State Department’s New U.S.-Cuba Relations Fact Sheet

On November 22, the State Department published its new U.S.-Cuba “Bilateral Relations Fact Sheet.”[1] Here is what it said.

“U.S.-CUBA RELATIONS “

“The United States seeks a stable, prosperous, and free country for the Cuban people. The United States pursues limited engagement with Cuba that advances our national interests and empowers the Cuban people while restricting economic practices that disproportionately benefit the Cuban government or its military, intelligence, or security agencies at the expense of the Cuban people. The U.S. government seeks to promote human rights, religious freedom, and democracy, encourages the development of telecommunications and the internet in Cuba, supports the growth of Cuba’s nascent private sector and civil society, and engages in areas that advance the interests of the United States and the Cuban people. The United States is committed to supporting safe, orderly, and legal migration from Cuba through the effective implementation of the U.S.-Cuba Migration Accords. Due to injuries sustained by our diplomatic community in Havana, visa processing for most Cuban applicants is presently taking place in third countries.”

“Bilateral Economic Relations”

“Although economic sanctions remain in place, the United States is the largest provider of food and agricultural products to Cuba, with exports of those goods valued at $220.5 million in 2018.  The United States is also a significant supplier of humanitarian goods to Cuba, including medicines and medical products, with total value of all exports to Cuba of $275.9 million in 2018. Remittances from the United States, estimated at $3.5 billion for 2017, play an important role in Cuba’s state-controlled economy.”

“Travel to Cuba” 

“Travel to Cuba for tourist activities remains prohibited, and U.S. federal regulations restrict travel to Cuba to licensed travelers engaged in certain specified activities. Anyone physically present in the United States, regardless of citizenship and nationality, must comply with these regulations.  Individuals seeking to travel to Cuba are not required to obtain licenses from the Treasury Department’s Office of Foreign Assets Control (OFAC) if their travel is authorized under a general license.  For travel not covered by a general license, travelers must seek OFAC authorization in the form of a specific license. Further information on the licensing process or the categories of authorized travel can be found on OFAC’s website.  Those contemplating travel to Cuba should also consult the consular information page about the country.”

“Transactions Involving Cuba”

“Transactions by persons subject to U.S. jurisdiction involving Cuba are generally prohibited unless specifically authorized by OFAC. For more information on transactions, please consult OFAC’s website.”

“Certain exports to Cuba must be licensed by the Department of Commerce’s Bureau of Industry and Security (BIS). Further information on exports to Cuba can be found on the BIS website. Most imports from Cuba and other Cuban-origin goods (e.g., merchandise purchased or otherwise acquired in Cuba or of Cuban origin acquired in a third country) are prohibited, although importation of Cuban-origin information and informational materials (for example, publications, films, posters, photographs, tapes, compact discs, and certain artwork) are exempt from the prohibition.  Exports of certain items to Cuba that are intended to improve the living conditions, support independent economic activity, strengthen civil society, improve the free flow of information and facilitate lawful travel and commerce are generally authorized without a license (see here).  Moreover, certain goods and services produced by independent Cuban entrepreneurs are eligible for importation into the United States – for more information, see the State Department’s Section 515.582 List.  Further information on imports from Cuba can be found on the OFAC website.”

“Cuba Restricted List” 

“Direct financial transactions with certain entities and sub-entities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services are also generally prohibited.  For more information, see the State Department’s Cuba Restricted List; Treasury’s regulations at 31 Code of Federal Regulations (CFR) part 515.209, here; and Commerce’s regulations at 15 CFR parts 730-774, here.”

“Cuba’s Membership in International Organizations”

“Cuba and the United States belong to a number of the same international organizations, including the United Nations and the World Trade Organization, but usually take opposing positions on international issues.  Cuba was suspended from participation in the Organization of American States in 1962.  Its suspension was lifted in 2009; however, it has not engaged in the dialogue required for further participation in OAS processes.  At the invitation of host governments, Cuba attended the Summit of the Americas in 2015 and 2018.”

“Bilateral Representation”

“Principal U.S. embassy officials are listed in the Department’s Key Officers List.”

“Cuba is represented in the United States by the Cuban Embassy in Washington, DC.”

“More information about Cuba is available from the Department of State and other sources, some of which are listed here:

CIA World Factbook Cuba Page
U.S. Embassy
USAID Cuba Page
History of U.S. Relations With Cuba
Office of the U.S. Trade Representative Countries Page
U.S. Census Bureau Foreign Trade Statistics
Office of Foreign Assets Control Sanctions Page
Bureau of Industry and Security Cuba
Travel Information

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[1] State Dep’t, U.S.Relations with Cuba: Bilateral Relations Fact Sheet (Nov. 22, 2019).

 

Decline of U.S. Visitors to Cuba   

In June 2019, the U.S. instituted a ban on cruise ships from a U.S. port going to Cuba. It had an immediate impact. That same month the number of U.S. visitors was down 20% from the prior June. And the similar figures for July 2019 were down 23.6%, and the Cuban government reduced its forecast of foreign visitors for the entire year to 4.3 million from the original forecast of more than 5 million; the new forecast is 8.5% drop from the 4.7 million visitors in 2018.[1]

This decline is impacting the state tourism sector as well as the many restaurants, bed-and-breakfasts and taxi drivers in the fledgling Cuban private sector that the U.S. says it wants to support. Some foreign companies in Cuba’s tourism sector also have been adversely affected by the U.S. recently permitting lawsuits by U.S. nationals claiming expropriation of their Cuban properties.

