Cuba

After the thaw: Re-imagining Cuba in 2015

Old American cars are seen in a street of Havana, on December 19, 2014. The U.S. could be a source of the parts needed to keep the vintage cars running.
Old American cars are seen in a street of Havana, on December 19, 2014. The U.S. could be a source of the parts needed to keep the vintage cars running. AFP/Getty Images

With glasses raised, some Cuban have kept up the ritual toast “Next Year in Havana” as the clock strikes midnight on New Year's Eve.

It has gone on for decades, ever since the 1959 Cuban Revolution brought Fidel Castro to power.

Now, for the first time in a long time, things may be quite different in their homeland in the coming year — just not in the way many expected. For some, it will hardly be a cause for celebration. They had envisioned a joyous, triumphant party as the dictator died, democracy returned to the island, and the U.S. and Cuba once again became friendly neighbors.

What changed everything, however, were the simultaneous announcements Dec. 17 in Washington and Havana that the U.S. and Cuba planned to renew diplomatic relations with Fidel’s brother, Raúl Castro, still in power — albeit making slow, methodical economic changes.

There are countless details to be worked out and the U.S. still must write the regulations that will govern the expanded trade and travel to the island that President Barack Obama outlined. Another important caveat that Ted Henken, a Baruch College professor, points out is: “If the Obama administration extends an open hand, there has to be a willingness by the Cubans to meet them half way.”

But here are what some of the changes could look like in 2015 as the process of rapprochement unfolds.

▪  A homeowner in Havana’s Playa neighborhood, just past the Almendares River, slaps a new coat of paint on his home and prepares to tile his patio. Both the paint and tiles have arrived on a commercial shipment from Miami.

Havana has been referred to as a city in need of a million gallons of paint and there are plenty of U.S. suppliers eager to sell Cuba paint.

Although the embargo will remain in place, under the Obama plan American companies would be allowed to export building supplies, inputs for small private farmers, and a range of products that Cuba’s self-employed population needs to set up businesses or expand them.

At this point, it’s up in the air how this would work. The products are intended for private Cuban citizens but Henken said, “It’s unclear whether private entrepreneurs will be able to capitalize on this directly or sales will continue to go through the government.”

▪  The owner of a vintage car in Santiago de Cuba wants to use his 1950s automobile to squire tourists around the eastern Cuba city but the car is barely running and lacks the chrome adornments that will catch the eye of visitors.

Now he can purchase those products in Cuba. It could happen, said Miami lawyer Pedro Freyre, a self-described car nut. “I’ve seen Russian tractor engines in old cars in Cuba,” he said, “but we have an entire replacement parts market for 1957 Chevys in the United States.”

Phil Peters, who heads the Cuba Research Center, said he expects American products would have a great advantage in the Cuban market. “We have good products, good prices and we’re right next door,” he said. “I’m optimistic but it does require a partner. It’s one thing to say we’ll sell but the Cubans have to want to buy.”

▪  Juan Pablo breaks his cellphone and heads to a store in Vedado operated by a cuentapropista, a self-employed entrepreneur, who can repair it but also sells new smartphones imported from the U.S., as well as data plans from U.S. providers.

Prices for the data plans are half what they were the previous year because there is now competition. He learns that soon the government plans to provide Internet service to homes and that at the end of the year broadband service will be coming from the United States, rather than just Venezuela, enabling a Wi-Fi network to be set up where he studies at the University of Havana.

But Henken said this is the dream scenario. It’s theoretically possible if the Cuban government goes ahead with its pledge to increase Internet access for Cubans and takes up Obama on new rules that would allow U.S. companies to sell consumer communications devices, related software and apps and services to update or establish communications systems in Cuba.

In the interest of providing telecom services, the U.S. would also allow American companies to provide telecom infrastructure and Internet services.

“What I expect is the government might try ways to have its cake and eat it too,” Henken said. “The government might try to remake the Internet in an authoritarian way.”

If that is the case, he said, Cuban civil society needs to demand that the government “treat Cubans like citizens and consumers rather than subjects.”

Cuba has an Internet penetration rate of only about 5 percent — among the lowest in the world — and the cost of telecommunications in Cuba is extremely high.

However, it has opened a chain of Nauta cybercafes, and ETECSA, the government telecommunications service provider, allows those who have Nauta cellular plans and addresses to receive emails on their phones, Henken said.

“When it comes to telecommunications, it will be up to the Cubans and American companies to agree. We’ll see,” Peters said.

