Friday’s announcements by Pres. Trump on Cuba are both more and less than they seem. Here’s some information and background to help make clear what will happen in the months ahead.
More and less, because while he said “Effective immediately, I am cancelling the last administration’s completely one-sided deal with Cuba,” he really wasn’t. Some important parts remain in place, a key item for travelers is rolled back, and a big new wrinkle was added for investors and developers with Cuba deals.
Still in place are the airline agreement (which hasn’t worked out as well as the airlines hoped), permission for cruise ships, and permission for travelers to bring back Cuban products such as rum and cigars.
However, one big group of travelers to Cuba will be affected: Those whose travel is for educational or ‘people-to-people’ purposes. Under the embargo which has been in place since the 1960s, travel is only permitted by license through Treasury’s Office of Foreign Asset Control. Under Obama’s new rules, a “general license” was created, and travelers allowed to self-certify that they fit one of its categories. Under the new rules, education and people-to-people trips will have to be run by OFAC-licensed specialty tour companies, and individual travel will no longer be allowed.
The new wrinkle is for investors: Over the past year, U.S. investors have been looking for and booking deals with Cuban companies; one of the most prominent is Starwood Hotels, which has already begun operating and renovating properties in Cuba. The new rules bar any deals with companies controlled by Cuba’s military, which controls much of the country’s economy.
That may seem odd; it stems from a period in the 1980s when Cuba’s economy was in trouble as its ties with the then-Soviet Union frayed. In an attempt to defeat corruption and mismanagement, the government called on the military, which created Gaesa, a company that owns and operates subsidiaries in the tourism, shipping and especially food and retail industries.
Starwood’s deal is with Gaviota, a Gaesa hotel operator, and would be barred under the new rules, although there are signs old deals won’t be undone. But hundreds of other deals now in negotiation will be banned, including some involving new port facilities in several cities, where Chinese companies will now be the prime bidders. China already has such deals in Santiago de Cuba.
