CUBA CENTRAL NEWS BRIEF: Notes from Havana: One Step Forward, Then 20 Back

Within 12 hours of President Trump’s announcement that he plans to limit travel to and trade with Cuba, Julio Álvarez and Nidialys Acosta had received three cancellations from groups of American visitors.

Julio and Nidialys founded Nostalgicar, a private taxi and classic car repair shop in Havana, in 2012, and now employ 10 drivers and 14 mechanics. In the last couple years, business – particularly from American travelers – has been very good.

When we visited the Nostalgicar repair shop last Saturday, they were worried.

The day before, President Trump had declared in Miami, “The previous administration’s easing of restrictions on travel and trade does not help the Cuban people,” announcing that he would roll back significant pieces of the policy. In his National Security Presidential Memorandum on Cuba, the President directed federal agencies to begin drafting new regulations curtailing travel and commerce, prohibiting individual people-to-people travel and placing limits on U.S. visitors’ financial transactions. According to a fact sheet released by the Treasury Department’s Office of Foreign Assets Control, regulatory changes will be issued “in the coming months.”

Since President Obama allowed Americans to write their own itineraries and travel to the island on their own, and restored regularly scheduled commercial flights to Cuba several months later, U.S. travel to the island has skyrocketed. Between 2015 and 2016, the number of U.S. visitors increased by 74 percent, and in the first five months of 2017, Cuba saw as many U.S. visitors as it did in all of 2016.

As we’ve joined many others in pointing out, President Trump’s claim that his impending policy changes will “support the Cuban people” just doesn’t match up with the reality we know in Cuba.

“It has already affected my business,” Julio told us Saturday. “I don’t see how it can be positive for the Cuban people … We’ll have to see what happens, but in the meantime, I am already losing money.”

Nidialys added: “President Trump says he wants to support the Cuban people. Tell me how.”

Just hours after President Trump’s speech, we visited Niuris Higueras. Niuris founded the popular private restaurant Atelier, and has been in Cuba’s restaurant business since the 1990s. “Eighty-five percent of my clients are now Americans. For businesses like mine, it will be really hard – we will have to find other clients,” she said.

Visitors from the U.S. spending dollars in Cuba have helped breathe life into the country’s nascent private sector. Twenty-five percent of Cuba’s working population is now employed in the private sector, up from just 12 percent in 2010. Since 2011, the Cuban government has approved 201 forms of self-employment, ranging from owning and working in restaurants to being a cobbler, from taxi services to accounting services, from party planning to being a barber. This has been life-changing for many Cubans who have been able to start their own businesses.

The Washington Post’s Nick Miroff reported on Twitter this week that in March 2016, when President Obama authorized individual people-to-people travel, there were about 4,000 Airbnb listings in Cuba. As of Monday of this week, there are 22,000 listings. “They’re related,” wrote Miroff. Indeed, as Airbnb announced earlier this month, “in 2016, over 12 percent of all U.S. travelers to Cuba … stayed in an Airbnb.” Since the company entered the Cuban market in April 2015, hosts on the island have brought in a collective $40 million, with the average annual payout for hosts at $2,700 each.

One Airbnb host we spoke with said, “It’s like we take one step forward, then 20 back.” That one step forward, particularly for Cubans renting out their homes to visitors using Airbnb, has been a big one.

Yamina Vicente, a former professor of economics at the University of Havana, owns a party decorations business called Decorazón. “This is not only a halt to improved relations, it is a step backwards,” she said of President Trump’s planned rollback of engagement. “This is not good news for anybody. Not only tourism-related businesses will be affected, but all the other businesses that depend on the overall health of the economy.”

Yamina was one of over a hundred Cuban entrepreneurs who wrote to President Trump soon after the election to encourage him to continue engagement, particularly travel, saying, “U.S. policy towards Cuba greatly affects our day-to-day reality … An influx of American and Cuban American visitors stimulates growth for our businesses, directly and indirectly.” They continued, “Small businesses in Cuba have the potential to be drivers of economic growth in Cuba and important partners of the U.S. business community.”

“Apparently President Trump did not listen to our letter,” Yamina told us. “This is so unfortunate – we had advanced so much.”

At the end of the day Saturday, we met up with Magia López and Alexey Rodríguez of the hip-hop duo Obsesión. “Today, we’re a little angry,” Magia said.

They had listened to President Trump’s speech, as he told the crowd in Miami’s Artime Theater that he and the U.S. “will stand with the Cuban people.”

“President Trump says he stands with the Cuban people, but with which Cuban people?” Alexey asked. “It’s an empty statement.”

