Week In Review: Trade, Travel, and Telecomms

January 29, 2016
This week, President Obama again used his executive authority to expand travel and trade with Cuba.  The new travel rules have different dimensions to them, but they will surely intensify the cultural connectivity between our two countries.
As press accounts again proved this week, the President’s earlier reforms are driving up the number of U.S. visits to the island substantially. While increased trips provide cashmoney needed for Cubans and their economy, the surge of Americans, as Reuters reported, may be testing the capacity of the Cuban tourism industry.
While Cuba’s government unrolled the red carpet for a delegation of U.S. government officials and industry leaders for ongoing negotiations about telecommunications,Ambassador Daniel A. Sepulveda (lead diplomat on the talks) worries that slow progress in striking deals to improve connectivity and the island’s high-tech infrastructure derives at least in part from a lack of trust (seems like a well-founded concern to us).
With lots of news – and new ideas – to consider, we sat down on the floor of our modest offices (cue sad trombone and then send donations) to see how the pieces fit together.
Reforms Resume in 2016
As the New York Times, the BBC, and myriad other news agencies reported, the Commerce and Treasury Departments made substantial changes in the rules relating to the U.S. embargo (still in place, sigh…) as they affect travel, exports, activities by U.S. business in Cuba and more.
If readers want to hash through the details, may we recommend the two Departments’ joint press release (viewed here), and Akin-Gump’s detailed summary can be accessed here.
There’s much to like about the changes.  As the BBC reports, “The key difference between this announcement and earlier efforts to ease trade with Cuba by the Obama administration is that this time the new rules will apply to trade with Cuban government agencies.”  This means the President’s reforms – which previously benefitted Cuban individuals, private entrepreneurs – are getting bolder.
The reforms unveiled this week relieve restrictions on payment and financing terms, allow exports for the construction of infrastructure and energy facilities, and will give applicants in the telecommunication field an easier time getting their exports licensed as well.
Travel & Culture
The new rules will increase travel to Cuba from the U.S. even further.  As Reutersreported this week, “Cuba received a record 3.52 million visitors last year, up 17.4 percent from 2014. American visits rose 77 percent to 161,000, not counting hundreds of thousands of Cuban-Americans.”  These numbers will rise – since the regulations give more travelers more legal means to get Cuba for business and professional activities – and because the rules anticipate more travelers arriving by commercial aircraft and ferries and cruise liners.
With demand comes pressure on supply and so, according to XINHUA, Cuba’s Tourism Ministry is considering an increase in the country’s 63,000 hotel rooms, and building more resorts and golf courses with foreign investment.
The Obama administration is also making it easier for U.S. actors and producers, writers and musicians, to work and perform in Cuba, and engage with Cubans in the process of creating their art.
We have come a long way since the days when Cuban artists of the caliber of the lateIbrahim Ferrer, of the Buena Vista Social Club, and Manuel Galbán were barred by the Bush administration from picking up their Grammy Awards, incidents our friend Jackson Browne recalled in his essay, Songs of Cuba, Silence in America.
Fast forward to the forward-leaning rules issued by the Obama administration.  As theWall Street Journal observed, “Moves by art and culture travelers to reconnect with Cuba are far outpacing efforts to reopen business with America’s former Cold War foe.”
Travel Moving at Warp Speeds, While Telecom Diplomacy is Like Dial-up Connection
While progress on cultural exchange and travel itself is moving at warp speed, the movement on telecommunications is more like dial-up, despite our earnest efforts at digital diplomacy. Officials at Cuba’s Ministries for External Relations, Communications, and Trade and Foreign Investment said this week’s round of talks took place in a positive climate.   The Cuba’s government takes pride in having added 58 hotspots, lowering the cost of access, and granting roaming agreements to Verizon and Sprint.
Ambassador Sepulveda has a warm relationship with his Cuban counterparts.  Outside the negotiating room, he delivered a speech at the University of Information Sciences and talked to Cuban bloggers – all the while delivering a pretty clear message: Cuba should do more.
He challenged Cuba to increase access, increase investment in faster technologies, and more closely integrate the Internet into what he calls their “industrial” policies (something Cuba already has done). He is also asking Cuba to allow for a new submarine cable from Miami to Havana which, given the history between the two cities, and recent comments by Cuban American leaders reported by NBC News, made us wonder how his counterparts reacted to that.
Sepulveda, who clearly feels tyrannized by the clock – his term in office ends with President Obama’s – wants the Cubans to do more and do it faster.  He put it this way in an interview with Milena Recio, “I perceived that they are open to talks; it’s just going to be a very slow conversation. [We in the U.S. are] not used to this pace of progress. But again, I respect that, they have the right to move at the pace they want.”
So long as we have been watching, Cuba has operated strictly by how it defines its own national interest and – although we agree, there are few foreign governments or audiences better attuned to U.S. politics – we expect they view the calendar with slightly less dread; they’ve seen administrations and reforms come and go.  While they doubtlessly appreciate, truly, what President Obama has done, and appreciate the risks he has taken, we imagine they will continue to move at their own speed, even as the end of the Obama era is coming.They will determine their priorities.  The notion that Cuba’s government is not rushing pell-mell into the arms of U.S. high technology companies cannot be surprising.
Telecommunications is an investment; it involves money out, compared to tourism, which is money in.  Cuba’s government, as we previously reported, is forecasting slower growth in 2016, dragged down by falling commodity prices, especially when the price fetched by its ally Venezuela’s crude oil has fallen below the cost of production. Tourism cannot offset those losses or others like the future decline in cigar sales if the most recent tobacco crop is has been hit as hard as reports say.
But, really, the problem is confidence.  Yes, U.S. companies want signs from Cuba that their investments will be welcomed and the normal rules of doing business overseas will apply to them on the island.  However, in ways that don’t trouble the Cubans about tourism, the issue that is probably slowing down progress on telecommunications is trust on the Cuban side.
Although Cuba’s Vice President, Jose Ramon Machado Ventura, is on Facebook (we know someone who friended him and got friended back), he’s been quoted by Cuba’s media saying that it is the intent of “imperialists” to use the Internet as a way to destroy the Revolution.
It’s not hard to imagine the reaction when Ambassador Sepulveda offers solid advice about how  the Internet will speed Cuba’s economic modernization, that his counterparts hear the traditional American swagger at the heart of “democracy assistance,” that we have the answers to Cuba’s problems, which gives them pause.
On the other hand, we love the fact that the grim days of squeezing Cuba through sanctions and isolation are in the rear view mirror, and that diplomacy and reform – at least until January 20, 2017 – are the order of the day.   Of course, time is of the essence, but we really need to get this right.

