Report — From the July 2016 issue

El Bloqueo

The Cuban embargo continues

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While the core of the U.S. embargo is statutory, regulations provide its machinery, and the administration has considerable discretion to shape them. Thus, the president can do a good deal to mitigate the embargo’s effects — or exacerbate them. In 2004, the Bush Administration severely cut — from $3,000 to $300 — the amount of money Cuban Americans could bring to family members when they visited Cuba. Bush also implemented a three-year rule: Cuban Americans could visit their family on the island only once every three years; no exceptions were made even for humanitarian need, such as the death or illness of a loved one. When Cuban Americans did travel to Cuba, they could spend only $50 a day.

Soon after taking office, President Obama lifted the three-year rule and permitted American travelers to spend about $170 per day in Cuba, which was at least enough for a hotel room and meals. But most of the other restrictions remained in place until this year, and while the Bush Administration was more bellicose in tone toward Cuba, the Obama Administration actually enforced the embargo much more aggressively for most of its tenure. One set of regulations, the Cuban Assets Control Regulations, is enforced by the Treasury Department. These rules affected all of Cuba’s international transactions. Cuba could not buy or sell anything in U.S. dollars, and Cubans could not have bank accounts denominated in dollars, the global reserve currency. If a foreign bank opened an account or executed a wire transfer for a Cuban national, it was subject to massive fines by the Treasury Department. For most of his presidency, Obama kept these rules in place. The Treasury Department has only recently authorized American banks to open accounts for Cuban nationals and to process so-called U-turn transactions for Cuba, in which both parties to the sale are outside U.S. jurisdiction. Yet foreign governments and companies remain wary, as the legal boundaries of these reforms have not been tested and the next president could decide to roll them back in six short months. Most American banks and financial companies continue to be reluctant to have any dealings with Cuba, citing the sanctions.

Photographs from Havana by Rose Marie CromwellThere is no question that the Obama Administration and the Cuban government have done much to normalize U.S.–Cuban relations since the accords of 2014. There have been talks to develop more cooperation between Washington and Havana on counternarcotics efforts, environmental practices, the prevention and treatment of transmissible diseases, and migration. Last December, the two countries announced a pilot program for direct postal service. While in Cuba, Obama announced that the “100,000 Strong in the Americas” project — which aims to encourage student exchange between the United States and the rest of the Western Hemisphere — will be available to Cuban universities. In the future, scholarships and educational grants will also be available to Cuban students.

Along with the reestablishment of diplomatic relations, one of the most important developments has been the State Department’s removal of Cuba from the list of state sponsors of terrorism. While not strictly part of the embargo, the terrorism designation deeply affected Cuba’s ability to do business. The State Department added Cuba to the list in 1982 because of its alliance with the Soviet Union. Up until last year, the designation persisted on the grounds that Cuba provided a safe haven to Basque separatists and Colombian rebels. Even though it had been many years since Cuba actively supported revolutionary movements, many companies, especially banks, were hesitant to do business with the country when it was on the terrorism list, forcing Havana to pay higher prices and to deal with questionable business partners. The removal of Cuba from the list has made international companies more comfortable conducting trade.

The regulatory changes make life easier in other ways for the U.S. enterprises allowed to do business in Cuba, which can now hire staff and have storefronts, warehouses, and offices. There have also been a number of modifications to U.S. regulations, though they fall far short of ending the embargo. Many of them only reverse the harsh measures imposed by the Bush Administration more than a decade ago, in effect restoring the terms that were in place during the Clinton era, such as increasing religious visits and educational trips. While such measures contribute to normalizing relations, none of them will help Cuba’s economy as much as one significant change: Cuban Americans can now send as much money to their families in Cuba as they would like. Family remittances, estimated to total about $2 billion each year, are a major source of revenue for the Cuban economy.

The T.S.R.A. still prohibits American tourism to Cuba, which is defined as any travel outside of family visits, journalism, religious activities, and professional research. But travel to Cuba has become much easier for U.S. citizens fitting these categories. Until this year, most eligible travelers had to apply for a specific license, a process that typically took months. The Treasury Department was often vague about what it required in order to grant the license, so churches, universities, or nonprofit organizations had to submit applications again and again, sometimes providing hundreds of pages of documentation, only to have the license denied the week before the trip. Other kinds of travel needed only general licenses, which were simply an authorization of travel, without requiring a specific application in advance. At different points in recent years, there were general licenses for academic researchers, full-time professional journalists, and Cuban Americans visiting family members. Perhaps the most significant change the Obama Administration made in regard to travel limitations was that several of the categories that had required specific licenses are now allowed to travel under a general license. A church group going to Cuba for religious activities must still comply with the regulations, but now it can travel without applying in advance. The same is true for people-to-people educational trips. Organizations can bring a group to see Cuban art, for example, without having first to obtain the approval of the Treasury Department for planned meetings and events on their itinerary. And in March, the regulations were loosened further to allow individuals to travel on educational trips.

As a result of these changes, the number of Americans visiting Cuba in 2015 reached 161,000, a 77 percent increase from the previous year, which does not include the estimated 400,000 Cuban Americans who made family visits. Marazul Charters, one of the major U.S.-based agencies handling Cuba travel, reported an increase of another 45 percent (not including family travel) as of this April, in addition to a 15 percent rise in foreign visitors. (Travelers from the United States still make up only a small portion of Cuba’s international visitors, which hit a record 3.5 million in 2015.) The United States and Cuba have also signed an agreement to start operating commercial flights between the two countries. More than a dozen U.S. companies are vying for approval for 110 daily flights.

The new regulations also allow Americans to use credit cards in Cuba, at least in theory. This would make travel far easier and more secure. The embargo long prohibited wiring money, sending traveler’s checks, or sending currency in any other form, so American travelers have had to carry cash for everything they buy, and for any emergencies. For a class of college students visiting Cuba for a week, their instructor would need to bring $10,000 or $15,000 in cash to pay for meals and expenses. The possibility of using credit cards would not only make life much easier for American travelers but would increase Cuba’s retail sales considerably. This new development, however, is of little use as yet, since Cuba lacks the infrastructure to collect payment on credit-card purchases.

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is the Ignacio Ellacuria, S.J., Chair in Social Ethics in the philosophy department at Loyola University Chicago.

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