Analysis: The limited reach of eased OFAC rules

José Manuel Pallí argues that, as long as the embargo remains in place, the response from the Cuban side will be slow and anything but bold.

Palli column headBy José Manuel Pallí, Esq.

For many years, I have avoided advising anyone about how to navigate the turbulent waters of the Office of Foreign Assets Control rules and regulations, which are supposed to tell us U.S. subjects what we can and cannot do in interacting with Cuba and its people.

I have avoided them because I have always found them devoid of much sense, and even antithetical to what most lawyers I know and respect would consider “good law”. A couple of elements have always been absent, in my humble opinion, from these OFAC rules for Cuba: that “good” laws reflect the guiding principles of the society enacting them, and that a wide majority of the members of that society effectively support them.

Having said that, it is obvious that these rules, whether good or bad, are part of the laws of the Unites States of America and, as a U.S. lawyer and citizen, I am subject to them. So even if I may choose to avoid them in my practice, I cannot ignore them.

There is a new set of rules in force since mid-January. There are several levels on which the new rules are likely to have an impact, beginning with the biggest potential impact: that on banking ties between the two countries. The biggest impact in this regard is not even the direct consequence of the these new rules, but rather of the eventual dropping of Cuba from the list of states sponsoring terrorism, where it has been capriciously kept for years (against the sense of a plurality of the institutions the United States charges with protecting the Homeland against terrorist acts).

We do not know yet whether Cuba will be dropped from that list, but unless that happens, I don’t see many banks, U.S. or foreign, daring to do business with Cuba and risking the kind of sanctions the United States recently imposed on several banks (the latest example of this came just a few hours before the historic announcements made Dec. 17, 2014).

Besides, the U.S. embargo (or blockade, as Cubans call it) is still in place, and is likely to remain in place for some time. Without its removal, it is hard to conceive a “normal” relationship between Cuba and the United States, which is exactly the point the Cuban side has been making at recent meetings. They are absolutely right in making that point.

Even after Cuba is dropped from the terror list — ­which should happen before the Americas Summit in Panama this April — it is ludicrous to think any re-established diplomatic ties will entail a normal relationship between the two nations. The answer to the key question for a U.S. national or resident interested in investing in Cuba remains mostly the same: NO, you cannot!

U.S. source investment in Cuba remains severely restricted, unless Congress takes action, which it may or may not do, but is unlikely to anytime soon. Trading with Cuba remains impossible except for certain products. U.S. companies have exported a lot of agricultural and a few medical goods, after clearing major obstacle courses. Now telecommunications equipment, as well as building materials for the use of private Cuban individuals and farm equipment are also allowed as exports to the island. The new rules also contemplate the importing to the United States of products made by private enterprises (all of them of a small size) in Cuba. A change in the terms of trade — ­the elimination of the “cash in advance” requirement — should also facilitate matters in this area, although only slightly.

Will this be enough to significantly increase trade? Time will tell. The fact that U.S. exporters remain barred from extending credit to their buyer in the island makes me think the overall impact will be slight.

But the new environment does make the arguments of the pro-embargo crowd even sillier and flimsier than ever. ­Their main argument is that “Cuba never pays its debts”, as if that should be a concern for any other than the U.S. exporter in question. Not that this crowd has ever been averse to silly and flimsy arguments; on the contrary, they seem to crave for them.

Sending, bringing and spending money in Cuba by U.S. subjects is likely to flourish under the new rules, and that alone should have a very strong impact on the living standards of many Cubans in the island, as well as in the growth of the Cuban private sector.

Switching to another level carrying far less potential impact on the relationship between the two countries, but important for its potential impact on Cuban society and on individuals and families, the new rules and regulations expand the ability of U.S. subjects to travel to Cuba. This is, in my view, the element in Cuba-related restrictions that is the most inimical to the guiding principles of our nation: telling Americans they cannot travel to Cuba. Cuban-Americans, for many years, have been treated differently than other Americans when it comes to travel to Cuba.

This distinction is being eroded somewhat under the new rules. The freedom to travel granted to Cuban Americans since President Obama took office remains solidly in place. Many in the proudly recalcitrant crowd that wants to keep the embargo in place — the members of the so called Cuban-American delegation to Congress among them — in a dazzling moral pirouette now claim they have “always” been in favor of family visits. These very same guys supported rules that restricted Cuban-Americans with family in Cuba to one visit every three years. But this is Miami of course, where memories are short and hypocrisy runs wild.

The joker in this “new” game, as usual, will be what the Cuban government will do, how it will react to President Obama’s door-opening act. Will they respond in kind? How much will they be willing to open up their own society and help enhance and widen the salutary effects the U.S. government’s move could have in Cuba, for the benefit of the Cuban people?

I am afraid that as long as the embargo remains in place, the response from the Cuban side will be slow and anything but bold. That’s why our new Cuban-American leitmotif should be “No Embargo, no Problem”, and our battle cry “Free Cuba from U.S. Politics”—  once and for all.

José Manuel Pallí is president of Miami-based World Wide Title. He can be reached a

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