Happy July 4th Weekend (just don’t read this while driving)

At the start of the U.S. celebration of Independence Day, it is sheer coincidence that the top four news stories you’ll read below are travel-related, driven by smart changes in U.S. policy and indicative of the vital role U.S. businesses can play contributing to normalization.

Here’s a preview: If you were in Cuba right now and needed some cash, you could use your Stonegate-issued MasterCard at an ATM in Havana. If you plan to book a flight with American Airlines, whose service to Cuba starts in September, you will be able to contact a new Cuba-specific reservations desk to get help obtaining a visa for your trip. If you want to use your people-to-people travel privileges to see Cuba by ship and automobile, and you qualify for AARP membership, you can book passage with Grand Circle Travel, which will begin its cruise service in January 2017. If you’re thinking about hotels in Cuba, and want a room that feels familiar, you might check out the Quinta Avenida Hotel in Havana, now operating as a Four Points Sheraton.

Without the exercise of Presidential leadership on key policy reforms, and decisions by the businesses involved to take some risks, the lead story in the news brief would be about the third bilateral meeting on the environment (not that there’s anything wrong with that).

American Airlines and Grand Circle Travel enter the Cuban market under the cover of competition, but without assurances consumers want to buy what they’re selling. Call that consumer risk. Stonegate Bank assumed regulatory risk when it became the first U.S.-based financial institution with a real foothold in Cuba; the substantial fines imposed by this administration and its predecessors for violating Cuba sanctions that are still in force shake lesser institutions down to their shareholders.

Starwood, however, by taking over management responsibilities for hotels in Havana owned by Gaviota, a Cuban state-owned enterprise, willingly assumed the biggest risk; exposing itself to political attack and reputational damage from click-baiting but factually accurate headlines like this one, Starwood begins managing hotel run by military in Cuba, from the Associated Press.

By awarding Starwood a license authorizing this arrangement, the Obama administration acknowledged a reality of Cuba’s centrally planned economy; namely, that building durable ties between our countries will require U.S. corporations to do business not just with Cuba’s independent small-business sector but also with state-owned enterprises, some controlled by Cuba’s military. Establishing this precedent is essential to moving the normalization process forward.

Starwood isn’t doing this for charitable reasons: it’s in Cuba to build its brand and make money from global tourists and U.S. guests visiting Havana. Ideally, it will also have knock-on effects and embolden other U.S. companies to seek licenses and bring their operations to the island.

It is our hope that the collective weight of such decisions will persuade policymakers in Washington that the embargo is so past its sell-by date that Congress will finally clear it from the “shelves” of our legal system. At which point doing business in Cuba won’t be require so many regulatory checks and P.R. balances.

This is a good strategy. But, the U.S. campaign finance system, among other factors, stands in our way.

On Wednesday, Senator Marco Rubio held a fundraiser in Washington that, according to Politico, raised at least $500,000. As is customary, Senator Rubio’s campaign committee sent out invitations topped by prominent names and listing suggested donation levels, e.g. a PAC can pay $5,000 and an individual can pony up $2,500 to be listed as sponsors. If you’d like to read his invitation, you can do so here.

Senator Rubio, of course, is an avowed opponent of President Obama’s trade and travel reforms, which lie at the heart of our commercial opening with Cuba. So, it’s no surprise to find Mauricio Claver-Carone’s name among the financially generous supporters of the Senator’s reelection; Claver-Carone’s U.S.-Cuba Democracy PAC donated nearly $400,000 to pro-sanctions legislators in the first quarter of 2016 alone.

Unfortunately, it is also no surprise to find on the list: the Chamber of Commerce, the nation’s premier advocate for free trade with Cuba for decades; Holland & Knight, a law firm whose “Cuba Action Team” advises clients on doing business in Cuba; and the American Hotel and Lodging Association’s Political Action Committee, which is urging Congress to “pass additional legislation to open up [Cuba] to American businesses, especially lodging companies who can build new infrastructure in that country to accommodate these additional travelers.”

In Washington, an individual, a company, or an institution that advocates for change and donates to the opponents of the change they stand for is understood to be a rational actor covering his bets.

This isn’t just legal. It’s business as usual. But it also makes deploying some of the most powerful and persuasive advocates for ending the embargo a somewhat more complicated task than it ought to be.

Happy Independence Day.

This week, in Cuba news…

U.S.–Cuba Relations

Havana ATMs accepting U.S. bank’s MasterCard: central bank, Marc Frank, Reuters

With approval from Cuba’s Central Bank, Stonegate Bank’s Cuba MasterCard has become the first U.S.-issued credit card that can be used to withdraw money from any ATM in Havana, Reuters reported.

