New Restrictions on U.S. Travel to Cuba and Transactions with Certain Cuban Entities                                     

On November 8, the U.S. Treasury, Commerce and State departments released regulations imposing new restrictions on U.S. citizens travel to Cuba. Taking effect on November 9, they “are aimed at preventing U.S. trade and travelers from benefiting its military, intelligences and security arms of the Communist-ruled country.” In addition, they require U.S. travelers on “person-to-person” trips “to use a U.S.-based organization and be accompanied by a U.S. representative of the group.”[1]

This blog post will first provide a list of the Treasury Department’s 12 categories of general licenses for approved travel to Cuba, only two of which are directly affected by the new regulations. These two categories will be discussed followed by the new regulations ban on transactions with certain Cuban entities that affects all 12 categories.

Categories of Approved Travel[2]

“Travel-related transactions are permitted by [OFAC’s] general license for certain travel related to the following activities, subject to the criteria and conditions in each general license: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain authorized export transactions.”

Only the two categories in bold are affected by the new regulations—travel for “educational” reasons (organized and people-to-people) and “support for the Cuban people.”

Formal Educational Travel[3]

OFAC states, “Among other things, this general license authorizes, subject to conditions, faculty, staff, and students at U.S. academic institutions . . . to engage in certain educational activities, including study abroad programs, in Cuba, Cuban scholars to engage in certain educational activities in the United States, and certain activities to facilitate licensed educational programs. U.S. and Cuban universities may engage in academic exchanges and joint non- commercial academic research under the general license. This provision also authorizes persons subject to U.S. jurisdiction to provide standardized testing services and certain internet-based courses to Cuban nationals.

In addition, “educational exchanges, including study abroad programs, sponsored by Cuban or U.S. secondary schools involving secondary school students’ participation in a formal course of study or in a structured educational program offered by a secondary school or other academic institution, and led by a teacher or other secondary school official are authorized. Such exchanges must take place under the auspices of an organization that is a person subject to U.S. jurisdiction, and a person subject to U.S. jurisdiction who is an employee, paid consultant, agent, or other representative of the sponsoring organization (including the leading teacher or secondary school official) must accompany each group traveling to Cuba. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565(a)(2)(vi). This authorization allows for participation of a reasonable number of adult chaperones to accompany the secondary school students to Cuba.”

“People-to-People” Educational Travel[4]

“OFAC is amending the general license for people-to-people educational activities in Cuba to remove the authorization for individual people-to-people educational travel. This general license now authorizes, subject to conditions, persons subject to U.S. jurisdiction to engage in certain educational exchanges in Cuba under the auspices of an organization that is a person subject to U.S. jurisdiction and sponsors such exchanges to promote people-to-people contact. Travelers utilizing this general license must ensure they maintain a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba.”

“The predominant portion of the activities must not be with a prohibited official of the Government of Cuba, as defined in 31 CFR § 515.337, or a prohibited member of the Cuban Communist Party, as defined in 31 CFR § 515.338.”

“A person subject to U.S. jurisdiction who is an employee, paid consultant, agent, or other representative of the sponsoring organization must accompany each people-to-people educational group traveling to Cuba to ensure that each traveler has a full-time schedule of educational exchange activities. Individuals traveling under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact may rely on the entity sponsoring the travel to satisfy his or her recordkeeping obligations with respect to the requirements described above. OFAC is amending this general license to exclude from the authorization direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List.”

Support for the Cuban People” Travel[5]

“This general license authorizes, subject to conditions, travel-related transactions and other transactions that are intended to provide support for the Cuban people, which include activities of recognized human rights organizations; independent organizations designed to promote a rapid, peaceful transition to democracy; and individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba. OFAC is amending this general license to require that each traveler utilizing this authorization engage in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities and that result in meaningful interactions with individuals in Cuba. OFAC is also amending this general license to exclude from the authorization certain direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List. The traveler’s schedule of activities must not include free time or recreation in excess of that consistent with a full-time schedule in Cuba. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.574.”

“ Renting a room in a private Cuban residence (casa particular), eating at privately owned Cuban restaurants (paladares), and shopping at privately owned stores run by self-employed Cubans (cuentapropistas) are examples of authorized activities; however, in order to meet the requirement of a full-time schedule, a traveler must engage in additional authorized Support for the Cuban People activities.”

Ban on Transactions with Certain Cuban Entities[6]

The new regulations also ban U.S. travelers and businesses from transactions with “the large military-run corporations that dominate the Cuban economy. These include GAESA and CIMEX, the holding companies that control most retail business on the island; Gaviota, the largest tourism company; and Habaguanex, the firm that runs Old Havana.” The regulations include a list of forbidden hotels, including Havana’s “Manzana Kempinski, which opened with great fanfare this year as Cuba’s first hotel to meet the international five-star standard.”

