Thursday, January 15, 2015

United States Cuba Relations: The Genie Is Out Of The Bottle

 We will have comment and analysis forthcoming.  However, the bottomline is that Americans can now engage Cuba in meaningful ways.  Americans can travel to Cuba with minimal bureaucratic hassle and good faith compliance now... 

FACT SHEET: Treasury and Commerce Announce Regulatory Amendments to the Cuba Sanctions

Amendments Implement Changes Announced by the President on December 17 Related to the Easing of Cuba Sanctions

WASHINGTON - On December 17, 2014 the President announced a set of diplomatic and economic changes to chart a new course in U.S. relations with Cuba and to further engage and empower the Cuban people.  The U.S. Department of the Treasury and the U.S. Department of Commerce today are announcing the forthcoming publication of the revised Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), which implement the changes announced on December 17 to the sanctions administered by Treasury’s Office of Foreign Assets Control (OFAC) and Commerce’s Bureau of Industry and Security (BIS).  The changes take effect tomorrow, when the regulations are published in the Federal Register. 
These measures will facilitate travel to Cuba for authorized purposes, facilitate the provision by travel agents and airlines of authorized travel services and the forwarding by certain entities of authorized remittances, raise the limits on and generally authorize certain categories of remittances to Cuba, allow U.S. financial institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions, authorize certain transactions with Cuban nationals located outside of Cuba, and allow a number of other activities related to, among other areas, telecommunications, financial services, trade, and shipping.  Persons must comply with all provisions of the revised regulations; violations of the terms and conditions could result in penalties under U.S. law.
To see the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, please see here.  To see the Commerce regulations, which can be found at 15 CFR parts 730-774, please see here. The regulations will be effective as of Friday, January 16. Major elements of the changes in the revised regulations include:

Travel –
  • In all 12 existing categories of authorized travel, travel previously authorized by specific license will be authorized by general license, subject to appropriate conditions.  This means that individuals who meet the conditions laid out in the regulations will not need to apply for a license to travel to Cuba. 
  • These categories are: family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain authorized export transactions. 
  • The per diem rate previously imposed on authorized travelers will no longer apply, and there is no specific dollar limit on authorized expenses.  Authorized travelers will be allowed to engage in transactions ordinarily incident to travel within Cuba, including payment of living expenses and the acquisition in Cuba of goods for personal consumption there.
  • Additionally, travelers will now be allowed to use U.S. credit and debit cards in Cuba. 

Travel and Carrier Services 
  • Travel agents and airlines will be authorized to provide authorized travel and air carrier services without the need for a specific license from OFAC.

Insurance –
  • U.S. insurers will be authorized to provide coverage for global health, life, or travel insurance policies for individuals ordinarily resident in a third country who travel to or within Cuba.  Health, life, and travel insurance-related services will continue to be permitted for authorized U.S. travelers to Cuba.

Importation of Goods –
  • Authorized U.S. travelers to Cuba will be allowed to import up to $400 worth of  goods acquired in Cuba for personal use.  This includes no more than $100 of alcohol or tobacco products.

Telecommunications –
  • In order to better provide efficient and adequate telecommunications services between the United States and Cuba, a new OFAC general license will facilitate the establishment of commercial telecommunications facilities linking third countries and Cuba and in Cuba. 
  • The commercial export of certain items that will contribute to the ability of the Cuban people to communicate with people within Cuba, in the United States, and the rest of the world will be authorized under a new Commerce license exception (Support for the Cuban People (SCP)) without requiring a license.  This will include the commercial sale of certain consumer communications devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems.
  • Additional services incident to internet-based communications and related to certain exportations and reexportations of communications items will also be authorized by OFAC general license.

Consumer Communications Devices –
  • Commercial sales, as well as donations, of the export and reexport of consumer communications devices that enable the flow of information to from and among the Cuban people – such as personal computers, mobile phones, televisions, memory devices, recording devices, and consumer software – will be authorized under Commerce’s Consumer Communication Devices (CCD) license exception instead of requiring licenses.