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[1] Reuters, Tourism to Cuba Plunges After Trump’s Tightening of Travel Ban: Data, N.Y. Times (Aug. 21, 2019).

 

Cuba’s Suffering from Continued U.S. Hostility  

After the Obama Administration had taken steps to improve U.S. relations with Cuba, the Trump Administration has gone in the opposite direction, as discussed in many earlier posts.[1]

U.S. Actions and Policies Against Cuba

These negative actions and policies include the following: continuation of U.S. embargo of Cuba; elimination of one of the “general licenses” for U.S. nationals to travel to Cuba; cancelation of right of U.S. cruise ships to make stops on the island; reducing amount of money U.S. nationals legally may remit to relatives and friends in Cuba; allowing litigation in U.S. federal courts over alleged trafficking in U.S.-owned property on the island under the Halms-Burton Act; additions to the U.S. “Cuba Restricted List” of entities and sub entities with which U.S. nationals may not transact business; U.S. negative reports on Cuban human rights, religious freedom and human trafficking; unilateral U.S. report about increasing Cuban Internet access; U.S. consideration of re-designating Cuba as a State Sponsor of Terrorism and of re-instituting U.S. parole for Cuban medical professionals; additional U.S. sanctions against Cuba for its alleged support of Venezuela.[2]

While there are recent bilateral bills in Congress to end the embargo and enhance U.S. nationals’ rights to travel to Cuba, they have not received, and are unlikely to receive, any consideration in the current Senate and perhaps the House of Representatives.[3]

Negative Impact on Cuba of U.S. Actions and Policies[4]

The negative impact, especially of the recent U.S. limiting the ability of Americans to travel to the island, has especially harmed Cuba’s emerging private sector. For example, a website and app used to make reservations, rate restaurants, and pay for meals at most restaurants throughout Cuba (AlaMesa) had to reduce its staff from 20 to 12 in response to a 30 to 40% decline in reservations.

But “Cuba’s economic woes go beyond U.S. policy. The island, with one of the world’s last communist governments, has been caught in a perfect storm. Its economy has been stagnant for years, averaging only about 1 percent annual growth. Its centrally-planned economy imports over two-thirds of its food. Its ally, Venezuela, has been in political and economic turmoil, causing an overall decline in oil shipments from the South American country. The island’s medical exchange program, a major source of revenue, also took a blow. Last November, Cuba recalled 8,517 medical professionals from Brazil in response to President Jair Bolsonaro’s tough stance against Cuba.”

The U.S. allowance of litigation over alleged trafficking in Cuba property owned by Americans is seen as discouraging foreign investment today.

Recently “there have been shortages in basic goods such as eggs, cooking oil and chicken.”

Cuban Government’s Response to Rough Economic Conditions[5]

At the July 13 closing  session of the National Assembly, President Diaz-Canel reported that a series of emergency measures announced that month aimed to stimulate domestic production and he hoped for slight growth this year. “Even in the eye of the hurricane of adversity that the enemy conceived to suffocate us, the Cuban economy can grow slightly, thanks to the fact that we have the potential to resist and continue advancing in our development.” He added that the economy grew 2.2% in 2018, compared with an earlier estimate of 1.2%, and that stronger base would make it harder to reach this year’s goal of 1.5% growth.

The President also said there will be price controls and policies aimed at stimulating local production to meet increased consumer demand without sparking inflation.

The next week of July 15, Cuba experienced power outages and fuel shortages that prompted citizen concern about the possible emergence of a “Special Period II” of harsh economic shortages. Cuba Energy Commissioner Raul Garcia sought to reassure citizens that the power outages were due to breakdowns in power plants, not oil shortages, and that those outages would be fixed by the end of the week.

These measures came at a time when falling Cuban imports have caused scattered shortages of food, hygiene and other products across the country. Diaz-Canel admitted the country was suffering from a liquidity crisis and bureaucracy and was short on fuel. He called on officials and the public to join together in the national emergency and each do their part to move the country forward. “Putting aside vanities and selfishness, practicing honesty, industriousness and decency, we will also be contributing to GDP,” he said.

On August 2, the Cuban government for the first time published details of its foreign exchange earnings from services such as telecommunications, hotels, health and education assistance, in an apparent concession to creditors. The biggest export earner in 2018 was health services at $6.4 billion, followed by “support services” at $1.3 billion while hotel and related services garnered $970 million, followed by telecommunications at $722 million and transportation and support services, which includes everything from airlines to docking fees, at around $600 million. Total exports were $18.6 billion in 2013 and $14.5 billion last year, down from $18.6 billion in 2013. Imports fell from $15.6 billion to $12.6 billion.

All of these developments have resulted in an increase in the country’s foreign debt from $11.9 billion in 2013 to $18.2 billion in 2016, an increase of almost 53% percent.

Cuba Introduces Price Controls[6]

In early July  President Miguel Diaz-Canel announced that the government had adopted a series of emergency measures to fight economic stagnation and dwindling foreign currency earnings that began in 2015 as the economy of key ally Venezuela imploded, and that have been aggravated by a series of new U.S. sanctions. The measures included increased wages and pensions for more than 2 million state employees, amounting to more than 8 billion pesos annually, or close to 13 percent of this year’s budget. The President also said there will be price controls and policies aimed at stimulating local production to meet increased consumer demand without sparking inflation.

