U.S. President Barack Obama and Cuban President Raúl Castro. Photo by: Pete Souza / White House and Blog do Planalto / CC BY-SA

U.S. President Barack Obama’s historic announcement on Wednesday that he wants to re-establish diplomatic and economic ties with Cuba — a plan that is yet to be approved by Congress — leaves many unanswered questions for U.S. foreign assistance to the long-embargoed nation.

U.S.-Cuba relations have remained virtually frozen since the early 1960s, when Washington imposed a trade embargo shortly after the triumph of the communist revolution led by Fidel Castro, whose brother Raúl now leads the Caribbean country.

Though Obama’s plan to reopen doors includes humanitarian engagement, the need for congressional approval of his plan, the historically controversial role of the U.S. Agency for International Development in Cuba, and Cuba’s current status as a state sponsor of terrorism make it unclear whether U.S. aid to Cuba country will resume anytime soon.

Cuba joins Iran, Sudan and Syria on the U.S. Department of State’s list of states that sponsor terrorism, and until it is removed from that list, the trade embargo cannot be lifted. Obama has asked Secretary of State John Kerry to conduct a study on that possibility for review this week. In addition, Wednesday’s announcement was made solely under an executive order, and the Department of Treasury’s Office of Foreign Assets Control is expected to craft it into regulation this week.

However, this won’t change the law, as it needs approval from a Republican-controlled Congress that has already voiced fervent opposition to lifting the embargo, which would mean repealing the Helms-Burton Act of 1996 and the Cuban Democracy Act of 1992.

“There is much more to be done to reverse the embargo that the president does not have the authority to do, and I don’t see this Congress doing it in the near future,” Mavis Anderson, senior associate at the Latin America Working Group, told Devex.

USAID’s controversial past a barrier for aid

Wednesday’s move included the dramatic release of former USAID contractor Alan Gross, who has spent five years behind bars in Cuba on charges of subversion and whose release was brokered by the Vatican — but Obama made no mention of USAID.

Former USAID Administrator Brian Atwood does not envision the agency rushing into Cuba, or Cuba wanting that to happen anyway given USAID’s unpopular past on the island.

“I don’t see the warming of relations going that far,” he told Devex, noting that travel and business opportunities could instead help develop the country.

Anderson said private companies — among them U.S.-based development organizations — will likely go into Cuba as soon as they can, but not USAID, since the funds for democracy promotion that used to go to the agency have been diverted to the State Department’s National Endowment for Democracy.

Even if Congress does give the green light, U.S. aid agencies will need Cuban government approval to set up shop there, which could be challenging given the widespread sentiment among many Cubans that USAID has traditionally been used by Washington for espionage activities and to promote subversion to the communist state.

Many Cuban-American activists such as Gladys Cañizares recognize how past USAID projects in Cuba, such as the Creative Associates “Cuban Twitter” scandal, were “total failures” and “far too clandestine,” and hopes any future projects will be much more transparent.

Unclear when (and whether) ODA will resume

Top donors such as the World Bank, the International Monetary Fund and the Inter-American Development Bank have refrained from offering direct aid to Cuba since much of their funding comes from the United States, which has veto power over where funds go.

If Cuba gets off the terror list, though, Anderson said, “This will open new avenues for aid and development.”

The few U.S.-based aid organizations that have been able to work in Cuba have done so through their international partners instead of their U.S. branches. Nongovernmental organizations with a Christian mandate were more easily accepted- Catholic Relief Services confirmed to Devex on Wednesday it has “done things quietly, especially working with the Catholic Church” but called its work in Cuba a “very sensitive issue.”

While Obama encouraged the Red Cross and UNHCR to begin operations in Cuba, the Red Cross told Devex it does not have any “clear idea of what type of form or engagement” was discussed between the two countries in order to begin planning operations. Those details will all depend on whether Cuba is dropped from the list of state sponsors of terrorism.

And even if official development assistance does start to flow, donors will need to provide assistance to Cuban private and NGO sectors, which Anderson noted “have a lot of growing to do” and are “very different from other countries’ NGOs” since they exist in a socialist one-party state.

Technical-level contacts, business training

In his announcement, Obama cited recent low-level U.S.-Cuba engagement in technical areas including informal environmental agreements, medical (mainly pharmaceutical) supplies, oil, migration, drug interdiction with the U.S. Coast Guard and postal relations as well as Internet access.

Anderson said the progress on technical aspects is an important step toward restoring trust and opening doors for development.

“The issue of government control in Cuba won’t disappear overnight, but accessibility will help solve some development issues,” she explained.

Finally, another priority focus area of Obama’s new policy on Cuba is business training. Entrepreneurship and formalization — giving entrepreneurs tools to do business, enable the business environment for entrepreneurship to grow and provide exchange of information about markets — is where development agencies will likely be concentrating now, since “that is the bulk of the reforms and entry point between development, markets and economic growth in Cuba,” Manuel Orozco, senior fellow at the Inter-American Dialogue, told Devex.

Many Cuban-Americans welcomed this proposal, saying this is a rich area of opportunity given Cuba’s budding entrepreneurial sector — with up to half a million small and medium-sized enterprises — that lacks people with sufficient skills to run small businesses.

“Small businesses in Cuba need training, backing, incentives and legal reform,” Cañizares told Devex from Miami. “I am sure big businesses will come to Cuba, but the government must help empower microbusinesses that have been punished financially under the embargo.”

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About the author

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    Claire Luke

    Claire is a journalist passionate about all things development, with a particular interest in labor, having worked previously for the Indonesia-based International Labor Organization. She has experience reporting in Cambodia, Nicaragua and Burma, and is happy to be immersed in the action of D.C. Claire is a master's candidate in development economics at the George Washington Elliott School of International Affairs and received her bachelor's degree in political philosophy from the College of the Holy Cross.