home Cuba US Companies: Beware of Cuba’s “Gusanos” Discriminatory Policies

US Companies: Beware of Cuba’s “Gusanos” Discriminatory Policies

Officials with the cash-strapped, Stalinist police state Cuba, were forced to change a long-standing of prohibiting Cuban-born foreign nationals from arriving at Cuba by sea. Why now? Because the Cuban regime needs the money. If someone tells you differently, that person either does not know what they are talking about or support closer relations with the regime.

This issue surfaced when a Miami Herald reporter revealed that Carnival Cruises, after securing permission from the Obama administration to cruise to Cuba, announced that Cuban-Americans would be unable to buy tickets for the voyage. A class-action lawsuit and several negative media stories later, the Cuban regime had to reverse course. Faced with growing domestic unrest, hunger, and mounting political problems, changing the law was the only option. Party planners need the revenue flow.

Carnival Cruise lines was slapped with a class-action lawsuit alleging violations of the Civil Rights Act of 1964 for unlawful discrimination against Cuban-born American citizens. Plaintiff’s counsel could have also included the Obama administration as co-defendants for issuing the licenses that allowed Carnival to negotiate cruises to Cuba.

For Cuba, it was not just about money. Cuba had to changes it laws or it would risk losing a lot of political capital with the Obama administration as well as with the special interests groups that have spent millions the past few years to normalize relations and ease sanctions. Let’s face it folks, a drawn out jury trial in South Florida is bad for politics and, of course, business.

I was in Miami on Monday to speak on a Cuba panel that was held as part of a tech conference. We were asked a question about this Carnival matter and what lessons could be drawn from it. In addition to what I’ve said up until this point in this blog post, I also stressed two points that U.S. persons should keep in mind before engaging in Cuba:

  1. Do your due diligence – Cuba not only remains subject to a comprehensive embargo, but there is a lot more to scrub in proposed transactions than in other emerging economies. In addition to the usual FCPA, sanctions, AML, checks, you need to make sure that you’re not trafficking in stolen properties that used to be owned by Americans, among other things such as state-sponsored slave labor; and
  2. There is a lot of politics involved. You can’t ignore the domestic politics. Carnival should’ve known better than to engage in South Florida – the world capital of the Cuban Diaspora – without running the political traps. It has lost a lot of good will with powerful Members of Congress as well as sectors of the South Florida business community. Sure, they will recover, but this issue will always fester.

One related point I stressed in Miami worth repeating here: there is no private sector in Cuba. Even the cuentapropistas are connected to the state apparatus. As a matter of US law, the Obama administration has cobbled together a convoluted process that allows US persons to engage in transactions with Cuban-designated cuentapropistas (i.e., Cuba’s version of a private entity); however, there is nothing really private about them. As Heritage Foundation scholar Mike Gonzalez discusses in his recent Forbes post:

Previously, the private sector [in Cuba] had been barred from the “concentration of property.” As of the new congress, the private sector will also be barred from the “concentration of wealth.”

While the immediate Carnival cruise to Cuba fracas may be over, I doubt this is the last we will hear of it. Cuba continues to engage activities that, in the US, amounts to unlawful discrimination. Persons subject to US law who help facilitate these activities risk litigation and negative publicity. If you’re in the travel industry, you should pay close attention.

For example, Communist Cuba, paranoid and obsessed with losing power, likes to keep tabs on Cuban-born foreign nationals who try to travel to the island. They hold an especially harsh view of any Cuban-American who left the island before 1971. The regime calls these people gusanos (worms). Fidel made clear in 1961 how the system views gusanos and how they would deal with them:

“… the worms can live only on rot, and the worms could not live, they are instruments of imperialism … Prison sentences do not scare worms, worms believe they will spend a few days in jail [and then be set free as if nothing happened] … Worms believe that the revolution can not finish them [but] the Revolution, which has done away with many evils, knows well how to kill worms!

In other words friends, they do not like gusanos. It is a distinct group of people who are singled out for special treatment by the regime. It has nothing to do with security issues, gusanos are not terrorists or criminals. Rather, it is ideological. It is the Cuban version of, “sit in the back of the bus,” if you’re even allowed on the bus. They opposed Communism, Socialism, and everything that system stands for. Those that were not imprisoned, totured, or killed, fled for freedom to the United States and many other nations.

To this very day, gusanos are viewed down upon by the regime; however, now they are cash-strapped and need money that the gusanos have made after decades of hard work, living in liberty. So, the regime has been forced to make exceptions and tolerate their presence on the island. Yet, unlike other travelers to Cuba who happen to be Cuban born, gusanos have to jump through a few extra hurdles when securing a permission to visit. As detailed on the Cuban Canadian Consulate’s website:

Cuban emigrants who left the country prior to 1971 (i.e, gusanos) can travel to Cuba with their foreign Passport after requesting the Consulate for the HE-11 permission to enter Cuba. This process has two different moments: the request of the permit to Cuban Immigration Authorities and getting the permit at the Consulate once approved.

In addition to fees that can run up to $250 more than any other traveler to Cuba, the regime engages in special processing (political scrubbing against watch lists they maintain to keep politically undesirable people out) and, at times, certain people are not allowed in. By the way, there is no refund if you are rejected.

While not directly relevant to the Carnival matter, in other to better understand it, keep in mind that the Cuban Penal Code contains very harsh penalties for Cubans attempting to flee Cuba without government permission. The regulation that will allegedly be repealed in the Carnival matter (a regulation based on Decree Law 194) is part of an overall control scheme that includes the Penal Code in use by the Communists since 1959. The regime does this to keep politically or ideologically undesirable people out as well as keep people in. Potemkin Cuba is one big Communist gulag. It is about control.

As a sovereign nation, Cuba has every right to exclude from Cuba whoever it wants, including the gusanos. However, persons subject to US law cannot engage in helping faciliate that transaction. I’ve always wondered how travel agents in Miami, for example, who sometimes serve as a go-between the American traveler and the Cuban Consulate in Washington, DC, have avoided being sued in the same way that Carnival was sued for engaging in similar discriminatory activities?

I wish that I could tell clients that these Cuban laws, rules, and regulations are from mostly rooted in a by-gone era. However, as was on full display this week in the Seventh Communist Party Congress, old habits never die with the Cubans. They’ll ease up, just enough, to cash in and as soon as they have what they need they’ll shut it down again. If you’re going to engage in that market, go in fully informed.

 

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