New U.S. Sanctions Against Cuba

The U.S. recently has announced additional sanctions against Cuba. Here is a summary of those measures.

 U.S.Sanctions Against Certain Cuban Hotels, Cigars and Alcohol[1]

On September 23 President Trump announced that the “Treasury Department will prohibit U.S. travelers from staying at properties owned by the Cuban government. We’re also further restricting the importation of Cuban alcohol and Cuban tobacco. These actions will ensure that U.S. dollars do not fund the Cuban regime and go directly to the Cuban people.”

Treasury Secretary Mnuchin said, “The Cuban regime has been redirecting revenue from authorized U.S. travel for its own benefit, often at the expense of the Cuban people. This Administration is committed to denying Cuba’s oppressive regime access to revenues used to fund their malign activities, both at home and abroad.”

A negative assessment of this move was made by Lawrence Ward, a partner in the international law firm Dorsey & Whitney, who said Trump’s action will make it nearly impossible for Americans to visit Cuba since the government owns or controls nearly all hotels. “Certainly, these new sanctions will have some minor impact on the Cuban government and Cuba’s economy but there’s a fair argument that the actions are more symbolic and political given that the United States stands nearly alone in its sanctions as to Cuba.”

Enrique Gutierrez, a spokesman for the Democratic Party said in an email, “This is a desperate and hypocritical attempt by Trump to pander to Cuban-American voters in Florida. American citizens are already banned from traveling to Cuba because of the coronavirus.” Mr. Trump was “using our foreign policy for his own political gain.”

U.S. Sanctions Against Cuban Debit Cards[2]

On September 28, the State Department added American International Services (AIS), a financial institution, to the Cuba Restricted List. According to Secretary of State Michael Pompeo, the stated reason for this action was AIS’ allegedly being “controlled by the Cuban military that processes remittances sent to the Cuban people” and its charging “fees and manipulat[ing] the remittance and foreign currency market as part of the regime’s schemes to make money and support its repressive apparatus. The profits earned from these operations disproportionately benefit the Cuban military, furthering repression of the Cuban people and funding Cuba’s meddling in Venezuela.”

The Secretary added, “Adding AIS to the Cuba Restricted List furthers the Administration’s goal of preventing the Cuban military from controlling and benefiting from the flow of remittances that should instead benefit the Cuban people.  The people should be able to receive funds from their family abroad without having to line the pockets of their oppressors.” Therefore, the Secretary urged “anyone who sends remittances to family in Cuba to use means other than Cuban government-controlled remittance entities.”

This move against AIS hurts ordinary Cubans who receive remittances in hard currencies from families in the U.S. and elsewhere through AIS that are used to buy food in government-owned retail grocery stores. Bruno Rodriguez, Cuba’s foreign minister, said in a tweet, “it is a maneuver aimed at damaging the Cuban people and the family ties between both nations.”

List of Cuba Prohibited Accommodations and Entities [3]

In addition, on September 28, the Department published its initial list of Cuba Prohibited Accommodations. This is a “list of properties in Cuba owned or controlled by the Cuban government, a prohibited official of the Government of Cuba, as defined in 31 CFR § 515.337, a prohibited member of the Cuban Communist Party, as defined in 31 CFR § 515.338, a close relative, as defined in 31 CFR § 515.339, of a prohibited official of the Government of Cuba, or a close relative of a prohibited member of the Cuban Communist Party.” The list is by cities and towns that not in alphabetical order so it should be carefully examined by any U.S. citizen traveling to Cuba.

On September 29, the Department published the List of Restricted Entities and Subentities Associated with Cuba. This is a “list of entities and subentities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba.” U.S. nationals are prohibited from having “direct financial transactions with these entities.”