The other shoe dropped on July 30, when the President announced a ban on all retail and wholesale price increases except for products imported and distributed by the state where already-set profit margins cannot be increased. In recent weeks, regional authorities have slapped price controls on taxi fares, beverages and haircuts, among other items. The price controls differ from province to province.

These price controls are especially difficult for the private sector.

For example, on August 15, retail prices in Havana were set for some basic foods such as beans, pork, lemons, bananas, onions and cabbage. The retail price of pork, a staple of the Cuban diet, was set at 45 pesos a pound, although market sellers said it previously went for some 65 pesos a pound. And farmers still charge 28 pesos a pound for pork. Another example is lemons, which used to sell for 30 pesos a pound,  now has a new maximum price of 10 to 15 pesos, which is the same price that farmers charge for the lemons.

On August 12, Cuba  Minister of Finance and Prices, Meisi Bolaños, stated, “We are going to be rigorous with those who try, by means of devices, to evade and violate the new measures approved to avoid the increase in prices. . . . We cannot allow that measures like these that the country approves to boost the  economy and generate greater capacity to buy in the population to be spoiled by a few unscrupulous that cause Cubans to lose confidence in state control.” The Minister also denied that the purpose of the measures is “to stop the development of non-state forms.”

Economists assert that such price controls are ineffective. Andrew Zimbalist, a Cuba expert at U.S.’s Smith College, said, “Such measures are usually okay for short periods of time, but if they stay in place they begin to create serious distortions in the economy.” A similar opinion was expressed by Pavel Vidal, a former Cuban central bank economist who teaches at Colombia’s Universidad Javeriana Cali. He said, “The more they control prices in formal markets, the more inflation and instability there will be in informal markets and the less incentive the productive sector has.”

Experts also have criticized Cuba’s verbose regulations of the private sector that were introduced at the end of 2018. They concluded that these “regulations approved by the Council of Ministers were written in reverse: excessive documents (29) and processes that represent obstacles in the application process for licenses, cracking down on violations, excessive inspections, the definition of twenty-two oversight agencies for the private sector (with specific departments to deal with them), the new requirement of a bank account with two months’ worth of taxes as credit in this account, needing to pay payroll taxes from the very first employee, etc.”

Conclusion

 Obviously Cuba is in a very perilous situation that the U.S. has helped to create. All who support normalization of the two countries relations need to voice their opinions to their senators and representatives and to Trump Administration officials.

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[1] See List of Posts to dwkcommentaries—Topical: CUBA.

[2] E.g., Sabatinni, Trump Doubles Down on Failed Cuba Policy, N.Y. Times (July 24, 2019); U.S. Updates Cuba Restricted List (July 26, 2019); U.S. State Dep’t, State Department Updates the Cuba Restricted List (July 26, 2019); U.S. State Dep’t, List of Restricted Entities and Subentities Associated With Cuba as of July 26, 2019 (July 26, 2019); New U.S. Government Hostility Towards Cuba’s Medical Mission Program, dwkcommentareis.com (Aug. 14, 2019); “U.S. (Trump) and Cuba, 2016-2017,”  “U.S. (Trump) and Cuba (2018),” “U.S. (Trump) and Cuba, 2019,” “U.S. Parole Program for Cuban Medical Professionals, 2019,” “Cuba, Venezuela and U.S., 2019,”  “Cuba Restricted List, 2019,”  “ Helms-Burton Act Title III Authorization, 2019” and U.S. Embargo of Cuba, 2019” sections  in List of Posts to dwkcommentaries—Topical: Cuba.

[3] See these posts to dwkcommentaries.com: New Bill To End U.S. Embargo of Cuba (Feb. 9, 2019); Senator Leahy’s Senate Floor Speech To End Embargo of Cuba (Feb. 18, 2019); Congressional Bipartisan Bills for Reversal of U.S. Policies Regarding Cuba (Aug. 13, 2019).

[4] Sesin, In Cuba, entrepreneurs see a steep decline with Trump policies, NBC News (July 6, 2019); Cuba Says Fuel Shortage, Blackouts Are Temporary, Being Fixed, Reuters (July 19, 2019); Frank, Cuba hopes for slight growth as Trump pummels Caribbean island, Reuters (July 13, 2019).

[5]  Kuritzkes, The End of Cuba’s Entrepreneurship Boom, Foreign Policy (July 15, 2019); The decline in tourism from the United States to Cuba already feels strongly on island, France23 (July 18, 2019);Taylor, Cubans Talk About Impact of Trump Administration Travel Policy Changes, Travel Pulse (July 22, 2019); Myers, A Visit To Cuba Reveals Economic Pain of Trump’s Travel Ban, Travel Weekly (July 29, 2019); Eaton, Cuba Trying to Attract Tourists and Investors Even as U.S. Clamps Down, Tampa Bay Times (July 30, 2019); Reuters, Cuba Reveals Health, Hotel, Other Service Earnings, N.Y. Times (Aug. 2, 2019); Whitefield, Cuba Feels the Pinch of the Trump administration’s travel restrictions, L.A. Times (Aug. 11, 2019); Torres, Cuba’s foreign debt is on the rise despite big profits from medical services abroad, Miami Herald (Aug. 12, 2019);Myers, Taking the pulse of demand for Cuba travel, Travel Weekly (Aug. 13, 2019); The Cuban economy is increasingly indebted, official figures reveal, Diario de Cuba (Aug. 15, 2019).

