International Economic Sanctions: the Boycotts of Cuba, Israel, and Rhodesia
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INTERNATIONAL ECONOMIC SANCTIONS: THE BOYCOTTS OF CUBA, ISRAEL, AND RHODESIA By DONALD LEE LOSMAN A DISSERTATION PRESENTED TO THE GRADUATE COUNCIL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY UNIVERSITY OF FLORIDA 1969 UNIVERSITY OF FLORIDA 3 1262 08552 4055 To Barb ACKNOWLEDGEMENTS I wish to express my appreciation to the many persons who rendered me assistance in the course of my investigations and without whose help this dissertation could not have been completed, I would like to thank my supervisory committee, Professors R. Bradbury, R. Blodgett, I. Goffman, and J. Morrison for their helpful suggestions and careful reading of this paper. My committee chairman, Dr. Bradbury, was particularly helpful, both with my research and writing and with the scheduling of my graduate coursework, qualifying examinations, and a host of administrative problems which arose in the course of my resi- dence. Dr. C. Donovan, chairman of the department of economics, has also been most helpful to me throughout my years of graduate study. My colleagues at the University of Chattanooga—Professors Armstrong, Cook, Haemmel, and Keilany very kindly offered their time and assistance and made valuable contributions to my work. I owe a particu- lar debt of gratitude to Dr. A. Vieth, chairman of the department of economics and business, for the cheerful encouragement he gave and the innumerable favors he most unselfishly rendered on my behalf. Others whose help I would like both to note and to whom I wish to express my thanks include: Dr. P. Sweezy, Miss Susan Parks, Miss Tina Silver, Mr. P. LeRoux, Mr. J. Pouch, Dr. Rafael Rivas-Vasquez, Mr. J. Morton, Mr. and Mrs. J. Nesler, Mr. R. Hernandez, Mr. M, Gonzalez, Mrs, B. Chappell, Mrs. A. Harris, Mr. Steve Weinstock, and Miss V. Parian. iii iv The bulk of the research contained in this dissertation was, of course, accomplished within the confines of the many libraries whose services I utilized. I would like to thank the librarians at the Uni- versity of Chattanooga, in particular Mr. Grady Long and Mrs. Nina Pharr, for their very great assistance, and the librarians at the University of Miami, Coral Gables, Florida, Northwestern University, Evanston, Illi- nois, and the University of Pittsburgh, Pittsburgh, Pennsylvania, for their invaluable help. The University of Chattanooga provided the financial assistance without which the dissertation could not have been written. In addition, several students at Chattanooga--Mrs . Nancy Hullander, Mrs. Jackie Doty, Miss Brenda Biggers, Miss Nancy Ballard, and Miss Patricia Long--typed the many drafts and revisions which the dissertation underwent. The author would also like to acknowledge the time and efforts of Mrs. Hilke and Mrs. Haines, of the University of Florida Graduate school, both of whom were extremely helpful at the final stage of writing. Cole Printing and Letter Service, Knoxville, Tennessee, typed the final copy. A list of the many others who in one way or another made my job somewhat easier would be too long to provide here and would still probably neglect a few persons. To these unnamed people my heartfelt thanks. Finally, to my wife Barbara, I owe perhaps the greatest debt. During the year of research and writing she provided both encouragement and comfort, allowing me to center my attention almost exclusively on my work. During that time her sacrifices were many and pleasures few. Without her understanding and patience this dissertation could not have been written. TABLE OF CONTENTS CHAPTER PAGE DEDICATION ii ACKNOWLEDGMENTS iii LIST OF TABLES vii LIST OF FIGURES x I. INTRODUCTION 1 Boycotts: Theoretical Background 2 Historical and Political Aspects 9 II. CUBA 16 Historical Background 16 The Pre-Castro Economy--An Overview 28 United States Investment in Cuba 41 International Trade 53 Political Pre-Conditions to the United States Embargo 84 Boycott Implementation and Maintenance 93 Economic Impact of the Boycott 104 Structure of trade 104 Effects upon domestic economic structure and production 117 Political Repercussions 149 vi CHAPTER PAGE III. ISRAEL T 156 Historical Background , 156 The Israeli Economy--An Overview 165 The economic structure of Palestine 165 The economic structure of Israel 197 Political Pre-Conditions to the Boycott 218 Boycott Implementation and Maintenance 221 Economic Impact upon Israel 246 Political Repercussions 268 IV. RHODESIA 271 Historical Background 271 The Rhodes ian Economy 280 Political Pre-Conditions to Sanctions 297 Implementation and Maintenance of Sanctions 301 Economic Impact Upon Rhodesia 321 Political Repercussions 352 V. SUMMARY AND CONCLUSIONS 358 APPENDICES 371 Appendix A 372 Appendix B 380 BIBLIOGRAPHY 387 BIOGRAPHICAL SKETCH 399 LIST OF TABLES TABLE PAGE 1. Cuban Sugar Exports 1786-1850 29 2. Cuban Sugar Production 1911-1954 33 3. Performance of Cuban Economy 1928-1940 36 4. Average Annual Growth Rates of Industrial Production Latin American Nations 1955-1960 39 5. United States Investments ....... 