U.S. Eases Restrictions on Travel to Cuba and Bank Transactions

U.S. Eases Restrictions on Travel to Cuba and Bank Transactions
By JULIE HIRSCHFELD DAVISMARCH 15, 2016

WASHINGTON — The Obama administration announced Tuesday that it would
allow individuals to travel to Cuba for "people to people" educational
trips and lift limits on the use of American dollars in transactions
with Cuba, wiping away stiff restrictions on travel and commerce as
President Obama prepares to make a trip to Havana next week.

The actions are some of the most significant regulatory changes the
Treasury and the Department of Commerce have made on the way toward
normalization that Mr. Obama and President Raúl Castro of Cuba announced
in December 2014. They come days before Mr. Obama will land in Cuba, the
first visit by a sitting American president in 88 years and a marquee
element of his foreign policy.
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While Americans are permitted to make educational visits to Cuba in tour
groups, a tourism ban has barred individuals from traveling there under
most circumstances. Under Tuesday's revisions, Americans who plan a trip
with a full schedule of educational exchange activities, including
interacting with Cuban people, will for the first time in decades be
able to travel on their own to Cuba without special permission from the
United States government.

The change punctures a major element of the American embargo against
Cuba, which remains in effect despite Mr. Obama's repeated calls for its
repeal — the Republican-led Congress has shown little interest in
lifting it. While tourism is still barred by statute, the new rules
amount to permission for any American who wants to travel to Cuba to
plan an educational sojourn there, as long as they keep records of their
activities for five years.

Travelers who fill their days with museum visits, cultural sightseeing
and conversations with Cubans about their society, and keep a daily
journal, could meet the requirements. American officials suggested that
there would be little policing of the comings and goings of those making
people-to-people trips.

"We have enormous confidence in the American people as ambassadors for
the things that we care about," said Benjamin J. Rhodes, Mr. Obama's
deputy national security adviser for strategic communications and his
point man on opening relations with Cuba. "There's no shortage of
opportunities for Americans to build that type of meaningful schedule of
people-to-people engagement while they go to Cuba. We believe that's the
best way to connect the Cuban people with the wider world."

But Representative Ed Royce, Republican of California and the chairman
of the House Foreign Affairs Committee, said the actions would prop up a
government with a long record of human rights abuses. "While the Castros
and their agents are given access to the U.S. financial system, the
suffering Cuban people will still get paid in funny money — if at all,"
he said.

John Caulfield, who served as the chief of the United States mission in
Cuba from 2011 to 2014, said the change would expose Americans to a more
authentic experience in Cuba than they have been able to get on
organized tours.

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Many of the existing tours have evolved into a formulaic itinerary that
can be heavily influenced by Cuban state-run companies, involving a
relatively closed circle of architects, performers, economists and
organic farmers who cycle through American tour groups, often receiving
money for the visits.

"In our diligence to make sure people were doing people-to-people, we
allowed them to fall into the trap of the Cuban propaganda machine," Mr.
Caulfield said in an interview. "Basically it was the Potemkin tour of
Cuba, where the Cubans could exert control."

He added, "This allows a lot more flexibility for the travelers."

The rules announced on Tuesday will also allow Cuban citizens to earn a
salary in the United States and make it easier for dollars to be used in
financial transactions with United States banks, something government
officials in Havana have long pressed for. They come on the heels of an
agreement last month between American and Cuban officials to restore
direct commercial flights between the countries.

The changes reflect a major behind-the-scenes effort by American and
Cuban officials to strike a series of deals before Mr. Obama's visit to
ensure that the trip is seen as a success.
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Removing these barriers "is recognition that the Cuban people,
particularly the growing number of Cubans who run their own small
businesses, benefit when Americans travel to the island," said Senator
Jeff Flake, Republican of Arizona, who supports lifting the embargo and
will make the trip with Mr. Obama. "Increased travel by Americans will
lead to more Cuban entrepreneurs who are less dependent on the Cuban
government. This is a great thing."

While administration officials argued that lifting the sanctions would
serve United States interests, making it less expensive and easier for
Americans to travel to Cuba and do business there, they also
acknowledged on Tuesday that the Cubans must make their own regulatory
modifications to allow the changes to take hold. The Cuban government
still imposes a penalty of 10 percent to exchange American dollars in
Cuba, Mr. Rhodes noted, and does not allow foreign firms to hire Cubans
directly.

Cuban officials routinely contend that there can be no true move to
normalization until the United States repeals the embargo, and many
American companies are fearful of running afoul of the statute even with
the latest revisions.

As part of the action on Tuesday, the Treasury Department, which
enforces the embargo through its Office of Foreign Assets Control, said
it would allow so-called U-turn transactions, in which money from Cuba
or a Cuban citizen can be cleared through a United States bank and
transferred back in dollars. They would also allow American banks to
process dollar-denominated transactions from Cuba, and to open accounts
for Cubans that they could use to receive payment in the United States
and send money back to Cuba.

But United States banks may still worry about being penalized, now or in
the future, for touching such transactions, said Carlos M. Gutierrez,
the Havana-born secretary of commerce under President George W. Bush,
who is a convert to Mr. Obama's policy change and will make the trip
next week.

"These are regulations — these are done by executive authority, so they
can be undone by executive authority," said Mr. Gutierrez, now chairman
of the Albright Stonebridge Group and the U.S.-Cuba Business Council.
"We have to get rid of the embargo for this to actually take hold."

Victoria Burnett contributed reporting from Mexico City.

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