Another Cuban “Blocked Person”[4]

On September 30 the Department added Luis Alberto Rodriguez Lopez-Calleja to the U.S. list of Specially Designated Nationals and Blocked Persons, which will block all transactions with “all assets, property and interests of property of Mr. Lopez-Calleja that are subject to U.S. jurisdiction, including within the possession or control of U.S. persons.”   The stated reason for this action was his being the head of the Cuban military-owned conglomerate Grupo de Administración Empresarial S.A. (GAESA), which allegedly uses its revenue “to oppress the Cuban people and to fund Cuba’s parasitic, colonial domination of Venezuela.  He also is the son-in-law of Raul Castro.

Other Reactions [5]

 These new sanctions might seem inconsequential to someone in the U.S. But they are especially mean-spirited when directed at the much smaller and weaker island whose economy is suffering from the total collapse of foreign tourism and mismanagement and whose food is sold at high prices in government-operated stores only for U.S. Dollars as a way for the government to obtain Dollars it needs for other purposes.

Elijah Love, a commentator in the private Diario de Cuba and generally supportive of U.S. restrictions on Cuba, says, “Unfortunately, private entrepreneurs have been especially harmed, and although the US government wants the sanctions applied to military companies and State Security to leave room for private entrepreneurs to occupy the place they deserve, it does not seem that this be the case.”

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[1] White House, Remarks by President Trump Honoring Bay of Pigs Veterans (Sept. 23, 2020); Treasury Dep’t, Office of Foreign Asset Control, Cuban Assets Control Regulations, 85 Fed. Reg. 60068-72 (Sept. 24, 3030)(new prohibition on lodging and related transactions at certain Cuban properties; restrictions on U.S. imports of Cuban alcohol and tobacco products; ends authorization of attendance or organization of professional meetings in Cuba and participation or organization of certain public performances , clinics , workshops in Cuba); Yeginsu, Trump Administration Adds to US Travel Restrictions in Cuba, N.Y. Times (Sept. 24, 2020); Superville, Trump tightens Cuba sanctions as he woos Cuban-American vote, Wash. Post (Sept. 23, 2020).

[2] State Dep’t, Addition to the Cuba Restricted List (Sept. 28. 2020); Rodriguez, U.S. adds popular Cuban debit card to restricted list, Wash. Post (Sept. 28, 2020).

[3]  State Dep’t, Cuba Prohibited Accommodations List Initial Publication (Sept. 28, 2020);  State Dep’t, List of Restricted Entities and Subentities Associated with Cuba Effective September 29, 2020 (Sept. 29, 2020)

[4] State Dep’t, Press Statement (Secretary Michael Pompeo): Addition to the Specially Designated Nationals and Blocked Persons List (Sept. 30, 2020);Lee, US imposes sanctions on Cuba’s Raul Castro’s son-in-law, Wash. Post (Sept. 30, 2020)

[5]  Augustin & Robles, Cuba’s Economy Was Hurting. The Pandemic Brought a Food Crisis, N.Y. Times (Sept. 20, 2020); Love, US sanctions on the Cuban economy create opportunities, but also risks, Diario de Cuba (Sept.  29, 2020).

 

U.S. Reduces Permissible Remittances to Cuba       

On September 6, the U.S. Treasury Department announced that effective October 9, one Cuban-American may remit no more than $1,000 per one family member on the island, per-quarter.[1]

In addition, the new rules forbid remittances to “close family members of prohibited Cuban officials and members of the Cuban Communist Party.” Also prohibited are remittances by non-family members.

On the other hand, the new rules will authorize remittances to certain individuals and independent non-governmental organizations in Cuba “to support the operation of economic activity in the non-state sector by self-employed individuals, in light of . . . [U.S.] policy to encourage the growth of the Cuban private sector independent of government control.”

Treasury’s new rules will also ban “banking institutions subject to U.S. jurisdiction . . . [from processing] certain funds transfers originating and terminating outside the United States, commonly known as “U-turn” transactions.”