[6] The Government of Havana sets maximum prices for sale of products, Cubadebate (July 28, 2019); Frank, Cuba, battling economic crisis, imposes sweeping price controls, Reuters (July 30, 2019); Vela, Cuba’s Price Control Is Short-Term Fix To Production Problems, Economist Says, ABC10 News  (July 30, 2019); Fuentes Puebla & Romeo Matos, Price control, a necessary complement to the salary increase in the budgeted sector, Cubadebate (Aug. 1, 2019); The Cuban Government warns that it will be relentless in the face of ‘artifice’ to avoid its price cap, Diario de Cuba (Aug. 13, 2019); Reuters, Cuban Government Imposes Price Controls as It Seeks to Keep Lid on Inflation, N.Y. Times (Aug. 15, 2019); Fernandez, It’s a Long and Winding Road for Cuba’s Private Sector, Havana Times (Aug. 15, 2019).

 

 

Congressional Bipartisan Bills for Reversal of U.S. Policies Regarding Cuba 

This year two bipartisan congressional bills have been filed to reverse two U.S. policies regarding Cuba. The most recent one would improve U.S. travel to the island while the other would abolish the U.S. embargo of Cuba.

Improve U.S. Travel to Cuba[1]

 On July 23, 2019, H.R. 3960 (Freedom for Americans To Travel to Cuba) was introduced in the House of Representatives by Congressman James McGovern (Dem., MA) and referred to the House Committee on Foreign Relations and the next day to its Subcommittee on Western Hemisphere Affairs. It had 15 Democratic cosponsors–Kathy Castor (FL), Barbara Lee (CA), Jose Serrano (NY), Donald Beyer (VA), Jarred Huffman ( (CA), Raul Grijalva (AZ), Peter Welch (VT), Karen Bass (CA), Eleanor Norton (D.C.), Ro Khanna (CA), Maxine Waters (CA), Janice Schakowsky (Il), James Ranking (MD), Eliot Engel (NY) and Donald Payne (NJ). They were joined by five Republicans so-sponsors–Tom Emmer (MN), Rick Crawford (AR), Darin LaHood (IL), Guy Reschenthaler (PA) and Denver Riggleman (VA).

 Representative McGovern said, “Every single American should have the freedom to travel as they see fit. Yet the travel ban deliberately punishes the American people – our very best ambassadors – and prevents them from engaging directly with the Cuban people. It is a Cold-War relic that serves only to isolate the United States from our allies and partners in the region, while strengthening the control of ideological hardliners in both countries.  It’s time for us to listen to the majority of Americans, Cuban-Americans, and Cubans who do not support the travel ban, and get rid of it once and for all.”

On July 29, Senator Patrick Leahy (Dem., VT) and 46 cosponsors (40 Democrats, 4 Republicans and 2 Independents) introduced a companion bill in the Senate “so Americans can travel to Cuba in the same way that they can travel to every other country in the world except North Korea. . . .  It is indefensible that the federal government restricts American citizens and legal residents from traveling to a tiny country 90 miles away that poses no threat to us.  At a time when U.S. airlines are flying to Cuba, does anyone here honestly think that preventing Americans from traveling there is an appropriate role of the federal government?  Why only Cuba?  Why not Venezuela?  Or Russia?  Or Iran, or anywhere else?  It is a vindictive, discriminatory, self-defeating vestige of a time long passed.”

End U.S. Embargo of Cuba[2]

In February of this year U.S. Senator Amy Klobuchar (Dem., MN) with co-sponsors Patrick Leahy (Dem., VT) and Michael Enzi (Rep., WY) introduced the Freedom To Export to Cuba Act of 2019 (S.428). Subsequent co-sponsors are Senators Tina Smith (Dem., MN) and Elizabeth Warren (Dem., MA). The bill was referred to the Senate Banking, Housing and Urban Affairs Committee.

Conclusion

Given the split party-control of the two houses of Congress, not much is expected for any progress on these bills in this Session of Congress.

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[1] H.R, 3960, Freedom for Americans To Travel to Cuba Act of 2019; Rep. McGovern, McGovern Introduces Bipartisan Legislation to End Cuba Travel Ban (July 25, 2019); S.2303, Freedom for Americans to Travel to Cuba Act of 2019; Sen. Leahy, Statement of Senator Patrick Leahy On the Freedom of Americans to Travel to Cuba Act of 2019 (July 29, 2019); Center for Democracy in Americas, CDA Applauds Reintroduction of the Freedom for Americans to Travel to Cuba Act of 2019 (July 25, 2019).

[2]  S.428—Freedom to Export to Cuba Act of 2019 (Feb. 7, 2019); New Bill To End U.S. Embargo, dwkcommentaries.com (Feb. 9, 2019); Senator Leahy’s Senate Floor Speech To End Embargo of Cuba, dwkcommentaries.com (Feb. 18, 2019).

