In blow to struggling Cubans, Western Union offices close as sanctions bite

HAVANA (Reuters) - Western Union Co suspended its operations across Cuba on Monday evening as new U.S. sanctions kicked in, cutting a key lifeline for many struggling Cuban families as the coronavirus pandemic deepens the Communist-run island’s economic crisis.

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U.S. President-elect Joe Biden has promised to roll back some sanctions on remittances. But any lifting of the suspension could take time and until then, Cuban Americans are expected to resort to alternatives that are more costly, less secure and less rapid.

Remittances to Cuba are believed to be around $2 billion to $3 billion annually, representing its third biggest source of dollars after the services industry and tourism.

Money transfers from the United States via Western Union were estimated at more than $1 billion last year, the majority of which was sent from Florida, according to John Kavulich, president of the U.S.-Cuba Trade and Economic Council.

Current options for remittances include agencies that hire “mules” to fly out to Cuba with cash and which predate Western Union’s start in Cuba 20 years ago, as well as companies that transfer dollars to Cuban accounts - though that money can only be used at state stores.

Cryptocurrency exchanges are also promoting themselves as an alternative. Cuban Americans can transfer digital currencies to middle men on the island who then give money to the Cuban Americans’ relatives.

But such platforms lack oversight, cryptocurrencies can fluctuate rapidly and unexpectedly in value and internet access is still not a given in Cuba, Kavulich said.

“We’ve looked but there are no safe services,” said local resident Arturo Labaut.

The closures of Western Union’s 407 offices in Cuba came into effect after U.S. President Donald Trump’s administration banned U.S. firms sending remittances via military-controlled companies that include Western Union’s main Cuban partner.

His administration has also previously capped the amount Cuban Americans can send family members at $1,000 per quarter, and transfers of money to non-family members are no longer allowed.

The new ban comes just as Cuba has started enacting structural reforms to revive its state-run economy which have been long called for but which will spell pain for its residents in the meantime.

“It’s a bad time to be doing this because of the suffering it will cause,” said Florida International University professor Guillermo Grenier.

“It’s not governments that suffer, it’s people.”

Reporting by Reuters Television, Nelson Acosta and Sarah Marsh; Editing by Edwina Gibbs