Let’s Make a “Better Deal”

In June, President Trump announced plans to bring about a “better deal” by “canceling the last administration’s completely one-sided deal with Cuba,” ordering relevant agencies to promulgate new regulations based on a National Security Presidential Memorandum published by the White House.

This week, the Treasury and Commerce Departments published new Cuba regulations (described below), and the State Department formulated a list of entities with ties to Cuba’s military and other select government departments, with which transactions are now prohibited.

While the new regulations, which restrict U.S. travel to Cuba and regulate how Americans can spend money on the island, do not go so far as to “cancel” the rapprochement started in December 2014, they certainly cannot be considered a “better deal,” either. The rules restrict the rights of U.S. citizens to travel freely, effectively limiting how much money will be spent at paladares and casas particulares, and are a blow to regional and global perceptions of the U.S. as a partner.

As we saw at the United Nations last week, virtually the entire world adamantly opposes the U.S. embargo. This isn’t a case of the U.S. having wisdom or a moral compass the rest of the world is missing. It is symbolic of a tendency to ignore the mistakes and failures of the past, and to pursue interventionist politics without an eye for their consequences. Meanwhile, doubling down on this failed policy will only continue to hurt U.S. credibility and perception abroad, two things already in sharp decline.

On Wednesday, Treasury Secretary Steve Mnuchin released a statement saying that the new regulations would “encourage the [Cuban] government to move toward greater political and economic freedom for the Cuban people.” Not only does this ignore the reality that attempts to strong-arm Cuba’s government into reforms have failed for over 50 years, it makes a flawed judgement that limiting the ability of Americans to visit Cuba will somehow yield economic prosperity for people on the island.

Even a cursory look at the explosion of U.S. travel to Cuba clearly shows how it benefits people in both countries. But you needn’t take our word for it – read the words of the Cuban people who we spoke with in the aftermath of President Trump’s announcement last June. The bottom line is, the administration’s new policy will most hurt the people it supposedly aims to support.

Despite the setback, we would be remiss to analyze this policy without noting a few positive (or perhaps more aptly, not-so-negative) takeaways. The new regulations allow for continued diplomatic relations, bilateral agreements and commercial contracts remain in effect, and ongoing negotiations on issues such as property claims are expected to continue. All this at a time when there is momentum in Congress to add bipartisan cosponsors to bills to ease travel and trade restrictions.

In addition to these agreements, the manner in which the writing of the new policy unfolded shows that many of the gains from engagement are already entrenched.

Recall the reports from the early months of the Trump administration that in discussions about altering U.S. policy toward Cuba, “Most of the agencies favored maintaining Obama’s more open policy.”

This week, Senator Marco Rubio, purportedly the architect behind President Trump’s memorandum, lamented that his intentions were not perfectly reflected in the regulatory iteration. Said Rubio, “Bureaucrats in the State Department who oppose the President’s Cuba policy refused to fully implement it.”

We think that one factor behind the softening was that departments, unlike the White House, heard some of the right voices. In July, CDA helped sponsor a group of Cuban entrepreneurs to travel to Washington to deliver policy recommendations to the Departments of State, Commerce, and the Treasury. Among their recommendations, the entrepreneurs wrote, “The Department of Commerce should adopt a favorable disposition to approving those exports to Cuba likely to benefit Cuban private sector individuals and/or companies.” That is precisely what Commerce did, a rare bright spot in this week’s regulatory changes.

This influence is made all the more noteworthy by the Miami Herald’s reporting this week that politicians like Senator Rubio and Rep. Mario Díaz-Balart were kept “in the dark” on the policy process, learning about the new rules well after news reporters.

Undoubtedly, the regulations published this week are a setback for U.S.-Cuba relations, and ultimately reflect the decision of a president with misguided intentions. But our two countries have weathered far graver moments in the past, and we are confident that we can brave the current storm to continue on the path toward normalization.

URGENT APPEAL – Preserve engagement with Cuba! Click HERE to support CDA’s advocacy work!

This week, in Cuba news…

U.S.-Cuba Relations

Trump administration releases new Cuba regulations

On November 8, the Departments of Treasury and Commerce published a series of changes to U.S. sanctions regulations for Cuba. The changes were announced by President Trump in his June National Security Presidential Memorandum on Cuba.

Key changes include:

  • A prohibition on individual people-to-people educational travel to Cuba. This means that most Americans who visit Cuba must travel with groups and travel providers, and be accompanied by a representative of the sponsor group. U.S. individual travel is allowed for a full itinerary of activities under the category of “Support for the Cuban People.” The regulations redefine this category, such that while eating at private restaurants, staying at private hotels, and patronizing other private businesses is encouraged, travelers must engage in additional activities to “enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities.”
  • A prohibition on direct financial transactions that benefit Cuba’s military, intelligence, or security services, including GAESA, the military business conglomerate that is heavily involved in the tourism sector. The State Department has published a list of 180 entities with which transactions are prohibited; the list, which will be updated periodically, includes several government ministries, hotels (including the recently opened 5-star Gran Hotel Manzana), tour agencies, shops, beverage producers, and the Special Economic Development Zone at the Port of Mariel.
  • An expanded list of Cuban “prohibited officials” who cannot travel to or receive funds from the U.S. to include members of the National Assembly, heads of neighborhood Committees for the Defense of the Revolution, high-level officials in ministries and state agencies, secretaries of the Confederation of Labor, employees of the Ministries of the Interior and Defense, editors of Cuban state media organizations, and employees of the Supreme Court. This returns the list to its pre-October 2016 state, when it was narrowed by President Obama.
  • A streamlined definition of allowable exports to Cuba’s private sector. Such exports were previously limited to items for either construction of private homes, private sector agriculture activities, or use by private sector entrepreneurs. The November 8 regulations remove these specifications, though exports still require licensing.

