One of the many dirty little secrets about traveling to Cuba is that a large chunk of the fees paid to travel charter companies are set aside for the regime. For example, the Cuban regime imposes a very high tax, assessed on the plane ticket at a rate of about $150 per ticket, for just landing at a Cuban airport. American travelers pay the most fees; travelers from other countries pay less.
A long-time aviation industry expert I’ve consulted through the years on this matter agrees that the regime is using these fees for things other than maintaining the airports. “If you look at the physical state of Cuban airports, with one or two exceptions, it is clear they are not spending the money on runways or facilities maintenance.”
By the way, in addition to the landing fee, the regime also charges about $50 dollars per traveler to prop up Cuba’s failed healthcare system. You know the one; Michael Moore still raves about it.
I pay approximately $250.00 or so to fly from Washington, DC to Miami, Florida and travel a distance of about 1,000 miles. Folks traveling 230 miles from Miami to Havana, pay about that much in fees to the Cuban government! Traveling to Cuba is not cheap and, when you’re there, it’s no bargain either. Want to visit the Caribbean try Puerto Rico or the Dominican Republic.
The Cuban government – a paragon of Communist economic planning – is whining that it needs to be paid these fees these fees before a plane lands in Cuba. According to the Miami Herald, several charter flights have been cancelled because U.S. banks, allegedly concerned about U.S. sanctions enforcement, are mucking up the approval process before releasing funds to the Cuban regime. Maybe, but I doubt it.
What is probably going on is that Cuba is upset that the Obama administration has failed to deliver on its promise to end the embargo so the petulant little people that they are, rather than make arrangements to receive payments at a later time, the Cubans are up in arms and canceling flights. The Obama Administration, of course, takes the Cuban regime’s side and is pressing for U.S. banks to take on more of the Cuba business.
According to MarketWatch:
A Chase spokeswoman declined comment. However, a source at the bank knowledgeable about the situation said that increased wire transfer demand alone may be making it hard for everyone involved to process the larger volume at even the slow but ultimately reliable pace as in the past.
Chase is being diplomatic. They do not want to cross the Obama administration. Compared to other financial services issues that I am certain they must grapple with on a daily basis, Cuba is small potatoes.
The problem is not Treasury’s OFAC or the new regulations, nor is it Chase, JP Morgan, Bank of America, Wells Fargo, or any other financial institution in the world that is subject to U.S. laws with respect to Cuba. The problem is the regime in Havana. They want their “fees”, for who knows what, and they are willing to cancel flights and play politics with American travelers if it leads to increasing political pressure in Washington, DC to ease sanctions. Policymakers should not fall for the bait.
Travel service providers in the United States should deposit travel fees it collects from travelers at Cuba’s bank in Miami, Florida – Stonegate Bank – and have the bank coordinate the future transfers with officials in Havana. If the regime wants more travelers to Cuba, and the fees that come with it, they need to act like adults, not children. Let the flights departand the fees will be released when the vetting is complete. There is no risk, legally, that these funds will be attached or otherwise frozen.
Frankly, I can’t quite figure why any serious and reputable U.S. bank would engage right now with Cuba. Hats off to Stonegate Bank in Miami for making a go of it. Dealing with Cuba is a compliance nightmare. It is a puny market run by corrupt officials — the Russia of the Americas. A new oligarch class is taking over and U.S. banks don’t want to be bothered with yet one more Latin America compliance nightmare, at least not until there is a transition. Those that do should take their time and screen as robustly as possible, no matter how long it takes.
I advise companies and organizations on compliance with U.S. sanctions and export control laws. Yes, it can be a cumbersome process but very manageable. In the case of the Cuba program, take this to the bank: complying with U.S. sanctions is a whole lot easier than engaging in transactions with the Cuban regime. The Cubans are not used to engaging in the free market and the folks who lead it now, never will.
These Cuban regime concocted travel crises are part of a larger lobbying effort by the communist rulers in Havana, and the legions that support them in DC, to secure access to U.S. credit markets. Access to the US market is a privilege not a right. For guidance, look to U.S. law, specifically LIBERTAD. Executive action will not cut it.
Let’s hope no one falls for This latest round of Cuban shenanigans. U.S. taxpayers are owed billions for stolen properties that Cuba never paid for and there are victims of Cuban terrorism that are also owed billions. Cuba is getting greedy. Time to call them on it. Or maybe, as this Miami Herald story reports, they are running out of rooms.