 

U.S. Reactions to New U.S. Anti-Cuba Policies 

U.S. objections to the new U.S. policies regarding Cuba (and Venezuela and Nicaragua) have been registered by a Bloomberg News editorial; by the U.S. Chamber of Commerce; by Representative Eliot Engel, the Chair of the House Committee on Foreign Affairs and other representatives and by groups and individuals outside the government. They will be discussed first.[1]

Then we will look at support for the policies from three Cuban-American legislators (Sen. Marco Rubio (Rep., FL), Sen. Robert Menendez (Dem., NJ) and Rep.Mario Diaz-Balart (Rep., FL); from Sen. Rick Scott (Rep., FL); and from Walter Russell Mead of the Wall Street Journal.

Given the legitimate current U.S.  preoccupation with the Mueller Report and its implications, there have been no editorials (to date) on these Cuba policy changes in other leading newspapers (New York Times, Washington Post and Wall Street Journal) or by the sponsors of the pending Senate bill to end the U.S. embargo of Cuba (Senators Amy Klobuchar (Dem., MN), Patrick Leahy (Dem., VT) and Mike Enzi (Rep., WY)) or by the Chair of the House ‘s Cuba Working Group Steering Committee (Tom Emmer (Rep., MN).

Critics of the New Policies[2]

  1. The Bloomberg Editorial.

Although it was worthy for the U.S. to seek to persuade Cuba to stop helping Venezuela’s Maduro, Bloomberg says the new policies are “the wrong way to get results.”

In fact, says Bloomberg, the new U.S. policies and actions will “inflict real damage on Cuba,” and  “that’s unlikely to make the country’s rulers budge. Instead, opening the [U.S.] floodgates for litigation against Canadian and European companies doing business in Cuba will fracture the international front against Maduro — not to mention swamping U.S. courts with troublesome lawsuits.” In fact, such litigation is “more an attack on America’s friends than on Cuba or Venezuela.”

Moreover, according to Bloomberg, “Aside from dividing what could have been a U.S.-led coalition [against Venezuela’s Maduro], the new escalation will play into the hands of aging hardliners, encouraging Cuba to seek help from Russia and China, and weaken potent internal forces for change.”

  1. Engage Cuba

Engage Cuba, the leading bipartisan coalition of businesses and others who support U.S.-Cuba normalization, issued the following critical comments:

(Statement by James Williams, President of Engage Cuba)

  • “President Trump is doing this for one reason, and one reason only: to appease fringe hardliners in South Florida ahead of the 2020 election. The only way to get property claimants what they deserve is through diplomatic negotiations, which President Trump just threw off the table. . . This lets the Cuban government off the hook and shifts the burden to American, European and Canadian companies. American companies and our closest allies will now be paying instead of the Cuban government.”
  • “The hypocrisy of the Trump administration cozying up to the most brutal dictatorships in the world in Saudi Arabia, Russia and North Korea, but claiming to care about democracy and human rights in Cuba, is like living in a parallel universe. President Trump himself tried for years to open up a Trump Hotel and golf resort in Cuba.”
  • “U.S. travel and remittances are the lifeblood of the private sector entrepreneurs in Cuba. These restrictions are a cruel betrayal and a knife in the back of Cuban civil society and the prospects for a growing independent private sector in Cuba. The Cuban people are already struggling under tremendous difficulties, and these actions only make it worse. We need a policy that focuses on empowering the Cuban people and advancing American interests, not continuing a 60-year failed policy that only serves fringe domestic politics in South Florida.”

(Property Claim Lawsuits)

  • “The Trump administration has chosen to break precedent with every administration since President Clinton by failing to waive Titles III and IV of the the LIBERTAD Act, commonly referred to as the Helms-Burton Act after its sponsors. When Title III takes effect on May 2, American companies and foreign firms will be subject to lawsuits in U.S. courts over the use of properties that were nationalized by the Cuban government following the 1959 revolution. Title IV will also take effect, requiring the denial of U.S. visas for anyone “trafficking” in confiscated Cuban properties, as well as their relatives.”
  • “In opposition to international law, Title III affords claimant rights to Cuban Americans who were Cuban citizens at the time their property was confiscated. Currently, there are 5,913 certified claims of seized American property in Cuba, but the State Department has estimated there could be a flood of up to 200,000 claims with the full activation of Title III.”
  • “Due to Title III’s potential to jeopardize U.S. trade interests, every U.S. administration since the law’s enactment in 1996 has suspended its implementation, typically for a period of six months. Today’s announcement marks the first time Title III has been fully activated and U.S. firms will be subject to lawsuits.”
  • “Companies from the biggest U.S. trade partners, including the European Union, Canada, and Mexico, will also be subject to property claim lawsuits under Title III, though most countries will protect their companies from having to pay damages to U.S. property claimants. The EU and Canada have threatened retaliation in the World Trade Organization.”
  • “Meanwhile, U.S. adversaries like Russia and China are unlikely to comply with Title III lawsuits and will instead align themselves with Cuba against this extraterritorial U.S. policy. By maintaining a trade embargo, the U.S. has already left a vacuum in Cuba for adversarial influence. As Cuba continues to be isolated by the Trump administration, it will increasingly turn to Russia and China, who offer them favorable credit terms and invest in high-profile projects.”

