The arrest of Alan Gross in Cuba last December has proven to be a major headache for the Obama administration. Externally, the arrest jeopardized the notion that the Obama administration could hold the key to improving relations with its neighbor. Internally, the Obama administration has embarked on a thorough review of the government's democracy promotion programs in Cuba, evaluating their effectiveness. The embarrassment over the detention of USAID employee Gross on spy charges, and his links to the U.S. government's controversial democracy promotion programs, has shed light on a murky area of U.S. politics and may have far-reaching consequences for the future of U.S.-Cuba relations.

Alan Gross (pictured with his wife) is at the center of a standoff between the United States and Cuba.

The details surrounding the arrest of Alan Gross were presented in an article on this website in January. Since then, more information has come to light. The U.S. government and much of the media claimed that Gross was helping Jewish groups in Cuba to "download music, access Wikipedia, and read the Encyclopedia Britannica, which was provided on flash drives." However, the leader of the main Jewish group in Cuba said that they had never heard of Mr. Gross. The U.S. government has come under pressure from politicians and members of the Cuban exile community regarding his arrest. At a Senate Committee on Foreign Relations hearing in February, Sen. Robert Menendez accused Secretary of State Hillary Clinton of stopping democracy promotion programs in Cuba following the arrest of Gross. "For some reason, it seems to me, when it comes to Cuba, the recent actions by the regime to arrest an American citizen have totally frozen our actions," he said during a heated exchange with Clinton. Menendez and fellow Democratic Senator Bill Nelson sent a letter to fellow senators at the beginning of March urging them not to allow their staff to go on a fact-finding trip to Cuba in light of the arrest. Forty members of the U.S. House of Representatives recently signed another letter warning Cuba that improved relations are contingent on the release of the jailed American. State Department spokesman P.J. Crowley said that the last communication that the U.S. government had with Gross was in February, and that during recent U.S.-Cuba talks on migration the United States requested to see Gross, to no avail.

Programs and Problems

Since the early 90s the United States has funded several programs that are designed ostensibly to promote democracy in Cuba. All are managed by USAID.

Gross's arrest has shone a spotlight on these programs, which have been questioned over the past few years for issues of corruption and transparency. Many USAID programs in Cuba are run through the Office of Transition Initiatives (OTI). A congressional report noted in 2009 that, "Unlike many foreign assistance programs, Transition Initiative programs are often initiated on short notice and are not always accurately detailed in budget justification documents. The annual appropriations provisions for OTI require that the office give only five days' notice to Congress of new TI programs, and even ongoing programs are not reported at the same level of detail as other foreign assistance programs."

A 2006 report by the Government Accountability Office (GAO) offered stinging criticism of USAID for the lack of oversight in its Cuba aid program. According to the report, "Nearly all of the $74 million spent on contracts to promote democracy in Cuba over the past decade has been distributed without competitive bidding or oversight in a program that opened the door to waste and fraud."

Some of the profligacy cited includes the purchase of a gas chainsaw, computer gaming equipment and software (including Nintendo Gameboys and Sony Playstations), a mountain bike, leather coats, cashmere sweaters, crabmeat, and Godiva chocolates. A Miami Herald article from the same year pointed out that "most of the USAID money has remained in Miami or Washington—creating an anti-Castro economy that finances a broad array of activities."

The corruption that exists in the Cuba democracy promotion programs came to a head in 2008, when Howard Berman, the chairman of the House Committee on Foreign Affairs, placed a hold on the $45 million due to be allocated to Cuban programs that year. Berman wrote a memo to the assistant secretary for Legislative Affairs, questioning the "four-fold increase" in funding for Cuban democracy promotion programs given the fraudulent abuse and lack of adequate oversight reported by the GAO in 2006 and the media. He requested the freeze be maintained until USAID responded to a list of questions regarding the reported irregularities. Berman wanted answers on where the $74 million awarded for Cuba democracy promotion programs mentioned in the GAO report had gone.

He also requested follow-up information and measures regarding the case of Felipe Sixto from the Washington-based Center for a Free Cuba (CFC). Sixto was discovered to have embezzled between $500,000 and $700,000 from the grantee's total award of $7.3 million. Sixto, who was a special assistant for intergovernmental affairs during the George W. Bush administration, was given thirty months in jail. Berman later unfroze the withheld funds saying that he had been given assurances by USAID and the State Department that it was "working to improve the program."