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Cuba and the Audacity of Hope, 2016 Edition

January 22, 2016

Last week, White House Chief of Staff Denis McDonough offered a teaser about the year ahead: He said, “We’ll do audacious executive actions throughout the course of the year, I am confident of that,” in comments reported by The Hill.

We can’t say what those executive actions involve since “McDonough did not hint on which areas the president will sidestep Congress and set policy on his own.” Since, however, Congress may not act, and there’s much within the President’s power to expand on the new policy, and to trim back on the old, we hope Cuba’s on the agenda.

Trim back on the old? As we have said before, if President Obama’s new direction in Cuba policy were like a painting, it would be more like pentimento than an entirely new piece of work. This is when traces of an underlying image become visible despite the top layers of more recently applied paint. In seeing such a painting, the viewer must ask her or himself whether the artist changed his mind thoroughly, or if the old parts peeking through suggest indecision present in the artist’s mind.

Yesterday, USAID published a notice reminding us – and we thank Tracey Eaton, the journalist who brought it to our attention – that the U.S. government is still funding activities with regime-change money under programs enacted by Congress to overthrow Cuba’s government, despite the renewal of diplomatic relations.

Dressed up as “humanitarian assistance to political prisoners and their families, and politically marginalized individuals and groups in Cuba,” Tracey underscores the circular reasoning on which the $6 million grant program is based. He cuts to the core in his typically genteel way:

I think it’s worth pointing out that many of those arrested for political reasons are taking part in programs funded by the U.S. government or U.S. government-financed organizations. I am not arguing for or against such programs or saying there are no human rights violations in Cuba, but I find it interesting that existing U.S. government programs are used to help justify and fuel the need for new programs.” [our emphasis]

The timing – and of course the substance – of this announcement is really telling. This declaration, and it’s not the first, that the U.S. is still in the regime change business comes one month to the day after the USAID Inspector General released a sharply critical report on how the agency’s recently-exposed debacles raised serious legal and regulatory questions about how these programs are administered.

