Additional Reactions to New U.S. Regulations Regarding  Cuba         

As noted in a prior post, on November 8, new U.S. regulations on travel to Cuba and business with Cubans were issued while another post discussed initial reactions thereto.  Already additional reactions have surfaced: impact on what Americans drink in Cuba and the adverse impact on U.S. interests.

Americans Drinks in Cuba[1]

The new Cuba Restricted List bans U.S. businesses and individuals from doing business with the Cuba companies that produce two rum brands—Ron Varadero and Ron Caney—and three soft drinks—Tropicola Cachito, Jupiña and Nahita. That has raised concern that Americans in Cuba would have to be careful about what they drink.

Two days after the issuance of the new regulations, the U.S. Treasury issued a clarification. The List only bans direct financial transactions with the entities on the List. Therefore, says the Treasury, “Americans may still consume those soft drinks and rums” — as long as they don’t buy them directly from the companies on the List. They can buy a Tropicola from a street vendor, for example, and they won’t have to tell a bartender: ‘No Varadero or Caney rum, please.’”

But the Americans may not buy “a rum and coke at . . . one of the 83 hotels that are run by Gaviota or Habaguanex, two tourism brands controlled by the military [and, therefore, on the List]. It’s off limits for not only drinks but also lodging.”

Adverse Impact on U.S. Interests[2]

A Miami Herald journalist, Fabiola Santiago, has identified at least five ways the new regulations harm U.S. interests.

“First, by doing away with the independent people-to-people travel by Americans, . . . [the regulations] are actually helping the Cuban government control what travelers do, whom they meet, and how their perceptions of the country are shaped, thus becoming enablers of the dictatorship. Yet, tours are the mode of travel endorsed by Trump’s policy — and propagandistic historical tours are one of the activities that prove to the Treasury Department that your travel to Cuba is ‘educational.’”

Second, the new regulations put “the trips back in the hands of babysitters . . . [i.e.,] loyal government employees who shuttle around visitors. . . . Trump just expanded their ranks. Jobs!”

Third, the new regulations thereby harm “Cuba’s fledgling entrepreneurial class,” who will lose customers to the state-owned businesses.

Fourth, the new regulations do not adversely affect U.S. cruise ship operators even though their “passengers are a captive audience of government stores filled with Che Guevara paraphernalia and peddlers who offer government services to people disembarking.”

Fifth, the regulations and the Trumpian rhetoric about Cuba are helping the Russians enhance their relationship with Cuba, which includes “aggressively pursuing establishing a military base in Cuba, 90 miles from the USA.”

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[1] Whitefield, Do new rules on Cuba travel mean no rum in cocktails for American travelers? Miami Herald (Nov. 10, 2017). (I was unable to find the Treasury Department clarification on its website.)

[2] Santiago, It’s your Cuba policy, Miami republicans. You can’t blame Obama now, Miami Herald (Nov. 10, 2017)

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.

 

Trump Administration Reportedly Planning Reversal of Some Aspects of U.S. Normalization of Cuba Relations   

Next Friday, June 16, in Miami, President Trump reportedly will announce certain changes in U.S. policies regarding Cuba. These changes will be the result of an overall review of such policies that has been conducted from the first days of this administration. Not surprisingly the review process has revealed conflicts between leaders of various federal departments favoring continuation of normalization, on the one hand, and political opponents of normalization from Florida, on the other hand. Supposedly the political cover for the rumored over turning at least some of the normalization is the U.S. desire to combat human rights problems on the island.[1]

While President Trump reportedly still has overall support from most Republicans in the Senate and House, on June 8, seven Republican Congressmen sent the president a letter urging continuation of normalization with Cuba. They were Representative Tom Emmer (MN), who is the Chair of the House Cuba Working Group, along with Jack Bergman (MI), James Comer (KY), Rick Crawford (AR), Darin LaHood (IL), Roger Marshall (KS), and Ted Poe (TX). The letter made the following points:

