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UPDATE 2-U.S. Congress eases some Cuba sanctions

* Reassurances on Cuba changes win key spending bill votes

* Cuba provisions stop short of lifting trade embargo

(Recasts with bill’s passage, Geithner, trade association)

WASHINGTON, March 10 (Reuters) - The U.S. Senate passed a bill on Tuesday that would relax some limits on contacts with Cuba, in what could herald deeper changes to the long-standing U.S. policy of shunning the communist-ruled island.

The Obama administration had to cajole two members of its own Democratic party to support the legislation containing the Cuba provisions, a massive spending bill that had to pass to keep the U.S. government running.

The episode raised questions about how easy it will be for Obama to change Cuba policy, which officials have indicated they would like to do. An administration review is under way now.

“We are ... currently reviewing United States policy toward Cuba to determine the best way to foster democratic change in Cuba and improve the lives of the Cuban people,” Treasury Secretary Timothy Geithner wrote to the two Democratic senators who were balking at voting for the $410 billion spending bill.

“Your views and the views of others on Capitol Hill will be important to that review, and the President remains committed to consulting with you as we consider changes to Cuba policy,” he wrote on Thursday.

Obama has made clear he favors relaxing limits on family travel and cash remittances by Cuban-Americans to Cuba, although he has said the trade embargo should stay in place to press for democratic reforms.

Many senior U.S. lawmakers also want a rethink of policy on Cuba, that was designed to isolate Fidel Castro after he seized power in a revolution half a century ago. They say that since Castro retired last year, it is time to review that policy.

But when provisions easing some sanctions were dropped into the government funding bill, it angered some senators from states with large numbers of anti-communist Cuban-Americans, who oppose reducing U.S. pressure on the Cuban government.

The changes, warned New Jersey Senator Robert Menendez, could “provide the Castro regime with enhanced financial benefit in the pursuit of its repressive policies.”


With Democrats short of the number needed to get the bill past procedural hurdles in the Senate, the Obama administration sprang into action.

It took two letters from Geithner -- who has plenty else on his plate trying to rescue the U.S. financial system -- to convince Menendez and another Democrat, Florida Senator Bill Nelson, that the changes would not be implemented in a way that would constitute a major reversal of U.S. Cuba policy.

A cash-in-advance requirement for agricultural sales to Cuba would still be required by law, Geithner said, while only a “narrow class” of businesses would be eligible to travel to Cuba to market and sell agricultural and medical goods.

“Exporters will still be required to receive payment in advance of shipment and will not be permitted to export to Cuba other than through third-party banks,” Geithner wrote.

The legislation, which had previously cleared the House of Representatives, would also allow members of Cuban-American families to travel once a year to Cuba instead of once every three years.

The National Foreign Trade Council, a business group that supports an end to the Cuba embargo, welcomed the changes as a “small but important” start to changing policy toward Havana.

“Congress has opened the door to further policy change on Cuba,” the council’s vice president for global trade issues, Jake Colvin, said in a statement.

Senator Nelson said that he still expected the president to take action to liberalize Cuba policy, but that the proposals should come from Obama.

“Once the new president announces his declaration of that policy, we can come out here and openly debate that issue,” Nelson told the Senate.

Obama can also do a lot to alter Cuba policy without Congress through the administration’s control over licensing authority for trade, Colvin said.

“The Obama administration can virtually gut the embargo administratively. It doesn’t need Congress to change large swathes of the embargo,” he said. (Additional reporting by Jeremy Pelofsky, editing by Anthony Boadle)