44 6. Direct United States Investments in Cuba in Selected Years , . 47 7. Sugar Mills in Cuba, Nationality of Owners, and Percentage of Sugar Production in Selected Years 1935-1958 . , 49 8. Cuban Trade With The United States, England, and Spain 1841-1859 55 9. Cuban Trade With The United States and Spain (1891-1896) f , 56 10. Cuba and The United States: Main Product Exchange 1893 58 11. Cuban-United States Trade 1902-1927 64 12. Cuban-United States Trade 1928-1940 ... 66 13. Sugar Cuba's Supply to the U. S. Market . 72 14. Balance of Payments 78 VII viii TABLE PAGE 15. Cuban Trade Balance With The United States and United States Share of Total Cuban Imports 1950- 195B 79 16. Geographical Distribution of Cuba's Foreign Trade: 1949 to 1958 81 17. Composition and Value of Imports, 1954 . , t 82 18. Cuba: Composition of Imports According to Economic Categories 1949-1958 83 19. Value of Principal Exports, 1953-1954 85 20. Cuban Trade With The United States and Latin America 1958-1963 , 99 21. Cuban Foreign Trade 1959-1966 105 22. Free World Shipping to Cuba Selected Months, 1963-1967 . 115 23. Basic Data of Israeli Economy , 166 24. Contribution of Citrus to Palestine's Exports (1927-1939) , 171 25. Jewish Industrial Establishments (Jewish Agency Census 1937) 176 26. Palestine's Balance of Trade 1930-1939 182 27. Palestine's Balance of International Payments, 1936 and 1939 187 28. Indexes of Value and Volume of Imports, 1942-1944 .... 192 29. Percent Distribution of Palestine's Imports, by Country of Origin, Selected Years, 1936-44 . , 193 30. Exports from Palestine in 1939 and 1943 195 31. Palestinian Foreign Trade, 1939-1944 . , . , 196 IX TABLE PAGE 32. Population and Jewish Immigration 1948-1966 198 33. Employment by Branches, 1955, 1960, and 1964 , . 201 34. Development of Selected Branches of Israeli Economy, 1950, 1956, and 1963 208 35. Israeli Trade Balances 1949-1966 209 36. Gross Imports by Economic Destination 1959-1966 211 37. Israel's Capital Imports by Sources, 1959-1964 , 213 38. Imports and Exports by Main Countries of Purchase and Destination , 217 39. Industrial Origin of Rhodesian Gross Domestic Product 1954-1964 284 40. Non-African and African Employees in Rhodesia, 1965 . , . 288 41. Rhodesian Exports 1964-1965 (Including Gold Sales) .... 292 42. Rhodesian Imports 1964-1965 f .,,,.. 294 43. Direction of Rhodesian Foreign Trade 1964 . 295 44. Summary of Most Trade Sanctions Applied Against Rhodesia January 16, 1966 ..... 305 45. Rhodesian Tobacco Industry 1965-1969 325 46. Rhodesia: National Income Measures (1964-1967) 331 47. Rhodesia: Net Migration (1956-1968) 350 48. Long Term Economic Development Credits Extended to Cuba by the Socialist Bloc 1960-1965 373 49. Cuba's Trade With the Socialist Bloc 1959-1965 378 LIST OF FIGURES FIGURE PAGE 1. The Middle East 164 2. Boycotting States and Israel 222 3. Southern and Eastern Africa , 272 CHAPTER I INTRODUCTION This dissertation studies the economic impact of international economic sanctions upon the target nation(s). Three specific boycotts are investigated: the United States boycott of Cuba, begun in 1960; the Arab boycott of Israel, which was initiated even prior to the legal creation of the state in 1948; and the economic sanctions against Rhodesia, initially implemented by Great Britain in late 1965 and later joined by the United Nations. Boycotts are essentially political acts, representing instruments of foreign policy by which one state tries to bring about a change in the domestic or foreign policies of another. They are, then, a form of coercion which attempts to inflict economic hardship upon the country under sanctions. Boycotts may have varying degrees of economic and political effectiveness. Economic effectiveness refers to the volume of pecuniary damage inflicted, while political effectiveness refers to the degree of desired changes, if any, under- taken by the target state. The thesis to be investigated is the propo- sition that economic sanctions will cause sufficient disruptions of a total economy to bring about the political changes desired by the boycott initiators. Boycotts : Theoretical Background For over two hundred years the gains and benefits of international trade have occupied a position of importance in both the economic policy of governments and the theory of academicians. While exceptions have been occasionally noted, the advantages accruing from the international division of labor and specialization are recognized to have not only an expansionary effect upon aggregate world product, but also upon the national dividend of each participating nation as well. Over the years, trade theory has been refined and sophisticated, from absolute advantage to comparative advantage, from two-country, two-commodity trade to multi-lateral, multi-product exchange. Emphasis has shifted from the older concern with the direction of trade to a more recent preoccupation with the volume of international transactions.