Editor’s Note: For an alternative viewpoints see Point: U.S. Policy Should Target Cuban Regime, Not Its People or U.S. Citizens.
The Trump administration again turned to its coercive tool of choice, economic sanctions, to ratchet up pressure on the Cuban regime. The actions announced on April 17 were framed as punishment for Havana’s domestic repression and its support of Venezuela’s Nicolas Maduro.
The location and timing of the speech — on the 58th anniversary of the Bay of Pigs invasion — suggest that the Miami announcement was also intended to shore up political support for President Trump among Cuban hardliners angered by the Obama administration’s easing of Cuba sanctions.
Among the disjointed array of policy announcements National Security Adviser John Bolton included in his speech were new restrictions with respect to Cuba travel, remittances and transaction processing; plus the newly authorized ability for Americans whose property in Cuba was confiscated after the 1959 Cuban revolution to bring federal court actions against foreign entities “trafficking” in (i.e. using) those properties.
These changes follow the cancellation of Major League Baseball’s deal to allow Cuban baseball players into the United States absent human smugglers; previously introduced restrictions on transactions with businesses owned by the Cuban military, intelligence or security services; restrictions on educational and individual travel to Cuba; and the significant reduction of staff and services at the U.S. embassy in Havana.
While the Trump administration is right to support freedoms for the Cuban people and the end of Maduro’s rule in Venezuela, these changes are the wrong way to pursue those worthwhile goals.
U.S. administrations over time have tried — and failed — to facilitate change in Cuba through tightening unilateral sanctions. There is no evidence over the half-century embargo that this will be successful. Instead, these changes will suffocate Cuba’s private sector (or cuentapropistas) by denying them a key source of income while simultaneously alienating U.S. allies and partners.
While the devil is in forthcoming regulatory details, Bolton asserted that the U.S. Department of the Treasury will restrict non-family travel to Cuba. If the Trump administration actually wants to support the Cuban people as advocated for in its central policy, it will allow additional areas of authorized travel to remain available, particularly for journalists, humanitarian support and legitimate educational research and travel.
These and other areas of permissible travel have demonstrably benefitted the Cuban private sector, which employs as many as four in 10 working-age Cubans and has already suffered under the 2017 Trump administration restrictions on authorized travel to Cuba.
Exacerbating the economic hardship for the cuentapropistas, and the Cuban people writ large, will be the second announced sanctions change reducing remittances to $1,000 per person, per quarter. The Obama administration had removed the Treasury caps on most remittances, which were estimated in 2018 to reach at least $2 billion per year. Remittances comprise a key source of investment capital for Cuban households and private enterprise. While the drop in remittances will limit opportunities for the Cuban government to benefit from remitted funds from its people, it will certainly hurt the Cuban people more.
The third, and least impactful regulatory change Bolton announced is the end of U-turn transactions. U-turns allow Cuba-related transactions to traverse the U.S. financial system provided the sender and recipient are not U.S. persons. In effect, this authorization should facilitate the Cuban government’s access to hard currency and support trade by U.S. allies and partners, but a limited number of U.S. banks have used it.
Bolton’s announcement mistakenly conflated allies and partners’ support for U.S. policy in Venezuela with support for the Trump administration’s unilateral moves to pressure the other members of the so-called troika of tyranny (Cuba and Nicaragua). Rather than bolstering support among allies, ending the U-turn and authorizing lawsuits against foreign firms will strain the anti-Maduro alliance.
Authorizing lawsuits against foreign firms under Title III of the 1996 Cuban Liberty and Democratic Solidarity (Libertad) Act is the most misdirected of the newly announced Cuba policy changes. Although this authorization existed for decades, every president since the law’s passage has suspended it because of the negative repercussions on allies and partners.
Opening up foreign firms in at least 20 countries to potential lawsuits from U.S. certified claimants is an antagonistic and ineffective means of pressuring the Cuban government and will have little — if any — impact on Maduro. Instead, the Trump administration has unleashed 6,000 claims to pursue amends through an untested legal process.
The potential implications for European and Canadian firms including hoteliers, airlines, cruise companies and mining companies are substantial. The European Union and Canada have committed to pursue action through the World Trade Organization to protect their firms. The result is likely to be more acrimony between the United States and its allies, with whom the U.S. should be working to increase pressure against the Maduro regime rather than engaging in what is likely to prove an unproductive distraction. Certainly, those with legitimate claims to confiscated property should be compensated; however, this is most effectively managed through a negotiated process.
Cuba has already weathered decades of unilateral U.S. sanctions. While its economy is certainly in a precarious position due to reduced support from Venezuela, Havana has demonstrated its adaptability to such pressures.
Although the new Trump policies may increase pressure on the Cuban regime, the negative impact on the Cuban people will be far greater. Further, these new policies are certain to generate tensions with U.S. allies and prove a distraction as the U.S. seeks to increase pressure on the Maduro regime, where the chances of success are far greater.
