New sanctions against Cuba to take effect Thursday

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The Gran Hotel Manzana de Kempinski, seen here, was included in the State Department’s list of entities tied to the Cuban military. Photo by Antonio Osa Ramie/SAHIC Cuba.

The U.S. announced new sanctions against Cuba that the Trump administration says will prevent U.S. businesses and travelers from benefitting the Cuban military, intelligence, and security services.

The new rules, which take effect Thursday, will bar U.S. companies from doing business with 180 entities linked to the Cuban military. The entities include hotels, tourist groups, marinas, stores, as well as the port and special economic development zone in Mariel.

U.S. companies that have already conducted business with entities linked to the Cuban military will still be authorized, the Treasury Department said. Transactions related to airlines and cruise lines will also be allowed to continue.

Under the new rules, U.S. citizens will no longer be allowed to visit Cuba on individual “people-to-people” educational exchange programs, which allowed visitors to set their own itinerary. Americans must now travel with an authorized organization that has its own U.S. representative on the trip. However, individuals who booked at least part of their Cuba travel before President Donald Trump’s June 16 Cuba policy directive will be exempted, the Treasury Department said.

Individuals can still travel to Cuba under the “support for the Cuban people” category that encourages them to stay at private B&Bs (casa particulares) and eat at private restaurants (paladares). However, those travelers must engage in a full-time schedule of “meaningful” activities with the Cuban people that “support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities.”

“We have strengthened our Cuba policies to channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people,” Treasury Secretary Steve Mnuchin said in a statement.

Florida Republicans Rep. Mario Diaz-Balart and Sen. Marco Rubio, who had roles in crafting the new policy, said the regulations are important first step, but more must be done.

“Today’s announced regulations include some positive first steps,” Diaz-Balart said in a statement. “I am disappointed, however, that the regulations do not fully implement what the President ordered. It is clear that individuals within the bureaucracy who support the former administration’s Cuba policy continue to undermine President Trump.”

Rubio was more specific in his criticism, saying the State Department’s list of restricted military-linked entities should include the Gran Caribe and Cubanacan hotel groups. Neither of those hotel groups fall under the Cuban military’s massive GAESA business conglomerate, but they work closely with Minister of Tourism Manuel Marrero Cruz, a former military official.

William LeoGrande, an American University professor and co-author of Back Channel to Cuba: The Hidden History of Negotiations Between Washington and Havana, disputes the suggestion that Cubanacan and Gran Caribe are run by the military. He says the new regulations didn’t interpret it that way either.

“It’s pretty hard to make that argument for an enterprise which is entirely civilian, in a ministry that is entirely civilian, and just happens to be led by somebody who used to be in the armed forces,” LeoGrande said.

Sen. Patrick Leahy (D-Vt.), one of the most prominent lawmakers in favor of expanding ties to Cuba, was more critical of the Trump administration than Diaz-Balart and Rubio.

“On a day when President Trump and members of his Cabinet are feted in Beijing by the world’s most repressive, nuclear-armed communist government, in a country to which Americans can travel freely, his Treasury Department releases onerous and petty restrictions on what private American citizens can do in Cuba – an impoverished neighbor that poses not the slightest threat to the United States,” Sen. Patrick Leahy (D-Vt.) wrote in a statement.

Groups that advocate for the end of the Cuban embargo and loosened restrictions on travel also blasted the new regulations.

“Anyone with knowledge of how the Cuban economy works knows that these additional regulations on U.S. companies will simply make it harder to do business in Cuba,” said James Williams, president of Engage Cuba, an anti-embargo lobbying group based in Washington. “Given the intertwinement of Cuba’s economy, these new restrictions on U.S. businesses could hinder that progress which could cost the U.S. economy billions and affect thousands of jobs.”

“Restrictions on trade and travel are hammering Cuba’s private sector, which has grown through interaction with U.S. travelers and U.S. companies, and put the U.S. on the sidelines, politically and economically, at a time of transition in Cuba,” Cuba Educational Travel President Collin Laverty wrote in a statement.

The long-awaited regulations will be issued about five months after Trump signed his Cuba policy directive in Miami. Many lawmakers and analysts expected the new rules to be issued sooner, but it nevertheless ends some uncertainties about the island from businesses and prospective travelers.

“The new rules are a welcome development because they remove the uncertainty and afford predictability for businesses, and they allow for robust transactions to continue on the island,” said attorney Pedro Freyre, the international practice chair at Akerman LLP.

Still, the delay allowed several U.S. companies to sign deals with the Cuban government before the U.S. government’s unspecified deadline passed. Rimco, Caterpillar’s dealer for Puerto Rico and the eastern Caribbean, earned approval last week to set up a dealer facility in the Mariel Special Economic Development Zone. John Deere also signed a last week to ship tractors to Cuba this month.

While businesses and travelers now have some clarity, the new rules could further weaken U.S.-Cuba relations. Bilateral ties soured after the State Department confirmed at least 24 U.S. officials or their family members suffered unexplained injuries in Havana.

The State Department has labelled the incidents “attacks.” It retaliated by withdrawing most of its Havana embassy staff, expelling Cuban diplomats in Washington, and issuing a travel warning for the island.

Cuba has repeatedly denied involvement in an alleged sonic weapon attack. More recently, high-ranking Cuban officials have accused the U.S. of withholding information on the investigation and suggested the “attacks” didn’t happen.

“It’s possible that could escalate to a point where the administration might put in place a second set of sanctions,” LeoGrande said. “But at least for the time being, the administration has wrapped up its Cuba policy, and I don’t expect them to revisit it anytime soon.”

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  1. Daily Briefing - November 9, 2017 - Cuba Trade Magazine - November 9, 2017

    […] Reactions to the new sanctions on Cuba: Lawmakers, academics, business leaders and activists are sounding off on the new regulations limiting U.S. business and travel in Cuba. Florida Republicans such as Sen. Marco Rubio and Rep. Mario Diaz-Balart said the move is an important first step, but more must be done. Pro-engagement lawmakers such as Sen. Patrick Leahy (D-Vt.) blasted the Trump administration for unveiling the rules while the president is in in China, which he called “the world’s most repressive, nuclear-armed communist government.” Americans with a business interest in Cuba criticized the regulations, saying it will stifle the country’s private sector and add hurdles for U.S. businesses already operating on the island. (Cuba Trade) […]

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