The IG report focused on the faux twitter program, ZunZuneo, which “was secretly created to stir unrest and raised concerns about the legality and covert nature of the project,” and another effort in which an HIV prevention workshop was used as “a guise to recruit young Cubans to anti-government activism” and how it “undermined the credibility of USAID’s health work around the world.”

Note and reminder: the existence of both programs was brought to light by excellent investigative reporting by the Associated Press.

Just these two programs, the IG reported, were plagued by conflicts of interest (a fancy, high-dollar contract was awarded to a grantee’s family member without competition) and needlessly high expenses. Because these efforts were undertaken covertly to prevent the Cuban government from detecting or disrupting them, excessive secrecy led to the creation of bank accounts to place agency money in the Cayman Islands, and to practices that concealed to Cuban participants the knowledge that they were involved in programs funded by regime change dollars.

But, their government did find out. The IG determined that the programs lacked safeguards to prevent them from being penetrated by the Cuban government and subverted by Cuban intelligence, and left Cubans participating in the programs vulnerable to being denigrated and threatened.

So, it’s reasonable to ask – did USAID take any of the IG’s findings on board, or is it happening again? There’s language in yesterday’s new announcement – “the primary goal of the program,” USAID seeks creative and innovative approaches in the design and delivery of the monies – that begged questions about what is really being funded.

Tellingly, USAID did offer cautions informed by Alan Gross’s arrest – to avoid the use of American citizens, recruit personnel who are fluent in Spanish and who’ve worked in Cuba before, and make it clear that recipients can’t sue USAID if they are caught, injured or killed (literally) – suggesting that something bigger is afoot than the delivery of humanitarian assistance.

Undoubtedly, there’s a regime change devotee in the USAID bureaucracy ready to dismiss these legitimate questions with the pettifoggery that we heard from the agency when ZunZuneo and the ‘not-really-an HIV-workshop’ debacles were first exposed. Then, the audacity of deceit ruled the day.

So, yes, we’d favor a long list of executive actions to increase travel and trade with Cuba, especially ones that free U.S.-Cuba commerce from the shadow of excess enforcement stemming from the old policy.

But, we’d like to see more. From the outset, President Obama’s new direction in Cuba policy was predicated on the idea that it does not serve America’s interests, or the Cuban people, to try and push Cuba toward collapse.

In 2016, is it too audacious for the President to cut the funding for – or at least reform – these efforts, so that the entire government, including USAID, speaks with one, clear voice when it comes to engaging with Cuba during his last year in office?

We can only hope.

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Stop and Smell (the Cuban) Coffee (or what would Goethe say?)

January 15, 2016

As he departed the presidency in 1961, Dwight D. Eisenhower summarized the foreign policy accomplishments of his administration. Ending the Korean War and preserving peace in the Middle East were among them.  But, he also noted a few of the world’s continuing dangers, starting with what he called the “Communist penetration of Cuba” which he labeled a real and serious threat.

Defining the challenges of his final year in office, President Obama used his last State of the Union address to make his most forceful appeal to Congress to “lift the embargo” on Cuba since he announced the new U.S. policy toward Cuba in December 2014.

“Fifty years of isolating Cuba,” he said, “had failed to promote democracy, setting us back in Latin America. That’s why we restored diplomatic relations, opened the door to travel and commerce, and positioned ourselves to improve the lives of the Cuban people. You want to consolidate our leadership and credibility in the hemisphere? Recognize that the Cold War is over. Lift the embargo.”

Congress had heard the appeal before; during last year’s address, after explaining the purpose behind his shift in policy, the President said, “Congress should begin the work of ending the embargo.”

Tuesday night he hit it harder – making it two years in a row that he urged Congress to take down what presidents dating back to Eisenhower had built up.

Everything is happening so fast.  Our compassion, concerns, and anxieties are pulled in a dozen different directions.  But, isn’t this a time when we could stop and admire the beauty of this historical moment?

Two years in a row a U.S. president actually said the state of the union would be stronger by ending the embargo against Cuba.  “The mere knowledge that such a work could be created makes me twice the person I was,” Goethe said.

