The days of Americans legally staying at Ernest Hemingway’s Old Havana haunt, the Hotel Ambos Mundos, or making purchases at Havana’s only luxury shopping arcade will be over under new regulations the Trump administration issued Wednesday as part of a crackdown on U.S. business and travel to Cuba.
Americans will be banned from doing business with 180 entities tied to the Cuban military and intelligence and security services, including 83 hotels, stores, marinas, tourist agencies, industries and even two rum makers owned by the government. U.S. companies will be barred from investing in a sprawling economic development zone in Mariel that Cuba envisions as crucial to its commercial future.
The long-awaited rules will take effect Thursday. The regulations, intended to cut off cash to Cuban leader Raúl Castro’s government and tighten U.S. travel to the communist island, stem from a directive President Donald Trump signed in Miami in June that outlined his new policy. Trump has distanced himself from former President Barack Obama’s opening to Cuba, criticizing him for getting a “one-sided” deal.
“We have strengthened our Cuba policies to channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people,” Treasury Secretary Steve Mnuchin said in a statement.
However, Miami Republican lawmakers who had cheered Trump’s more restrictive Cuba policies were openly critical of the new regulations Wednesday, saying they did not go far enough in punishing the Cuban government.
“Today’s announced regulations include some positive first steps,” Rep. Mario Diaz-Balart said in a statement. “I am disappointed, however, that the regulations do not fully implement what the President ordered. It is clear that individuals within the bureaucracy who support the former administration’s Cuba policy continue to undermine President Trump.”
James Williams, president of Engage Cuba, which supports closer ties to the island, said he found the timing of the regulations release puzzling, coming while Trump is on an official visit to China.
“The Trump administration has yet again shown their hypocritical approach to human rights,” Williams said. “The great irony of releasing these regulations while President Trump stands in Communist China is dumbfounding.”
The Treasury, Commerce and State departments, together with the National Security Council, worked for months on the regulations, which took longer than some members of Congress and U.S.-Cuba policy experts expected. Sanctions against other countries, most notably North Korea, took priority for the administration, which continues to be understaffed in State and other agencies.
The White House also had to deal with the ongoing mystery over an alleged sonic attack against U.S. diplomats in Havana. While Washington has not accused the Cuban government of causing the attacks, it holds Havana responsible for not protecting American diplomats while on Cuban soil and has reduced the U.S. Embassy staff by 60 percent.
But an administration official said at a morning briefing that the regulations had “nothing to do with the acoustic incidents.”
The delay in issuing the regulations allowed U.S. companies like Caterpillar, the heavy-equipment giant, to finalize business deals with Cuba that will be unaffected by the new restrictions. The Caterpillar agreement, which allows the company’s Puerto Rican distributor to set up a warehouse and distribution operation at the Mariel Special Economic Development Zone, was announced just last week.
Deere & Co., the Illinois-based agricultural equipment manufacturer, also came in just under the wire and signed a deal last week to sell John Deere tractors to the Cuban government for use by agricultural cooperatives. Deere, which has an export license from the Commerce Department, will send a tractor shipment to Cuba in mid-November for testing and then hopes to sell several hundred tractors and implements to Cuba over the next four years, said Ken Golden, Deere’s global public relations director.
The Mariel Special Economic Development Zone will be among the 180 entities restricted by the U.S. — as will Almacenes Universales and Terminal de Contenedores de Mariel, S.A., two companies that run the seaport’s container terminal.
The regulations, however, will otherwise exempt business with Cuban airports and seaports, allowing permissible trade to continue and airlines and cruise lines to operate as they do now. Most travel arranged prior to publication of the regulations also will be allowed.
“The Trump administration has edited, not undone, the Obama opening,” said Augusto Maxwell, an Akerman attorney whose clients include companies that are doing business with Cuba or are interested in pursuing legal opportunities there. “The regulations are nowhere as severe as some people had feared.”
In a sense, he said the new regulations are welcome because they “give a path forward with some predictability” as well as still allow “some robust business transactions.” Companies can still apply for specific licenses to do business with Cuban entities on the prohibited list, he said, but they would have to demonstrate how a deal would clearly benefit the Cuban people vs. benefiting the Cuban military.
While the Trump administration has said it doesn’t want to disrupt existing business relationships and licenses and contingent contracts that are already in place, the new regulations will roll back some Obama administration provisions and take specific aim at enterprises run by Grupo de Administración Empresarial, S.A., or GAESA, Cuba’s vast military conglomerate.
GAESA has made major inroads in the Cuban economy. Its holdings include Gaviota, a tourism brand that operates more than 27,000 hotel rooms along with marinas — such as the Marina Gaviota Varadero — rental car companies, taxi and tour bus operations, convenience stores, the Cuban Export-Import Corp. (CIMEX) and Almacenes Universales, which runs warehousing and logistics operations at all Cuban ports. Also included is Habaguanex, which controls many hotels and stores in Old Havana.
U.S. travelers won’t be able to book at the Gran Hotel Manzana Kempinski, Havana’s new five-star hotel managed by Kempinski under a contract with Gaviota, or shop at its ground-floor luxury arcade, but they will still be able to stay at private accommodations, as well as hotels operated by other Cuban tourism companies, such as Cubanacan and Gran Caribe.