“It wasn’t surprising,” Alexey said, to hear the President of the United States speak that way. “President Trump’s actions will hurt people in Cuba and, as always, those most affected are at the bottom.” If President Trump’s planned restrictions on travel and trade go through, “a lot of families will be affected” – not just small business owners.

Cubans are accustomed to enduring the ebbs and flows of U.S. policy toward the island, each tide with direct impact on their lives – this is a part of the Cuban reality. And they don’t like it.

Julio left us with a message to take back to Washington: “I hope you return to the U.S. with the will to help the Cuban people.”

These are the messages Cubans want to get to the White House. They know the people of the U.S. and Cuba stand to gain even more than they already have from continuing engagement, and they are eager to help President Trump to understand.

These are the voices of people most affected by his decisions on Cuba policy. He should hear them.

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This week, in Cuba news…

U.S.-Cuba Relations

Recapping President Trump’s planned Cuba policy changes: what we know, one week later

What we know: President Trump’s National Security Presidential Memorandum signed last Friday in Miami calls for increased restrictions on travel and business dealings with Cuba, while maintaining diplomatic channels established under the previous administration. The departments of State, Treasury, and Commerce have released fact sheets or FAQs on the policy. It is not yet clear when new regulations will be issued by relevant agencies, though they are to begin drafting within 30 days of Friday, June 16.

Here are the changes we expect to see in the coming months:

  • A prohibition on individual people-to-people travel to Cuba. For the most part, this means that Americans who visit Cuba must travel with groups and travel providers. U.S. travelers will be subject to more frequent, and likely more stringent, audits by the Treasury Department’s Office of Foreign Assets Control.
  • 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. That may mean Americans visiting Cuba will be forbidden from staying in certain state-run hotels, and will instead have to stay in privately-owned lodgings, like bed-and-breakfasts and Airbnbs. U.S. companies with existing contracts, such as Marriott/Starwood, which has a contract to manage the Cuban government-owned Four Points Sheraton hotel in Havana, are expected to be exempt from this regulation. The President’s memorandum directs the State Department to publish a list of entities with which direct financial transactions will be prohibited.
  • 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 is expected to effectively return the list to its pre-October 2016 state, when it was narrowed by President Obama.
  • A directive that the U.S. will oppose international calls, including proposed measures at the United Nations, to lift the embargo until Cuba has met the conditions established in the Cuban Liberty and Democratic Solidarity Act of 1996, or Helms-Burton. These conditions, which Cuba has rejected, include the implementation of free and fair elections under international observers, that Cuba cease interference with Radio and TV Martí transmission, and that Cuba’s government not include Raúl Castro.

Here’s what the President’s new policy won’t change:

  • Diplomatic relations between the U.S. and Cuba will continue. Embassies in both countries will remain open. However, the U.S. will continue not to have an ambassador in Cuba, though it will maintain a Chief of Mission at the U.S. Embassy in Havana (the Senate in 2016 declined to consider President Obama’s nomination of the highly qualified and highly regarded Jeff DiLaurentis who represents the U.S. now).
  • Existing cooperation agreements are expected to remain in effect – for example, as the Associated Press reported this week, U.S.-Cuba cooperation on drug interdiction has continued although the Trump administration canceled the scheduled high-level meeting on law-enforcement cooperation scheduled for the first half of this year.
  • Regulations allowing unlimited remittances to Cuba will remain in place – except for remittances to “prohibited officials” – and the President will not impose any limits on Cuban Americans’ travel to visit family on the island.

What we don’t know yet:

  • When the new regulations and the State Department’s list of prohibited entities and individuals will be issued, or how expansive those lists will be. There is no public timeline on issuance or implementation of the regulations beyond the direction for agencies to begin the drafting process by July 16; nor is there any indication of how long the process will take. We do not expect to see a notice published or a public comment period opened prior to the issuance of the regulations.
  • Whether high-level bilateral meetings and technical exchanges will resume on issues like law-enforcement cooperation, property claims, or human rights.

Cuba criticizes U.S. policy shift

Just hours after President Trump announced his decision to partially roll back engagement, Cuba’s government released an official response saying, “Any strategy directed toward changing Cuba’s constitutional order is condemned to failure.” The statement reiterates Cuba’s “willingness to continue the respectful dialogue and cooperation in areas of mutual interest, as well as the negotiation of pending bilateral issues” with the U.S.

The statement notes that the policy shift limits opportunities for U.S. businesses, restricts the rights of U.S. travelers, and stands in opposition to the to the opinion of the majority of Americans – 73 percent of whom support ending the embargo. Responding to President Trump’s assertion that his policy was driven by human rights concerns, Cuba’s government’s statement declared, “The United States is in no position to teach us a lesson,” citing various inequalities in the U.S.