(New Restrictions on Remittances,Travel, and Financial Transactions)

  • “Bolton also announced there will be new limits on non-family travel to Cuba and U.S. remittances to the island, a heavy blow to Cuba’s nascent private sector (roughly one-third of the workforce) which greatly depends on remittances and U.S. travelers to keep their small businesses alive. Remittances will now be capped at $1,000 per quarter, a dramatic departure from the $4 billion that flowed to the Cuban people after the Obama administration lifted all limits on remittances in 2015.”
  • “Five Cuban government-run businesses will be added to the list of entities with which direct financial transactions are barred. New Department of Treasury regulations will prohibit U.S. banks from processing “U-Turn transactions,” Cuba-related funds transfers from a bank outside the U.S. that pass through U.S. financial institutions before being transferred to banks abroad where neither the originator nor the beneficiary is a U.S. national.”
  1. U.S. Chamber of Commerce

“Six decades of trying to isolate Cuba has failed to bring change to the island, and today’s move only doubles down on this strategy. The U.S. Chamber’s support for a new approach to Cuba is founded in our profound conviction that more engagement with the Cuban people — on the basis of free enterprise and free markets — is essential to democratic change and improvements in the Cuban people’s lives.”

“We strongly support U.S. government efforts to protect the property rights of U.S. citizens abroad, but full implementation of Title III is unlikely to achieve those aims and is instead more likely to result in a protracted legal and diplomatic morass that ensnares U.S. courts, companies and partners. . . . Furthermore, it is difficult to see how this action squares with the administration’s earlier commitment to hold harmless U.S. companies legally authorized and previously encouraged to do business in Cuba.”

“Many American companies will now be subjected to countersuits in Europe, Canada, Latin America, and elsewhere. Today’s announcement threatens to disrupt our trade ties to these countries, which are among our closest allies and best customers. Instead, we should be working with them to make the case for democratic change in Cuba.”

  1. Center for Democracy in the Americas

Another U.S. group that supports U.S.-Cuba normalization, the Center for Democracy in the Americas, said through its executive director (and former Obama National Security Advisor) Emily Mendrala, “Capping remittances is mean-spirited, and can only be understood as the U.S. government’s attempt to create economic hardship among the Cuban people. Ambassador Bolton’s speech conflated Cuba with Venezuela, and he announced a policy approach that does the same. The two countries are different, living through very different moments, and to exploit events in Venezuela to settle Cold War scores with Cuba is a distraction from real needs in Venezuela.”

  1. Cuba Educational Travel

Collin Laverty, president of Cuba Educational Travel, added other critical comments. First, “the measures on remittances and travel threaten the economic survival of Cuban families and the viability of thousands of independent small businesses allowed to operate since 2010 under reforms implemented by former President Raúl Castro.” Second, “The only winners here are a handful of members of Congress and those stuck in the past that support them. The losers are millions of Cubans on and off the island and the overwhelming majority of Americans that support engagement with Cuba.”

  1. Current and Former Federal Government Officials

Representative Eliot Engel (Dem., NY), the Chair of the House Committee on Foreign Affairs, stated, ““President Trump’s rejection of over two decades of bipartisan consensus on a key piece of U.S. policy toward Cuba will further isolate the United States from our Latin American and European allies and diminish our ability to promote democracy in Cuba and Venezuela. Sadly, this decision will do nothing to resolve U.S. property claims in Cuba—an important goal toward which we must continue to strive.”

Similar statements were issued by Representatives Kathy Castor (Dem., FL), James McGovern (Dem., MA), Barbara Lee (Dem., CA) and Donna Shalala (Dem., FL).

Benjamin Rhodes, a former Obama adviser who helped negotiate the December 2014 U.S.-Cuba normalization agreement, said, “Restricting remittances that can be sent to Cubans will directly hurt the Cuban people. This is a shameful and mean-spirited policy.”

Mark Feierstein, a former National Security Council’s Director for the Western Hemisphere, tweeted: “As Bolton delivers speech in Miami today on Cuba, it’s useful to keep in mind that according to public opinion polls, most Cuban-Americans approve the measures taken by the Obama Administration to support the Cuban people. The [National Security Council]. . . is out of step with majority opinion in Miami.” In another tweet  he stated, “What we’re leading the Cuban people toward is a darker day, where there will be less economic opportunity.”

  1. Other Americans

Tim Fernholz, who covers space, the economy and geopolitics for Quartz, has addressed the new policies’ adverse effects on the emrging Cuban private sector. He says, “The Trump administration is setting out to crush free markets in Cuba.” These policies “will damage Cuba’s nascent private sector far more than a ruling regime that has out-lasted six decades of US embargo. Trump is pulling the rug out from Cuba’s cuentrapropistas—literally, self-employed—eliminating their sources of capital and revenue and reducing their influence during the all-important transition to a post-Castro Cuban government. . . . US policy toward Cuba, meanwhile, is defined by a near-theological belief that isolating the Cuban people will lead them to abandon national self-determination.”

Supporters of the New Policies[3]

The two Cuban-American Senators and one of the Cuban-American U.S. Representatives, as expected, endorsed at least some of the new U.S. policies. So did Senator Rick Scott. So did Walter Russell Mead, who is the James Clarke Chace Professor of Foreign Affairs and the Humanities at Bard College, a Distinguished Fellow in American Strategy and Statesmanship at the Hudson Institute, and The Wall Street Journal’s Global View columnist.

Senator Marco Rubio (Rep., FL) said, “”By no longer suspending Title III of the Freedom Act, the Trump administration is the sixth of impunity by the Castro regime. The United States is opening the door to justice and enabling victims of the Cuban dictatorship to rightfully sue their perpetrators. Today, as we commemorate the value of the fallen heroes in the Bay of Pigs invasion, history is once again being written. ”

Senator Robert Menendez (Dem., NJ) offered a similar statement: “By fully implementing Title III of the LIBERTAD Act, the United States is rightly providing U.S. citizens with the means to hold the Cuban regime accountable through the U.S. justice system.”

