Capitalism and Freedom, Milton and Rose D. Friedman, two applauded

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American economists, affirm that political freedom cannot exist without economic freedom, but
economic freedom can exist without political freedom.vi Hence, economic freedom fosters
political freedom, and therefore, must occur prior to political freedom. It is necessary to note
that economic freedom is not a “sufficient condition” for political freedom, as there are other
aspects that must be achieved.vii
It is particularly interesting to analyze the complex factors of political and economic
freedom for a country that has a low score on the Economic Freedom index, such as Cuba.
Henceforth, we will discuss the issues with Cuba’s economic and political freedom by analyzing
the country’s global position according to major institutions including The Fraser Institute, The
Heritage Foundation, Transparency International, the Central Intelligence Agency, the World
Bank, and Gapminder. Amidst the analyses of Cuba, we will shed light on the economic effects
of US foreign policy and suggest what the US and Cuba could do differently to reroute Cuba’s
course towards economic and political freedom.
An Analysis of Economic Freedom in Cuba
Cuba has been under communist rule since the 1960s. Communism is often a major
precursor to the decrease in political freedom. In opposition to a democracy’s bottom-up
economy, the central planning involved in a top-down Communist economy such as Cuba’s does
not consider the individual; it is devised by a small group of political elites who feel they know
best what society needs, which completely depletes an individual’s right to consume freely.
Without individual rights, citizens are extremely limited in their roles in the economy.
Cuba relies heavily on its labor force of approximately five million people, 72.3 percent
of which are in the state sector.viii Due to its many suffering industries including agriculture,
mining, and tourism, Cuba also relies heavily on external assistance, particularly oil subsidies

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from Venezuela and remittances from Cuban émigrés in the US. Because its prominent
industries are struggling, there are no safe bets for job security or livable wages. Without fair
wages incentivizing people to strive for success, Cuba’s socialized economy keeps citizens in
constant survival mode. In an effort to improve its poor economic realities, the Communist
Cuban government has “made measured concessions to encourage more entrepreneurship and
private-sector growth” and has “endorsed reforms to cut government payrolls and expand
approved professions.”ix
Specifically, the country has improved over the last year in trade freedom, fiscal freedom,
and freedom from corruption. In the “open market” realm of economic freedom, Cuba’s trade
freedom score increased by 3.8 since last year; its average tariff rate is still at a steep 8.1 percent
creating expensive obstacles for foreign businesses looking to export to Cuba. High tariffs force
businesses to increase the prices of their goods, making these goods unattainable for consumers.
Henceforth, the high tariffs on private goods prohibit Cubans from engaging in personal choice
and voluntary exchange—two major principles of economic freedom, and force them to rely on
public goods. Also in the “open market” realm, Cuba’s extremely low scores in investment
freedom and financial freedom remain stagnant. Finance and foreign banks continue to be vastly
controlled by the government.
In the “rule of law” realm, Cuba’s freedom from corruption score increased the most
since last year by 4.8. Freedom from corruption is also where Cuba has its best ranking in
comparison to the other countries at 63rd, but corruption remains a prominent issue. Also in the
“rule of law,” property rights stays at a low score of 10 due to the government owning nearly all
means of production. Only state enterprises are allowed to engage in foreign business