▪  An American visitor puts a U.S. bank card into an ATM machine near Old Havana’s Cathedral Square and withdraws $100 worth of cash. The traveler can pay her hotel bill with a U.S. credit card, too.

Under the new U.S. Cuba policy, both would be allowed and U.S. financial institutions would be able to open correspondent accounts at Cuban banks to facilitate processing of authorized transactions.

Previously, American visitors to Cuba had to carry large quantities of cash or use credit cards from foreign banks.

▪  A Hialeah businessman who has been saving up money to help a close friend open a small business in Artemisa heads to a local remittance forwarder and requests a transfer of $2,000. Before, he could only send up to $500 per quarter.

The new upper limit applies only to Americans who don’t have family members in Cuba. They can send to anyone on the island — except ranking government officials and members of the Communist Party.

“That’s really a form of investment. We’re talking about potentially a lot of capital that could go to that island,” said Julia Sweig, Council on Foreign Relations director of Latin American Studies and author of Cuba: What Everyone Needs to Know.

Those with family members in Cuba can already send unlimited remittances under a 2009 relaxation of the rules. “Hialeah is already the center of micro-financing for just about every paladar [private restaurant] in Havana,” Freyre said only partly in jest.

Remittances worth an estimated $2 billion are sent to Cuba annually, and that number is expected to increase under the new rules.

It’s also going to be easier for the remittance forwarders to do business because they will no longer need to apply for a license.

▪  A Coral Gables couple traveling with a Jewish group that will be helping Cuban Jews with a building project no longer has to go through the rigmarole of applying for a license from Treasury’s Office of Foreign Assets Control.

They don’t need to do any prior U.S. paperwork and — although the regulations are yet to be released — may only need to sign a affidavit certifying they’re making the trip for religious reasons.

Cuba, however, will still be in charge of who gets visas.

The new rules mean that travelers who fall into 12 approved categories, such as religious and educational activities, will “no longer have a bureaucratic process on the front end,” Sweig said. “This is a huge difference. I think it will streamline and grow travel [to Cuba] quite substantially.”

And, she said, it will free OFAC up to use its resources “to track terrorist financing and real bad guys and not prosecute Americans going down there to look at Cuban architecture.’’

▪  For the first time in a decade, smoking a Cuban cigar in Miami is no longer a covert activity. Now, U.S. travelers can bring back $400 worth of Cuban merchandise, including $100 of alcohol and tobacco products, per trip.

The last time visitors could legally bring cigars from the island was before Aug. 1, 2004, when the Bush administration tightened up the rules. Travelers who smuggled cigars in their luggage risked having them confiscated.

But the rules apply only to tobacco and alcohol products brought back for personal use — not for commercial resale.

▪  Instead of waiting at the bunker-like U.S. Interests Section overlooking the Malecon to apply for visas, Cubans will be going to the U.S. Embassy in Havana — same building, different name.

The U.S. trade embargo against Cuba, which can be lifted only by Congress, is being chipped away by the president’s new policies but it is still the main driver of economic relations between the two countries.

Despite all the possibilities that renewed U.S.-Cuba diplomatic relations could open up, Peter Hakim, president emeritus of the Inter-American Dialogue, has a word of caution: “People will be looking for change and they will probably see more change than there really is. My guess is the Cuban government doesn’t want big changes but it really depends on what it wants to allow.”

12 categories of authorized travel

Travelers in 12 categories will be able to visit Cuba under general licenses without seeking formal permission from the Office of Foreign Assets Control. That means they won’t have to submit any prior paperwork and will probably only need to sign an affidavit when buying their tickets.

Travelers who fell into some of these categories, such as journalists, were already allowed to travel under general licenses. Now, no one in these categories will need to specifically apply for a license:

1. Those on family visits

2. Travelers on official business of the U.S. government, foreign governments and “certain intergovernment organizations”

3. Journalists

4. Professionals engaged in research or who are attending meetings in Cuba

5. Those participating in performances, clinics, workshops, and athletic and other competitions

6. People engaged in religious activities

7. Those pursuing educational activities

8. People engaged in activities that support the Cuban people

9. Individuals or groups engaged in humanitarian projects

10. Those carrying out the activities of private foundations or research or educational institutes

11. People engaged in the export, import or transmission of information or information materials

12. Those engaged in export transactions authorized under existing regulations and guidelines

Source: White House

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