This “Cuba Restricted List,” which will be maintained and updated by the State Department, has the following categories of organizations (and the number of entities in each category): Cuban Ministries (2) ; Cuban Holding Companies (including CIMEX,GAESA, Gavotte and Companies Touristic Habituate S.A.) (5) ; Hotels in Havana and Old Havana (27); Hotels in Santiago de Cuba (1); Hotels in Varadero (13); Hotels in Pinar del Rio (2); Hotels in Baracoa (7); Hotels in Cayos de Villa Clara (15); Hotels in Holguín (11); Hotels in Jardine’s del Rey (5); Hotels in Topes de Collates (3); Tourist Agencies (2); Marinas (5); Stores in Old Havana (10);  Entities Directly Serving the Defense and Security Sectors (38); Additional Subentries of CIMEX (16); Additional Subentities of GAESA (13); Additional Subentries of GAVIOTA (4); and Additional Subentries of HABAGUANEX (1).

Conclusion

All of these new regulations are meant to implement President Trump’s National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba, which he signed on June 16, 2017, at an event in Miami Florida.[7]

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[1] U.S. Treasury Dep’t, Treasury, Commerce, and State Implement Changes to the Cuba Sanctions Rules (Nov. 8, 2017); U.S. Treasury Dep’t (Office of Foreign Assets Control), Frequently Asked Questions Related to Cuba (updated Nov. 8, 2017); Reuters, Trump Administration Tightens Sanctions Against Cuba, N.Y. Times (Nov. 8, 2018); Assoc. Press, US Takes Steps to Make It Harder for Americans to Visit Cuba, N.Y. times (Nov. 8, 2017); DeYoung, White House implements new Cuba policy restricting travel and trade, Wash. Post (Nov. 8, 2017).

[2] U.S. Treasury Dep’t (Office of Foreign Assets Control), Frequently Asked Questions Related to Cuba (updated Nov. 8, 2017).

[3] Id.

[4] Id.

[5] Id.

[6] U.S. State Dep’t, List of Restricted Entities and Subentities Associated With Cuba as of November 9, 2017 (Nov. 8, 2017); U.S. State Dep’t, Frequently Asked Questions on the Cuba Restricted List (Nov. 8, 2017).

[7]  White House, Trump’s National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba (June 16, 2017). This Memorandum and the Miami event were discussed in a prior post.

 

Cuban Police Search and Seize Property of Independent Legal Center

On September 23, the Havana office of the Independent Legal Center (“Cubalex”), which investigates and advises on human rights issues, was raided by the Cuban Revolutionary Police and State Security. They seized six computers, several hard drives, USB drives and cell phones and informed the Center’s Director, Laritza Diversent, that she could be accused of “illicit economic activity.” The officers also forced the lawyers to strip naked and squat to verify that there was nothing hidden in their bodies.[1]

The independent lawyers asserted that the officers never showed a warrant and did not meet the requirements for a legal search. Diversent said the raid could have been the government’s response to the organization’s mid-August “Report on the situation of freedom of expression and opinion in Cuba” to [the Special Rapporteur for Freedom of Expression of] the U.N. Human Rights Council.”[2]

A more detailed protest of this raid was posted on the Cubalex website along with a video and photographs of the raid.[3] It said that “the attorney general of Cuba, Beatriz Peña de la O, and Lt. Col. Juan Carlos Delgado Casanova, the instructor of the Criminal Investigation Division and Operations, and policemen “illegally entered the property [and]  broke the padlocks that protected the entrance arguing that . . . Cubalex had [lodged] a complaint against [them] for illegal economic activities.” After the seizure of computers and other equipment, “members of Cubalex were subjected to interrogations and five of them (four women and one man) were forced to strip in order to conduct a body check.” In  addition, two team members were arrested. One was released after 12 hours while the other (lawyer Julio Alfredo Ferrer Tamayo) as of September 29 was still in solitary confinement.

Earlier, in early May, Cubalex published on its website a searing criticism of the Cuban regime.[4] It concluded the following about current conditions on the island:

  • “1- That the Cuban citizens have rights to birth, but not to feed, clothe, recreate, inform us when we grow up.
  • 2- That citizens seniors could survive up to 78 years, but without balanced diet, lack of calories corresponding also not enjoy traveling, have, help, because their pension is less than $ 15 a month.
  • That there is one doctor for every 400 inhabitants, but are virtual statistics because between closed offices, doctors employed abroad and unconditionally Centers for work, attention is getting worse, this situation, that lack of resources and equipment in the provinces, overload the service in hospitals in Havana, with a corresponding impact on quality.
  • 4- The rights of working women (those who suffer most), are also fallacies in Cuba [that] do not fool anyone. [They do] not . . . for their double tasks–work home center or stipends to encourage them to procreate, commercial services in sales of home appliances. The Espín could never make the human life, [any] more fertile to their counterparts to ensure the productive forces tomorrow, given that in every community there exists a subsidiary FMC Center and sexual attention.
  • 5- Of the workers, . . . [their] wages are below the poverty line. The minimum wage in Cuba is the lowest in the world, and [for] those with better contracts the state takes away more than half of their pay, also they are prohibited from striking, [organize] freely, being that Cuba [is] a member of the ILO and a signatory to the Conventions 87 and 98 on this subject.”

