Nation & World

What Trump’s Cuba crackdown will look like

In this Dec. 19, 2014 file photo, Javier Yanez stands on his balcony decorated with U.S. and Cuban flags in Old Havana.
In this Dec. 19, 2014 file photo, Javier Yanez stands on his balcony decorated with U.S. and Cuban flags in Old Havana. AP

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 will issue 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, including 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, obtained by the Miami Herald in advance of their publication, 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.

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 a 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 its embassy staff by 60 percent.

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President Donald Trump signed his Cuba policy directive at the Manuel Artime Theater in Miami on June 16. AL DIAZ

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.

Other U.S. companies won’t be as fortunate: The Mariel Special Economic Development Zone will be among the 180 entities restricted by the U.S., according to the list obtained by the Herald — 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.

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.

While 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, they will still be able stay at private accommodations, as well as hotels operated by other Cuban tourism companies, such as Cubanacan and GranCaribe.

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The Gran Hotel Manzana Kempinski five-star hotel in Havana. Ramon Espinosa AP

Trump’s directive — drafted with significant input from a pair of stalwart anti-Castro Miami Republicans, Sen. Marco Rubio and Rep. Mario Diaz-Balart — barred 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, while the Office of Foreign Assets Control at Treasury will enforce any violations of the ban.

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 photograhs; Tropicola and Jupiña, which make soft drinks, and Coral Negro, a high-end jewelry store chain, are.

The regulations will expand the definition of prohibited Cuban government officials who are not eligible to receive remittances.

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 in 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.

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.

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.

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.

McClatchy Washington Bureau reporter Franco Ordoñez contributed to this report.