Representative Mario Diaz-Balart (Rep., FL) issued a lengthier statement, which is extracted below:

  • “At long last, victims of confiscated properties will finally have the chance to pursue claims to recoup losses suffered at the hands of the Castro regime.”
  • “President Trump and his administration have demonstrated remarkable solidarity with the Cuban people and the regime’s other victims in tightening sanctions by prohibiting financial transactions with the Cuban military.
  • “Cutting off resources and investment to the regime in Cuba will benefit both U.S. national security interests and regional security interests for neighbors in our hemisphere.”

Senator Scott stated, “Americans can finally sue for property stolen by the Cuban regime. We must continue to do everything we can to cut off the money supply to the Castro Regime, which continues to prop up dangerous dictators like Nicolas Maduro in Venezuela and Daniel Ortega in Nicaragua.”

Walter Russell Mead. He starts with the proposition that Venezuela presents the key challenge of Latin America. “Left to accelerate, the breakdown of governance and civilized life in Venezuela can only create more refugees, enrich arms smugglers and drug cartels, allow forces like Hezbollah to insinuate themselves more deeply in the region. On the other hand, a return to some kind of stability under a pro-business government would initiate an economic recovery that would help the people of Venezuela and their neighbors alike, and deprive the terror cartels of much of their arms and funding. Crucially, if Venezuelan oil production recovers, it would help stabilize world energy markets and significantly increase American leverage with both Russia and Iran.”

“The continued collapse of Venezuela’s economy means the Cuban regime is also facing disaster. From the Trump administration’s point of view, this is a historic opportunity. If Cuba . . . abandons socialism on Mr. Trump’s watch, the president’s prestige at home and abroad would soar.”

Therefore, says Mead, the Trump Administration hopes for “historic victories in Cuba and Venezuela.” That plus  “the fear of a costly defeat have combined to persuade the Trump administration to adopt some of the most far-reaching economic sanctions ever imposed.” In short, no previous U.S. president “has been willing to impose sanctions that alienate powerful allies to this degree over Caribbean policy. That Washington is pressing ahead suggests how high a priority Venezuela has become for the administration.”

Conclusion

There are so many reasons to oppose the new U.S. policies towards Cuba, as this blogger does. Just refer to the above section regarding such opposition and to the similar discussion in the previous posts cited in footnote 1.

As always, this blog invites reasoned comments, pro or con, or corrections from all readers of this post.

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[1] Prior posts have discussed (a) the April 17 announcement of the U.S. allowance of litigation over alleged trafficking in American-owned Cuba property that was expropriated by the Cuban government, circa 1959-60; (b) National Security Advisor John Bolton’s April 17 announcement of additional Cuba sanctions; (c) Cuban reactions to these changes; and (d) European and other countries’ reactions to these changes. These changes take effect in the midst of Cuba’s current dire economic situation, which was the subject of another post.

[2] Editorial, Cuba Is a Problem That Trump Is Making Worse, Bloomberg (April 22, 2019); Press Release, Engage Cuba Statement on New Cuba Sanctions (April 17, 2019); Engage Cuba, Memorandum: New Sanctions on Cuba Announced April 17, 2019 (April 2019); U.S. Chamber of Commerce, Statement on Cuba and Title III of the LIBERTAD Act (April 17, 2019); Center for Democracy in the Americas, CDA STATEMENT:Cuba Sanctions announcement (April 17, 2019); Cuba Educational Travel, CET Statement on President Trump’s Cuba Policy Changes (April 17, 2019); Engel on Implementation of Article III of the Helms-Burton Act (April  17, 2019); U.S. Rep. Castor: The Trump Administration’s Announcement of New, Hardline Restrictions on Cuba Brings Pain to Families, Hurts Growing Cuban Private Sector (April 17, 2019); McGovern Statement on Trump Administration;’s Reckless Policy Change Toward Cuba (April 17, 2019); Congresswoman Barbara Lee Slams President Trump’s Backwards Policy Towards Cuba (April 17, 2019); Caputo, Trump crackdown on “3 stooges of socialism’ has 2020 thrust, Politico (April 17, 2019) (Rep. Shalala quotation); Reuters, Trump’s Cuba Hawks Try to Squeeze Havana Over Venezuela Role, N.Y Times  (April 18, 2019) (Rhodes quotation); Feierstein Twitter Account; Fernholz, Cuba’s entrepreneurs are under attack by Donald Trump, Quartz  (April 22, 2019).

