In an overhaul of one of his predecessor’s signature legacies, President Donald Trump will redraw U.S. policy toward Cuba on Friday, tightening travel restrictions for Americans that had been loosened under President Barack Obama and banning U.S. business transactions with Cuba’s vast military conglomerate.
Trump’s changes are intended to sharply curtail cash flow to the Cuban government and pressure its communist leaders to let the island’s fledgling private sector grow. Diplomatic relations reestablished by Obama, including reopened embassies in Washington and Havana, will remain. Travel and money sent by Cuban Americans will be unaffected, but Americans will be unable to spend money in state-run hotels or restaurants tied to the military, a significant prohibition.
Trump is expected to sign the presidential policy directive Friday, surrounded by Cuban-American supporters at Miami’s Manuel Artime Theater, a venue named after one of the late leaders of the Brigade 2506 Bay of Pigs veterans whose group offered Trump their endorsement last October after he promised exiles a “better deal.” The Miami Herald obtained a draft of the eight-page directive Thursday.
In his remarks, Trump plans to cite human-rights violations in Cuba as justification for the new U.S. approach. Dissidents say government repression has increased.
“The Cuban people have long suffered under a Communist regime that suppresses their legitimate aspirations for freedom and prosperity and fails to respect the essential human dignity of all Cubans,” says Trump’s directive, which calls the policy a set of “initial actions” by his administration.
While not a full reversal of Obama’s historic Cuba rapprochement, Trump’s recast U.S. policy hews closer to the hard line espoused by Cuban-American Republicans who derided Obama’s 2014 policy as a capitulation. Florida Sen. Marco Rubio was instrumental in drafting Trump’s changes, with help from Miami Rep. Mario Diaz-Balart. Other Cuban-American lawmakers started getting briefed on the policy Thursday.
“If we’re going to have more economic engagement with Cuba, it will be with the Cuban people,” Rubio told the Miami Herald.
He called the new policy a strategic, long-term attempt to force aging Cuban military and intelligence officers to ease their grip on the island’s economy as a younger generation of leaders prepares to take over.
“All the pressure comes from American business interests that go to Cuba, see the opportunities and then come back here and lobby us to lift the embargo,” Rubio said. “I’m trying to reverse the dynamic: I’m trying to create a Cuban business sector that now goes to the Cuban government and pressures them to create changes. I’m also trying to create a burgeoning business class independent of the government.”
After decades of sanctions failed to push Fidel and Raúl Castro out of power, Obama contended a Cuba more closely tied to the U.S. would no longer be able blame its economic woes on yanqui “imperialism.” His backers, including prominent Miami Cuban-Americans, implored the Trump administration to give existing policy more time to play out. Like Rubio, they argued only a flourishing Cuban private sector would eventually lead to political change; where the two sides disagree is on how best to encourage private growth.
Trump’s policy will not reinstate wet foot, dry foot, the policy that allowed Cuban immigrants who reached U.S. soil to remain in the country. It will not alter the U.S. trade embargo, which can only be lifted by Congress. And it will not limit travel or money sent by Cuban Americans, as former President George W. Bush did — though fewer Cuban government officials will be allowed to come to the U.S. and receive money than under Obama.“You can’t put the genie back in the bottle 100 percent,” a senior White House official told reporters Thursday. “It’s not that he’s opposed to any deal with Cuba; he’s opposed to a bad deal with Cuba.”
Outright tourism to Cuba is prohibited by the embargo, but Obama had relaxed travel rules, allowing non-Cuban Americans to go under one of 12 legally authorized categories, such as family visits, professional research or educational activities. The Obama administration relied on what was effectively an honor system in which travelers self-reported their trip’s purpose.
Under Trump’s rules, travelers will be subject to a Treasury Department audit of their trip to ensure they fall under one of the permitted categories. Educational trips and so-called “people-to-people” group exchanges will fall under greater scrutiny, with educational groups once again having to travel with a guide from a U.S. organization sponsoring the trip, a requirement the Obama policy had effectively eliminated. Unlike under Obama, individuals will no longer be able to travel under the “people-to-people” category.
