Cuban Sanctions: What You Need To Know
Following the positive reception and further inquiry into Cuba after the TEIL Times June Newsletter, we are providing a follow-up to cover what you need to know about doing business under the threat of Cuba sanctions.
President Trump is threatening to tighten the travel restrictions against Cuba this coming week, his aides say. This could have dire ramifications for U.S. businesses who desire or whom have already decided to do business with Cuba and Cuban Nationals. Reversing the policy changes that the Obama Administration had put in place will affect not only business, but U.S. citizens’ ability to travel, be educated (Cuba has a literacy rate of 98% and sends its doctors all over the world given their development of cures for diseases like diabetes) and aide to the Cuban people.
Most people do not realize it, but the Obama Administration did not lift the sanctions. The Cuba embargo, of 50 years, has always remained in place since instituted in 1961 when the country became communist under Fidel Castro. At that time Cuba signed trade agreements with the Soviet Bloc and in 1962 saw a stand-off between the US-Russia in what is known as the Cuban Missile Crisis. U.S. reacted by attempting to kill Fidel Castro and his cabinet in the Bay of Pigs, but our Goliath Army was ultimately not successful. With the embarrassing loss the U.S. suffered, South Florida saw an influx of Cuban nationals. The travel restrictions instituted by the embargo made it difficult for the nationals in the U.S. to visit their families, but Fidel Castro's dogmatic approach made it hard for them to expand their fortunes in Cuba as all money had to come through the government. In 1994-2003 the U.S. collected over 8 million under the Sanctions as opposed to doing under the $10,000 for terrorism financing from those outside of Cuba.
The Sanctions, under President Obama, the first U.S. President to visit since the embargo, authorized specific licenses for travel conditions and other transactions directly related to attendance or professional meetings in Cuba. This did not change the sanctions, but simply softened them. With a change of policy came diplomatic travel which included increase in tourist industries; with U.S. businesses going in and Cuban entrepreneurs opening up their homes for restaurants and cars for joyrides. The airlines, like SouthWest, now fly non-stop and are inexpensive. Travelers are able to bring back famous agricultural products that Cuba is famous for like cigars, rum, and coffee. There is no authorized spending amount of U.S. dollars, but imports have remained subject to normal limits on duty and tax exempt merchandise for personal use. Slowly, U.S. companies have begun to allow credit card to process Cuban transactions and to have correspondent accounts in Cuban banks. There has also been an unblocking of Cuban national assets located outside of Cuba and Prisoner exchange.
The OFAC website reads that the organization's administration enforces economic and trade sanctions based on US foreign policy and national security goals, against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction and other threats to the national security, foreign policy or economy of the United States. OFAC is not forced on the type of product, technology or its uses and applications, and targets financial, export, import, and groups.
The penalties for breaking the law in these areas are up to a million dollars and 20 years in prison. And thus it makes sense to pay close attention to what the administration will actually do. If the restrictions are tightened and businesses are started in Cuba there could be money lost, due to an inability to get back into the U.S. if you travel. We expect restrictions will change slowing the ability for the U.S. government to negotiate with the Castro regime.
The policy against Cuba stands out among US Policies against other nations. The Trump Administration has cited several reasons for reinstitution of the restrictions. One reason is that there are human rights violations in Cuba. Another reason is that the Raul Castro, Fidel's brother, post-Fidel Castro government, has remained communist and U.S. businesses doing business in Cuba are all subject to the Cuban government, thus making it stronger and presumably not providing the U.S. enough incentives for allowing U.S. Nationals to come into their country. The President has also demanded the return of those protected by the Cuban government. The reasoning does not make sense as the U.S. does business with other communist countries and countries that have been accused of human rights violations. In fact the U.S. itself has been accused of human rights violations against Native Americans and many people of color and... I am sure that these human rights violations are some of the same violations that Fidel Castro considered when he allowed U.S. Citizens political asylum.
No matter what happens, it remains that Cuba has much to offer U.S. citizens and reinstating the restrictions and sanctions will make it difficult to do business and will hurt the Cuban people. The Cubans suffer under the embargo because of a lack of an inability to obtain products coming from the US or countries which do business with the U.S. (the U.S. imposes the restrictions on others too). Human rights violations can also be defined as not allowing others to gather basic necessities like toilet paper and making life unbearable for others. From President Trump's policy change, however, this appears to be the continued direction of the U.S.