  • “Given Cuba’s proximity, it is a natural partner for strategic cooperation on issues of immediate concern. Since the thaw in U.S.-Cuba relations, the [U.S.] and Cuba have signed nine formal bilateral agreements that have improved efforts to combat human trafficking, illicit drug trade, fraud identification, and cybercrime. A rollback of Cuba policy would threaten these efforts and in turn, the safety of the American people.”
  • “More concerning, if we fail to engage politically and economically, our foreign competitors and potential adversaries will rush to fill the vacuum in our own backyard. For instance, Russia is already strengthening its ties with Cuba, supporting infrastructure investment and resuming oil shipments for the first time this century. China is also expanding its footprint in Cuba as well. China is now Cuba’s largest trading partner and heavily invested in providing telecommunications services, among other investments, on the island.”
  • “Reversing course would incentivize Cuba to once again become dependent on countries like Russia and China. Allowing this to happen could have disastrous results for the security of the [U.S.]. Alternatively, we can counter the growing threat of foreign influence in our region by engaging with our island neighbor. We can empower the Cuban people by providing high quality American goods and supporting Cuba’s growing private sector through increased American travel.”
  • “We urge you to prioritize U.S. national security and not return to a policy of isolation that will only serve to embolden adversarial foreign power in the region.”

This letter was personally delivered to the White House on June 8 by Representative Emmer and three of the other signers of the letter. Afterwards Emmer told Reuters, “My hope is that when the administration is done with their review, they don’t let one or two voices overwhelm what is in the interest of the United States.”

For advocates of normalization, like this blog, this policy review reportedly has bad news and good news regarding U.S. diplomatic relations with Cuba, U.S. business with Cuban state or military enterprises, Americans travel to Cuba and U.S. “democracy promotion” programs on the island.

U.S. Diplomatic Relations with Cuba

Good news: severing U.S. diplomatic relations with Cuba seems very unlikely.

Business with Cuban State or Military Enterprises

Bad News. Reuters says the Administration is considering “tightening restrictions on U.S. firms doing business with Cuban state or military enterprises. Such a restriction could have far-reaching consequences for existing deals, such as the one last year by Starwood Hotels and Resorts last year to manage hotels in Cuba — one of which is owned by the military conglomerate Gaviota — and effectively freeze future ones, since the military in Cuba has a hand in virtually every element of the economy.”

Such restrictions would cost U.S. manufacturing and chemical companies through January 2021 (the end of the term for the Trump presidency) an estimated $929 million, adversely affecting 1,359 jobs. In addition, imposing new restrictions on U.S. agricultural and medical exports to Cuba, for the same time period, are estimated to cost the U.S. an additional $3.6 billion and 3,087 jobs.

On the other hand, there also is internal resistance in the Administration to making it more difficult for U.S. businesses and agricultural interests to do business with Cuba. Similar resistance exists in Congress as evident with various pending bills to end the U.S. embargo of the island, in whole or in part, as discussed in an earlier post.

Americans Travel to Cuba[2]

Bad News. There are rumors that the Administration may cut back on the ability of Americans to travel to the island. Again, however, there are pending bills in Congress that would prevent this.

Presumably, however, the Trump Administration would be hesitant to adopt measures that would be harmful to U.S. travel companies. U.S. cruise operators and airlines, for example, are estimated to lose around $712 million in annual revenues under enhanced travel restrictions with resulting risks to U.S. employment in these businesses. Especially at risk are jobs in south Florida involved in the cruise business. Through January 2021 (the period for the current term of the U.S. presidency), these costs are estimated at $3.5 billion, adversely affecting 10, 154 jobs.

These adverse effects were echoed at an early June aviation industry conference by Alexandre de Juniac, the Director General of the International Air Transport Association: “Restricting the network of aviation and access to Cuba would be bad news for aviation. Generally we welcome the extension of access to any country by plane.”