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agreements. In this realm, the economic freedom pillars of security of private property and
freedom to enter markets and compete are non-existent in Cuba.
In the “government size” realm, Cuba’s fiscal freedom score minutely increased by 1.8
since last year, while its zero score for government spending remains zero. As expected from a
Communist society, “public expenditures account for 60.2 percent of the domestic economy.”x
Lastly, “regulatory efficiency” includes business freedom, labor freedom, and monetary freedom.
Cuba’s business freedom and labor freedom scores are both at a stagnant 20, and monetary
freedom actually decreased by 1.0 since last year. In order to contain inflation, the government
controls prices and free-market activity areas, which in turn affects monetary growth. This tight
control is simply another representation of Cuba’s lack of economic freedom. These small
strides are noteworthy, but they are not expansive enough to substantially improve overall
economic freedom. Cuba’s overall economic freedom score increased by .9 to 29.6 since last
year, following suit with its minimal, but steady increases over the last five years. Cuba’s 29.6
falls well below the world average of 60.4 and very far below the free economy average score of
84.6. Hence, Cuba is ranked second-to-last at 177 with only North Korea in its shadow. xi As for
the country’s future in accordance with the world economy, Global Economic Prospects
forecasts slow and steady GDP growth at two percent annually, similar to its growth rates over
the last five years.xii
Enhancing Economic Freedom in Cuba
In light of the Cuban people having such little freedom to build a successful life or voice
their desire for reform, it is clear why the US has a problem with the human rights situation in
Cuba. While I understand and empathize with the US government’s stance, is a fifty-five year
long embargo in the best interest of US or Cuban foreign policy? As Professor Marek

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Chodakiewicz notes, “If the United States was unwilling either to back free Cubans or liberate
Cuba ourselves, the policy of American ostracism toward the Castros made sense.”xiii Perhaps
this is true. Perhaps “non-recognition was a symbolic policy of our objection to the trampling of
the island’s freedom.”xiv I appreciate and reckon with this argument, but I cannot help
considering the people. American exceptionalism is important for our reputation as a great
power, but connectivity may trump in this case. In our globalizing world, how can we expect the
future generations of Cuba to grow and overcome communism if we disconnect them more than
they are already forced to be disconnected? After all, the US is the most globalized and
progressive democracy in the world. It would be interesting to see an analysis of whether the
lives of the Cuba’s general population have enhanced or worsened since the embargo lift. Is it
possible that influence and economic engagement is more necessary and strategic in this case
than maintaining our exceptionalism? Only time will tell, but it is worth posing the question.
Regardless, in December 2014, Cuba and the US announced the restoration of diplomatic
relations.xv As of June 30, 2015, both countries announced the formal renewal of diplomatic ties,
meaning the reopening of embassies in each country. In the same address, President Barack
Obama urged congress to lift the embargo, a change that Raul Castro has been pushing for the
last few years. Lifting the embargo would undoubtedly boost Cuba’s economy and likely
advance US self interest. By allowing Cubans to trade with capitalist American business people,
the US would be exposing Cubans to a democratic way of life while enhancing their economic
freedom. With enhanced economic freedom, opportunity for enhancing political freedom will
soon follow. The US must continue to fight for normalization with Cuba if it wants to play a role
in bettering economic and political freedom for Cuba’s people; as stated in the Wall Street

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Journal, “true normalization between the two countries will come only when decades-old laws
banning most US business and travel on the island are lifted.”xvi
As for Cuba addressing its own issues, its government recently eased restrictions on local
businesses, but these changes “have proven to be cosmetic in what remains a socialist state.”xvii
The government also eased restrictions for Cubans traveling to foreign countries, but not enough
to make a difference for the majority of Cubans. It is imperative that the country exhausts all
opportunities to ignite rapid economic growth. The best way to facilitate rapid growth is to make
property and trade more accessible for Cubans. One aspect of accessibility is bringing the
majority of people well above the poverty line. People do not need charity, but opportunities to
make satisfactory incomes. In turn, Cuba must loosen property and trade restrictions so people
can put their earnings back into the economy and create a more natural economic flow.
Obviously, these drastic changes imply proper free market reform, which is difficult to imagine
beyond the “cosmetic changes” the government is making now.xviii However, I do not see a route
to economic freedom that does not involve a free market. Supposing Cuba does find its way to a
true market economy, the state will need to supplement “its reforms with measures that
strengthen institutions, protect consumers and the environment as well as financial regulatory
bodies that allow for open competitiveness.”xix Without this comprehensive foundation, Cuba’s
free market will be engulfed by monopolies.
Corruption: A Complex Hindrance
Tying in with the many obstacles Cuba must overcome in the economic sphere, there is
another subset of issues within the political sphere that affect both political and economic
freedom. One of the biggest political issues in Cuba is corruption. According to the 2014
Corruption Perceptions Index, which draws “data from expert and business surveys carried out

