January 16, 2015 / 12:18 AM / 5 years ago

Obama measures on Cuba trade, travel poke new holes in embargo

WASHINGTON (Reuters) - The United States announced sweeping new rules on Thursday that will significantly ease sanctions on Cuba, opening up the communist-ruled island to expanded U.S. travel, trade and financial activities.

A passenger pushes a luggage cart after arriving on a charter flight from Tampa, Florida, at the airport in Havana January 15, 2015. REUTERS/Stringer

Defying hardline critics in Congress, President Barack Obama made good on his commitment last month to loosen restrictions on dealings with Cuba as part of an historic effort to end decades of hostility.

The U.S. embargo on Cuba, in place for 54 years, will remain. Only Congress can lift it.

But the package of regulations issued by the Treasury and Commerce Departments, which will take effect on Friday, will allow U.S. exports of telecommunications, agricultural and construction equipment, permit more travel by Americans to the island and open banking relations.

U.S. airlines will also be permitted to expand flights to the Caribbean island, beyond the existing chartered flights that connect Cuba and the United States. United Airlines Inc [UALCO.UL] said on Thursday it planned to serve Cuba from Houston and Newark, New Jersey, subject to government approvals. Delta Air Lines (DAL.N) and JetBlue Airways (JBLU.O) said they would look into adding services.

Thursday’s moves were the first tangible U.S. steps to implement economic changes Obama pledged on Dec. 17 when he and Cuban President Raul Castro announced plans to restore diplomatic relations between the old Cold War foes.

“Today’s announcement takes us one step closer to replacing out-of-date policies that were not working, and puts in place a policy that helps promote political and economic freedom for the Cuban people,” said U.S. Treasury Secretary Jacob Lew.

While Castro has welcomed last month’s deal, he has made clear that Havana does not intend to abandon single-party rule or the state-controlled economy. Congressional critics of Obama’s shift say that Washington should not be rewarding Cuba.

The new regulations will allow Americans to travel to Cuba for any of a dozen specific reasons, including family visits, education and religion, without first obtaining a special license from the U.S. government as was previously the case.

But general tourism will still be banned.

John McAuliff, executive Director of the Fund for Reconciliation and Development, which has organized trips to Cuba, said that apart from Cuban-Americans visiting relatives, most other Americans would still be corralled into escorted group tours.

Still, U.S. travelers will be allowed to bring home small numbers of the Cuban cigars that are highly rated by aficionados.

It will also be easier for U.S. companies to export mobile phone devices and software as well as to provide Internet services in Cuba.

In an expansion of remittances allowed, Americans will now be able to send up to $8,000 to Cuba a year, up from $2,000 previously, and bring $10,000 with them when they travel to the country. They will also be able to use credit and debit cards.

In addition, a changed definition of “cash in advance” payments required by Cuban buyers could help businesses, most notably U.S. agriculture, gain greater access to Cuban markets. The largest U.S. meat processor, Tyson Foods Inc (TSN.N), which already does some business with Cuba, hailed the changes.

The announcement came after the Obama administration said Cuba had fulfilled its promise to free 53 political prisoners and a week before high-level U.S.-Cuba talks in Havana aimed at normalizing ties, including discussions on when to reopen embassies.


Obama’s spokesman, Josh Earnest, called it a “significant step” in delivering on Obama’s new Cuba strategy. The president declared last month that decades of trying to force change by isolating the island had not worked.

But Republican Senator Marco Rubio, a Cuban-American who has been strongly critical of the policy shift, called the announcement “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.”

While Obama is using executive powers to poke holes in trade barriers, Republicans who control Congress have made clear they will not let him entirely dismantle the embargo. Washington imposed economic sanctions as Fidel Castro steered the island along a socialist path that made it a close ally of the Soviet Union, and severed diplomatic ties with Cuba in 1961.

U.S. officials made clear the new measures do not mean Cuba is now open for business, stressing that while investments in Cuba’s limited array of small businesses are permitted, general investment will still be prohibited.

And while telecommunications firms can export devices, U.S. companies still have to reach an agreement with the Cuban government, which controls all imports and maintains a firm grip on Internet access.

Reaction from the U.S. business community, which had pressed the administration to open up Cuban markets, was positive but tempered with caution.

“The regulations were welcome and they went even farther than was articulated in the president’s announcement,” said Jake Colvin, vice president at the National Foreign Trade Council. “But now it will depend on the reality on the ground in Cuba.”

Tourists visit Revolution Square in Havana January 15, 2015. REUTERS/Stringer

There was no immediate official reaction from Havana, but some ordinary Cubans welcomed the changes.

“If more Americans can come here, that means more customers, and this will be good for the economy,” said Orlando Veliz, a cook for a private restaurant in Havana.

Additional reporting by Dan Trotta in Havana and Patricia Zengerle in Washington; Writing by Matt Spetalnick; Editing by Doina Chiacu, Frances Kerry and Gunna Dickson

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