The card, which is the first U.S. credit card issued for use in Cuba, can also be used at hotels, restaurants, and car rental companies, depending on the presence of point-of-sale devices.

Irma Margarita Martínez, First Vice President of Cuba’s Central Bank, announced the development at the International Money Transfer Conference this week in Havana. She also indicated that Cuba is open to extending the service to all U.S. credit card holders, but no other U.S. bank has expressed interest in doing so. Carlos Gutiérrez, former U.S. Secretary of Commerce, separately told Reuters, “where we have the biggest room to move is on the financial side,” and urged U.S. banks to begin supporting increased commerce with Cuba.

EFE reported that the cash advance service will initially be offered only in Havana, but will eventually be available country-wide. Tania Fernández, Stonegate’s Cuba banking manager, told the Associated Press that 500 of the 1,000 limited-edition credit cards have already been issued in the two weeks since the card’s debut. Most cardholders thus far are Cuban Americans traveling to visit family and U.S. companies looking to do business on the island.

In January, the U.S. Treasury Department’s Office of Foreign Assets Control authorized the use of credit cards by U.S. visitors to the island.

Starwood begins managing hotel run by military in Cuba, Michael Weissenstein, Associated Press

Quinta Avenida Hotel in Havana, owned by Grupo de Turismo Gaviota, which is a part of Cuba’s Armed Forces Ministry, is now up and running as a Four Points Sheraton managed by Starwood Hotels & Resorts. After receiving a special Treasury Department license to conduct business in Cuba, Starwood struck the multimillion-dollar hotel management deal that was announced just before President Obama’s visit in March. Starwood is the first U.S. company to manage a hotel in Cuba since 1959. According to Reuters, Starwood will begin managing the state-owned Gran Caribe Inglaterra Hotel, also in Havana, on August 31.

Robert Muse, a Washington-based lawyer and an expert on U.S. sanctions, told the AP that the deal with Starwood “certainly goes further and faster than anyone contemplated. The Cuban government proved that it can quickly and decisively deal with the U.S. hospitality sector. No reason they can’t do it again and again and again.”

American Airlines will offer Cuba travelers help with visas, Mimi Whitefield, Miami Herald

Set to begin taking U.S. travelers to Cuba in early September, American Airlines announced it will create a Cuba-specific reservations desk and will aid travelers in the visa process. According to an American Airlines spokesperson, the carrier will employ a “third-party vendor” to simplify the process of obtaining visas for travel to Cuba. Journalists and business travelers, however, will have to apply for visas through the Cuban Embassy in Washington, D.C. Tickets have gone on-sale for American Airlines’ first direct commercial flights to Cuba, but the airline is still finalizing arrangements with Cuba’s government.

Another cruise line announces plans for Cuba voyages, Gene Sloan, USA Today

Grand Circle Travel, which offers international vacations to AARP members, will operate cruises for people-to-people travelers to Cuba starting in January 2017. The 11-night trips will begin in Miami and, after sailing around Cuba for a week, bring passengers to Cienfuegos, then via car to Havana, returning to Miami by plane. Grand Circle Travel is the third cruise company to receive approval to take U.S. travelers to Cuba; in May, Carnival Corp.’s Adonia became the first U.S. cruise ship to arrive in Cuba since 1978, and the French luxury line Ponant received approval in April, but will not begin service until next year. Several other companies, including Norwegian Cruise Lines and Victory Cruise Lines, have also applied for licenses, but still await approval from Cuba’s government.

Cuba and U.S. hold third meeting on the environment, Prensa Latina

The U.S. and Cuba held talks in Havana this week about key issues affecting the marine environment, including on a bilateral agreement to protect the Gulf of Mexico from future oil spills. The Department of State sent a delegation (pictured here) to Cuba led by David Balton, Deputy Assistant Secretary of State for Oceans and Fisheries, along with representatives of the National Oceanic and Atmospheric Administration and marine conservationists. The Tampa Bay Times reports that representatives from the Florida Aquarium in Tampa, which is working with Havana’s National Aquarium on an initiative to improve the health of coral reefs, also joined the delegation. U.S. delegates visited Zapata Wetlands National Park and attended meetings in Havana about coastal resilience, overfishing, and preserving coral reefs.

The United States and Cuba signed a Memorandum of Understanding in November 2015 to facilitate cooperation in protecting the environment, especially marine life in the Florida Straits, and, more recently, the two countries agreed to work together to protect shark populations.

