home Economic Sanctions, terrorism, Trade Security & Related Cuba is a Terror State, Notwithstanding Presidential Decrees, and Congressional Acquiescence, to the Contrary

Cuba is a Terror State, Notwithstanding Presidential Decrees, and Congressional Acquiescence, to the Contrary

The Miami Herald reports this morning that Cuba’s removal from the state sponsors of terror list may prove more symbolic than business friendly. Some of the experts cited in the story have a somewhat myopic way of viewing the impact of delisting and, at a certain level, are completing distorting or misunderstanding current U.S. law and long-standing U.S. policy. It also damages U.S. interests in the Americas and, in a post-09.11 world, well beyond the immediate U.S. sphere of interest.

Just ask yourself, if this were ‘symbolic’ or a mere gesture of goodwill from America to the dictators, then why has the regime, for decades, along with an army of U.S.-based lobbyists as well as Members of Congress, been obsessed with Cuba’s removal from the list? Acquiescence

Rev. Jesse Jackson talks with journalists after a meeting with members of the Revolutionary Armed Forces of Colombia, or FARC, at the Hotel Nacional in Havana, Cuba, Sunday, Sept. 29, 2013. Jackson says he intends to press forward in a bid to mediate the release of a U.S. Army veteran taken captive by Colombian rebels three months ago. (AP Photo/Ramon Espinosa)
I bet most Americans, including Members of Congress, had no idea that Rev. Jesse Jackson was tapped to help with FARC “peace” talks hosted by Cuba. Here he is with journalists after a meeting with members of the Revolutionary Armed Forces of Colombia, or FARC, at the Hotel Nacional in Havana, Cuba, Sunday, Sept. 29, 2013. Jackson says he intends to press forward in a bid to mediate the release of a U.S. Army veteran taken captive by Colombian rebels three months ago. (AP Photo/Ramon Espinosa)

The regime has even gone as far, with the help of Americans I am told, to stage a faux peace process with Colombia’s terrorist group, the FARC just to provide supporters a talking point and data input to cloud the designation analysis. Yes, my friend, these people are not your average banana republic tin horn dictators. Cuba is helping FARC terrorists (leaders of which fled to Cuba seeking safe haven in the aftermath of the 09.11 terror attacks) secure what Wall Street Journal’s Mary O’Grady penned a few weeks ago: amnesty for war crimes. Over the long run, it is the same thing that the regime leaders want for themselves.

The removal of Cuba from state sponsors list will have negative ramifications for U.S. interests not only with respect to Cuba, but elsewhere around the Americas and around the world. The Obama Administration, in a process that started with the Bush Administration, has made a paper tiger of certain sections of very important laws including, but not limited to, the Export Administration Act, Arms Export Control Act, and the Foreign Assistance Act.

As for news reports that Congress is powerless to stop the President from removing Cuba, that too, is not correct. While Section 6(j) of the Foreign Assistance Act does not include language to do so, Congress can, simply, pass a legislation to make it so. On the other hand, Section 40 of the Arms Export Control Act does contain a procedure providing for a joint resolution to block what President Obama is doing.

For those of you who still believe that the de-listing of Cuba is merely symbolic, here are some scenarios where I envision potential issues, and negative ramifications, from removing Cuba from the state sponsors of terrorism list:

  1. It has weakened the designation process and made paper tiger of the law. It signals a very bad signal to enemies, and would be enemies, of the United States. I’m not going to beat a dead horse, there are plenty of posts on this blog and other places detailing, just using public information, why the Cuban regime must remain on that list.
  2. If you have a judgment against the Cuban government, and I know several people that do, good luck trying to freeze Cuban assets moving forward. The process has become a little more challenging from a practical standpoint and, potentially, as a matter of law.
  3. It has sparked a curiosity in the financial markets that, up until now, pretty much stayed away from dabbling in engaging, or supporting, financial transactions with Cuba. Remember, Cuba has commercial relations with our European allies, China, Russia, and more. Removal will likely improve Cuba’s financial risk rating, and in this business, even a nominal improvement could attract regime supporting economic activities.
  4. As a result of the de-listing, this summer, the Paris Club may meet with regime officials to start a dialogue on pending debt obligations.
  5. In my view, it clouds several sections of the Arms Export Control Act on the question of third-country matters (may post an item in the future about this); for starters, see §126.1(d) of the International Traffic in Arms Regulations (ITAR).
  6. Removing Cuba has made compliance with U.S. sanctions that are based on the Trading with the Enemy Act, Helms-Burton, and other laws, quite more challenging for persons subject to U.S. laws.
  7. It may result in the export of certain U.S. products and services that should not be allowed to be exported to Cuba.
  8. It has removed an important negotiating tool at the disposal of the State Department that would’ve been used to change Cuban behavior not only in the terror sponsoring realm, but in overall future negotiations with a transition government to deal with human rights issues or, settling certified claims of American citizens against the government of Cuba.
  9. It will weaken re-export controls contained in the Arms Export Control Act. I may post an item just on this issue because, in my view, Cuba’s de-listing weakens the AECA.
  10. If U.S. financial institutions go ahead with supporting or providing credit and debit card services in Cuba, they could, arguably, be facilitating prohibited transactions in Cuba by U.S. persons who use these services in Cuba. For companies, it is difficult to do a fulsome SDN screening. American travelers to Cuba can’t, and should not be expected, to worry about these things. The onus will be on the financial institution. And, as I have advised my clients, if you’re one of the few industries that can go into Cuba, do it right and look for the long-term because changes are coming that may be politically volatile.

Make no mistake about it. The Obama Administration is trying to also make an end run around Helms-Burton and the Trading with the Enemy Act, but we’ve said that in earlier posts. For now, Congress has allowed them to do it. The Obama Administration is doing with Cuba what they’ve done with immigration, ObamaCare, and more: abused executive grants of power from Congress to try to change the laws through executive action. And they are just getting started. American taxpayers deserve better.

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