Obama regs chip away at Cuba embargo

The new regulations, written by the Commerce and Treasury Departments, expand and clarify rules issued in January that increase travel and trade between the U.S. and Cuba as part of the White House’s decision to renew diplomatic relations with Cuba.

“Today’s announcement underscores the administration’s commitment to promote constructive change for the Cuban people,” Treasury Secretary Jack Lew said in statement. “These regulatory changes build on the revisions implemented earlier this year and will further ease sanctions related to travel, telecommunications and internet-based services, business operations in Cuba, and remittances.”

A “stronger, more open” U.S.-Cuba relationship, Lew said, has the potential to create economic opportunities for both Americans and Cubans alike.

“By further easing these sanctions, the United States is helping to support the Cuban people in their effort to achieve the political and economic freedom necessary to build a democratic, prosperous and stable Cuba,” he said.

Members of Congress vehemently opposed to President Obama’s new Cuba policy said the administration is naively fueling expectations of a new Cuba that has no basis in reality.

“These new regulations are another desperate attempt to ignore the iron grip that the Castro regime maintains on the island’s economy an will only serve to benefit the coffers of the regime,” said Rep. Ileana Ros-Lehtinen, a Florida Republican who was born in Cuba and emigrated with her family as a young girl.

She argues that the Obama administration is conceding too much to the Castro regime without getting any assurances of a freer, more democratic Cuba in return.

“The sad reality is that the Castro regime is taking full advantage of the Obama administration’s willingness to concede on loosening the regulations while expecting nothing in return from the communist dictatorship,” she continued. “Our regulations do not have to change. It is Cuba that needs to change and the Castro brothers will not let that happen.

The new regulations will become official Monday when they are published in the Federal Register.

According to a 27-page document outlining the new Commerce rules changes obtained by the Washington Examiner earlier this week, the new regulations would allow the free-flow of more U.S. goods to Cuban citizens in order to “improve living conditions and support independent economic activity in Cuba.”

They also likely will help facilitate U.S. travel to Cuba by authorizing airlines and ships to lease property and set up ticket offices on the island, and export airplane parts and other “airport safety equipment,” including screening equipment to service major carriers.

Close relatives of Cuban citizens will be allowed to visit the island for more than just official business and certain educational activities to include journalistic activity, professional research, religious activity, as ell as humanitarian projects or certain research or education institutes.

These authorized travelers will be allowed to open and maintain bank accounts in Cuba in order to access funds while there.

In addition, the new regulations will allow some U.S. entities to have business transactions with companies operated by the Cuban government and even provide loans and lease payment terms for certain authorized products.

And in a major hiring shift with national security implications, the rules appear to allow U.S. software companies to export software to the island and hire Cubans to work on it in order to “improve the free flow of information that will support private sector activities.”

Lawyers are still digesting the rules, but Cuba sanctions experts say among other transactions, the new regulations could allow companies like FedEx and UPS to have drop-off locations in the island, major airlines to have ticket offices, Home Depot to sell building materials and supplies on the island, software companies like Microsoft to have showrooms, and agricultural companies like Sysco to sell food products to independent restaurants.

Critics of the administration’s efforts to normalize relations with Cuba argue that the president is making too many concessions to the Castro government without receiving many in return. They argue that the embargo restrictions need to remain in place until Havana has met certain conditions.

They also warn that Cuba lacks a true private sector, and that most commerce is controlled by the Castro regime, so any effort to support private-sector activities is subject to Cuban government intervention and at least some type of control.

“I would say the new regulations continue a pattern of making it easier to engage in transactions with a non-existent private sector,” said Jason Poblete. His firm, Poblete Tamargo, represents families pressing the Obama administration to recover billions of dollars in seized assets the Castro regime took after the country’s 1959 revolution.

“By continuing to create these holes in the U.S. sanctions regime, all they are doing is helping the Cuban government,” he said.

While the Obama administration can issue the new rules, the Cuban government can still reject all or some of them.

Robert Muse, a lawyer and expert on Cuba trade, said the new set of regulations are more significant than those issued in January.

“Now they are engaging the [U.S.] business community in a way that’s going to be interesting and important to them,” he said. “It begins to give them real commercial traction.”

The fact that U.S. businesses can now maintain a physical presence in Cuba is “brand new,” he said. “That’s the biggest step they have taken here. The intention is to bring American businesses to the island.”

The rules specifically exclude the Cuban government or Cuban Communist Party as entities allowed to develop software.

They also specify that only certain types of commercial and recreational ships may travel to Cuba, including “freight vessels, seagoing barges, tankers [transporting certain agricultural commodities] and towing vessels.”

The rules also would allow a broader class of passenger ships to transport people or items other than automobiles to Cuba for the purpose of participating in certain international sports competitions, as long as they are open to the Cuban public. These ships are only allowed to remain in the country for up to 14 consecutive days.

President Obama would like to lift all trade and travel restriction to Cuba, but only Congress can fully eliminate the embargo so the administration is using its executive authority to expand export exceptions.

The Commerce Department’s Bureau of Industry and Security “may issue specific or general authorizations in the form of licenses or license exceptions for transactions that support the goals of the United States policy while the embargo remains in effect,” the new regulations state.

The new rules say they will help “facilitate engagement between the American and Cuba people; the free flow of information to, from, and among the Cuban people; and independent activity generated by Cuba’s private sector.”

Later this year, the Treasury Department is expected to issue new regulations that would allow all Americans to travel to Cuba as individuals and not as part of tour groups or purely educational activities approved by the Cuban government.

The expected rules changes would allow Americans to book commercial flights from the U.S. to Cuba, instead of booking tickets only by charter.