New U.S. regulations on travel and trade to Cuba go into effect Friday, relaxing some of the strictest measures of the 54-year embargo that has isolated the Caribbean nation from its northern neighbor. Under the revised rules, announced Thursday, Americans face significantly lower barriers to traveling to the island and American businesses can take advantage of the new opportunities in the Cuban market.
Having announced the historic thawing of the U.S.-Cuba Cold War-Era relationship in mid-December, the Obama administration has moved quickly to alter state policies and to open communication channels with Cuban officials. But President Obama can only take the changes so far; to completely normalize relations between the two countries, and to open the island to U.S. investment, Congress will have to overturn its embargo laws, a move that does not seem likely.
The sweeping changes introduced Friday demonstrate just how strict the U.S. policies had been towards cutting off the flows of trade and tourism over the past five decades. Americans seeking to travel to Cuba no longer need to seek a special dispensation from the U.S. Treasury Department — a time-consuming logistical hurdle. While the Obama administration could not revoke the ban on Americans traveling to Cuba for tourist purposes, the U.S. has broadened the number of travel exemptions to 12 categories.
If someone is conducting government business, pursuing a journalistic project, participating in educational or religious activities, engaging in a humanitarian project or work for a private foundation, or scoping out import and export work for business investments, then Cuba is just a flight away. Interested in visiting Havanna? Getting official approval could be as simple as signing a form promising to talk to Cuban natives to learn more about their lives on the island.
Prior to Friday’s changes, Americans abroad in Cuba were unable to use American credit or debit cards on the island, forcing them to carry huge quantities of cash. Travellers are also now allowed to bring about up to $400 worth of Cuban goods from their travels, $100 of which can be in alcohol or tobacco products. (Cuban cigar, anyone?)
While many of the more obvious changes involved the relaxed travel policies, the revised trade embargoes look to have the most groundbreaking impact on the U.S.-Cuba relationship in the long-term. The new rules around business investment and in Cuba allows American companies to sell "tools, equipment, supplies and instruments for use by private-sector entrepreneurs" — vague wording that seems to allow an unexpectedly wide range of new economic activity.
In particular, the U.S. relaxed the ban on exporting cellphones, computers, software and other technologies vital for establishing telecommunications infrastructure. At the moment, Cuba remains one of the world’s least Internet-friendly places. Only about five percent of the island has access to the web, and much of that involves the sputtering connections available in tourist hotels.
While the sweeping changes mark a significant shift for the Cuban economy, the process will be gradual as much of the infrastructure required for high influxes of tourists and large-scale investment does not yet exist.
Under current U.S. regulations, airlines still cannot fly directly from U.S. cities to Havana. The Obama administration has highlighted the flight ban as one of the next steps in the thaw. In years past, individuals attempting to travel to Cuba had to go through approved travel agencies to book flights. But at some point in 2015, Americans may be able to purchase their flights easily online. Chris Chiames, the CEO of Orbitz, told CNN that the tourism site is looking to have flight and hotel options available for Cuba at some point this year.
Likewise, the business community is exploring how to make its first forays into a market where few Cubans have the sort of buying power needed to support many commercial products.
Friday’s rule changes represent a significant first step for the Obama administration’s slated goal of changing the draconian Cold War isolationist position towards the Castro regime. A number of government officials are headed to Cuba this year to continue talks, including Commerce Secretary Penny Pritzker. The president has also announced that the United States will seek to place an embassy in Havana.
But a full repeal on the embargo rests with Congress. And the relaxing of tensions with Cuba has proved a controversial subject among its GOP members. Sen. Marc Rubio (R-Fla.) has fiercely criticized the president for what he sees as an attempt to reward bad behavior.
This is a windfall for the Castro regime that will be used to fund its repression against Cubans, as well as its activities against U.S. national interests in Latin America and beyond, Rubio said in a statement.
Even without Congressional action, the Obama administration’s executive actions look poised to cause a tectonic shift in the Cuban economy. If you're interested in seeing Cuba before the flood of foreign investment, then I’d look to book a ticket soon.
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