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by a variety of independent and reputable institutions” to measure corruption in the public sector,
Cuba has a score of 46/100 (zero being highly corrupt).xx While this score is pretty mediocre,
Cuba is not among the worst. In actuality, Cuba ranks 63/175 countries, number one being most
transparent.xxi Although the state has been running an anti-corruption campaign for the last five
years and cracking down on offenders, corruption is still a major hurdle that must be
overcome.xxii
In fact, some critics suggest that corruption is a bigger challenge than communism in
Cuba. With “a transition process heavily based on economic reforms,” corruption must be
eradicated.xxiii The most exposed proponent of corruption in Cuba is the black market. Cuban
citizens find themselves illicitly involved in the informal economy because of incentives that are
simply not present in the formal economy. Because the black market does not abide by the laws
and tariffs enforced in a socialist economy, people on both the supply and demand sides are
drawn to it, whether it is for a product that is unattainable in the public sector or because of lower
taxes.xxiv Moreover, many people turn to the black market for necessities such as food due to the
insufficient government-subsidized food rations; as stated in IB Times, “human rights groups
have pointed to frequent food shortages they say fuel a black market for food.”xxv Hence, the
black market is corruption that indirectly results from issues created by Cuba’s public sector.
As expected, there are many wealthy elites involved in the black market, plenty of which
are government officials. For instance, eighteen government officials recently were prosecuted
in Cuba for stealing over eight million eggs and selling them on the black market.xxvi In addition,
the Cuban government is cracking down on foreign businesses engaged in the black market. One
example is when Cuba arrested the president of a Canadian transport company, seized $100
million of his company’s assets, and sentenced him to prison for fifteen years for bribery. Oddly

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enough, Cuba released him just three years into his sentence without any explanation from the
Cuban or Canadian government. The probability that the Cuban government was bribed by the
Canadian government to release the executive is both ironic and alarming.xxvii
While reports of the Cuban government cracking down on corruption portray a reforming
economy, we must consider those instances of corruption that are not reported. It is quite
possible that Raul Castro could be corrupt and is off the radar for a variety of reasons. It is also
important to consider that Castro’s anti-corruption campaign is not solely motivated by his desire
for the common good. It is likely that Castro has become adamant about tackling the black
market not only to promote justice or the betterment of the Cuban people, but also to protect and
ensure his regime’s money, control, and ultimate power. It is impossible for anyone on the
outskirts of Castro’s regime to know where all of the money seized from the black market goes.
Also, it is likely that he is keeping a tight leash on the “free market” that Cuba is moving towards
not only to prevent economic failure or foster a smooth transition, but also to protect the long-
standing communist government from transforming into a democracy. Regardless of Castro’s
intentions, the doings of a national government should not be this mysterious.
The Greatest Obstacle to Freedom
Whether we are considering political freedom or economic freedom, it is understood that
neither can be achieved without human rights. One of the most prominent human rights issues in
Cuba is the human trafficking industry, which was not actually reported by the country prior to
2013. Despite the fact that Cuba is a source country for trafficking victims, the government
“does not fully comply with the minimum standards for the elimination of [human] trafficking
and is not making significant efforts to do so.”xxviii Furthermore, the state does not offer
assistance to trafficking victims.xxix Cuba desperately needs to put a stop to the modern slave