Bruno Rodríguez, Cuba’s Minister of Foreign Affairs, speaking in a press conference Monday during a tour of four European countries, called President Trump’s announcement a “grotesque spectacle,” as Reuters reported. Earlier this year, Mr. Rodríguez expressed his desire to continue engagement and dialogue with the U.S., as the Miami Herald reported at the time.

Minnesota Lieutenant Governor leads trade delegation to Cuba

Tina Smith, Minnesota’s Lieutenant Governor, began a five-day a trade delegation to Cuba Monday, the first official delegation to the country since President Trump’s Cuba policy announcement, the Associated Press reports.

The delegation includes Minnesota Agriculture Commissioner Dave Frederickson, State Senator Julie Rosen, and leaders from a variety of local agriculture organizations, according to the Minneapolis-based Star Tribune. The delegation met with officials from Cuba’s ministries of foreign affairs and agriculture, and visited local cooperatives, Reuters reports. According to Lt. Gov. Smith, the goal of the trip is to facilitate agricultural sales from Minnesota to Cuba. The Trade Sanctions Reform and Export Enhancement Act of 2000 permits food exports to Cuba on a cash-in-advance basis, financing terms which limit Cuba’s ability to purchase U.S. products. Legislation has been introduced in the U.S. House of Representatives and the U.S. Senate with bipartisan support to remove the cash-in-advance requirement to allow private financing of agricultural sales to Cuba.

Earlier this week, Minnesota Senator Amy Klobuchar, who visited Cuba in February 2015 on a trip led by the Center for Democracy in the Americas, penned an editorial in CNN stating that the United States is at its best when it is engaging with the rest of the world, Cuba included.

Amount of drugs seized by Cuban authorities in 2017 triple 2016 January-May totals

Since the beginning of 2017, Cuban authorities have seized 1.8 tons of drugs, three times the amount confiscated in the same period in 2016, according to Antonio Israel Ibarra, the head of Cuba’s National Commission on Drugs. Mr. Ibarra told the Associated Press that the increase is largely due to cooperation between Cuba and the U.S.’ coast guards to stop shipments of marijuana.

In July 2016, the U.S. and Cuba signed a Counter-narcotics Arrangement to combat drug trafficking. The arrangement stipulates that U.S. and Cuban officials will meet twice annually to discuss drug trafficking issues, but no such meeting has occurred since President Trump’s inauguration, according to Mr. Ibarra,  Reuters reports. Last week, officials from Cuba’s Ministry of the Interior warned that rolling back engagement could lead to an increase in narcotics smuggling.

Cuba’s Foreign Relations

EU Foreign Affairs Committee approves cooperation agreement with Cuba

The European Union has moved one step closer to fully normalized relations with Cuba. This week, the EU Parliament’s Foreign Affairs Committee approved the Political Dialogue and Cooperation Agreement to expand bilateral relations with Cuba, which was signed by EU and Cuban officials in December. The agreement signals each party’s intent to normalize relations and aims to “expand bilateral trade, promote dialogue and economic cooperation, and develop a joint action in multilateral fora.” It also calls for an end to the U.S. embargo on Cuba, and for Cuba’s government to improve human rights on the island. The EU parliament will vote on the agreement in July, the final step for its formal ratification.

What We’re Reading

Trump’s rollback on Cuba: The consequences of undoing the rapprochement, Michael Bustamante, Foreign Affairs

Michael Bustamante, assistant professor of Latin American history at Florida International University, posits, “If after 50 years of isolating Cuba a narrow group of opponents gave Obama’s policies only three years to ‘work,’ Trump’s middling approach should be held to a similar metric.”

Trump’s Cuba policy tries to redefine ‘good’ U.S. tourism. That includes putting visitors back on tour buses, Nick Miroff, Washington Post

The Washington Post’s Nick Miroff writes that President Trump’s policy shift will put the brakes on the previously rapid growth of Cuba’s private sector.

Poll: Trump’s Cuba policy has some support but less popular than Obama’s

A Florida Atlantic University poll found that 37 percent of Floridians support President Trump’s new Cuba policy, compared with the 47 percent who support the policy implemented by the previous administration. The poll also finds that just 21 percent of Floridians surveyed believe that President Trump’s policy will “make life better” for Cubans on the island.

What President Trump’s new Cuba policy means for American business, Mimi Whitefield, Miami Herald

Wary of navigating the increased red tape created by President Trump’s Cuba policy announcement, U.S. businesses are already showing less interest in operating on the island, the Miami Herald’s Mimi Whitefield reports.