U.S.-Cuba Sanctions: Bitter Pill, Good Medicine

Some areas where we would not want U.S. telecommunications  equipment or services sold include Cuba’s tourism sector, any government agency that can be directly linked to human rights abuses, and  entities involved with biological weapons research and related capabilities, to name a few.  A tall order, but well-worth the extra effort and somewhat required by law.  

Supporters of easing U.S. sanctions on Cuba are just about ecstatic that the Obama Administration has announced that it intends to ease sanctions toward the Communist country.  In addition to allowing for unlimited travel by individuals in the U.S. with families in Cuba, it has also pledged to ease telecommunications services.  These people-to-people measures are designed, as stated in statute, to generate “support for the Cuban people.”As the administration starts to implement these new rules, it must also contend with the other half of the U.S.-Cuba statutory rules, economic isolation of the state sponsor of terrorism.  

As with most public policy debates in this town, political myopia and parochialism has already started to set in on this issue.  The primary aim of the U.S. in this area should be to minimize, as much as reasonably possible, long-term political instability on the island.  And the only way to do that is to maintain economic sanctions on the Cuban regime, seek support for doing the same from Cuba’s main trading partners, and re-focusing our approach to Cuba so that national interests and security goals dictate our actions toward the hardline state and its criminal ruling elites. 

Contrary to what opponents of U.S.-Cuba policy contend, the U.S. does not maintain a comprehensive, ironclad embargo on Cuba.  Quite the opposite.  The statutory goal of U.S.-Cuba policy is a “peaceful transition” to democracy.  To accomplish this goal, the Congress approved a legal framework that calls for support for the Cuban people as they decide their future return to democratic rule, while maintaining economic sanctions on the regime.  This is no easy task.  In order to “help” the Cuban people, the U.S. must engage the party leaders within the generous confines of U.S. law.

The Bush Administration found a the correct balance between these competing tensions, although it should have pressured the regime ever more so.  The Bush team limited travel to Cuba, as well as the money family could send to relatives, and Party officials, in Cuba.  It was a bitter pill, but good medicine.  It worked.  For the first time since the Cuban Revolution in 1959, there was an opposition movement starting to take hold that was supported by people within the island.  Some of our allies, most notably the eastern European, former Soviet Bloc countries, stepped up to assist in the effort.

Where the Bush Administration sought to create conditions to move Cuba in the direction of freedom, the Obama Administration’s approach will retard that process and put Cuba on a path to power consolidation for Communist Party leaders, suffocating the small, but important opposition gains of the past few years.  The Obama approach, if implemented unchecked, will most certainly put Cuba on an unstable path, harm U.S. foreign and national security interests.  It will work against statutory goals of “peaceful” transition. 

In the days and weeks ahead, the U.S. government will need to update the Cuban Assets Control Regulations, 31 CFR Part 515, with regards to travel and telecommunications.   With regards to the travel provisions, there is really not much to say except that it is a mistake to ease the Bush-era limitations.  It will put money in the hands of the Party and the military.  The benefits of the “assistance” to the Cuban people will be substantially outweighed by the harm these monies will do when the regime gets a hold of it.

According to various news reports, it appears as if various telecommunications companies are eager to enter the Cuban market; however, these companies should be aware that while telecommunications is a statutorily allowed service that can be provided in Cuba, it is not without conditions and key restrictions.  For example, the Cuban Democracy Act of 1992 (“CDA”) states that licenses issued and payments to the Cuban government must be done “in a manner that is consistent with the public interest and the purposes of this title [22 USCS §§ 6001 et seq.], except that this paragraph shall not require any withdrawal from any account blocked pursuant to regulations issued under section 5(b) of the Trading With the Enemy Act [50 USCS Appx § 5(b)].”   See 22 U.S.C. §§ 6004.

The telecommunications provisions of the CDA were amended by the Cuban Liberty and Solidarity Act of 1996 (“LIBERTAD”) that, in part, clarified that U.S. telecommunications provider could not invest in Cuban domestic telecommunication services.   It states that “an ‘investment’ in the domestic telecommunications network within Cuba includes the contribution (including by donation) of funds or anything of value to or for, and the making of loans to or for, such network.” See 22 U.S.C. § 6004 (e)(5).  

In other words, it is not going to be as easy as advocates of easing sanctions make it out to be.  Even the Trade Sanctions Reform Act of 2000 (“TSRA“) that eased sanctions on agricultural products, does not allow for some of the high-tech gadgets that Cuba wants.  Export controls remain in place for agriculture commodities, medicine, or medical devices that are controlled by the Arms Export Control Act, the Export Administration Act, or things that can be used to “facilitate the development or production of a chemical or biological weapon or weapon of mass destruction.”  See § 904, Title IX, Trade Sanctions Reform and Export Enhancement Act.  There are also restrictions in place given Cuba’s special status as a state sponsor of international terrorism.  

Some areas where we would not want U.S. telecommunications  equipment or services sold include Cuba’s tourism sector, any government agency that can be directly linked to human rights abuses, and  entities involved with biological weapons research and related capabilities, to name a few.  A tall order, but well-worth the extra effort and somewhat required by law. 

The scriveners at the Treasury Department, Office of Foreign Assets Control (“OFAC”), and colleagues at other agencies,  have a challenging task before them since CDA and LIBERTAD require that U.S. regulations do a somewhat conflicting thing:  support the Cuban people (by easing the telecommunications restrictions) while isolating the Cuban Communist Party.   It is somewhat neurotic when you come to think about it.  Our goal is to deny hard currency to the Communist Party, but we need to talk with the Communist Party leaders in order to allow these changes to take hold.  The Cuban leaders know this and will game this process to ensure it can extract maximum concessions from the United States in order to increase revenue flow to party coffers.   

Let us hope that the Obama Administration does the correct thing and closely limits how much support it allows, in the form of money and technical know-how, to enter the Communist Party coffers and the telecommunications market in Cuba.  In doing so, it will strike the correct balance of support and economic isolation, afford the opposition in Cuba the right conditions to growth and consolidate, and, in the long-term, accomplish the primary goal of U.S. law and policy, a peaceful transition or return to democracy on the island.

If you are interested in a taste of what is likely to come, take a look at this post at the Babalu Blog.

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