[3] Press Release, Rubio Commends Trump Administration’s Move to Hold Cuba Accountable (April 17, 2019); Press Release, Rubio Highlights Importance of Trump Administration’s Commitment to Democracy in Latin America (April 17, 2019); Press Release, Menendez Statement on Announcement to Let Cuban Americans File Suit over Property Confiscated by Cuban Regime (April 17, 2019); Diaz-Balart: Trump Administration’s Full Implementation of Title III Is a Monumental Decision   (April 17, 2019); Press Release, Sen. Rick Scott Applauds President Trump For Fully Implementing Title III of the Libertad Act (April 17, 2019); Mead, Trump Takes Aim at Caracas and Havana, W.S.J. (April 22, 2019).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

More Cuban Businesses Forbidden to U.S. Visitors

On November 14, the U.S. State Department announced that it was “adding 26 subentities to the Cuba Restricted List, including 16 hotels owned by the Cuban military [intelligence and security services or personnel]. The Department is also updating the names of five already listed subentities to ensure they remain current. . . .  Direct financial transactions [by U.S. nationals] with these entities and subentities are generally prohibited because they would disproportionately benefit those services or personnel at the expense of the Cuban people or private enterprise in Cuba.” [1]

The 26 new names range from the new five-star Iberostar Grand Packard and Paseo del Prado hotels in Old Havana to modest shopping centers in beachside resorts far from the capital. They join the list of 179 other Cuban entities on the Cuban Restricted List that the State Department first issued on November 8, 2017.[2]

This change was predicted in a speech earlier this month by National Security Advisor John Bolton.[3]

However, it must be remembered that U.S. travel to Cuba is still legal under 12 general licenses that are published by the U.S. Treasury Department’s Office of Foreign Assets Control. [4]

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[1] U.S. State Dep’t, State Department Updates the Cuba Restricted List (Nov. 14, 2018); U.S. State Dep’t, List of Restricted Entities and Subentiies Associated with Cuba as of November 15, 2018 (Nov. 15, 2018); Assoc. Press, US Adds New Sanctions on Cuba Tourist Attractions, N.Y. Times (Nov. 14, 2018); Sánchez, History repeats itself: new US measures UU against Cuban entities, Granma (Nov. 15, 2018).

[2] See these posts to dwkcommentaries: New Restrictions on U.S. Travel to Cuba and Transactions with Certain Cuban Entities (Nov.8, 2017); Reactions to New U.S. Regulations About U.S. Travel to Cuba and Transactions with Cuban Entitties (Nov. 9, 2017); Additional Reactions to New U.S. Regulations Regarding Cuba (Nov. 11, 2017); Trump’s New Regulations Adversely Affect Cuban Entrepreneurs (Nov. 18, 2017).

[3] See U.S. National Security Advisor Announces New U.S. Hostility Towards Cuba, dwkcommentaries.com (Nov. 3, 2018).

[4] See posts to dwkcommentaries listed in footnote 2. See also U.S. Treasury Dep’t, Office of Foreign Assets Control, Frequently Asked Questions Related to Cuba (Nov. 8, 2017).

Good News: Increasing U.S. Travel to Cuba

A website for travel professionals reports that recently U.S. travel to Cuba is increasing. It cites Tom Popper,  the president of InsightCuba, which specializes in travel to the island, who says it has seen an increase of 30% for such travel in May, June and July 2018 over the prior year.[1]

One of the problems many U.S. nationals encounter in planning a trip to Cuba is not finding flights to Cuba on Expedia, TripAdvisor or Orbitz. This is due to such businesses wanting to avoid hassling with the airlines that fly to the island having an obligation to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for confirming that U.S. nationals on such flights are going there for a legal reason under the OFAC regulations.

The airlines, however, have no such difficulty because when you buy a ticket to fly to Cuba, you merely have to hit “accept” on the affidavit pop-up that you are traveling under one of 12 general licenses for U.S. legal travel to Cuba, which are described on OFAC’s website. The traveler, therefore, before buying a ticket must carefully review that website and determine which of the following 12 general licenses fits the planned trip:

  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.

U.S. travelers to Cuba also need to review this OFAC statement (para. 32) about spending in Cuba by “persons subject to U.S. jurisdiction:”

  • “There is no specific dollar limit on authorized expenses; however, in accordance with the NSPM [National Security Presidential Memorandum], OFAC is amending the CACR [Cuban Assets Control Regulations] to restrict persons subject to U.S. jurisdiction from engaging in direct financial transactions with entities and subentities identified on the State Department’s Cuba Restricted List, with certain exceptions. See 31 CFR § 515.209 and § 515.421. Consistent with these authorizations and restrictions, authorized travelers may engage in transactions ordinarily incident to travel within Cuba, including payment of living expenses and the acquisition in Cuba of goods for personal consumption there. In addition, travelers are authorized to acquire in Cuba and import as accompanied baggage into the United States merchandise for personal use only. Value imports remain subject to the normal limits on duty and tax exemptions for merchandise imported as accompanied baggage and for personal use.” (Emphasis added.)

As this OFAC statement indicates, the U.S. State Department has published its “List of Restricted Entities and Subentities Associated with Cuba as of November 9, 2017.” Direct transactions with these entities and subentities by “persons subject to U.S. jurisdiction” are prohibited. The State Department also has published “Frequently Asked Questions on the Cuba Restricted List (Nov. 8, 2017).”

Finally Americans thinking about going to Cuba should know that the two major carriers to the island—Delta and American—have taken over many routes abandoned by other airlines and with the experience of the last several years have figured out the best size of aircrafts and frequency of flights to Cuba from the gateways of New York City, Houston, Atlanta and Miami. The result? Round-trip tickets to Cuba from these gateways are inexpensive, such as $300 from JFK in New York.

The traveler will be aided in all of this by working with a company, like InsightCuba, that specializes in travel to the island.

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[1] Cogswell, Under the Radar, Cuba Market Comes Back, travelmarket report (Aug. 1, 2018).