Financial Services –
  • Depository institutions will be permitted to open and maintain correspondent accounts at a financial institution that is a national of Cuba to facilitate the processing of authorized transactions. 
  • U.S. financial institutions will be authorized to enroll merchants and process credit and debit card transactions for travel-related and other transactions consistent with section 515.560 of the CACR.  These measures will improve the speed and efficiency of authorized payments between the United States and Cuba.

Remittances –
  • The limits on generally licensed remittances to Cuban nationals other than certain prohibited Cuban Government and Cuban Communist Party officials will be increased from $500 to $2,000 per quarter. 
  • Certain remittances to Cuban nationals for humanitarian projects, support for the Cuban people, or development of private businesses will be generally authorized without limitation.  These general licenses will allow remittances for humanitarian projects in or related to Cuba that are designed to directly benefit the Cuban people; to support the Cuban people through activities of recognized human rights organizations, independent organizations designed to promote a rapid, peaceful transition to democracy, and activities of individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba; and to support the development of private businesses, including small farms.
  • Authorized travelers will be allowed to carry with them to Cuba $10,000 in total family remittances, periodic remittances, remittances to religious organizations in Cuba, and remittances to students in Cuba pursuant to an educational license. 
  • Under an expanded general license, banking institutions, including U.S.-registered brokers or dealers in securities and U.S.-registered money transmitters, will be permitted to process authorized remittances to Cuba without having to apply for a specific license. 

Third-Country Effects –
  • U.S.-owned or -controlled entities in third countries, including banks, will be authorized to provide goods and services to an individual Cuban national located outside of Cuba, provided the transaction does not involve a commercial exportation of goods or services to or from Cuba.
  • OFAC will generally authorize the unblocking of accounts of Cuban nationals who have permanently relocated outside of Cuba.
  • OFAC is issuing a general license that will authorize transactions related to third-country conferences attended by Cuban nationals.
  • In addition, a general license will authorize foreign vessels to enter the United States after engaging in certain trade with Cuba.

Small Business Growth –
  • Certain micro-financing projects and entrepreneurial and business training, such as for private business and agricultural operations, will be authorized. 
  • Also, commercial imports of certain independent Cuban entrepreneur-produced goods and services, as determined by the State Department on a list to be published on its website, will be authorized.

“Cash in Advance” –
  • The regulatory interpretation of “cash in advance” is being redefined from “cash before shipment” to “cash before transfer of title to, and control of,” the exported items to allow expanded financing of authorized trade with Cuba. 

Supporting Diplomatic Relations and USG Official Business –
  • The President announced the reestablishment of diplomatic relations with Cuba.  To facilitate that process, OFAC is adding a general license authorizing transactions with Cuban official missions and their employees in the United States.
  • In addition, in an effort to support important U.S. government interests, an expanded general license will authorize Cuba-related transactions by employees, grantees, and contractors of the U.S. government, foreign governments, and certain international organizations in their official capacities.

Support for the Cuban People –
  • Exports and reexports to provide support for the Cuban people in three areas:  improving living conditions and supporting independent economic activity; strengthening civil society; and improving communications – will be eligible under Commerce’s SCP license exception. 
  • To improve living conditions and support independent economic activity, SCP will authorize: (1) building materials, equipment, and tools for use by the private sector to construct or renovate privately-owned buildings, including privately-owned residences, businesses, places of worship, and building for private sector social or recreational use; (2) tools and equipment for private agricultural activity; and (3) tools, equipment, supplies, and instruments for use by private sector entrepreneurs.
  • To strengthen civil society, SCP will authorize export and reexport of donated items and temporary export and reexport by travelers to Cuba of items for use in scientific, archaeological, cultural, ecological, educational, historic preservation, or sporting activities.  SCP will also authorize exports and reexports to human rights organizations, individuals, or non-governmental organizations that promote independent activity intended to strengthen civil society.
  • Travelers will also be able to export temporarily items for use in professional research in the traveler’s profession or full time field of study under SCP.  The activities or research must not be related to items on the United States Munitions List or items controlled for sensitive reasons on the Commerce Control List. 
  • To improve communications, SCP will authorize exports and reexports of items for use by news media personnel and U.S. news bureaus. 
  • SCP will not authorize the export of items on the Commerce Control List for sensitive reasons such as national security, nuclear proliferation, regional stability, missile technology, and other reasons of similar sensitivity.