In addition, making it more difficult for Americans to travel to Cuba would adversely affect the relative prosperity of the island’s emerging private enterprise sector, which acts as a counterweight to the state-owned enterprises and as a force for liberalization of various aspects of Cuban society and government. According to Engage Cuba, a U.S. coalition of businesses and others supporting normalization, Cuba’s private business sector currently accounts for 1/3 of Cuba’s workforce, has greatly expanded Cubans’ earning potential, has gained a larger share of the island’s food service industry, is providing almost 1/3 of all rooms available for rent in Cuba, and through tech entrepreneurs is helping to modernize the economy.[3]

Just recently some of the Cuban entrepreneurs have formed the Association of Businessmen to help, advice, train and represent the members of the private sector. The group applied in February for government recognition. The official deadline for a government response has passed without approval or rejection, thereby leaving the group in the peculiar status known in Cuba as “alegal” or a-legal, operating unmolested but vulnerable to a crackdown at any time.

U.S. “Democracy Promotion” Programs in Cuba

Good News. As noted in a prior post, the Administration’s proposed Fiscal 2018 State Department budget eliminates funding for the so-called covert “democracy promotion” programs in Cuba conducted by the U.S. Agency for International Development (USAID).

However, it also has been reported that the president is weighing an increase in funding for USAID programs that promote democracy in Cuba, initiatives that the Castro government has long condemned as covert efforts to overthrow it.

Cuban Human Rights[4]

A White House spokesman, Michael Short, recently observed, “As the President has said, the current Cuba policy is a bad deal. It does not do enough to support human rights in Cuba. We anticipate an announcement in the coming weeks.”

This issue also was highlighted in a recent article by U.S. Ambassador to the U.N., Nikki Haley, which severely criticized the U.N. for electing human rights violators, like Cuba, to membership on the Human Rights Council. Cuba’s government, she said, “strictly controls the media and severely restricts the Cuban people’s access to the Internet. Political prisoners by the thousands sit in Cuban jails.” Therefore, she was proposing that “membership on the Council must be determined through competitive voting to keep the worst human rights abusers from obtaining seats.”

However, at a Council meeting in Geneva on June 6, Ambassador Haley did not mention Cuba in a short statement to emphasize the U.S. “strong conviction to the protection and promotion of human rights” and the importance of the Council’s “resolutions [that] can give hope to people who are fighting for justice, democracy, and human rights, and they can pave the way for accountability.”

Later that same day in Geneva at what she described as a Council “side-event,” she spoke about “Human Rights and Democracy in Venezuela.” As the title of her remarks suggest, she focused on that country’s current abuses of human rights and democracy and complained about Venezuela’s being a [Council] member in good standing . . . [and using] that membership to block any meaningful discussion of its human rights violations. The . . . Council has no excuse. It cannot consider itself the world’s leading human rights organization and continue to ignore the violations and abuses that are occurring in Venezuela.” Although Cuba is a strong ally of Venezuela and frequently dismisses the latter’s critics, Ambassador Haley made not mention of Cuba in these remarks.

Cuba, however, returned to her remarks later the same day, June 6, at Geneva’s

Graduate Institute, where her focus was the Council’s failure “to act properly – when it fails to act at all – it undermines its own credibility and the cause of human rights. It leaves the most vulnerable to suffer and die. It fuels the cynical belief that countries cannot put aside self-interest and cooperate on behalf of human dignity. It re-enforces our growing suspicion that the Human Rights Council is not a good investment of our time, money, and national prestige.”[5]

One example of the Council’s failure, she said, was Cuba, where “the government continues to arrest and detain critics and human rights advocates. The government strictly controls the media and severely restricts the Cuban people’s access to the Internet. Political prisoners by the thousands continue to sit in Cuban jails. Yet Cuba has never been condemned by the . . . Council. It, too, is a member country.”

In addition, according to Haley, Cuba uses its membership in the Council as proof that it is a supporter of human rights, instead of a violator. The Cuban deputy foreign minister called Cuba’s 2016 re-election to the Human Rights Council, “irrefutable evidence of Cuba’s historic prestige in the promotion and protection of all human rights for Cubans.

