U.S. Agricultural Commodies/Food Product Exports To Cuba Decrease

ECONOMIC EYE ON CUBA©
November 2017

September 2017 Food/Ag Exports To Cuba Decreased 34%- 1
Healthcare Product Exports US$308,534.00- 2
Humanitarian Donations US$452,451.00- 2
Obama Administration Initiatives Exports Continue To Increase For Airlines/Hotel- 3
U.S. Port Export Data- 14

Complete Report To Be Published Soon....

 

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Alaska Airlines Ending Flights To Cuba; American Airlines Likely Replacement Due To LAX HUB

"Documentary Services Division
U.S. Department of Transportation 1200 New Jersey Avenue, SE West Building Ground Floor
Room W12-140
Washington, DC 20590

Re: 2016 U.S.-Cuba Frequency Allocation Proceeding {Docket DOT-OST-2016-0021)

Dear Sir or Madam:

Alaska Airlines has announced that it plans to discontinue its Los Angeles-Havana service. Alaska's last flight on the route will operate on January 22, 2018. Alaska has no plans to resume service to Havana and has no objection to the Department's reallocation of the frequencies after January 22, 2018."

LINK TO DOCUMENT

Alaska Airlines will discontinue flying to Havana, Cuba
Aircraft and crew will be re-deployed to markets with higher demand

SEATTLE, Nov. 14, 2017 /PRNewswire/ -- Alaska Airlines announced today that it will end a daily flight between Los Angeles and Havana, Cuba. The last flight is planned for Jan. 22. The airline will redeploy aircraft used to serve Havana to markets with higher demand.

Alaska Airlines will discontinue flying to Havana, Cuba

"Travel is about making connections, and we were honored to have played a role in helping people make personal connections by traveling between the U.S. and Cuba," said Andrew Harrison, chief commercial officer for Alaska Airlines. "We continually evaluate every route we fly to ensure we have the right number of seats to match the number of people who want to go there."

About 80 percent of Alaska's flyers to Havana visited under a U.S. allowance for individual "people-to-people" educational travel. Changes to U.S. policy last week eliminated that allowance. Given the changes in Cuba travel policies, the airline will redeploy these resources to other markets the airline serves where demand continues to be strong.

Alaska started the Los Angeles-Havana flight on Jan. 5, 2017.

Alaska has launched 44 routes this year, which continue to develop according to forecasts. The company anticipates it will grow about 7.2 percent this year. As the airline looks ahead to 2018, its planning for nearly 8 percent network growth by adding capacity in primarily existing markets. Redeploying aircraft and crews will help the airline support the growth.

Alaska guests who have travel booked to Havana after Jan. 22 will be rebooked on another airline at no additional cost or offered a full refund.

Alaska Airlines, together with Virgin America and its regional partners, flies 40 million guests a year to more than 115 destinations with an average of 1,200 daily flights across the United States and to Mexico, Canada and Costa Rica. With Alaska and Alaska Global Partners, guests can earn and redeem miles on flights to more than 900 destinations worldwide. Alaska Airlines ranked "Highest in Customer Satisfaction Among Traditional Carriers in North America" in the J.D. Power North America Satisfaction Study for 10 consecutive years from 2008 to 2017. Learn more about Alaska's award-winning service at newsroom.alaskaair.com and blog.alaskaair.com. Alaska Airlines, Virgin America and Horizon Air are subsidiaries of Alaska Air Group (NYSE: ALK).

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Knowledge@Wharton: Gustavo Arnavat & John Kavulich Discuss The Recent Changes To U.S. Policy On Trade With Cuba

http://knowledge.wharton.upenn.edu/article/future-u-s-business-cuba/

Listen to the podcast: Gustavo Arnavat and John S. Kavulich discuss the recent changes to U.S. policy on trade with Cuba.

The move last week by the Trump administration to tighten restrictions on travel and trade with Cuba has created new anxieties for individuals and businesses – but it also provides some clear boundaries than can now be navigated, experts say.

Under the new policy changes, individuals will once again only be allowed to travel to Cuba as part of groups licensed by the U.S. Treasury Department as traveling for specific purposes. In addition, Americans will be barred from patronizing 180 businesses that the State Department has determined to be owned by, or that directly benefit, the Cuban military. Businesses will also be restricted from engaging with the 180 entities on the State Department list. The new regulations will not impact some travelers and businesses that had already begun transactions with Cuba – for example, individuals who have already purchased airline tickets or firms that signed contracts prior to the announcements.

Officials say the move is designed to steer investment away from the Cuban military and intelligence and encourage the communist government to further open the island’s economy. It follows restrictions announced in June that rolled back tourist travel and investments in more than half of Cuban industry, but retained many smaller features like permitting family-related travel and professional/academic visits to the country.