Treasury Secretary Steven Mnuchin said, “We are taking additional steps to financially isolate the Cuban regime.  The United States holds the Cuban regime accountable for its oppression of the Cuban people and support of other dictatorships throughout the region, such as the illegitimate Maduro regime. . . Through these regulatory amendments, Treasury is denying Cuba access to hard currency, and we are curbing the Cuban government’s bad behavior while continuing to support the long-suffering people of Cuba.”

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[1] U.S. Treasury Dep’t, Treasury Issues Changes to Strengthen Cuba Sanctions Rules (Sept. 6, 2019; Assoc. Press, US Limits Amounts of Money That Americans Can Send to Cuba, N.Y. Times (sept. 6, 2019).

 

 

 

New U.S. Sanctions on Cuba and Venezuela

On April 5, the U.S. Treasury Department announced new sanctions on Venezuela and Cuba. The sanctions are on 34 vessels owned or operated by Venezuelan state-run oil company Petróleos de Venezuela, S.A, or PDVSA , and also on two companies and a vessel that delivered oil to Cuba in February and March. The announcement stated, “The United States continues to take strong action against the illegitimate regime of former President Nicolas Maduro, not only to isolate corrupt Venezuelan enterprises, but also to target Maduro’s supporters in Havana who continue to enable the oppression of the people of Venezuela.” [1]

The announcement further said, “The relationship between Cuba and Venezuela hinges on a two-decade long political, security, and economic alliance, particularly given Cuba’s reliance on a barter system for Venezuelan oil imports.  Cuba is a major importer of crude oil from Venezuela, and in return, sends assistance to Venezuela in the form of political advisors, intelligence and military officials, and medical professionals, all of whom are used to ensure Maduro’s hold on power and complete social control over the people of Venezuela.  Cuba’s influence has contributed to Venezuela’s failure.  Maduro continues to send aid to Cuba as Venezuelans suffer from a deepening humanitarian crisis while denying entry to food, medicine, and other supplies provided by the United States and our allies and partners.”

“As a result of today’s action, all property and interests in property of these entities, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC [Treasury’s Office of Foreign Assets Control]. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.”

The Treasury Secretary, Steve Mnuchin, said, “Treasury is taking action against vessels and entities transporting oil, providing a lifeline to keep the illegitimate Maduro regime afloat. Cuba continues to profit from, and prop up, the illegitimate Maduro regime through oil-for-repression schemes as they attempt to keep Maduro in power. The United States remains committed to a transition to democracy in Venezuela and to holding the Cuban regime accountable for its direct involvement in Venezuela’s demise.”

Vice President Mike Pence also voiced support for these new measures on April 5, actually just before their official announcement.. He said, “The United States will continue to exert all diplomatic and economic pressure to bring about a peaceful transition to democracy, calling oil shipments “the lifeblood of that corrupt regime” with its oil shipments being “the lifeblood of that corrupt regime.”Pence also called Cuba’s “leaders as the “real imperialists” in the Western Hemisphere, adding: “The time has come to liberate Venezuela from Cuba.”[2]

Cuban President Díaz-Canel immediately responded to these new sanctions. He tweeted, The U.S. “sanctioned Friday vessels and companies involved in the transportation of fuel between [Cuba and Venezuela], a legal activity and covered by trade agreements. These measures are an act of extraterritoriality, interference and imperial arrogance.”[3]

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[1] Treasury Dept, Press Release: Treasury Sanctions Companies Operating in the Oil Sector of the Venezuelan Economy and Transporting Oil to Cuba (April 5, 2019); Reuters, U.S. Targets Cuba’s Oil Supply From Venezuela in New Sanctions, N.Y. Times (April 5, 2019).

[2] Reuters, U.S. ratchets Up Pressure on Venezuela, Cuban Backers, N.Y. Times (April 6, 2019).

[3] Diaz-Canel qualified as an act of extraterritoriality, interference and imperial arrogance, the recent sanctions against Venezuela and Cuba, Granma (April 6, 2019).