Making good on a campaign pledge, President Donald Trump on Friday will announce a significant rollback of former President Barack Obama’s accord with Cuba by clearly banning tourist travel to the island, restating the importance of the 56-year-old trade embargo with the island and instituting a broad prohibition on financial transactions with companies significantly controlled by the Communist government’s military, according to a draft version of the directive obtained by POLITICO.
The administration says its goal is to put an end to business transactions that financially benefit the Castro regime while the Cuban people get little in return.
“My administration’s policy will be guided by key U.S. national security interests and solidarity with the Cuban people,” the draft of the five-point, eight-page Presidential Policy Directive reads. “I will seek to promote a stable, prosperous, and free country for the Cuban people. To that end, we must ensure that U.S. funds are not channeled to a regime that has failed to meet the most basic requirements of a free and just society.”
For American tourists, Trump’s policy means that the days of drinking Havana Club rum in a Havana club will likely soon be over.
Under a strict interpretation of the directive, an American probably can’t even stay in an Old Havana hotel or use a tour service because they’re run or controlled by Grupo de Administracion Empresarial S.A., or GAESA, the business arm of the Cuban military that controls a vast swath of the country’s economy, including most of Cuba’s foreign-run hotels. The prohibition includes any subsidiaries or affiliated companies, along with certain other state-controlled entities.
“The policy the Trump administration is announcing regarding Cuba based on President Trump’s core conviction that what the Cuban exile community is asking for is right and just,” the White House said in a written statement to POLITICO. “The oppressors of the Cuban people are the Cuban government who have increased repression on the island against dissidents and Ladies in White since reestablishing diplomatic relations. Prior to that, it was not clear to some if the Obama policy toward Cuba would work; today it is clear that the Obama policy toward Cuba does not.”
The GAESA concept was proposed in a bill in 2015 by Republican Sen. Marco Rubio, Rep. Mario Diaz-Balart and other Cuba hardliners. The bill went nowhere but the two, especially Rubio, urged Trump to adopt it as a centerpiece of the policy that he is scheduled to announce Friday at a Miami theater that bears the name of Manuel Artime, a leader of the failed Bay of Pigs invasion to topple Castro.
A Bay of Pigs veterans group endorsed Trump a week before the election. In return, people familiar with the president’s decision-making said, Trump wanted to make good on his promise to crack down on Cuba.
“This is a new way to enforce the old embargo,” said John S. Kavulich, president of U.S.-Cuba Trade and Economic Council. He estimates that 60 percent of the total Cuban economy is under GAESA’s authority and as much as 80 percent of the tourism economy is controlled by the military-run holding company.
For U.S.-based companies such as the Marriott-owned Starwood Hotels, the Trump policy could mean the cancellation of its special U.S. government license – obtained last year under the Obama administration – allowing it to sign a deal with GAESA giving it management over a historic Havana hotel.
The directive instructs the Secretary of the Treasury to consult with the Commerce Department to promulgate new rules 90 days after the presidential policy directive is issued Friday.
Paying for goods and services from Cuba’s small class of independent entrepreneurs, known as “cuentapropistas” who often run small cafes or inns out of their own homes, will be permitted.
While tourism to Cuba is banned by federal law, the Obama administration had been allowing people to travel to Cuba and spend money as part of “people to people” educational trips for visitors who plan a full itinerary of educational exchange activities, though there had been little to no enforcement of these requirements.
The Trump administration is stepping up requirements on those sorts of trips, requiring a full-time schedule of activities that “enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that the travel must result in a meaningful interaction between the traveler” and Cubans, according to the draft. Travelers to Cuba will have to keep detailed records of all their financial transactions in the country for five years to make available to the Treasury Department if requested.
The president is also directing the Treasury secretary to regularly audit Cuba travel to make sure U.S. travelers are following the rules on avoiding GAESA-linked transactions. Anyone who travels to Cuba, however, might be able to stay at an Airbnb or eat at independent restaurant, although that interpretation is not clearly spelled out in the draft order. But those who go to the island under a U.S. license will need to keep strict notes proving they’re complying with the new executive order – or face fines.
“The airlines might complain that they will see less demand for travel because travelers can no longer spend money at the military-run properties. But whatever reduction we do see in travel is direct proof of how much the military is benefiting from the current policy,” Rubio told POLITICO. ““The pro-engagement groups point to the expansion of privately owned small business as a major defense of the current policy. This new policy helps them. It puts these private businesses at an advantage, because Americans can only spend money with them, not the military monopoly.”
Rubio said the proposal shifts the onus to the Cuban government to give its citizens the right to prosper without government interference. Rubio, Diaz-Balart and the Trump administration say Obama’s rapprochement with Cuba opened markets more but enriched the military-run government, not the Cuban people. And repression, meanwhile, increased.
But there’s still healthy skepticism that a crackdown on spending on the island will actually lead to regime change or a substantial improvement of the human rights situation when a decades long embargo has already failed to do so.
“No matter what President Trump may decide, the net impact on Cuba’s decision making on human rights issues will probably be nil,” said Mark Entwistle, a former Canadian ambassador to Cuba who now advises Canadian and American companies on doing business there.
The new policy targets state officials, significantly expanding which Cuban government officials are subject to certain financial sanctions, such as being barred from having a U.S. bank account. That previously included not just members of the Cuban cabinet and high-level military officers, but will also now include ministers and vice ministers, top leadership for all Cuban ministries and state agencies, the top leaders of the party-controlled labor union confederation, employees of the Ministry of the Interior (which controls the state security force), employees of the Ministry of Defense, members and employees of the national assembly (as well as members of any provincial assembly), editors of state-run media, and justices and employees of Cuba’s highest court.
The Justice Department will be required to issue a report to the president within 90 days on American fugitives living in Cuba. Perhaps the most famous example is Black Panther Party member Assata Shakur, also known as JoAnne Chesimard, who was convicted in the 1973 murder of New Jersey State Trooper Werner Foerster, among other crimes. She escaped from prison, and after five years on the lam, fled to Cuba in 1984.
In what may presage a funding a request for more money for regime change efforts, the Secretary of State and the head of USAID are directed to review all of the U.S. democracy development programs in Cuba to make sure they line up with federal law.
There will be some other exceptions for spending money in Cuba, though few that would apply to anyone visiting for pleasure. Still allowed will be spending related to U.S. government operations on the island, such as the Guantanamo Bay Naval Station and the diplomatic mission on the island, and spending that supports programs aimed at building democracy in Cuba or further U.S. interests and certain transactions with airports and seaports dealing with travel and trade, such as docking and landing fees.
Purchasing visas, too, will be permitted for those who are allowed to travel to Cuba. Transactions related to the sale of agricultural commodities, medicine and medical devices— exceptions to the embargo that have already been carved out in U.S. law—will still be okay.
And remittances from Cubans living in the U.S. will also still be allowed.
The changes won’t be a complete roll back of the normalization of relations pursued under the Obama administration. The U.S. embassy in Havana will remain open as an embassy, as opposed to its precursor, the “U.S. Interests Section.”
The Trump administration also won’t be reinstating the “wet foot, dry foot” policy, which gave safe haven to Cuban refugees who successfully reached American shores, on the basis that it encouraged Cubans to make the perilous journey across the Florida Straits. In January, the Obama administration ended the policy, which faced criticism for giving preferential treatment to Cubans over other immigrants.