According to the Tampa Bay Times, a Florida man faces up to $100,000 in fines for alleged violations of the U.S. embargo on Cuba. It is a reminder to business travelers to the island to be mindful that despite the political rhetoric, a comprehensive embargo remains in place and that there remains, as I shared with the Wall Street Journal a few months after the President’s D17 policy speech, a whole lot of “irrational exuberance” in the marketplace about Cuba, its market potential, and what the regulations allow and do not allow.
The travel exceptions to the embargo are clear, the traveler is supposed to engage in one of several types of travel. In order to qualify for the exception, the traveler must maintain a full-time schedule of non-tourist travel under one of, now 12, categories of travel. By the way, oil exploration for oil is not one of them. There are also no hybrid exceptions or mixing and matching of the exceptions to meet your travel goals. If the latter is the case, you must apply for a specific license that, in my experience, will usually denied if it involves any activities that may provide financial benefits to the government.
For a few years now I’ve answered questions from reporters, academics, potential clients, and even briefed Congressional folks about all sort of proposed travel and business work arounds to the embargo. The most interesting one cobbled together by a very creative person, possibly an attorney or attorneys, I’ve dubbed the “humanitarian drop” exception. Of course, it’s not legal, but I’ll give them an “A” for creativity. This is how I think it works.
The proposed traveler wants to travel to Cuba on business, for example oil exploration. That, at least up until recent regulatory amendments, is illegal without a specific license and, in my book, still is. In order to get into Cuba, and fool U.S. Customs on the way out and in, the traveler says that they are visiting the island for “humanitarian” reasons, to help the people of Cuba. In order to give the trip a patina of legitimacy, as well as satisfy the record-keeping requirements under U.S. law, the traveler loads up on a lot of medicine and other medical supplies. The donations are then given to one of many of a constellation of “approved” religious groups that Communist Cuba’s religious police – the Office of Religious Affairs – has approved. I call these the “good” churches or groups.
Upon arrival in Cuba or the day after, the traveler drops off the much-needed medical supplies at the charity, takes a lot of photos, tours the church or facility, and has a few meetings, possibly over the course of a few days. However, during the down time, the traveler attends otherwise unlawful meetings in with government officials or at a government sponsored conference or professional meeting. Even if they could’ve secured a license such a trip, for some reason known only to the traveler, he or she does not want anyone knowing about it so they engage in this unlawful behavior.
Around the time discussed in the Tampa Bay Times story, I recall a back and forth with Congress and the Obama administration over the use of oil rigs off Cuba’s north coast. The rigs, I believe from China, may have contained U.S. components. Under the law, if a foreign product contains 10% or more U.S. components, a license for export to Cuba is required. A license that would’ve been denied then and, I hope, would be denied today. You see certain U.S. equipment is allegedly needed to reach Cuba’s potential black gold, but under the embargo and export controls, oil exploration is not allowed.
For context, I’ve appended a Congressional Research Service (CRS) report from that time period that summarizes well how “[s]ome U.S. business and policy groups have called on Congress and the Administration to allow U.S. oil companies to become involved in Cuba’s offshore oil development.” There was a lot of buzz in this town around that time about Cuba’s latest snake oil proposal to revive the Communist economy, an oil discovery. I’ve heard about oil off Cuba’s north coast for decades, even from family members, since my teens. I’m now in my mid-40s. As I wrote in 2012, Communist Cuba’s dreams of milk, honey, and oil came to a crashing end.
While it is unclear what happened in the case reported on by the Tampa Bay Times, the traveler’s comments reminded me of the “humanitarian drop” visit I just described. According to the story the traveler,
contends that he fulfilled his humanitarian obligations by delivering medical supplies to families and churches. “I then attended the oil meetings that I pushed to happen,” he said. “I did not engage in business. I was not paid.”
Attended “oil meetings that I pushed to happen,” is not humanitarian travel so unless he had a specific license, he may have violated the embargo. Maybe they had a specific license for other travel? If they did, then there should be no issue; however, the quote raises a lot of questions. There is absolutely no “humanitarian obligations” requirement under a professional meetings specific license.
The potential lesson here, among others, is that if you’re interested in Cuba travel for business reasons, keep in mind that Cuba remains subject to a comprehensive embargo. Also, never rely on rumors that OFAC and other federal enforcers are asleep at the switch on Cuba sanctions, or my favorite, under instructions from the White House to look the other way. And never ever fall for the trap of combining license exceptions to create custom travel under non-allowable “hybrid” authorizations because, as in this case, you may end up with a lot of explaining to do.