Stays at hotels run by the Cuban military conglomerate — many brand-name hotels — will be prohibited, but a senior White House official suggested travelers who had already booked trips would be accommodated.
The Treasury and Commerce departments will have 90 days to start writing the new rules, according to the draft directive.
Commercial flights and cruise trips to Cuba will be allowed to continue, because paying landing fees at military-run airports and seaports will be exempt from the Trump ban. (So will paying bank fees at the military-run bank, to allow Americans to still send money and rent private properties like those offered on Airbnb.) But the audit threat could shrink demand for Cuban travel, and indirectly hurt private-run bed-and-breakfasts and restaurants intended to benefit from the new policy.
The main target of Trump’s policy is the Cuban military’s umbrella enterprise for state-run businesses, GAESA (short for Grupo de Administración Empresarial, S.A.), the sprawling conglomerate that experts estimate controls about 60 percent of the Cuban economy. Americans and U.S. companies will be barred from financial transactions with GAESA and any of its “affiliates, subsidiaries or successors.”
“That’s a huge deal — that’s pretty much everything,” Diaz-Balart told the Herald. “That’s the entire tourism industry.”
U.S. companies have inked more than two dozen deals with the Cuban government since 2015. Most involve exempt airline and cruise travel and telecommunications, a sector not controlled by the military. The number of U.S. citizens traveling to Cuba surged by 74 percent from 2015 to 2016, according to Cuba.
The challenge for Trump’s administration will be enforcing the ban for travelers who might unknowingly violate it. The State Department will also have to identify, on an ongoing basis, the numerous organizations tied to the Cuban military, made more difficult by the communist regime’s lack of transparency. Cuba could also try to skirt the ban by creating new state-run entities, separate from the armed forces, said Ted Piccone, a senior fellow at Brookings Institution who specializes in U.S.-Cuba relations. The ban also applies to any other entities under Cuban military, intelligence or security control identified by the U.S.
There are exemptions to continue operations at the U.S. naval base in Guántanamo Bay, to expand telecommunications and internet access, and to continue U.S. exports allowed by law of agricultural commodities, medicines and medical devices.
The ban — and the possibility of accidentally violating it by doing business with a military-run company unknown to the U.S. — might discourage American companies that were considering Cuban ventures from moving forward with their plans, Piccone said: “It’s too small a market to go through all those hoops.”
Trump’s policy is not just limited to travel and business. His administration will also oppose measures at the United Nations and elsewhere that call for an end to the embargo. Last year, under Obama, the U.S. abstained for the first time when the U.N. took a vote condemning what Cuba calls a trade “blockade.”
Trump will also require federal agencies to report on human-rights abuses and U.S. fugitives harbored by the government in Cuba.
Cuban-American proponents of further engagement, who have spent weeks rallying Republican support on Capitol Hill to maintain the Obama policy, questioned the extent to which Trump’s changes would cause an impact, suggesting the new president’s actions could have been more drastic.
Carlos Saladrigas, president of the Cuba Study Group, which promotes more U.S.-Cuba ties, said if Trump’s policy is limited to not doing business with the Cuban military and keeping better U.S. travel records, its impact “will be minimal” for now.
“There are no major commercial relations with military enterprises except in tourism,” he said.
The most obvious example is the Marriott-owned Starwood Hotels and Resorts, which runs a Four Points by Sheraton in Havana owned by Gaviota, GAESA’s tourism arm, which boasts it welcomed nearly half of Cuba’s visitors in 2015 to its facilities. Trump’s policy could keep Starwood’s operating license from getting renewed by the Treasury Department’s Office of Foreign Assets Control.
Starwood delayed plans to run a second hotel, which John Kavulich, president of the U.S.-Cuba Trade and Economic Council, said suggested the company’s lawyers advised caution before expanding. For U.S. companies, “it will be difficult to argue against these policies,” he noted, given that they’re “trying to prioritize dealings with private entities.”