Trump’s directive — drafted with significant input from a pair of stalwart anti-Castro Miami Republicans, Diaz-Balart and Sen. Marco Rubio — bars Americans and U.S. companies from financial transactions with GAESA and any of its “affiliates, subsidiaries or successors.” The State Department will be charged with keeping the “list of restricted entities and subentities associated with Cuba” updated. Companies not listed among the 180 entities will not be restricted, even if they have military ties.
Not specifically listed are eateries, supermarkets and a commercial bank tied to GAESA. But PhotoService, which prints photographs and sells camera batteries; Tropicola and Jupiña, which make soft drinks; and Coral Negro, a high-end jewelry store chain, are.
How closely the government will enforce the new rules remains unclear. No additional enforcement resources are being added to Treasury’s Office of Foreign Assets Control, which under Obama relied on an honor system when it came to policing U.S.-Cuba travel. Senior administration officials said Wednesday travelers would be required to retain records of their itineraries and expenses, which will be subject to review.
The regulations will expand the definition of prohibited Cuban government officials who are not eligible to receive remittances and gift parcels. The list of so-called prohibited officials includes not only ministers and vice ministers, members of the Council of State and members and employees of Cuba’s National Assembly, but also members of any provincial assembly, local chiefs of the Committees for the Defense of the Revolution, and director generals and sub-directors of all Cuban ministries and state agencies.
All employees of the Ministry of the Interior and the Ministry of Defense are classified as prohibited persons, as are secretaries and first secretaries of the Confederation of Labor of Cuba and its unions; chief editors, editors, and deputy editors of Cuban state-run media organizations; and members and employees of the Supreme Court.
Though Trump cast his policy as an overhaul of Obama’s Cuba rapprochement — “I am canceling the last administration’s completely one-sided deal with Cuba,” Trump declared in June — the regulations won’t fully reverse the diplomatic opening enacted by the sitting president’s predecessor. Instead, they will focus on restricting commerce with entities that directly fund the Cuban government, an approach aimed at pressuring communist leaders to unshackle the island’s nascent private sector.
The regulations will prohibit individual “people-to-people” exchanges and non-academic educational trips to Cuba. Americans who want to take such trips designed to promote exchanges with the Cuban people will have to travel in groups accompanied by a person who is an authorized representative of the trip’s sponsoring organization.
The new regulations will also raise the bar for Americans traveling under the support-for-the-Cuban-people category. They must engage in a full-time schedule of activities that “support contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence.” Eating at a private restaurant or other interactions with Cuba’s self-employed sector won’t be enough to qualify for this type of travel, according to the regulations.
However, if a traveler booked at least one transaction (airfare or hotel, for example) for an individual “people-to-people” trip prior to Trump’s June 16 directive, that travel will continue to be authorized. For those traveling under the non-academic educational and support-for-the-Cuban-people categories, the old rules will apply if travelers have made at least one travel-related transaction by Thursday.
Travelers in the three categories that have been tweaked must maintain full-time schedules of meaningful activities and keep detailed records of their trips.
The new rules won’t affect nine other approved categories of travel, including visits to the island by Cuban Americans. Outright tourism, including beach vacations, continues to be outlawed, as the U.S. embargo remains in effect.
“Americans can rest assured that it’s still completely legal to visit Cuba. Commercial flights, cruise ships, Marriott hotels, Airbnb and top-notch tour providers continue to operate business as usual, and it takes just minutes to secure your legal trip to the island,” said Collin Laverty, president of Cuba Educational Travel, which organizes trips to Cuba.
Critics who support closer Cuba ties argue that cracking down on individual visits, tightening regulations on other travel and making it more difficult for U.S. companies to get a toehold in Cuba will only hurt budding entrepreneurs and hit average Cubans’ pocketbooks. Individual travelers, they say, tend to eat at private restaurants and stay at casas particulares (private bed and breakfasts) rather than at hotels, as many group travelers do.
Laverty said “U.S. backtracking on Cuba” couldn’t come at a worse time because “restrictions on trade and travel are hammering Cuba’s private sector, which has grown through interaction with U.S. travelers and U.S. companies, and put the U.S. on the sidelines, politically and economically, at a time of transition in Cuba.”
But in an effort to further support the private sector, the administration said it was simplifying and expanding the list of exports that can be sent to private entrepreneurs without obtaining special licenses. Among items that may now be sent to Cuba’s cuentapropista (self-employed) sector are kitchen appliances and cars that would be used by private taxi drivers.
McClatchy White House correspondent Franco Ordoñez contributed to this report.
WHAT NEW TRUMP CUBA POLICY DOES AND DOESN’T DO
1. Prohibits most U.S. business dealings with Cuban military enterprises.
2. Makes exceptions for business with Cuban airports and seaports. Airlines and cruise lines will continue to operate as they do now.
3. Lists 180 companies with ties to the Cuban military and intelligence and security services that are off limits for Americans.
4. Imposes new restrictions on Americans who fall into three categories of admissible travel to the island.
5 . Emphasizes that travelers must retain records of all transactions they make in Cuba for five years.
6. Retains current policies on family travel.
7. Prohibits U.S. travelers from staying at hotels run by the Cuban military.
8. Greatly expands a list of prohibited officials who are not eligible to receive remittances and gift parcels sent from the United States.
9. The embargo remains in effect.