The latest actions by the Trump administration create further anxiety for anyone in the U.S. who is interested in relations with Cuba, but the visible impact won’t become clear until the U.S. government fleshes out the new policy.

“The Trump administration’s regulations [on Cuba] were designed to create anxiety and discourage travelers from traveling and businesses from engaging in business,” said John S. Kavulich, president of the U.S.-Cuba Trade and Economic Council, Inc., a not-for-profit that provides liaison services for businesses and the governments in both countries. “And they were successful.”

According to Gustavo Arnavat, a senior adviser at the Center for Strategic and International Studies, a Washington, D.C.-based think tank, the latest Cuba policy appears to permit American companies and individuals to do business with Cuban government-controlled entities, as opposed to those run by its military or its intelligence or security services. Arnavat also represented the U.S. on the board of the Inter-American Development Bank under the Obama administration.

“I think a message is being sent to the Cubans that perhaps the U.S. would be more amenable to trading with them if they would restructure their ownership stakes in companies in order to allow for the military to own fewer of these,” said Arnavat. “I’m not sure that the Cuban government is interested in doing that, but at least that possibility is open.”

Kavulich and Arnavat discussed the implications of the U.S. government’s latest Cuba policy on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

“The [new] regulations were designed to create anxiety and discourage travelers from traveling, businesses from engaging in business.”–John Kavulich

The 180 entities with whom business dealings are banned include 83 hotels, a shopping mall, a couple of rum brands and a cola brand called TropiCola, which Kavulich described as Cuba’s version of Coca-Cola. “What we’re uncertain about is [whether the new policies] mean that U.S. companies can’t deal with these companies, or do they mean a visitor in Cuba can’t buy a TropiCola or these particular rum products?” said Kavulich.

However, Arnavat said the new policy actually lessens the uncertainty on the U.S. approach to Cuba. “We know in terms of regulations what the limits are,” he said. “Any regulation has to be fleshed out, but we at least have a basic understanding of the contours [of the new policy].” He noted that Obama was “very much focused on engagement” with Cuba, while Trump is not. “But at least people now know where Trump stands; whereas before his June 2017 speech [in Miami], they definitely did not know which way he was going.”

According to Kavulich, “the vast majority of economic activity remains under the authority of the Cuban government.” Experts say GAESA, the Cuban military’s business conglomerate, controls almost 60% of the Cuban economy. GAESA’s holdings include the Gaviota hotel chain and TRD, the military retail chain.

While the new policy limits what businesses and individuals could do with respect to Cuba, the reality is that not much will change for many U.S. companies already doing business there. “The Trump administration has grandfathered many U.S. companies that are already engaged with Cuban military entities, specifically airlines, cruise lines and hotels like Marriott, for example,” said Kavulich. “So, it’s not that tremendously impactful. It has a political optic. It creates anxiety, but is any U.S. company being required to stop doing what they were doing? The answer is no.”

Arnavat, while not wanting to be overly optimistic, added that “the new normal” in the U.S. policy on Cuba is “quite positive” in that it retains many features adopted by the Obama administration, which announced that it would re-open diplomatic relations with Cuba in December 2014.

However, the likely impact of the restrictions on individual travel to Cuba is clearer. The new regulations revert to requiring group travel instead of individual “people-to-people” trips. Kavulich said that move would hurt the airlines because they have seen a surge in individuals traveling from the U.S. to Cuba in the past two years. By contrast, the cruise lines will benefit from the new policy because they are better suited for group travel.

“The Cubans could have been much more creative, could have been much faster, and could have been much more giving in entering into agreements with the United States.”–Gustavo Arnavat

Arnavat noted that tourism per se within Cuba by U.S. persons has always been prohibited either under embargo-related regulations or specifically under a law passed by the U.S. Congress in 2000. What the latest policy change does is to eliminate the category of people-to-people travel on an individual basis because the Trump administration felt that was “the most abused.” Some Americans, for example, might say that they are visiting Cuba to meet with Cubans to comply with the official requirement for that category of travel, “but instead they would just simply go to the beach, and hang out.”

Missed Opportunities

According to Kavulich, the new Cuba policy could have been pre-empted. “It’s important to focus on culpability,” he said. “One of the only reasons that President Trump was able to do what he is doing is because of what the Obama administration and the Castro administration didn’t do during the period from December 17, 2014, when Obama first moved to rebuild U.S. ties with Cuba, through January 20, 2017, when Trump assumed office as president.”

The Obama administration could have allowed more regulatory changes, specifically permitting direct correspondent banking, and allowed more than charcoal and coffee to be imported, Kavulich explained. On its part, the Cuban government could have done more to allow the Obama administration initiatives to take their course, “which basically they didn’t.”