Whatever the merits of the U.S. allegations about Cuban human rights, reversing any aspect of the current status of normalization, in this blogger’s opinion, will not cause Cuba to change its own policies and practices. Instead, any reversal may well harden Cuban resistance to change and provide opportunities for other countries, like Russia and China, to enhance their relations with Cuba. Finally such reversals are hypocritical in light of the recent U.S. embrace of Saudi Arabia with a poor human rights record.

Conclusion

A New York Times editorial summed up this controversy by criticizing the rumored return to the “hard-line sanctions-based approach [that] was in place for more than 50 years after the 1959 revolution and never produced what anti-Castro activists hoped would be the result, the ouster of Cuba’s Communist government in favor of democracy. Isolating Cuba has become increasingly indefensible.”[6]

In contrast, said the editorial, “Mr. Obama’s opening to Havana has enabled the freer flow of people, goods and information between the two countries, even as significant differences remain over human rights. It has produced bilateral agreements on health care cooperation, joint planning to mitigate oil spills, coordination on counternarcotics efforts and intelligence-sharing. In April, Google’s servers went live in Cuba and thus it became the first foreign internet company to host content in one of the most unplugged nations on earth. Mr. Obama’s approach also encouraged Latin American countries to be more receptive to the United States as a partner in regional problem-solving.”

All U.S. supporters of normalization need to express their opinions to the White House, the U.S. State Department and members of Congress.

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[1] Rumors of Upcoming Trump Administration Rollback of U.S. Normalization of Relations with Cuba, dwkcommentaries.com (May 25, 2017); Reuters, Trump Administration Nearing Completion of Cuba Policy Review: Sources, N.Y. Times (May 30, 2017); Davis, Trump Considers Rolling Back Obama’s Opening With Cuba, N.Y. Times (May 31, 2017); Mazzei, Gomez, Kumar & Ordońez, How Cuba policy, and its inevitable drama, ensnared Trump’s White House, Miami Herald (June 1, 2017); Trump Reversing Cuba Policy Would Cost $6.6 Billion, Over 12k Jobs, Engage Cuba (June 1, 2017); Reuters, Trump Expected to Unveil New Cuba Policy as Early as Next Friday: Sources, N.Y. Times (June 9, 2017); Mazzei, Trump to reveal Cuba policy in Miami Next Friday, Miami Herald (June 9, 2017); Reuters, Some Republican Lawmakers Urge Trump Not to Reverse Cuba Opening, N.Y. Times (June 9, 2017); Letter, Representative Tom Emmer and six other Republican Congressmen to President Trump (June 8, 2017);Werner, Many in GOP unshaken by Comey’s testimony against Trump, StarTribune (June 10, 2017).

[2] Reuters, U.S. Travel Sector to Suffer if Trump Reverses Cuba Detente: Report, N.Y. Times (June 1, 2017); Glusac, How a Shift in U.S. Policy could Affect Travel to Cuba, N.Y. Times (June 1, 2017); Assoc. Press, Cuban Entrepreneurs Start first Private Business Group, N.Y. Times (June 1, 2017); Reuters, U.S.-Cuba Policy Looms at Aviation Industry Conference, N.Y. Times (June 7, 2017).

[3] 5 Facts About Cuba’s Private Sector, EngageCUBA (Feb. 24, 2017).

[4] Assoc. Press, Trump Faces Tough Task Unwinding Obama Cuba Policy, N.Y. Times (June 2, 2017); Haley, The U.N. Human Rights Council whitewashes brutality, Wash. Post (June 2, 2017); Haley, Remarks at a Human Rights Council Side Event: “Human Rights and Democracy in Venezuela (June 6, 2017); Haley, Remarks at the U.N. Human Rights Council (June 6, 2017); Cumming-Bruce, U.S. Stops short of Leaving U.N. Human Rights Council, N.Y. Times (June 6, 2017).

[5] Haley, Remarks at the Graduate Institute of Geneva on “A Place for Conscience: the Future of the United States in the Human Rights Council,” (June 6, 2017).

[6] Editorial, Undoing All the Good Work on Cuba, N.Y. Times (June 5, 2017).

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).