Shaq brings U.S. basketball diplomacy to Cuban capital, Associated Press

The U.S. Department of State sent NBA Hall of Famer Shaquille O’Neal, its recently appointed sports envoy, to “lead basketball clinics for youth and demonstrate how sports can serve as a means of developing academic, leadership, and teamwork skills,” as the Department said in a prepared statement. O’Neal, who played in the NBA for 19 seasons, was joined by Dallas Mavericks Assistant Coach Kaleb Canales. OnCuba Magazine reported that the delegation also attended a cocktail reception at the home of Amb. Jeffrey DeLaurentis, the U.S. Chief of Mission to Cuba, along with Cuban basketball and baseball icons and representatives from Cuba’s Ministry of Foreign Affairs.

The trip follows several other high-level cultural exchange delegations to the island, including an April 2015 NBA delegation and, this spring, a cultural mission of the President’s Committee for the Arts and the Humanities facilitated and joined by The Center for Democracy in the Americas.

Separately, The Guardian reported this week that the U.S. men’s national soccer team will make a historic trip to Havana to play a friendly match against the Cuban national team on October 7.

Harlem-Havana cultural exchange to bring music, arts, food to New York, Cuba, Jared McCallister, New York Daily News

The Greater Harlem Chamber of Commerce announced the Harlem/Havana Music & Cultural Festival will take place August 12-21 in Manhattan. The festival will feature Cuban musicians, artists, and culinary experts. The cultural exchange will continue next February when a delegation from Harlem will travel to Cuba. Last September, the Greater Harlem Chamber of Commerce traveled to Cuba to discuss trade, business, and tourism, and begin planning for this summer’s cultural exchange program.

Lighthouse Cuban migrants climbed isn’t ‘dry land,’ judge rules, Catherine E. Sholchet, CNN

A federal judge ruled that the 24 Cuban migrants who reached the American Shoal Lighthouse 6.5 miles from the Florida Keys and were held for over a month on a U.S. Coast Guard cutter did not reach “dry land,” and therefore must be sent back to Cuba under the “wet foot, dry foot” provision. Judge Darrin P. Gayles wrote in his decision that the lighthouse, though U.S.-owned, does not qualify as U.S. soil; consequently, “landing on the Lighthouse is essentially no different than having been interdicted at sea.” The migrants’ attorneys have stated that they plan to appeal the decision, according to Miami news channel WSVN.

State Department keeps Cuba on Tier 2 Watch List for Human Trafficking

The State Department released its 2016 Trafficking in Persons Report, keeping Cuba on its Tier 2 Watch List for the second year in a row. Last year’s report upgraded Cuba from Tier 3, where the State Department had ranked it since 2003. This identified Cuba as a country that was not making significant efforts to combat trafficking. This year’s report recognizes that despite having issues with human trafficking, Cuba is making significant strides to comply with minimum standards set forth in Victims of Trafficking and Violence Protection Act of 2000. Cuba remains on the Tier 2 Watch List, which is below Tier 2 but one level up from Tier 3; the report cites a lack of evidence of increased efforts to eliminate trafficking in persons, and the continued prevalence of the problem in the country.

The State Department report acknowledges that Cuba’s response to human trafficking has progressed, citing an October 2015 report in which Cuba’s government detailed its anti-trafficking efforts. The report includes recommendations for Cuba such as implementing comprehensive anti-trafficking laws to penalize forced labor and sex trafficking on the island.

In Cuba

Cuba plans cuts in fuel, electricity consumption: sources, Marc Frank, Reuters

Two sources – a senior diplomat and the director of a foreign joint venture – told Reuters that Cuba’s Economic Ministry will impose fuel and electricity-consumption rationing measures of up to 50 percent for some state enterprises and joint ventures through the second half of 2016. The cuts will go into effect this month, and official quotas, which are “still under discussion,” will be announced at next week’s session of the National Assembly. Venezuela’s oil shipments to Cuba remain steady despite low oil prices; however, a source told Reuters, “It is obvious all this has to do with the crisis in Venezuela.”

Although no official rationale has been announced, the cutbacks to energy consumption do not come as a surprise: Diplomats stated that they had been alerted of the rations for state companies and, late last year, Cuba’s President Raúl Castro told the National Assembly that the country’s economic growth would slow to 2 percent this year, down from 4 percent in 2015, a report he reiterated in April during the Seventh Congress of the Communist Party of Cuba. This year’s energy rationing measures are not expected to be as severe as those instituted in the early 1990s after the fall of the Soviet Union.

Cuban ministers discuss economy, corruption, Yaima Puig Meneses and Leticia Martínez Hernández, Granma

Cuba’s Council of Ministers met on June 27 to review documents to be presented at the next session of the National Assembly of People’s Power on July 8th, including a report on the country’s economic performance in the first half of 2016, and a “close-out report” on the country’s 2015 budget. According to Lina Pedraza Rodríguez, Cuba’s Minister of Finances and Prices, Cuba finished 2015 with a fiscal deficit of 5.55 billion pesos, equal to 6.1% of GDP, and devoted 54 percent of expenses budgeted last year to education, health, and social assistance.