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trade happening within its borders. The government also needs to offer services to those who
have escaped trafficking so they may have a chance to escape slavery and not be dependent on
their illicit incomes. Ultimately, these victims of government negligence will not be truly free or
protected until Cuba depletes the black market by granting its people freedom to operate in a
market economy.
Perhaps the most widely known human rights violation imposed by Cuba is the “violent
repression of civil society and of dissidents,” which “has increased dramatically…under Raul
Castro.”xxx While the state has freed and exiled many political prisoners in recent years, it has
turned to other means as it moves forward with repression. Human Rights Watch discusses
Cuba’s new approach:
Arbitrary arrests and short-term detention have increased dramatically in recent
years and routinely prevent human rights defenders, independent journalists, and
others from gathering or moving about freely. Detention is often used
preemptively to prevent people from participating in peaceful marches or
meetings to discuss politics. Detainees are often beaten, threatened, and held
incommunicado for hours or days.xxxi
Public shaming is used in addition to these tactics. Considering Cuba’s use of physical abuse,
threats, and unjust imprisonments on its citizens, political freedom is virtually non-existent.xxxii
In order to overcome this human rights hurdle, Cuba must grant its people freedom of
expression.xxxiii Cuba is fearful to do so because of what critics or dissidents may reveal to the
world, but perhaps an approach that works simultaneously with economic enhancement would
create more positive rhetoric. Cuba cannot continue to suppress its people for having opinions
that acknowledge the hardships of citizens or opinions that do not align with its stark
government.
Another human rights issue worth discussing is Cuba’s prison system. According to IB
Times, “Political prisoners are commonly denied parole after their minimum sentences are

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completed,…and Cuba’s prisons are overcrowded and unclean, with prisoners who are often
malnourished and suffer from illnesses.”xxxiv It seems that poor prison facilities should not be an
issue in a socialized state that controls the majority of the money. If the government insists on
controlling food rations, there is no excuse for malnourished prisoners, particularly if they are
unjustly imprisoned. Again, lack of justice and mistreatment of people are not the bases of
political freedom. If Cuba has any desire to improve the human rights conditions in its country,
the state must learn to value its citizens as humans and assets to the economy and government.
Concluding Remarks
As briefly mentioned earlier, many US politicians and academics are weary of Barack
Obama’s decision to befriend Cuba due to human rights violations. However, the fact of the
matter is that the US’s isolationist policy towards Cuba did nothing to improve human rights. In
fact, the destitution imposed by the embargo enabled Cuba “to garner sympathy abroad,” to
alienate potential allies for the US, and to blame the US for its human rights issues.xxxv Now that
the US is doing its part by apprehensively moving towards a policy of engagement, Cuba
simultaneously needs to own its human rights abuses and improve circumstances. Achieving
basic human rights for citizens is imperative before Cuba can consider the bigger picture of
granting its people economic and political freedom.
Furthermore, the moral battle behind congress’s decision of whether or not to lift the
embargo is warranted. It is understandable why some members of congress do not want the US
to associate with or to help enhance a corrupt country that oppresses its people. However, it
seems that they are not considering the important goal of enhancing political and economic
freedom for the Cuban people. Instead of shutting out Cuba because of its unjust, corrupt
government, congress members should be relishing in the potential opportunity to help an entire

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population gain the basic freedoms that our country prides itself on. They should also see it as
an opportunity to ally with other democracies in the region “to promote human rights, judicial
independence, free elections, independent unions, and free expression.”xxxvi The US must take a
new, multilateral approach in order “to move the Cuban government toward respecting
fundamental rights.”xxxvii Cuba’s economy will flourish most with the involvement of multiple,
like-minded actors, particularly those who value economic and political freedom for their people.
i “Home Page,” Free the World, accessed October 10, 2015,
http://www.freetheworld.com/.
ii James Gwartney, Robert Lawson, and Joshua Hall, Economic Freedom of the World:
2014 Annual Report (Vancouver, B.C.: The Fraser Institute, 2014), v, accessed October 10,
2015, http://www.freetheworld.com/2014/EFW2014-POST.pdf.
iii Gwartney, Lawson, and Hall.
iv Ibid.
v “What is freedom in a political context?,” Capitalism Magazine, accessed October 10,
2015, http://capitalism.org/freedom/what-is-freedom-in-a-political-context/.
vi Milton and Rose D. Friedman, Capitalism and Freedom: Fortieth Anniversary Edition
(Chicago: University of Chicago Press, 2002), 10, accessed October 10, 2015, Google Books,
https://books.google.com/books?id=iCRk066ybDAC&pg=PA7&source=gbs_toc_r&cad=2#v=o
nepage&q&f=false.
vii Friedman.
viii Terry Miller et al., 2015 Index of Economic Freedom (Washington, D.C.: The Heritage
Foundation; New York: Dow Jones & Company, Inc., 2015), 179, accessed October 10, 2015,
http://www.heritage.org/index/pdf/2014/countries/cuba.pdf; Central Intelligence Agency, World
Factbook, s.v. “Cuba,” accessed October 11, 2015, https://www.cia.gov/library/publications/the-
world-factbook/geos/cu.html.
ix Terry Miller et al., 2015 Index of Economic Freedom (Washington, D.C.: The Heritage
Foundation; New York: Dow Jones & Company, Inc., 2015), 179, accessed October 10, 2015,
http://www.heritage.org/index/pdf/2014/countries/cuba.pdf.
x Ibid., 180.