Arnavat agreed with Kavulich that “the Cubans could have been much more creative, could have been much faster, and could have been much more giving in entering into agreements with the United States.” However, he noted that the Trump administration has not reversed all of the Obama administration’s initiatives — and that should bring some relief to U.S. companies that had feared much worse.

Kavulich pointed out that 52 U.S. companies have a presence in Cuba, including John Deere, which signed a deal to export farm tractors; Caterpillar, whose Puerto Rico-based distributor is setting up a warehouse and distribution center in Cuba’s Mariel Special Economic Development Zone, and General Electric, which is reportedly interested in setting up a hydroelectric power plant in Cuba’s Matanzas province. However, those companies do not have offices in Cuba, he added. “If the Cuban government had allowed U.S. companies to sell products directly to the self-employed, you would have had such a root system that the Trump administration would have found it difficult to move against it.”

Kavulich noted that those 52 companies have total global revenues of $1 trillion annually. “These are not small players. Yet, most of them, if they are doing anything in Cuba, will not issue a media release. They don’t want to talk about it. And that’s tragic.”

For those 52 companies and others looking to do business outside the United States, including in Cuba, “there’s always political uncertainty,” said Arnavat. That is in addition to the “political risk in the U.S., and that is the change in administration” from Obama to Trump.

“These are not small players. Yet, most of them, if they are doing anything in Cuba, will not issue a media release. They don’t want to talk about it. And that’s tragic.”–John Kavulich

Disenchantment in Cuba

People in Cuba are not happy with the latest policy, said Kavulich. “There’s frustration in that many of those who are either self-employed or are in cooperatives that dealt with U.S. companies feel as though they’re hostages to a greater political good,” he added. “And they don’t see how it helps them.”

Cubans have had anxiety-ridden days of late, Kavulich noted. Looming above all else is the uncertainty around the stepping-down of Raul Castro as president in February, and the likely ascension to that post of first vice president Miguel Díaz-Canel. They also feared retaliation from the U.S. after nearly two dozen U.S. diplomats in Cuba suddenly faced “health issues” such as hearing loss and cognitive difficulties. The Trump administration withdrew nonessential staff from Cuba, but that issue cast dark shadows on U.S.-Cuba ties. Kavulich also pointed to Cuba’s issues with Venezuela not being able to provide the support it once did due to that nation’s own economic struggles, low commodity prices, and high import prices, and also the weather — Hurricane Irma made landfall in Cuba in September. “They’ve gotten pretty much hammered,” he added.

A new regime in Cuba could present new opportunities for U.S. businesses, aided by a change of heart in the White House, some analysts say. However, a new president in Cuba, even if it is Miguel Díaz-Canel, will likely not move to change the country’s relationship with the U.S., Kavulich predicted. “Don’t get your hopes up. The revolution continues,” he said. Arnavat agreed. “Whoever takes over is going to be spending time underscoring his or her revolutionary bona fides. There’s no question about that.”

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Moody's Changes Cuba's Outlook To "Stable" From "Positive"; Caa2 Rating Affirmed

Rating Action:

Moody's changes Cuba's outlook to stable from positive; Caa2 rating affirmed

Global Credit Research - 08 Nov 2017

New York, November 08, 2017 -- Moody's Investors Service has today affirmed Government of Cuba's Caa2 foreign currency issuer rating, assigned a Caa2 local currency issuer rating, and changed the rating outlook to stable from positive.

The key drivers of the change of outlook are:

1) The rapprochement process with the United States has stalled resulting in a reversal of measures to ease the economic embargo, and in recent months US-Cuba relations have deteriorated

2) Moody's expectations of continued reform momentum and favorable macroeconomic performance have not materialized due to a series of climate shocks, strained relations with the US and the upcoming domestic political transition

Cuba's Caa2 sovereign rating reflects credit weaknesses that include limited access to external financing, structural inefficiencies, political transition risk, and importantly, limited data transparency. The rating also incorporates the economic impact of the growing tourism sector, nickel-related mining activities, and the potential for future economic diversification.

Cuba's long-term local-currency country risk ceilings and the foreign currency bond ceiling remain unchanged at Caa2. The foreign-currency bank deposit ceilings is also unchanged at Caa3. The short-term foreign currency bond and deposit ceilings remain at NP (Not Prime).

RATINGS RATIONALE

RATIONALE FOR THE OUTLOOK CHANGE TO STABLE

The positive outlook on Cuba's Caa2 rating was based on increased prospects for rapprochment with the US as well as for domestic economic reforms. The principal drivers of Moody's decision to change the outlook to stable from positive are the stalled process of rapprochement with the US, and the dimmer prospects for further economic reform on the island.