Gift Parcels –
  • Consolidated shipments of gift parcels will be eligible for the same Commerce license exception that authorizes individual gift parcels.

Liberalizing License Application Review Policy –
  • Commerce will set forth a general policy of approval for applications to export or reexport items necessary for the environmental protection or enhancement of U.S. and international air and water quality or coastlines (including items that enhance environmental quality through energy efficiency).
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Wednesday, December 31, 2014

United States Cuba Relations: A Transformative 2014 and the Promise of 2015

For this end of year posting we interviewed Antonio C. Martinez II., Attorney, Political Consultant, and Editor of USCubaPolitics.com to discuss the historical moments of December 2014 and what bodes next for Cuba policy in the U.S. Congress, the Obama Administration, and the 2016 elections on the horizon:

1.  In light of the announcement of December 17th of the restoration of diplomatic relations what is likely to happen in the 114th Congress?

On May 2, 2012, we published here “The Freedom of Alan Gross and The Cuban Five” which was a dramatic portrayal of events forecasted in the future. (see http://www.uscubapolitics.com/2012/05/united-states-cuba-relations-freedom-of.html ) I was very pleased that the envisioned scenario then pretty much played out in real life two and half years later.  I understand now why the White House did not acknowledge the letter I had sent it earlier this year outlining this scenario. Alan Gross came back home to his family.  The remaining three of the Cuban Five went home to theirs.  One of them will be a new father to a baby girl soon thanks to the humanitarian effort of Senator Patrick Leahy (D-Vt) and his staff.  The Cuban government also released political prisoners and freed a Cuban intelligence officer who had served the CIA and sent him to the United States.  So there was a balance in the actual deal. 

2.  Why did President Obama take this action?

I believe he wisely chose to take a principled stand to end our incongruent and hypocritical foreign policy.  He clearly saw that it was time to do a reset of our relations with Cuba.  The crisis of Alan Gross’ and the Cuban Five’s imprisonment gave the opening to transform the relationship.  The “adults in the room” prevailed. That began with providing immediate relief to the individuals caught in the sordid web that has been our relations with Cuba.  Emotional maturity prevailed.  Logic and reason prevailed.

This was a correction of the flawed narrative that had developed on U.S. Cuba relations—that somehow we could force Cuba to change its way of government and its political leadership through sanctions by a policy driven by Cuban Americans here in the U.S. and using the U.S. taxpayer to support it.  More than one billion tax dollars have been spent on our failed U.S. Cuba policies.  Billions more have been lost by both countries. By extension, it was like the Cuban Revolution of 1959 never ended but was carried over between Miami and Havana via Washington DC.   A valuable lesson has been learned.   Political and economic isolation to achieve regime change does not work and in Latin America is just more salt in the wounds of our dark history as a country that supports coups and installing our preferred dictators.  Latin America wants partnership with the United States, not to be its client.  The sooner we embrace the notion, the better the entire hemisphere will be.

President Obama seized the opportunity to make history as being the U.S. President that restored diplomatic relations with Cuba after more than five decades and began the process of ending the embargo.  I believe we will see more history made in the remaining two years of his term.

3.  Cuban dissidents feel the U.S. betrayed them by this act of recognizing the Cuban government.  Was this a betrayal?

President Obama did not betray anyone.  He was acting in the strategic and best interests of the United States, which is what his job is to do.  He chose not to continue a policy that does not work.  When more Americans go to Cuba to visit now, they will discover for themselves the challenges that the Cuban people face and compare it to what they had been told as part of the narrative.  Through the natural ebb and flow of travel and trade, we will be able to positively influence Cuba instead of trying to interfere with it. 

