Biden administration takes back some Trump sanctions

Private entrepreneurs, such as homeowners who work with AirBnB, are among the main beneficiaries of the sanctions-easing measures.

CUBA STANDARD — Surprising most Cuba watchers and political players, Joe Biden unilaterally took back some of the harshest sanctions imposed by his predecessor and is opening up new spaces for interaction with Cuban private businesses.

Arguing that the Biden administration’s Cuba policy is “first and foremost” focusing on “support for the Cuban people, including their human rights and their political and economic well-being”, the State Department announced a package of sanctions-easing measures.

The move signals an end to the ice age in relations that began five years ago when Donald Trump moved into the White House.

Cuba’s foreign ministry reacted with a statement describing the measures as “one limited step in the right direction”.

The State Department announcement also prompted pushback from political players such as New Jersey Sen. Bob Menendez, the Cuban American Democrat in charge of the Senate Foreign Relations Committee. In a tweet, he called the measures a “wrong message to the wrong people, at the wrong time and for all the wrong reasons.”

The administration “is working expeditiously” to implement the new rules, the State Department statement said, signaling that political pushback won’t stop it.

Pushed by a migratory crisis?

Biden promised during his campaign that he would remove Trump sanctions against Cuba, but he did not take any substantial action in his one-and-half years in office. Now, his hand seems to have been forced by a migratory crisis. The move, “in line with our national security interests”, according to the State Department, comes as a record number of Cuban migrants are reaching the U.S. border, after pandemic restrictions and U.S. economic warfare sent the Cuban economy reeling. In April alone, nearly 90,000 Cuban migrants arrived at the U.S. border, breaking records set during the Mariel boat lift of 1980; Cubans are currently outnumbering Central American migrants.

“The Cuban people are confronting an unprecedented humanitarian crisis — and our policy will continue to focus on empowering the Cuban people to help them create a future free from repression and economic suffering,” the State Department said.

The U.S. government agreed in April to resume migratory talks between the two governments, with a first meeting on April 21. During the talks, Cuban officials pointed out that the U.S. State Department has been granting less than the minimum 20,000 visas a year it had promised during the Obama administration.

As part of the package, the Biden administration now reinstates the Cuban Family Reunification Parole program, and continues to ramp up visa processing at the U.S. consulate in Havana, “making it possible for more Cubans to join their families in the United States via regular migration channels”. The consulate in Havana resumed limited immigrant visa processing on May 3, but the bulk of visa applications by Cubans are still processed at the U.S. embassy in Guyana. Cubans seeking visas have been forced to travel to Guyana first.

Benefiting private entrepreneurs

Easier visa applications for Cubans aside, the measures are mostly benefiting private businesses in Cuba, with increased flights and some easing of travel restrictions for Americans, and allowing entrepreneurs access to U.S. resources. They include:

• Travel-easing measures, including allowing scheduled and charter flights to provincial airports, after the Trump administration limited U.S. scheduled flights to Havana. Group people-to-people travel (but not individual travel) will be reinstated, as will be group educational travel, as well as travel to some professional meetings and professional research, such as to investigate expanded Internet access and remittance processing, and to provide support to Cuban entrepreneurs.

• Easing restrictions on private businesses in Cuba, including allowing access to U.S. Internet services, expanded cloud technology, application programming interfaces, and e-commerce platforms, as well as support for new avenues for electronic payments for Internet-based business. The new rules explicitly allow U.S. business activities with private Cuban entrepreneurs, through microfinance and training, and electronic payments. They seem to imply direct banking relations with businesses in Cuba and remittances going directly to finance institutions in Cuba, which would open up new spaces for U.S. business

• The remittance cap of $1,000 per quarter is removed, and “donative remittances” to Cuban entrepreneurs will be allowed, but the restrictions on working with state entity Fincimex apparently remain.

“We will engage with electronic payment processors to encourage increased Cuban market accessibility. We will not remove entities from the Cuba Restricted List,” a State Department summary said.

U.S. investments in private businesses?

All this is happening as OFAC apparently green-lighted the first equity investment by a U.S. entity in a private business in Cuba. John Kavulich, founder of the New York-based U.S.-Cuba Trade and Investment Council, started a test balloon last year by negotiating an equity investment and loan with a privately-owned service provider in Havana. He then hired a lawyer and created an LLC just for that specific purpose, and finally applied for a license with OFAC. After 11 months of review, the sanctions enforcement agency granted the license earlier this month, Kavulich announced in his blog.

To be sure, on the Cuban side there are obstacles to overcome too. While the Cuban government allowed the incorporation of private “sociedades de responsabilidad limitada”(SRL) last fall, shareholders and partners in these companies have to be residents of Cuba.

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