by JD Adler
After confirmation of the release of 53 political prisoners earlier this week, the US Department of Treasury, Office of Foreign Asset Control (OFAC) published official amendments to its Cuban regulations today. This publication, in turn, arrives just one week prior to the Assistant Secretary of State heading to Havana to discuss potentially re-opening the US embassy there.
For airlines, travel agents, telecom companies, banks and Cuban citizens, these changes are tremendously beneficial. For anyone else, little has changed. The White House is unable, by executive action, to completely lift the embargo, as legislation can only be repealed by Congress. President Obama can, however, alter the details by executive order, and these published amendments turn those EOs into action as of today.
Cuba is still not open to any and all tourists, the 12 categories of acceptable reasons to go remain. However under the new rules, permission does not have to be acquired from OFAC each time, as long as the group going and their travel agent maintain all the proper documentation.
From the Summary:
OFAC is amending sections 515.533, 515.545, 515.560 through 515.567, and 515.574 through 515.576 to authorize travel-related transactions and other transactions incident to activities within the 12 existing travel categories in OFAC’s … without the need for case-by-case specific licensing, while continuing not to authorize travel for tourist activities, which is prohibited by statute.
– Dept. of the Treasury
As of today, US banks can do business with Cuban banks and credit cards will be viable as well. US citizens can give Cuban citizens up to $8000 per year (an increase of $5000) and can bring home up to $400 of Cuban merchandise (up from $0). Which should provide a boost to the Cuban economy.
Travel amendments include allowing travel agencies and insurers to do business with Cuba. There is also specific mention made to airlines doing business with Cuba. However, at no time is any mention made of boats/ships being offered new status traveling to and from Cuba.
From the Summary:
Travel services. OFAC is amending section 515.572 to permit persons subject to U.S. jurisdiction, including travel agents and airlines, to provide authorized travel and carrier services, and certain entities to forward authorized remittances, under conditions set forth below, without the need for specific licenses from OFAC.
From the Body:
515.548 Services rendered by Cuba to United States aircraft.
The receipt of services from Cuba and payment to Cuba of charges for services rendered by Cuba in connection with overflights of Cuba or emergency landings in Cuba by aircraft – 19 -registered in the United States or owned or controlled by, or chartered to, persons subject to U.S. jurisdiction are authorized.
– Dept. of the Treasury
It is certainly true that US flagged ships have docked in Cuba in the past, but they did it within the confines of certain grey areas that are now all the murkier. When I asked the White House for clarification on this point, I was referred to prior statements about Cuba that in fact offered no commentary regarding this particular subject. Does that mean the old rules regarding ships still apply, or has a new grey area been created?
Perhaps the most intriguing aspect of this new Cuban deal is the telecom bonanza. The White House has presented this as an opportunity to make inroads into Cuban culture with Western ideals via the internet and media. However, when one goes to the Cuban government websites the telecom appears to be their objective. When President Castro informed his people of this new agreement he said,
“ I urge the Government of the United States to remove obstacles that
prevent or restrict the links between our peoples, families and citizens of both countries, in particular those relating to travel, direct mail and telecommunications. “
-Pres. Raul Castro 12/17/2014 (translated)
Then this past January 7, Cuban diplomats met with the International Telecom Union in Geneva to “reaffirm their commitment” and finalize the conference in Havana this February. If anything, Castro appears to recognize the need for his nation to acquire new industry and data sources in order to grow.
“Drop money into the streets without a corresponding increase in the supply of goods and services generates inflation, a phenomenon among many other harmful effects reducing the purchasing power of wages and pensions, hitting first the humblest. And that we can not afford.”
– Raul Castro before Cuban Assembly 12/22/2014 (translated)
Which is not to suggest that President Obama has been tricked. He has opened a new marketplace for our telecom companies, that is legally organized into trusts, and the only local competition utilizes 60 year old technology. As US banks overwhelm Cuban banks with simple volume of cash, telecom companies will employ most of their people and addict them to high-tech toys.
Revise § 515.542 to read as follows:
(d) General license for telecommunications facilities. Transactions, including payments, incident to the establishment of facilities, including fiber-optic cable and satellite facilities, to provide telecommunications services linking the United States or third countries and Cuba, including facilities to provide telecommunications services in Cuba, are authorized.
– US Dept. of the Treasury
On the flip side, Senator Marco Rubio (R-FL), sees all of this as bad news. While international human rights groups and overwhelming polling numbers support this action, and call for further action by Congress, he sees it as rewarding Castro for being an oppressor.
“We should actually learn our lessons from those policies. You talked about China as an example. We reestablished both commercial and diplomatic relations with China in the 1970s. Certainly the Chinese economy has grown. But politically, they’re more repressed than they were to 20 or 30 years ago. There’s no freedom of religion, no freedom of speech, no free access to the internet, no elections, no political parties.
So in essence, that is the model that Cubans will try to follow. They’re are going– they wholly control the economy. They’re going to use all the benefits of access to the U.S. markets to grow their own, line their own pockets, the government. But there isn’t going to be any political opening, Raul Castro made it clear. And Vietnam and China are the model for that.”
– Rubio in response to Chuck Todd, NBC
Though that does seem to run counter to Castro’s own comments before his assembly,
“Also, the elimination of administrative boundaries for the payment of salaries linked to results became available. These changes should be implemented gradually, without haste, with order, discipline and requirement. The fair aspiration to earn higher wages is a very sensitive issue, in which you are not allowed to make mistakes, nor be led by desire or improvisation. We are pleased to increase gradually the wages of those workers employed in activities more efficient results and report benefits of particular economic and social impact. However, it should be clear that you can not distribute wealth that we have not been able to create, doing so would entail serious consequences for the national economy and of every citizen.”
– Raul Castro before national assembly 12/22/2014 (translated)
Ultimately, Rubio sums up his point in a recent op/ed by suggesting the US should have continued to wait out the Castro regime,
“The opportunity for Cuba to normalize relations with the U.S. has always been there, but the Castro regime has never been interested in changing its ways. Now, thanks to President Obama’s concessions, the regime in Cuba won’t have to change.”
– Sen. Rubio
This is a traditional American government philosophy; demanding that other nations behave in a manner the US approves of before we will work with them in the name of spreading democracy. However it is not the philosophy of those who founded this country. When George Washington left office he specifically warned against this type of behavior,
The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave. It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest.
Pres. George Washington, Farewell Address
Regardless of political posturing, the deal is now done. It is just a matter of stages. Once corporate America has vested itself in Cuba there will be no turning back. The question for Key West is whether charter boats will be able to get ready access or will charter planes be flying over head from Miami, bypassing our fair community.