Restrictions on travel to Cuba, which the previous US administration had loosened, have been tightened. Regulations effective 9 November rescind the travel authorization for individual "people-to-people" exchanges, a broad category increasingly used by Americans under the previous administration to conduct legally authorized travel to the island without the need to participate in organized group exchanges. The tightened controls also include a provision applicable to persons that are otherwise authorized to engage in Cuban travel or other Cuba-related activity, prohibiting them from engaging in most direct financial transactions with 180 entities linked to the Cuban military, which controls a broad swath of the tourist economy.

While the tightened travel authorizations only reinforce the longstanding statutory tourism ban on Cuba, these changes and new sanctions targeting the Cuban military highlight a reversal of the previous rapprochement efforts undertaken by Cuba and the previous US administration. Although a number of relevant measures taken by the previous US administration remain in place, Moody's believes that the changes to be adopted on 9 November will curtail the flow of American visitors to Cuba and diminish impetus for investment into the country, primarily into tourism projects, but also into other sectors that were expecting a further opening up of the Cuban economy.

More recently, diplomatic relations between the US and Cuba have become strained by alleged sonic attacks on US embassy and government personnel in Havana, resulting in the US recalling the majority of the staff from its embassy in Cuba and expelling Cuban diplomats from Washington. These developments will likely constrain further economic or diplomatic openness between the two nations.

Despite recent growth in the tourism sector, Cuba's economic outlook remains challenging following climate and commodity price shocks, and negative spillovers from the economic crisis in Venezuela. The country has been hit by two major hurricanes since late-2016. This caused widespread destruction and affected economic activity. Agriculture, food production, construction and healthcare likely posted a significant contraction owing to the various shocks faced by the economy. Key export prices for nickel have recovered but remain short of the highs achieved in 2008 and 2011, and sugar prices remain near 2015 lows.

Moody's estimates that the Cuban economy contracted 0.9% in 2016 despite a 13.3% increase in visitor arrivals. Moody's forecasts that the economy will contract once again in 2017 by 0.5% before returning to moderate growth of 1.1% in 2018. Nevertheless, prospects for recovery remain fragile and the upcoming political transition will limit the pace of reforms that could support economic recovery.

President Raul Castro will step down at the end of his second five year term in February 2018. This will be the first time since 1959 that a member of the Castro family will not rule Cuba, potentially posing risks to political stability and increasing uncertainty over economic policy and prospects. Moody's believes that risks to economic liberalization are substantial given the state's wavering commitment to private enterprise and Cuba's lack of experience with implementation of market policies.

WHAT COULD MOVE THE RATING UP/DOWN

There could be upward pressure on Cuba's rating if there is a further easing of US economic sanctions or domestic reforms that have a material impact on Cuba's economic prospects. More clarity over the political transition at the end of President Raul Castro's current term would ease concerns over political and social instability. Enhanced data timeliness and transparency would also be credit positive.

Conversely, evidence of increased stress on Cuba's external finances along with deteriorating economic prospects due to external shocks or reform reversal would result in downward pressure on Cuba's rating.

GDP per capita (PPP basis, US$): $7,700 (2016 Actual) (also known as Per Capita Income)

Real GDP growth (% change): -0.9% (2016 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 3.1% (2016 Actual)

Gen. Gov. Financial Balance/GDP: -6.8% (2016 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: 0.7% (2016 Actual) (also known as External Balance)

External debt/GDP: 23.4% (2016 Actual)

Level of economic development: Low level of economic resilience

Default history: No default events (on bonds or loans) have been recorded since 1983.

Note: Numbers have been updated to 2016 (from 2014), which is what was used for committee purposes.

On 06 November 2017, a rating committee was called to discuss the rating of the Cuba, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have materially decreased. The issuer's institutional strength/ framework, have not materially changed. The issuer's governance and/or management, have not materially changed.

The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

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Sun Country Airlines Abandons Cuba Route Allocation; Cites Uncertain Market Demand

On 1 November 2017, Eagan, Minnesota-based Sun Country Airlines has returned its Republic of Cuba flight allocations to the United States Department of Transportation (USDOT) due to continuing uncertain market demand:

Application of MN Airlines, LLC d/b/a SUN COUNTRY AIRLINES

For an exemption pursuant to 49 U.S.C. 40109 to provide scheduled service Between the United States and Cuba and Order 2016-2-12 for allocation of newly available Frequencies between the United States and Cuba:

November 1, 2017

Docket DOT-OST-2016-0021

MOTION OF MN AIRLINES, LLC D/B/A SUN COUNTRY AIRLINES FOR RETURN OF FREQUENCY ALLOCATION

MN Airlines, LLC d/b/a Sun Country Airlines (Sun Country), moves to return the Cuba frequency allocation in Order 2016-6-5 dated June 10, 2016, which granted Sun Country's application for (1) once-weekly service (i.e., Saturdays) between Minneapolis/St. Paul and Matanzas and (2) once-weekly service (i.e., Sundays) between Minneapolis/St. Paul and Santa Clara. On January 11, 2017, Sun Country was granted approval of a waiver of the 90-day start­ up condition placed on the two U.S. - Cuba frequencies awarded to Sun Country in order to allow Sun Country to commence new U.S. - Cuba service using these frequencies on or before the 2017 - 2018 winter traffic season or December 17, 2017. Such a waiver was necessary to give Sun Country additional time to examine and mitigate barriers still in place due to the current

trade embargo between the US and Cuba, and further to more thoroughly evaluate the market opportunities in Cuba, establish procedures and arrange contracts with key vendors.

Regrettably, the market demand remains uncertain and there is still a lack of clarity surrounding travel restrictions; therefore Sun Country does not desire to retain the granted frequency allocations for Saturday-only Minneapolis/St. Paul - Matanzas and Sunday-only Minneapolis/St. Paul -Santa Clara.

WHEREFORE, Sun Country requests DOT to accept the return of Sun Country's Cuba frequency allocations effective immediately and grant such other relief as the Department deems necessary and appropriate.

LINK TO DOCUMENT

 

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FedEx Requests And Receives Third Delay From DOT To Commence Operations In Cuba

Memphis, Tennessee-based FedEx Corporation (2017 revenue exceeded US$60 billion) has received approval from the United States Department of Transportation (USDOT) to delay, for the third time, its regularly-scheduled cargo flights from the United States to the Republic of Cuba.  FedEx Corporation requested the extension on 7 September 2017 and the USDOT issued the authorization on 5 October 2017:

The Department grants the request of Federal Express Corporation (FedEx) for relief, until June 15, 2018, from the 90-day start-up condition applicable to the Monday-Friday Miami-Matanzas frequencies allocated to FedEx by Notice of Action Taken dated July 15, 2016, in this docket. The Department will require that FedEx inaugurate its Monday-Friday Miami-Matanzas service no later than June 15, 2018. [LINK TO DOCUMENT].

http://www.cubatrade.org/blog/2017/3/6/fedex-requests-extension-from-april-to-october-to-begin-cuba-operations-usps-began-operations-in-2016?rq=FedEx

 

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White House Background Briefing On New Cuba Regulations

THE WHITE HOUSE

Office of the Press Secretary
                                              For Immediate Release                                               
November 8, 2017

BACKGROUND CONFERENCE CALL BY SENIOR ADMINISTRATION OFFICIALS
PRESIDENT TRUMP’S CUBA POLICY

     MS. FERRÉ:  Good morning, everyone.  Thank you so much for joining us for this call.  My name is Helen Aguirre Ferré.  I am director of media affairs at the White House.  Our purpose today is to provide you with an overview of the regulations that implemented the President's Cuba policy he announced in June of this year.

     I am joined by representatives of the departments of the Treasury, State, and Commerce on this call.  I would like to say that this call is on background.  It is not for direct attribution to any member on this call.  This is call is embargoed until the end of this call.  

     Before we get to the meat of the regulations I want to provide a brief reminder of the goals of the policy and changes that we outlined, and this I will pass -- at this point, I will pass to my colleague, who is director of policy for the White House.

     SENIOR ADMINISTRATION OFFICIAL:  Thank you, Helen.  And just before I begin let me just -- as a heads up -- we're expecting a fire drill at some point today in the White House so if for some reason, over the course of the next 30 minutes or so if you hear a fire alarm it is a planned fire drill.  We are not being told of the exact time so do not panic.  It's all planned.  I just want to mention that in case you hear a fire alarm, and we have to leave the call.  But hopefully that won't happen within the next 30 minutes.

     Thank you so much for joining the call today.  Let me just tell you that the purpose of this call is to provide you with a brief overview of the regulations that were released a few minutes ago that implement the President's Cuba policy that he announced in his speech in Miami in June of this year.

     As Helen mentioned, we are joined by representatives from the Department of the Treasury, State, and Commerce on this call.  And so before we get to the meat of the regulations and before I hand it over to our colleagues from the different departments I want to provide you with a brief reminder of the goals of the policy changes that the President announced in June in Little Havana.

     The policy, and more specifically, the regulations that we're announcing today are intended to support compliance with U.S. law, including the embargo in Cuba and the statutory ban on tourism.