In preparation for what it considered a potential worst-case scenario under Trump — severely restricted Cuba travel, including for Cuban-Americans — the Cuba Study Group estimated one in nearly four privately run Cuban businesses could close, since they’ve benefited from the increase in U.S. travelers and international tourism.
Carlos Alzugaray, a retired Cuban diplomat who lives in Havana, acknowledged that Cuba’s private sector is intricately tied to the state.
“There’s no way to hit the government without hitting the private sector — and American interests,” he said.
Cuban political dissidents, including some who favored Obama’s approach, have welcomed targeting military enterprises. Miriam Celaya, an independent journalist who was part of a group that met with Obama in Havana lasts year, said she wants the U.S. to lift the trade embargo but “conditionally and gradually,” and in a way that “benefits Cubans and not the dictatorship, which is what’s happening now.”
Celaya said it’d be “dangerous to keep giving dollars and empowering the regime” when repression against opponents and activists has increased; the government’s chief ally, Venezuela, is in crisis, and Cuban leader Raúl Castro is preparing to leave power next year.
Castro, who has said he will step down in February 2018, said in January he hoped “to pursue a respectful dialogue and cooperation on topics of common interest” with Trump.
Obama surprised the international community when he renewed diplomatic relations with Cuba in December 2014, easing travel and commerce with the island by executive order. A policy directive and batch of regulations issued last October were intended to make the Cuba changes “irreversible,” Obama said at the time. Now, Trump’s directive will replace it.
The Cuban government abstained from responding in recent weeks to chatter about the upcoming Trump changes, which followed a nearly six-month policy review by the new administration. Deputy secretaries from a number of federal departments, including state, homeland security and treasury, met last month and recommended sticking with Obama’s policy.
Their recommendation, however, was at odds with the political goals of the White House and National Security Council, which were pressured by Rubio and Diaz-Balart to deliver on Trump’s promise to Cuban exiles in Miami.
Early in the campaign, candidate Trump appeared to care little about Cuba policy, characterizing Obama’s rapprochement as “fine” but arguing he would have cut a better deal. As his attention turned to Florida, and after an explosive report that his business had once violated the embargo, Trump adopted the language of hardliners, citing Cuba’s lack of reciprocity toward the U.S. opening as justification to seek changes.
“All the concessions that Barack Obama has granted the Castro regime were done through executive order, which means the next president can reverse them — and that I will do unless the Castro regime meets our demands,” Trump said at a Miami rally in September. “Not my demands. Our demands.”
Alzugaray, the retired Cuban diplomat, countered that Cuba “allowed” the U.S. to reopen its Havana embassy — in the same building that had launched the U.S. interests section — and argued the embargo remains the key obstacle between the two countries.
“One can’t forget this is an asymmetrical relationship,” he said. “The Cuban government will surely adapt to the new reality.”
The Cuban military’s vast conglomerate
Here is a list of the main business entities linked to Grupo de Administración Empresarial, S.A., or GAESA, the military-run holding company that controls most of Cuba’s economy and will be targeted by President Donald Trump’s new Cuba policy:
▪ ANTEX (staffing agency for joint ventures)
▪ AUSA (warehousing and customs at Port of Mariel)
▪ Banco Financiero Internacional (banking)
▪ CIMEX (financial services, high-end retail stores, import/export)
▪ ECASOL (cooking oil trade)
▪ GEOCUBA (mapping services)
▪ Grupo Bahía de La Habana (Havana Bay cleanup)
▪ Grupo de Turismo Gaviota (tourism, including hotels, hotel supplies, marinas, car rentals, flights, tours and rentals)
▪ HABAGUANEX (Old Havana hotels, restaurants and shops)
▪ Inmobiliaria Almest (real estate)
▪ PETRAF (petroleum and gas trade)
▪ SASA (car services)
▪ SERMAR (ship repairs)
▪ TECNOIMPORT (technology import/export)
▪ TECNOTEX (technology import/export)
▪ TRD (hard currency stores)
▪ TRIMAGEN (film production import/export)
▪ Unión Agropecuaria Militar (military agriculture)
▪ Unión de Construcciones Militares (military construction)
▪ Unión de Industrias Militares (military industries)