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xi Ibid., 179-180.
xii World Bank, s.v. “Cuba,” accessed October 11, 2015,
http://data.worldbank.org/country/Cuba. Note that this was the only dataset and there was no
further information due to “data limitations.”
xiii Marek Jan Chodakiewicz, “Cuba Libre,” American Thinker, December 23, 2014,
accessed October 13, 2015, http://www.americanthinker.com/articles/2014/12/cuba_ libre.html.
xiv Ibid.
xv Encyclopædia Britannica Online, s.v. “Cuba,” accessed October 13, 2015,
http://www.britannica.com/EBchecked/topic/145542/Cuba.
xvi Felicia Schwartz, “Obama Announces Renewed Diplomatic Ties with Cuba,” Wall
Street Journal, July 1, 2015, accessed October 11, 2015, http://www.wsj.com/articles/u-s-cuban-
embassies-to-reopen-july-20-havana-says-1435762387.
xvii Miller, 179.
xviii Ibid.
xix Romina Ruiz-Goiriena, “Cuba is a Kleptocracy, Not Communist,” Daily Beast,
December 19, 2014, accessed October 12, 2015, http://www.thedailybeast.com/articles/2014/12/
19/cuba-is-a-kleptocracy-not-communist.html.
xx Transparency International, 2014 Corruption Perceptions Index, s.v. “Cuba,” accessed
October 12, 2015, http://www.transparency.org/country#CUB. Note that this was the only
dataset and there was no further information, presumably due to data limitations.
xxi Ibid.
xxii “Cuban Officials Jailed over Egg Black Market Scam,” BBC News, March 20, 2015,
accessed October 12, 2015, http://www.bbc.com/news/world-latin-america-31993579.
xxiii Ruiz-Goiriena.
xxiv Ibid.
xxv Philip Ross, “Cuba Human Rights: Violations Persist as Political Dissidents Face
Beatings, Arbitrary Arrest: Report,” International Business Times, January 23, 2015, accessed
October 12, 2015, http://www.ibtimes.com/cuba-human-rights-violations-persist-political-
dissidents-face-beatings-arbitrary-1792700.
xxvi “Cuban Officials Jailed.”

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xxvii Daniel Trotta, “Cuba Frees Canadian Businessman Tokmakjian after Three Years in
Jail,” Reuters, February 21, 2015, accessed October 12, 2015,
http://www.reuters.com/article/2015/ 02/22/us-cuba-corruption-canada-
idUSKBN0LP0QA20150222.
xxviii Central Intelligence Agency, World Factbook, s.v. “Cuba,” accessed October 12,
2015, https://www.cia.gov/library/publications/the-world-factbook/geos/cu.html.
xxix Ibid.
xxx Miller, 179.
xxxi Jose Miguel Vivanco, “Lifting the Embargo means Cuba can No Longer Play
Victim,” Human Rights Watch, December 19, 2014, accessed October 12, 2015,
https://www.hrw.org/ news/2014/12/19/lifting-embargo-means-cuba-can-no-longer-play-victim.
xxxii Ross.
xxxiii Vivanco.
xxxiv Ross.
xxxv Vivanco.
xxxvi Ibid.
xxxvii Ibid.