Granma also reported that Gladys Bejerano Portela, Cuba’s Comptroller-General, reported on cases of illegalities, administrative corruption, and social indiscipline reported in 2015, with most instances occurring at the municipal level. She blamed “an environment of impunity and the lack of control” in these areas despite measures previously adopted to counteract such behavior.

Cuba reports no Zika transmission since March; Dengue all but eliminated, Marc Frank, Reuters

Also, at the Council of Ministers meeting, Dr. Roberto Morales Ojeda, Cuba’s Minister of Public Health, reported that Cuba’s Zika prevention efforts have been successful; measures to exterminate the illness-carrying Aedes mosquito population have also virtually eradicated Dengue fever on the island. Cuba has seen 20 imported cases of Zika and 14 cases in which the infection was transmitted locally, the last of which was reported on March 15. Cuba’s government has implemented prevention programs such as routine fumigations, conducted by the military in neighborhoods with significant amounts of standing water, and has set up health checkpoints around the island and in airports for travelers coming from countries hardest hit by the Zika virus, including Brazil and Venezuela.

On June 13, Sylvia M. Burwell, U.S. Secretary of Health and Human Services, signed a Memorandum of Understanding with Cuba’s Ministry of Public Health to coordinate responses to public health issues including Zika.

Drought Prompts Debate on Cuba’s Irrigation Problems, Ivet González, IPS Cuba

Ivet González examines sustainable solutions for water conservation as Cuba faces its worst drought in 115 years. Since the onset of the drought in late 2014, Cuba’s agricultural sector has suffered, and farmers have had to resort to using the island’s rapidly depleting reservoirs to water crops. The use of irrigation has led to higher crop yields, but environmental experts on the island are urging farmers to augment their water conservation efforts, especially in light of potential long-term effects of the region-wide drought. Theodor Friedrich, the UN’s Food and Agriculture Organization representative in Cuba, told IPS that “irrigation is not the answer to drought.” Instead, Cuba should take a multilateral approach encompassing improved soil management and reducing the use of irrigation machinery to maintain the water table.

New archbishop may transform Cuban church with modest style, Andrea Rodríguez, Associated Press

Following the retirement of Cardinal Jaime Ortega as Archbishop of Havana in April, observers and church officials in Cuba say his successor Juan de la Caridad García is likely to adopt a lower key, locally oriented approach as Havana’s pastoral leader. Archbishop García had served as Archbishop of Camagüey since 2002 and, as the National Catholic Reporter put it, “has worked quietly to help rebuild the Cuban church, physically and spiritually.” Archbishop García told the AP last Sunday, “Obviously there are many things to work on, many places to spread the word, but I’m not going to start from zero. The previous bishops and Cardinal Jaime Ortega have done a lot.” During his 35-year term as archbishop, Cardinal Ortega helped improve relations between Cuba’s government and the Church, paved the way for the release of political prisoners, and played a crucial role in renewing diplomatic ties between the U.S. and Cuba. Archbishop García has praised Cardinal Ortega’s legacy, and says, “we will try to continue his work,” though it is not yet apparent whether he intends to carry forward the role that Cardinal Ortega played diplomatically.

Cuba’s Foreign Relations

Vice President Salvador Valdés Mesa concludes official visit to China (in Spanish), Juventud Rebelde

Salvador Valdés Mesa, Cuba’s Vice President of the Council of State, traveled to Beijing to inform the Central Committee of the Communist Party of China (CPC) about the results of the Seventh Congress of the Communist Party of Cuba, held in April. Mr. Valdés Mesa met with China’s President Xi Jinping, Vice President Li Yuanchao, and other CPC officials to discuss the state of Cuba-China relations; both country delegations affirmed their commitment to continuing to strengthen bilateral ties. On June 28, Mr. Valdés Mesa continued on to the Democratic People’s Republic of Korea.

Cuban and Slovakian Banks Sign Financial Agreement in Havana (in Spanish), EFE

The National Bank of Cuba and the VUB Bank of Slovakia signed a Memorandum of Understanding on future energy projects, including a financial agreement for the Slovakian Bank to help fund the remodeling of the thermoelectric plant in Mariel. Ricardo Cabrisas, Vice President of Cuba’s Council of Ministers, and Peter Kazimir, Slovakia’s Minister of Finance, led the talks and discussed the progress of bilateral relations since the visit of Robert Fico, Slovakia’s Prime Minister, to the island last October.

Editor’s note: The Center for Democracy in the Americas is now accepting applications for the Cuba Travel Coordinator position. Click here for more information about how to apply. Applications are due by July 7.

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