home Cuba, Economic Sanctions Cuba’s Debt Problem, Caveat Emptor

Cuba’s Debt Problem, Caveat Emptor

The following excerpt is from a piece posted on LinkedIn’s commentary page:

Whatever the reason, none of them good at this juncture because the Cubans are not ready for it, normalization of relations with Cuba will come at a price, a very steep price, for you and me. If you’re doing business in Cuba, or plan to do so, your compliance division will have a great deal more self-policing to do because when you do business pursuant to a general license, it comes with the territory. While the new regulations appear to make it easier to invest or trade with Cuba in select markets, it does not change the fact that transactions remain subject to the Trading with the Enemy Act, the Cuban Democracy Act, the Cuban Liberty and Democratic Solidarity Act, the Export Administration Act, the International Emergency Economic Powers Act, among many other important statutes, regulations, and executive orders. More on this in a future post.

Not only does this shotgun approach to the Cuba paradox come with a high economic cost, but it may foment exactly the opposite behavior sought in U.S. law and policy: helping the Cuban people with a peaceful transition to a more open society. I’ll have more to say on this latter issue in another post. The more pressing issue now, since Congress and the President are about to offer dueling budgets in the next few weeks, is the question of Cuban debt and how best to contain the damage that will result from executive overreach from certain regulations issued yesterday by the Treasury Department Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security of the Department of Commerce (BIS).

Read the rest at LinkedIn.

 

  • Brian Garcia

    I was curious about a comment I noticed in the Miami Herald on Sunday from an Andy Gomez, identified as “a Cuba advisor to the Washington law firm Poblete Tamargo.” He stated, “Members of our Congressional delegation are in front of a big losing proposition.” Is he talking about the Cuban American congressional delegation? The article also mentions how lawmakers from the Midwest would like to see open trade with Cuba. Do you believe this might lead to a split in the GOP over the Cuba issue?

  • Brian, thank you for your questions. Dr. Gomez was a expressing several views to the reporter and, unfortunately, he was quoted out of context. Traditionally, US-Cuba policy tends to be handled – actual votes in Congress – with bipartisan majorities that have a heavier Republican vote count. This happens with other issue areas such as free trade agreements and even certain domestic spending programs. In the case of Cuba, the national security arguments tend to sway the conference in favor of sanctions.

    For the moment, the majority view within the GOP Conference in the House and Senate remains steadfast in support of an approach toward Cuba that isolates the regime and helps the Cuba people. Sanctions are a tool of that policy. Despite what you may hear from the President, certain Democrats, as well as supporters of more engagement with the regime, the sanctions are not a policy, never have been.

    • Brian Garcia

      Jason, thank you for clarifying that for me. I consider myself a liberal Democrat but I remain fairly skeptical about all the sudden policy change towards Cuba and what the true motivation is.

      I’d like to ask you your thoughts on the business side of the equation. There has been a lot of talk lately about American companies that have an interest in doing business in Cuba. Now I’m well acquainted with the Helms-Burton act and it’s provisions, but do you believe that Corporate America could potentially influence the outcome of any negotiations between the United States and Cuba, up to and including a repeal of Helms-Burton? Could business trump politics whether or not it’s in the best interest of either the US or the Cuban people?

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