home Cuba, Economic Sanctions, Trade Security & Related Cuba Castro Incorporated, Keeps Growing and Growing

Cuba Castro Incorporated, Keeps Growing and Growing

Penned at the request of a client, the following post briefly discusses how the Cuban government is utilizing loopholes of U.S. economic sanctions law to, in essence, lobby the Congress and the Obama Administration to ease travel and other restrictions toward the communist country. In this post, I’m focusing on tourism. In future posts, we will take a look at other sections of U.S. law and show how the regime is exploiting or violating the law to avoid the sanctions.

Economic isolation of the Cuban government and support of the Cuban people is the aim of U.S. law. It is difficult to do and, as with any foreign policy matter, subject to the whims of the executive branch. If the Cuban government does things that call for easing of the sanctions, it receives sanctions relief. And vice-versa.

Ask anyone who has followed and worked on this issue as long as we have, and they’ll tell you that the reality is that the law has never been enforced as Congress intended. Despite flaccid-like application of sections of the law, the policy has been remarkably effective. That is why the regime, and its supporters in the United States, are always looking for creative ways to lower the trade barriers.

The statutory roadmap for easing sanctions is very clear, yet during the past five (5) years both sides – Cuba and the U.S. – fail to follow it. During Bush II, even though U.S. trade with Cuba reached record levels, regime officials could not really do much to foster the level of behind the scenes dialogue that exists today with the Obama Administration. Restrictions have been eased, and if they are allowed to do so, more will come.

Although I’ve been unable to find solid evidence, yet, such as lobbying or foreign agent registration forms, it appears the Cubans are receiving a lot of advice from Americans in this town. In most cases, such lobbying would be illegal and, while there are certain situations that Cuba could retain such services, lobbyists and foreign agents would need OFAC approval for payments for these services.

People-to-People Travel Has Evolved into Unlawful Tourism Travel

In January 2011 the Obama Administration amended the travel regulations to allow what is called “people to people” travel. Under this exception to the law, any American can travel to Cuba so long as the trip, organized by someone with an OFAC license, and not tourist travel. Wait a minute, not tourist travel?

Technically, it is not tourist travel because you’re supposed to be on a full-time schedule of educational activities that will result in, as the U.S. government says, “meaningful interaction between travelers and individuals in Cuba.” Several months after the regulation change was announced by OFAC, the Treasury Department had to issue a warning and clarification. Go figure:

The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) is aware of misstatements in the media suggesting that U.S. foreign policy, as implemented by OFAC, now allows for virtually unrestricted group travel to Cuba by persons subject to the jurisdiction of the United States. Although OFAC amended the Cuban Assets Control Regulations, 31 C.F.R. Part 515 (the “Regulations”), in January 2011 to expand licensing of travel to Cuba for certain specific purposes, the amended Regulations still contain significant travel restrictions.

You can read the entire Treasury OFAC alert here.

After this policy change was announced in 2011, Cuba, without missing a beat, ramped up its marketing campaign in the United States to boost “people to people” trips.

The industry is booming, including in South Florida. It is part of what I have repeatedly labeled as Cuba Castro IncorporatedCuba Castro Incorporated is a satellite network of U.S.-based companies that have some economic tie to the island. Remittances, airline travel, phones, calling cards, dollar stores, and much more, make millions every year from these transactions.

Many of these companies are legal, but I’ve been advised by law enforcement experts that there are many that are not. In fact, some are just front companies for the Castro regime’s family of front companies in the United States, Latin America, and Europe. Cuba Castro Incorporated is an economic life-line for the regime and our laws have made it possible.

Let’s get back to this travel business.

Advertising in Tourism Magazines Published in the United States

If people-to-people travel is supposed to be educational, why does it seem that the Cuban government advertises in U.S.-based magazines? For example, in the June 2013 edition of OnCuba, a slick publication that one usually finds at an airport or in the back pocket of an airplane seat, there’s plenty of advertising for restaurants throughout Havana. Who is paying for these ads? Do patrons who show the ad at the restaurant receive a discount?

I’ve embedded below a few examples of these ads. And what about the Facebook ads (see below)? Mark Zuckerberg should spend less time playing politics on immigration reform , and focus on ensuring the Facebook’s compliance house in order.

In another edition of the OnCuba magazine, my client who asked that I pen this blog post thought they had seen a property that was subject to a certified U.S. claim against the Castro regime. Cuba owes many U.S. citizens what amounts to more than $7 billion for properties the communist government stole without compensation, along with contracts and other commercial paper.  In this particular property case, we were exploring a Title IV move pursuant to Helms-Burton, but it turned out that the property in question was in another part of the island.

Obama Administration, and Congress, Rudderless

When it comes to U.S.-Cuba matters, the Obama Administration and the Congress are rudderless. The Obama Administration has weakened sanctions and, in some cases, appears to have turned a blind eye to violations right in the open. In the meantime, the Cuban government is holding an American citizen hostage, Alan Gross, on trumped-up charges that he was spying for the United States during his many trips to Cuba.

Cuba is no closer today than it was ten years ago to meeting the statutory guidelines for the easing of sanctions. Quite the opposite. Someone with some leadership skills in the U.S. government needs to start cracking down the U.S.-based entities that make up Cuba Castro Incorporated.

Supporters of easing sanctions dislike current policy, but its the law. The law, what’s that? If folks want to change it, you’ll need to amend it.  A lot of it. This means the President will need more than his “pen and phone”.


OnCuba June 2013 Samples

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