     We will hold the Cuban regime accountable for oppression and human rights abuses ignored under the previous administration's policy.  We will further the national security and foreign policy interests of the United States and those of the Cuban people.  And we will lay the groundwork for empowering the Cuban people to develop greater economic and political liberties.  

     These regulations that we are releasing today -- that were just released today are designed to implement each of these important goals.

     I want to thank each of the agencies representative of this call -- Treasury, State, and Commerce -- for their great work over the past five months and for their diligent efforts to implement our new Cuba policy.  Our actions today show that we stand with the people of Cuba, and I want to reiterate that improvements to the United States-Cuba relationship will depend entirely on the Cuban government's willingness to improve the lives of the Cuban people, including promoting the rule of law, respecting human rights and taking concrete and specific steps to foster political and economic freedoms.  So again, thank you for your participation.  And now I'm happy to pass the call to my colleague at the Department of the Treasury.

     SENIOR ADMINISTRATION OFFICIAL:  Good morning, everyone.  I’m from Treasury’s Office of Foreign Assets Control, or OFAC.  Thanks to everyone for joining the call.  As my colleague mentioned, OFAC, Commerce, and State are taking steps today to implement the changes to the Cuba sanctions program announced by the President in June.

     OFAC is amending its Cuban assets control regulations, and these regulatory amendments will become effective tomorrow, November 9th, once they're published in the Federal Register.

     In addition to the new regulations, OFAC, Commerce, and State issued a joint fact sheet that you should have received already, and OFAC has new and updated FAQs that go into further detail on these changes.  All of OFAC's materials can be found online on OFAC's Cuba webpage.

At the highest level, OFAC's amendments to the Cuban regulations are intended to steer economic activities away from the Cuban military, intelligence, and security services in order to expand economic ties to the private small-business sector in Cuba.

Channeling economic activity away from entities controlled by the Cuban military will encourage the government to move toward greater political and economic freedom for the Cuban people.  The amended Treasury regulations on travel help to ensure that the restrictions on travel in Cuba are meaningfully implemented without unnecessarily impacting humanitarian, educational, commercial, or other expressly permitted activities.

In accordance with the National Security Presidential Memorandum, or NSPM, issued by the President in June, Americans will be prohibited from engaging in certain direct financial transactions with entities and sub-entities identified by the State Department on the Cuba Restricted List.  

Certain transactions will be excluded from this prohibition pursuant to exceptions detailed in the NSPM.  Consistent with the administration's intent in avoiding negative impact on American business and travelers, commercial engagements in place prior to the State Department's listing of any entity or sub-entity will continue to be authorized, as will most previously arranged travel.  For example, businesses will be permitted to continue transactions outlined in contingent or other types of contractual agreements agreed to prior to the issuance of the new regulations consistent with other regulatory authorizations.    

I'll now defer to my colleague, the coordinator for Cuban affairs at the State Department to discuss this list.  

SENIOR ADMINISTRATION OFFICIAL:  Thanks.  Today the Department of State is publishing its list of restricted entities and sub-entities associated with Cuba, otherwise known as the Cuba Restricted List.  As directed by the June 16th National Security Presidential Memorandum, the Department of State identified the entities and sub-entities that are under the control of, or act for or on behalf of the Cuban military, intelligence, or security services or personnel.  

The department then developed a list of those identified entities and sub-entities with direct financial transactions with which direct financial transactions would disproportionally benefit the Cuban military, intelligence, or security services or personnel at the expense of the Cuban people or private enterprise in Cuba.

The list is comprised of 180 entities and sub-entities including the Ministries of Interior and the armed forces, holding companies, tourism companies, the Mariel Port and Special Development Zone, and 83 hotels across the island.  You can find the Cuba Restricted List on the State Department's website by searching under 'Cuba Restricted List'.  It's also published in the Federal Register.  We will publish updates to it periodically as the need arises.  

I'll turn this over to my Treasury colleagues to explain the regulations and how they will be implemented.

SENIOR ADMINISTRATION OFFICIAL:  Thanks.  So following up and talking about some of the travel restrictions in accordance with the NSPM, OFAC is making changes to the travel authorizations for people-to-people travel.  

As announced by the President in June, OFAC is removing the authorization for individual people-to-people travel.  Future people-to-people travel will need to meet two requirements.  First, all  people-to-people travel must be conducted under the auspices of an organization that is subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact.  And second, such travelers must be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization.  

Consistent with the administration's interest in avoiding negative impact on Americans for arranging lawful travel to Cuba, certain people-to-people travel that previously was authorized will continue to be authorized where the traveler has already completed at least one travel-related transaction, such as purchasing a flight or reserving accommodations prior to the President's June 16th, 2017 announcement.  

