Cuba’s Economic Sanctions and Property Rights

Libertarians hold that the fundamental reason for the existence of governments is to protect life, liberty, and property. These are the principles articulated by John Locke (1632-1704), regarded as the principal architect of liberal thought (in the historical European use of the term) and who deeply influenced our own Declaration of Independence.

Within a democratic realm, citizens are expected to rely on our domestic institutions for the protection of these rights. For instance, an independent judiciary is essential for the resolution of property claims and other matters. But what is a citizen to do when his property rights are violated by a foreign totalitarian regime where no recourse to the rule of law is available?

It would seem that, when a US citizen’s property is expropriated by a foreign country, the property rights principle, so dear to libertarians, would take center stage. And yet, paradoxically, libertarian thinkers often argue against economic sanctions with nary a word about property rights.

They argue that unilateral economic sanctions do not work, and that individuals should be free to invest as they choose and undertake the risk of their investments. Agreed, but that leaves open the question as to how a government should protect its citizen’s property rights when a foreign government capriciously and arbitrarily changes the rules of the game.

US economic sanctions against Cuba are a case in point. The sanctions were first authorized in 1961 when President John F. Kennedy issued an executive order in response to the Cuban government’s expropriation without compensation of American assets — an issue that remains unresolved.

One can state validly that the sanctions have failed to change the course or nature of the Cuban government, but the failure argument is peculiarly offered in a form of isolated reverse logic. It is also valid and necessary to point out that the alternative policy pursued by the international community of engaging with the Cuban government has also failed to change the nature of that regime.

Currently over 190 nations engage economically and politically with Cuba while the United States remains alone in enforcing its economic sanctions policy. If indeed US policy is deemed as one case of failure to change the nature of the Cuban government, there are 190 cases of failure on the same grounds. By a preponderance of evidence (190 to 1) the case can be made that engagement with that regime has been a dismal failure.

Fifty years ago President John F. Kennedy sent a reasonable message to the international community that governments that choose to expropriate the properties of US citizens need to compensate them. Governments that choose to simply steal the properties of US citizens should expect some form of retaliation from the US government. That message remains valid today as an expression of a government’s duty to protect the property rights of its citizenry in foreign countries where the rule of law does not prevail.

It is one thing to argue, as those of us who value personal freedoms do, that investors should be free to invest and accept all the risks of their decisions when the rules of the game are known in advance and where the rule of law prevails. It is a different situation when the rules are changed after the fact, as the Cuban government did, and where no legal recourse is available.

Investors in communist countries cannot expect their government’s protection; they know in advance what they are getting into. The maxim “investors beware” is fully in place. After all, Karl Marx makes it clear in chapter two of The Communist Manifesto that “. . . the theory of the Communists may be summed up in the single sentence: Abolition of private property.”

Useful or not, the use of economic sanctions as a foreign policy tool is neither new nor particularly American. Pericles’ decree banning the Megarians from the Athenian market and ports, for example, helped incite the Peloponnesian War in 431 BC.

Unintended and undesirable consequences are inherent in the use of economic sanctions. Arguably they should not be used to compel a democratic transformation or even to advance human rights or other laudable goals. They seem, however, an appropriate in-kind response to the economic aggression of another country such as expropriations without compensation. What are the policy alternatives to protect the property rights of a citizenry when negotiations fail?

This article first appeared in the Miami Herald.

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