Tuesday night we felt that way, too; even more, after dozens of Members of Congress heard what the president said and rose from their seats to applaud.  Stop for a minute and smell that coffee!

As we previously reported, there is majority, bipartisan support nationally for ending the embargo, including among Floridians and Cuban Americans.   With Congress hesitant to act, the upcoming election, and the impending close of President Obama’s second term, there is a greater sense of urgency in Washington and Havana to push Cuba policy forward in 2016.

In just a few weeks, Representatives Tom Emmer (MN-6) and Kathy Castor (FL-14), lead sponsors of legislation to repeal the trade embargo, are bringing a partisan delegation from the U.S. Congress to visit Cuba to build support for opening travel and trade relations with Cuba among the new or uncommitted colleagues who will accompany them.

Aside from the difficult task of adopting such sweeping legislation in an election year, diplomacy has brought changes to the U.S.-Cuba relationship, such as the restoration of commercial airline service, direct mail service, and direct phone service, and U.S. ports and U.S. businesses are seeking ways to use the new authorities granted by administration policies to create commercial relationships with Cuban counterparts. All of this builds on the policy opening in anticipation of a new president taking office in January 2017.

Josefina Vidal, who leads the Cuban side of the normalization talks, told the official Cuban News Agency that she’s “beginning to feel a certain bit of realism as the electoral process in the United States approaches; we don’t know what’s going to happen.”

Neither do we.  But, just like Governor McAuliffe hit the accelerator of the 1957 Chevy he drove through the streets of Havana during his trade mission to Cuba last week, we’re part of a larger effort to encourage policymakers, business leaders, advocates and experts to wrench as much change as possible out of U.S. policy before the next president is sworn in.  We have a year and hope to put it to good use. Read the rest of this entry »

Cuba and the U.S. – The State of the Reunion

January 8, 2016

In the days before President Obama’s 2015 State of the Union address, we wrote about the promising dimensions of his new direction in Cuba policy – it’s strong emphasis on expanding travel, encouraging diplomacy, broadening engagement by “ball players and marine scientists, artists and experts,” and bringing the business community farmers, businesses, and individuals with property compensation claims into the process to increase the momentum for reform.

In the last year, all of this – and more – has come to pass.

During the first days of the New Year, we got to see first-hand the benefits of the policy when we joined a trade delegation led by Virginia’s Governor Terry McAuliffe – a visit that produced cooperation agreements between the Cuban and Virginia Port Authorities, and between Virginia Commonwealth University and the University of Havana.

The first clears the way for businesses in Virginia to build and grow relationships with counterparts in Cuba; the second means students from both countries will be able to expand their horizons through academic exchanges and joint research projects.

McAuliffe, who delighted onlookers by driving a 1956 pink Chevrolet Bel Air named Lola around Havana, concluded his visit to Cuba by previewing an appeal he promised to make to Paul Ryan, the House Speaker, Mitch McConnell, the Senate Majority Leader, and to Members of the House and Senate across the political aisle:

“2016 needs to be the year that we move our relationship forward, that we end this embargo, and we do the right thing for the citizens of the United States of America and the citizens of Cuba.”

He also told reporters, he’d be surprised if the President didn’t visit Cuba. The President’s Deputy National Security Advisor, Ben Rhodes, delivered the same message to reporters over the weekend, as he laid out the administration’s foreign policy priorities for the coming year.

What’s exciting to us is that the administration continues moving forward on efforts to broaden and deepen the reforms. Reuters broke an exclusive story this afternoon saying the U.S. government is finally considering putting to an end the program that lures Cuban doctors and nurses off their foreign postings with promises of easy entry into the United States.

A year ago, Rep. Rosa DeLauro and more than a dozen colleagues urged the administration to cancel this program, especially after lauding what Cuba had done to fight the Ebola outbreak in Western Africa. Cancelling this program – conceived under President George W. Bush as a brain-drain effort – is not just consistent with President Obama’s new direction, it is long overdue.

The progress we have seen in the last year was made possible by smart and strategic policy initiatives but also by patient diplomacy that set aside the kinds of distractions which left us trapped in the Cold War mindset

If this can be the steady state of our diplomacy it augers well for the state of the U.S.-Cuba reunion.

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