The surprising beneficiaries of the new US Cuba regulations

Just over a week ago the US administration published new regulations governing travel and trade between the US and Cuba. Their effect is to partially reverse elements of the more liberal policy towards Cuba adopted by President Obama, and to setback relations.

They turn into law a range the policies that President Trump announced earlier this year banning all US citizens from engaging in direct financial transactions with more than 180 entities and sub-entities identified on a ‘Cuba Restricted List’. This includes companies, manufacturers, the port of Mariel and its associated development zone, and over 80 hotels, travel agencies, and shops: all facilities the US Administration believes are benefitting the Cuban military, its security services or their personnel.

The regulations also end individual people-to-people travel, allowing only carefully controlled group travel. In future all such ‘educational travel’ to be conducted by an organisation subject to US jurisdiction, with each traveller engaging in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba. They also say that such visits must enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from the Cuban authorities.

There are exceptions but for the average US traveller or business, the approach seems designed to create enormous uncertainty about what is and is not allowed, about where to visit, what to say to whom, and where to eat, drink and sleep. This is because the listings of hotels and products, and the instructions on people-to-people contact appear idiosyncratic, and in some respects almost impossible to interpret responsibly.

It of course remains to be seen how closely OFAC will enforce the new regulations on US visitors and companies, but the most likely outcome will be to curtail US visitor arrivals and the hope that US companies had for new business, unless they can prove they already have contractual arrangements in place, or find alternative Cuban entities with which to partner.

Nonetheless, what is different now, is that the US accepts it stands almost entirely alone in its desire to isolate Cuba. In confirmation of this, Nikki Haley, the US Ambassador to the UN, made this clear in a strongly worded address to the United Nations General Assembly before the annual vote condemning the US embargo on Cuba.

First, when it comes to travel, the clear beneficiaries will be the US cruise lines able to reposition vessels to reap the rewards from those US travellers who still want to visit Cuba, as it were, safely cocooned in a US environment. Others likely to benefit will be specialised US-based US-run tour operators able to package visits that are prepaid though counterpart Cuban state enterprises not proscribed by US regulations.

The losers and those most likely to suffer in the short term include the Cuban non-state taxi drivers, the self-employed small property or restaurant owners, and their self-employed private suppliers, whose growing economic strength had begun to pose significant challenges to conservative thinkers within the Cuban political system. Others that will lose out are individual US travellers, constrained from travelling independently by their own government, and the scheduled airlines who carried them.

In addition, while the rest of the Caribbean will likely receive US visitors displaced from Cuba in the short-term, it is probable that some regional destinations will see cruise ship arrivals out of south Florida cut in the medium term, as a means to incorporate overnight or longer port calls in and around Cuba for the many US citizens who still want to visit.

Secondly, the US’s allies may benefit the most from the new regulations.

During the Obama Administration countries from Japan to Germany were able to normalise their relations with Cuba and are translating this into new investments in productive enterprises and tourism.

The clearest example is in the now much changed relationship with the European Union through its Political Dialogue and Cooperation Agreement with Cuba. Agreed during the period of détente, this formalises political dialogue, strengthens cooperation in trade, development and culture, and enables the discussion of human rights.

Speaking recently to Cuba’s state media about this, the EU Ambassador in Havana, Alberto Navarro, said that he expects the relationship to become ‘more serious and mature’ and bilateral ties to take on a new momentum. “The European Union believes in building bridges, not in building walls,” he pointedly told journalists.

Thirdly, and paradoxically, among the nations that may also benefit are some that most in the US do not regard as friends. Russia, China and countries that have a very different world view and values to the US, have been steadily strengthening relations with Cuba and other like-minded nations in the hemisphere.

And finally, while the rest of the Caribbean, will likely in the short-term receive US visitors displaced from Cuba, it is probable that in the medium term some regional destinations will see cruise ship arrivals out of south Florida cut to incorporate overnight or longer port calls in and around Cuba for the many US citizens who still want to visit.

As for the Cuban Government, it sees the reversal of US policy as a “serious setback” in bilateral relations, according to Josefina Vidal, the Director General of the US Division of the Cuban Foreign Ministry.

Despite this, it is worth noting that separately the country’s Ministry of Tourism has just said that it still anticipates a record 4.7m visitors by the year’s end, and that its Ministry of Foreign Trade and Investment recently announced that overseas investment commitments so far this year stand at a record US$2bn.

By setting aside the nuanced and complex reality of Cuba, and effectively ending détente, the new US policy appears strategically flawed, and likely to help almost everyone other than the Cuban people. Instead it will likely bolster conservative political thinking in both countries, benefitting only those who see an antagonistic relationship as a way of holding back the liberalising effects of generational change. But these are issues for a future column.

David Jessop is a consultant to the Caribbean Council and can be contacted at

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November 19th, 2017