With regard to academic educational travel, in accordance with the NSPM, persons subject to U.S. jurisdiction engaging in certain authorized educational travel will now be required to do so under the auspices of an organization that the person is subject to U.S. jurisdiction.  These authorized educational travelers will now also be required to be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization, unless the traveler is the representative and obtained a certification letter from the sponsoring organization.

Again, consistent with the administration's interest in avoiding negative impacts on Americans for arranging lawful educational travel to Cuba, certain educational travel that was authorized will continue to be authorized where the traveler has already completed at least one travel-related transaction prior to tomorrow when the regulations become effective.  

In accordance with the NSPM, OFAC is also requiring under the support for the Cuban people travel category, that each traveler engage in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba.  Such activities must also enhance contact with Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities.  

So, staying in a room in a rented accommodation of private Cuban residents, known as casa particular, or eating at privately owned Cuban restaurants known as paladares, and shopping at privately owned stores run by self-employed Cubans, cooperativistas are example of authorized activities.  However, in order to meet the requirement of the full-time schedule, a traveler must engage in additional authorized support for the Cuban people activities.

Finally, in accordance with the NSPM, OFAC's amending the definition of the term “prohibited officials of the government of Cuba” to include certain additional individuals.  This definitional change will affect the scope of certain existing authorizations.  

In conclusion, these amendments to the Cuban regulations implement the President's new Cuba policy to ship resources to the Cuban private sector and the nascent middle class.  These regulatory changes take effect tomorrow, when the regulations are published in the Federal Register.

Now, I'll turn it over to my colleague from the Commerce Department's Bureau of Industry and Security.  

SENIOR ADMINISTRATION OFFICIAL:  Thank you, and good morning to everyone.  This is the deputy assistant secretary of Commerce for export administration.  Our bureau, the Bureau of Industry and Security, will be implementing the President’s Cuba policy -- articulated in the NSPM -- through amendments to our export administration regulations, as they relate to exports, re-exports, and in-country transfers to Cuba and in Cuba.

     And our amendments fall into three baskets -- licensing policy, for things that require individual licenses for export to Cuba; and then some changes to parties who are potentially eligible for license exceptions, which are general authorizations; as well as changes to exports to the Cuban private sector.

     Specifically, we will amend our regulations to reference the State Department’s Cuba Restricted List for licensing policy.  So that potential exporters know that if they have a transaction they’d like to undertake with one of those entities, it will likely be denied.  

But exports that are consistent with the NSPM such as agricultural commodities, medicines, medical devices, and items for use by the Cuban private sector will still be approved, likely.

     The second thing is, as my colleague mentioned, the expanded list of prohibited Cuban government officials.  This is a limitation on three license exceptions or general authorizations we have -- consumer communication devices, support for the Cuban people, and gift parcels.  There will be additional universal parties in Cuba who will not be eligible to receive goods under these license exceptions for general authorizations.

     And the third change we’re doing is simplifying expanding our license exception called “support for the Cuban people” to make it clear that items that will be eligible for this license exception or general authorization are any items to be used by the Cuban private sector for private-sector economic activities to support free enterprise in Cuba.  

An example would be kitchen appliances going to the private sector for use in constructing or renovating privately owned homes.  Another example would be vehicles for use by private-sector taxi operators.  Those are the kinds of things that will be allowed to go under this general authorization or license exception.

As with the Treasury’s amendment, this regulation of ours will become effective tomorrow, and we will also have a revised set of frequently asked questions up on our website for those who are interested in more detail on the impact of these changes.

So that’s the summary of the changes to the export administration regulations by Department of Commerce.

MS. FERRÉ:  Thank you very much.  And now we're going to open up, operator, for questions.  As a reminder to everyone, this is all embargoed until the end of this call.  Everyone, this on background, not for attribution.  We have a senior White House official.  We have a senior official from the Department of State, from Treasury, and Commerce.

Q    Good morning, this is Michelle Caruso-Cabrera from CNBC.  I’ve read through these and I just want to understand very clearly.  If somebody is going to travel with one of the organizations that are allowed to do people-to-people travel, once these regulations are published tomorrow, those individuals and those people-to-people organizations -- licensed organizations -- cannot place individuals into these hotels, correct?

And to what degree do we know that they’ve been staying in the hotels that are listed here?  And how many -- future travels would have to change location or go to an Airbnb, et cetera?

SENIOR ADMINISTRATION OFFICIAL:  So this is Treasury, if I understand the question right, if the accommodations or the arrangements have already been made for the travel, they can move forward with travel that’s already been authorized -- already been arranged.