4.  At the time of this interview, the Cuban government shut down the proposed #YoTambienExijo public demonstration in Havana that was to occur on December 30, 2014 and arrested or detained organizers.  Could acts like this sabotage the normalization process?

Possibly.  However, lets look at what happened.  The White House has rightfully condemned these events.  I would say to our Cuban friends, what are you afraid of by having an open microphone in a public square and letting your citizens speak their minds freely without fear of arrest or harassment?  I believe the Cubans perceive any sort of demonstration that is connected to Cuban Americans and this one has such a connection is a contrived and orchestrated event organized indirectly by the United States.   You have to understand the history that is involved here. The Cubans won’t tolerate what they perceive is interference from foreigners. So instead of an act of airing grievances and aspirations, to them it is somehow inauthentic because of the U.S. connections.  I recall something that I was told when I have been in Cuba, that there are actually two dissident movements.  There is one that is relatively a small group of people who rely on U.S. support and do not have an audience or major following on the island.  Then there is a much larger dissident movement which reflects the majority of the population. It is tired and frustrated by the limitations imposed upon them by their own government and the U.S. embargo.  We must not allow events like this to drive this normalization effort off course.  There will probably be efforts to divert the normalization effort from its conclusion. We just need to get ourselves out of the way and extend the hand of friendship and we will be able to positively influence Cuba for the better.  There is a Cuban saying, “todo se consigue por las buenas” or “you can better get what you want through goodwill".

5.  What is likely to happen in the new 114th Congress and Republican Majority?

Senators Marco Rubio (R-Fl),  Rafael Eduardo “Ted” Cruz (R-Tx), Robert Menendez (D-NJ), Reps. Ileana Ros-Lehtinen (R-Fl), Mario Diaz-Balart (R-Fl), Albio Sires (D-NJ), and newly elected Rep. Carlos Curbelo (R-Fl) all have gone on record as being against lifting the embargo and the establishment of diplomatic relations.  They have stated they intend to block and obfuscate all efforts to allow these relations to develop through Congressional action.  They may get some traction and trade their votes on issues with other members for support for theirs on Cuba, but in the long run, their unprincipled and hypocritical stands will come out and that will be why they ultimately fail.  If I were a U.S. Senator who supports President Obama’s initiative with Cuba, I would have a series of amendments to offer during the debate.   These would be amendments to call on cutting off diplomatic relations and trade with every country that we say is autocratic, communist, or violates human rights.  I would also ask on the floor of these Members when was the last time they visited Havana?   Every member of the press and media should be asking the same questions of any Member of Congress.  When were you last in Havana, Cuba?  This will drive home the point that if they are going to vote on U.S. Cuba issues, how can they properly arrive at an informed, independent, judgment without even first visiting the country?  The hardliners will have more success in the House because of the rules of that body of Congress limit amendments, but all Members can speak on the floor.

6.  What can the average person who supports normalization and lifting the embargo can do with respect to Congress?

-The single most important thing you can do as a constituent is request that your Senators and Representative in Congress personally visit Cuba to assess the sanctions and whether the embargo should be lifted.   The more Members of Congress who visit Cuba will likely arrive at the same conclusion that is the overwhelming majority of those who visit Cuba.  The embargo has not worked and it should be lifted as quickly as possible.  Engagement is better than isolation.  This constituent inoculation should help stave off the dark influence of political money and hamstringing in Congress that will go on to stop normalization.

-Work with groups who support this kind of grassroots activity.  I had been particularly critical of some of these groups and NGOs as to their effectiveness.  However, their efforts cumulatively helped move the normalization debate in the right direction and I have to acknowledge and recognize their contributions.

-Because there is pro-embargo/anti-engagement campaign money circulating, the pro-normalization side must step up its political game too.  Cuban American moderates led by groups like CAFÉ and CubaNow  should evolve politically to lead voter registration efforts in New Jersey and Florida.  There must be commitments made to candidates who support engagement and lifting the embargo.  The opposition is marshalling its forces in Congress and on the campaign trail.  The challenge out there for 2016 will be which side of the Cuban American electorate can deliver votes and money and most importantly determine the election?