What the new regulations don’t change:

  • Diplomatic relations between the U.S. and Cuba will continue. Embassies in both countries will remain open.
  • Existing bilateral agreements will remain in effect, and the U.S. and Cuba are expected to continue dialogues on issues including migration, law enforcement, and property claims. (The State Department’s ordered departure of non-essential diplomats from the U.S. Embassy in Havana stipulates that the U.S. will not participate in official meetings in Cuba for the time being.)
  • Regulations allowing unlimited remittances to Cuba will remain in place – except for remittances to “prohibited officials” – and there are no limits on Cuban Americans’ travel to visit family on the island.
  • U.S. companies with existing commercial agreements in Cuba are exempt from the State Department’s November 2017 restrictions. Marriott/Starwood, which has a contract to manage the Cuban government-owned Four Points Sheraton hotel in Havana, and Caterpillar subsidiary RIMCO are among the companies grandfathered into Obama administration-era regulations. Caterpillar was the only U.S. firm to secure a contract to operate in Cuba’s Mariel Special Economic Development Zone.

In response to the regulations, Josefina Vidal, director general for U.S. Affairs at Cuba’s Ministry of Foreign Affairs, released a statement saying, “The measures confirm the serious regress of bilateral relations” under the Trump administration.

Cuba’s Foreign Minister meets with U.S. Chamber of Commerce, Members of Congress

Bruno Rodríguez, Cuba’s Minister of Foreign Relations, met separately with representatives from the U.S. Chamber of Commerce and Congress in Washington November 3. Mr. Rodríguez was in the U.S. for the United Nation’s annual vote on a resolution condemning the U.S. embargo against Cuba, held November 1.

Senators Patrick Leahy (VT), Jeff Flake (AZ), Amy Klobuchar (MN), Chris Van Hollen (MD), Chris Coons (DE), and Tom Udall (NM) were among those in attendance at the congressional meeting. According to a statement from Cuba’s Ministry of Foreign Affairs, Mr. Rodríguez reiterated Cuba’s position that it has no information on the source of alleged health attacks on U.S. diplomats, and both parties “reaffirmed the importance of the dialogue and cooperation between the two nations.”

The U.S. Chamber of Commerce released a statement Wednesday condemning new Trump administration regulations on Cuba, saying, “We urge the administration to continue to keep business in mind and avoid further steps to restrict the economic relationship between the U.S. and Cuba.”

U.S. travel companies stand to benefit from Cuba engagement, but are wary of policy shift

U.S. cruise lines Norwegian, Carnival, and Royal Caribbean will earn over $600 million through 2019 from their current itineraries servicing Cuba, EFE reports. The three companies have a combined 286 scheduled trips to Cuba, expected to take 455,000 passengers to the island. U.S. cruise operators Victory Cruise Lines, Azamara Club, Pearl Seas, Regent, Holland America, and Oceania also service the island.

However, Minnesota airline carrier Sun Country this week abandoned its Cuba flight allocation from the U.S. Department of Transportation because, “The market demand remains uncertain and there is still a lack of clarity surrounding travel restrictions.” In June 2016, the department awarded Sun Country three once-weekly flights between Minneapolis/St. Paul and various Cuban cities; in December 2016, the airline filed a request to delay its entry into the Cuban market until December 2017 so that it could “examine and mitigate barriers still in place due to the current trade embargo between the US and Cuba.”

U.S. airlines Frontier, Silver, and Spirit have all terminated flights to Cuba this year due to low profits; however, American, Delta, FedEx, JetBlue, Southwest, and United applied in August for additional flights to the island, as we previously reported.

What We’re Watching

Engagement or Estrangement: What next for US-Cuban relations?, Inter-American Dialogue

CDA Executive Director Emily Mendrala is featured on a panel discussion at the Inter-American Dialogue on the future of U.S.-Cuba relations, alongside Jorge Domínguez, professor of Government at Harvard University, and Michael Bustamante, professor of History at Florida International University. Video of the event is available through C-SPAN.

What We’re Reading

As Cuba-US ties harden, orchestra keeps building bridge, AFP

AFP tells the story of a joint U.S.-Cuba youth orchestra. As Cuban cellist Adriel David Rodriguez Laza says, “I believe music is like an ambassador between the two nations.”

Do Trump’s Cuba Regulations Promote – Or Punish – Cuban Entrepreneurs?, Tim Padgett, WLRN Miami

WLRN Miami speaks with Collin Laverty, president of Cuba Educational Travel, on the human impact of the Trump administration’s actions to restrict travel to and trade with Cuba.

Editor’s note: CDA is seeking interns for the Spring 2018 semester! Applications are due by November 15. Please visit our website for more information about how to apply.

Support CDA: Click here to support CDA’s work bringing you the Cuba Central News Brief each week and promoting a U.S. policy toward Cuba based on engagement and recognition of Cuba’s sovereignty.

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