In spite of the efforts of Rep. Berman, USAID's Cuba democracy promotion programs have continued to be riddled with problems. A recent article from the Miami Herald stated that, "The lack of clear rules allowed some of USAID's grantees to spend 95% of the millions of dollars they received to cover salaries, office overhead, and attend international conferences, while Cuba's dissidents were left with crumbs. Many of those USAID grantees had funding automatically renewed without the benefit of competition or an assessment of the impact their programs were having on the ground in Cuba."

The issue of transparency looms large in these programs. USAID's Cuba program is one of the only programs that does not fully disclose the names of the organizations it funds or the amounts it provides. With other country projects such as Bosnia, Afghanistan, and Iraq, full up-to-date disclosure is given regarding all aspects of the programs funded. In the case of Cuba, its list was last updated in July 2006. A GAO report in November 2008 stated that "continued efforts were needed to strengthen USAID's oversight of U.S. democracy assistance in Cuba," yet it censored the names of active grantees, with the exception of two organizations whose names had already appeared in the media due to corruption scandals.

The legality of such programs is also under scrutiny. Julia Sweig, of the Council on Foreign Relations, described the types of programs in which Mr. Gross was involved as a continuance of "Cold War tactics," stating that prior to 1989 these operations were carried out covertly, but with no Russian influence in Cuba, the United States can carry them out overtly. John McAuliff, executive director of the Fund for Reconciliation and Development, points out that not only are Alan Gross's actions illegal under Cuban law; they are illegal under U.S. law as well. "The Foreign Agents Registration Act criminalizes any unregistered agent of a foreign power (which this 'contractor' certainly was) who 'within the United States solicits, collects, disburses, or dispenses contributions, loans, money, or other things of value for or in the interest of such foreign principal.' In the United States such a foreign agent would be liable to a sentence of 5 years in jail and a fine of $10,000."

Reviews and Recriminations

When the Obama administration took office, it promised to review controversial USAID programs. The arrest of Gross seems to have spurred this task on. In July 2009, the State Department began its Quadrennial Diplomacy and Development review (QDDR) to assess diplomacy and development programs at the State Department and USAID. In August 2009, President Obama signed a Presidential Study Directive (PSD) on Global Development Policy, authorizing a comprehensive review of U.S. development efforts. Both reviews were due to be completed by now but have yet to surface. The reviews have been backed by proposed legislation that would increase oversight and transparency at USAID, introduced by Howard Berman in the House of Representatives and John Kerry and Richard Lugar in the Senate.

Since the arrest of Mr. Gross, Cuban democracy promotion groups have accused the Obama administration of failing to hand over $40 million in funds allocated for democracy promotion efforts in Cuba. The director of a Miami-based group that received over $12.5 million from USAID said his "small organization only has enough money to continue operating for a few more months." Representative Ileana Ros-Lehtinen recently stated, "I continue to be concerned by reports that USAID programs in Cuba have come to a standstill since the arrest and imprisonment of U.S. citizen Alan Gross." Nine Republican congressional representatives have accused the Obama administration of trying to appease the Cuban government by freezing the funds. State Department spokesman P.J. Crowley denied the suggestion that the programs had been frozen but admitted that a full review was underway.

Despite repeated criticism, proven corruption, and pending reviews of democracy promotion programs in Cuba, the Obama administration proceeded to set aside $20 million for its 2011 budget to "promote self-determined democracy in Cuba." Funds are to be used "to provide humanitarian assistance to political prisoners, their families, and other victims of repression; advance human rights; strengthen independent civil society organizations; and support information sharing into and out of Cuba." Furthermore, the State Department recently notified organizations that they can start making trips to Cuba again, the Miami Herald reported. The trips were halted after the Gross arrest.

On March 26, Senator John Kerry, chairman of the Senate Committee on Foreign Relations, placed a new hold on U.S. democracy promotion programs in Cuba until State Department officials "undertake a review of these programs, and while the committee investigates whether they're effectively accomplishing our shared goal." Kerry's spokesman Frederick Jones commented that, "We all want democratic change in Cuba. The question is whether American taxpayers are getting progress toward that goal."

As the debate over the USAID programs rages on, the Cuban government continues to denounce the programs as subversive and hostile. With Alan Gross's case unresolved and other contractors continuing similar activities, analysts say the Obama administration must tread carefully if it wants to avoid a repeat of the current debacle.

For More Information: Arrest of Alleged American Spy in Cuba Further Sets Back U.S.-Cuba Relations Obama Takes Step-by-Step Approach to Ending Obsolete Cuba Policies The Case of the Cuban Five: American Justice as a Political Weapon