7.  What were the take away lessons from the November 2014 elections with respect to U.S. Cuba relations?

There were two elections of import to the issue.  The first was the Florida Governor’s race.  The second was the Garcia-Curbelo Congressional race in the 26th CD in Florida.  While pro-engagement candidate Charlie Crist did receive the majority of the Cuban American vote in the election, it was not enough to get him to victory.   So there is the lesson of delivering votes and money again, but more importantly being a determining factor in an election outcome.  

Joe Garcia ran a flawed campaign and entered into it hobbled by scandals around him concerning his staff.  His U.S. Cuba policy flaws were several.   He was half pregnant on the issue of Cuba, supporting travel and engagement but also supporting the embargo.  He ran a political ad with a Cuban dissident which probably was not a smart move.  He allied himself with his political enemies.  Why would he ever allow himself to be photographed with Mario Diaz-Balart or Ileana Ros Lehtinen, when those two were only thinking about how to defeat Garcia from the moment he was first sworn in?

Carlos Curbelo had the advantage then in the race.  However, he has no independence of thought on Cuba as he is owned by the hardliners and his family history on this issue.  He has never been to Cuba himself so how can he ever objectively determine if sanctions work?  He is trapped by history and apparent ignorance.  He intends to make fighting President Obama on Cuba the hallmark of his freshman term.  We will see if that was a wise political move.

If Garcia challenges Curbelo in a rematch or whoever challenges Curbelo in 2016, my advice to the candidate is go all in on Cuba.  Spend these next two years creating and seeding jobs in the district related to Cuba opening.  In Florida there is going to be an economic multiplier because of the Cuba opening.  Let Curbelo’s intransigence be his weakness at the ballot box in November 2016.

8.  What about the issues of American fugitives in Cuba? Governor Chris Christie (R-NJ) recently called upon President Obama to demand the extradition of Joanne Chesimard from Cuba.

In the scenario I wrote in May 2012, the return of American fugitives was part of the bargain that was struck.  The reality is more complicated.  The benefit of having normal relations is that we can have an extradition treaty in place between both countries.  I hope Governor Christie actually studies the history of this issue more as he will discover that New Jersey was once a hotbed of Cuban American related violence and bombing in the late 70’s and early 80’s.  There is even a still unsolved murder of one Cuban American from Hudson County, NJ named Eulalio Negrin, whose offense at the time was his support and efforts to reconcile Cubans and travel to Cuba to visit relatives.  There is information that requires intervention at the highest levels to get released that could help solve another murder, of a Cuban American killed in Puerto Rico,  Carlos Muniz Varela.  The other challenge we have is that we have given refuge to Cubans who were involved with the downing of a Cuban airliner in 1976 and other acts of sabotage and terror in Cuba.  So it is a complicated conversation. 

Hopefully we will work out something with the Cubans where there will be no more fugitives.  I think whatever fugitives we can get extradited back to face justice ie. those recently involved with Medicare fraud,  we should pursue that in the negotiations.

9. What happens to the Cuban Adjustment Act (CAA)? 

It can no longer be justified.  Democrats should offer amendments on immigration bills that would provide the same benefits of the CAA to America’s twelve million undocumented immigrants who are already here.  Why shouldn’t the wet foot dry foot policy apply to them too?  The CAA is essentially legal amnesty now.  Anti-immigrant Republicans will have a hard time reconciling the CAA which creates a pathway to citizenship for Cubans, but not support legislation that does the same for others, especially Hispanic immigrants.

As for Cubans who truly face political persecution, there is ample authority under current law to provide political asylum.