This earlier statement also asserted, “great Cuban monopolistic [government-owned] corporations such as CIMEX, Shops TRD, ETECSA, TRANSVAL . . . [violate] all kinds of transparency, democracy and legality regarding functions, powers and duties. . . . In recent months [there are] new cases of related desertions or state of defenselessness of workers mainly because their labor disputes . . . [are not investigated].”

Washington, D.C.’s American University Washington College of Law has started a fundraiser in support of Cubalex. The seizure of the Center’s equipment has put the organization in a “precarious financial situation,” and it”needs funds, not only to replace what has been lost but also to cover operating costs and continue their important work.”[5]

According to a Cuban newspaper, Diario de Cuba, the raid on Cubalex was just one of many recent government harassments and arrests of other dissidents: the Patriotic Union of Cuba (UNPACU), the Independent Trade Union Coalition, the Ladies in White, the Committee for Racial Integration (CIR), the Partido Arco Progresista (PARP) and other unorganized dissidents.[6]

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[1] Cuban police storm independent legal center in Havana, seizing computers, InCubaToday (Sept. 26, 2016); Laritza Diversent: “They want to disqualify me as a lawyer and paralyze the work of Cubalex, Diario de Cuba (Sept. 24, 2016)

[2] Marti, Assail consulting Cubalex, Cuban lawyer who met twice with Obama (Sept. 24, 2016).

[3] Cubalex, Cubalex condemns the recent attack made [on] its facilities and demands an end to government repression (Sept. 29, 2016) The Cubalex lawyer who has been detained is Julio Alfredo Ferrer, who has been a previous subject of government persecution. (Gonzalez, Julio Alfredo Ferrer, the price of being an independent and efficient lawyer, Diario de Cuba (Sept. 26, 2016).)

[4] Cubalex, No rights, no human (May 4, 2016).

[5] The American University raises funds for Cubalex, Diario de Cuba (Oct. 1, 2016).

[6] Editorial, The regime unleashes repression all over the island, Diario de Cuba (Sept. 26, 2016).

United States and Cuba Hold Economic Discussions

On September 12 the United States and Cuba held its Inaugural Economic Dialogue in Washington, D.C.[1]

The goal of the Dialogue is promoting long-term bilateral engagement on a wide range of topics as part of the ongoing normalization process. The delegations discussed trade and investment, labor and employment, renewable energy and energy efficiency, small business, intellectual property rights, economic policy, regulatory and banking matters, and telecommunications and internet access. Both parties agreed to continue the dialogue and, under its auspices, convene working groups to continue technical discussions in the coming months.

The U.S. delegation was co-chaired by Assistant Secretary of State for Economic and Business Affairs Charles Rivkin and U.S. Department of Commerce Deputy Assistant Secretary for the Bureau of Industry and Security Matthew Borman. The Cuban delegation was headed by Ministry of Foreign Trade and Foreign Investment Vice Minister of Commercial Policy Ileana Nunez Mordoche.

In the meantime, a U.S. newspaper, InCubaToday, reports that the Cuban military’s Business Administration Group, GAESA, “has grown dramatically since the declaration of detente between the U.S. and Cuba on Dec. 17, 2014.”[2] GAESA operates through at least the following branches or subsidiaries:

  • Its tourism office, Gaviota, “has 62 hotels with 26,752 rooms across Cuba, pulling in some $700 million a year from more than 40 percent of the tourists who visit Cuba” and “is in the midst of a hotel building spree that outpaces projects under control of nominally civilian agencies like the Ministry of Tourism.”
  • Its Cimex has “retail stores, auto-rental businesses and even a recording studio among its holdings.”
  • Its “retail chain, TRD, has hundreds of shops across Cuba that sell everything from soap to home electronics at prices often several times those in nearby countries.”
  • “The military-run Mariel port west of Havana has seen double-digit growth fueled largely by demand in the tourism sector.”
  • “The armed forces this year took over the bank that does business with foreign companies, assuming control of most of Cuba’s day-to-day international financial transactions.”

According to the InCubaToday article, the Cuban “armed forces are widely seen in Cuba as efficient, fast-moving and relatively unscathed by the low-level payoffs and pilferage that plague so much of the government.” A similar observation was offered by Richard Feinberg of the Brookings Institution: “GAESA is wisely investing in the more international — and more lucrative — segments of the Cuban economy. This gives the military technocrats a strong stake in a more outwardly oriented and internationally competitive Cuba deeply integrated into global markets.”

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[1] Department of State, United States and Cuba Hold Inaugural Economic Dialogue in Washington, D.C. (Sept. 12, 2016); Cuba Foreign Ministry, Celebrate Cuba and the United States first bilateral economic dialogue, Granma (Sept. 12, 2016).

[2] Rodriguez, Amid post-détente tourism boom, Cuban military expands its economic empire, InCubaToday (Sept. 9, 2016).