10.  What about claims and reparations for nationalized properties?

This is going to be complicated.  However it should be solved with creativity and flexibility.   The capital to pay off claims must be raised.  So the issue will be how to do that in a mutually beneficial way.    As much as we will ask the Cubans how they intend to compensate our claims, I am wondering what we are going to hear from the Cubans on the other side of this.   History will come into the conversations.  For example, most do not know that when Cuban dictator Fulgencio Batista was overthrown in 1959, he and members of his government and their families took with them approximately one billion dollars from the Cuban Treasury at the time.  Allegedly more than $464 million of those monies were deposited in U.S. bank accounts.  What happens to that stolen money?  So as we claim for properties that were stolen or taken from Americans, Cubans are going to ask the same of us.  Both sides will need to get past this history.

11.  What happens in Cuba next? 

With diplomatic and normal relations, things should improve.   Justifications for repression and siege mentality in Cuba should begin to lift.  I am confident that Cubans will figure it out.   There are 11 million people living on the island and about 3 million abroad, most in the United States and with great economic power to bear on the island.  So you have an interesting demographic situation where a nation finds twenty percent of its people reside abroad.  Reconciliation of the Cuban family and nation should be the focus, in spite of whatever anyone thinks about the Castros.    We made U.S. Cuba relations about the Castros and where did that get us?   Better as Cuba’s friend and respectful of their sovereignty we can actually influence them and offer them our counsel and opinions and work together where we can to increase economic activity and solve medical and scientific challenges.

We do not have to do much for people to know that pluralism of ideas is the natural order of man’s thinking and exists.  It must be tolerated in a truly free society.  Also we must show that political power should circulate. Do the Castros really want their legacy to be that they established a dynasty of autocratic power in Cuba, which would be contrary to everything they said was about their Cuban Revolution?  One benefit of stopping our own hypocrisy is that congruency allows one to point out hypocrisy elsewhere with integrity.  In the air of normal relations, I believe Cuba will be fully open to and explore the question – can their economy be saved with more capitalism added to it?  I think the answer is yes, provided that it springs from a Cuban and not any foreigner.   That does not mean that we cannot stimulate conversation or show examples to drive the point across.  Political and economic extremes are not useful and are actually self destructive to the society.  So instead of rubbing it in their faces, which no one likes, we can have more rational and intelligent conversations about how peoples and nations can progress.

12.  What are the next evolutions of President Obama’s U.S. Cuba agenda?

I think the next rounds of conversations that we will have with Cuba will continue to be productive.  Assistant Secretary of State for the Western Hemisphere Roberta Jacobson will lead those negotiations at the end of January.  That should lead to a historic Summit of the Americas in April.  I predict a Presidential visit to Havana is in store before President Obama leaves office.  2015 will be another historic year for U.S. Cuba relations.


“We enjoy the comfort of opinion without the discomfort of thought” – John F Kennedy.

“Peace, commerce, and honest friendship with all nations...entangling alliances with none” – Thomas Jefferson

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Wednesday, December 17, 2014

United States Cuba Relations: The U.S. and Cuba Have an "Adults in the Room" Moment

As we had predicted here and posted on this blog in May, 2012 in The Freedom of Alan Gross and The Cuban Five, peace and courage have prevailed and Alan Gross is back in the U.S. and the remaining three of the Cuban Five have been freed and sent back to Cuba!  This historic moment for the resetting of relations and the opportunity to meaningfully engage Cuba bodes well for the future. Emotional and intellectual maturity have prevailed over political posturing, denial, and egos.  This was no easy task.

We salute President Obama, Secretary of State John Kerry, and the team who worked very hard to resolve these human issues.  Very serious hard work remains to be done.   Similarly, those who oppose this rapprochement between the U.S. and Cuba on Capitol Hill will be able to throw obstacles on the normalization pathway that finally begins to unfold.  We will have a year end overview and outlook, including analysis of this announcement by President Obama and what the new makeup of Congress will have in store for U.S. Cuba relations.

On a personal note, this year has been one of challenges and growth.  We look forward to resuming publishing regular updates and analysis.  We welcome the participation of other similarly minded writers who are interested in working with us.

-Tony Martinez,  Editor

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