So, if you’ve already booked your flights, if you’ve already booked in a hotel that’s on the list, then you can move forward with that trip.  After the regulations become effective tomorrow, then you will not be allowed to do a people-to-people trip that would stay in one of those hotels that’s on the list.

So again, we’re not trying to impact travel that has already been booked or arranged, we are trying to make changes for the future.  

     Q    And how did you pick these specific hotels, and to what degree do you know that they're being used currently by people-to-people licensed organizations?

     SENIOR ADMINISTRATION OFFICIAL:  Hi, this is State.  We have our economic specialist on the line as well.  Can you ask the question again?

     Q    So to -- how did you pick these specific hotels?  Because there are other hotels there.  And to what degree do you know whether or not currently licensed people-to-people organizations are staying in hotels on the list, and therefore, in the future would have to pick other places?

     SENIOR ADMINISTRATION OFFICIAL:  So, with regard to the first part of the question, any entity identified as being controlled by the military, intelligence, or security services was evaluated within the guidelines laid out by the NSPM.  

     The department listed those entities with which direct financial transactions would disproportionately benefit Cuba’s military, intelligence, or security services or personnel at the expense of the Cuban people or private enterprise in Cuba consistent with U.S. national interests.

     Some entities controlled by the military, intelligence, or security services or personnel did not meet these criteria and therefore would not appear on the list.

     Q    Hi, this is (inaudible) with The Hill.  I'm just wondering, entities that are included on the prohibited list, would they be able to challenge that, and if so how would that process work?

     SENIOR ADMINISTRATION OFFICIAL:  Well, we update it periodically based on information that we receive at the State Department.  So information we receive we’d evaluate and determine whether it would meet the criteria for changes to the list.  

     Q    Hello, I'm Ambrosio Hernandez, chief anchor here at Channel 23 News Univision Miami.  The question is about the Americans -- if I understood correctly -- visiting casas particulares y palabras in Cuba.  But then, it was added that they must also engage in support for the Cuban people.  Can you explain that to us and also about the packages to Cuba?  What is allowed and what is not allowed?  Thank you.

     SENIOR ADMINISTRATION OFFICIAL:  So, thank you.  This is Treasury answering the question.  First, I'll appreciate that you pronounced the terms better than I did, and what we tried to emphasize that is staying or eating or shopping in some of those privately owned places is something that we wanted to encourage.  But what we wanted to say is that that alone is not enough.  So, if you stay in one of the privately owned accommodations or eat at a paladares, that alone won't be enough.  But, we've always had the support for the Cuban people category.  And so what we're saying is that can be  -- those will be some of the factors that you can use to demonstrate your support for the Cuban people but you should plan on additional activities that would support the Cuban people.

     We actually put out an FAQ that references this that will give us a little bit more detail.  I think it's also maybe addressed in our press release to try to make sure we're as clear as can be.

     SENIOR ADMINISTRATION OFFICIAL:  On the question -- the second part of the question, items eligible for gift parcels, those are generally items that would normally be exchanged in a gift arrangement.  The changes that we're making at Commerce to our regulations expand the list of individuals in Cuba who are not eligible to receive such gift parcels.  And, as you can expect, they're generally people affiliated with the Communist Party, the government, the military, the intelligence, and security services.  

     Q    My name is Chris Clayton.  I'm an editor from DTN/The Progressive Farmer.  And I’m curious, we've had some major manufacturers such as John Deere and Caterpillar just announce that they were going to be sending equipment to Cuba after cutting a deal with the Cuban government.  Would these business arrangements that have already just recently been announced suddenly now be halted or restricted?

     And also you mentioned agricultural exports will be approved likely.  What restrictions might there be placed on agricultural exports to Cuba?  Thank you.

     SENIOR ADMINISTRATION OFFICIAL:  So both types of transactions go through the filter that's been described, which is under the Commerce regulations, we would look at whether they're going to entities in the Cuban government that primarily generate revenue for the state.  That preexisted these changes.  The additional licensing policy is items going directly to any party on the State Department's Cuba Restricted List would also likely be denied.  So I can't speak to any specifics of any particular transaction.  But those are the policies that we would apply to proposed exports of farm equipment, construction equipment, agricultural items to Cuba.

     SENIOR ADMINISTRATION OFFICIAL:  And from the Treasury side, I’d say that we made it explicit consistent with the administration's desire to avoid negative impacts on American business.  We're saying the commercial engagements that were in place prior to the State Department's listing of any entity or sub-entity will continue to be authorized.  

     So if you had a contract in place before the State Department lists the entity, then you'll be allowed to continue with the contract.

     SENIOR ADMINISTRATION OFFICIAL:  And that's the same for Commerce.  Even if a U.S. party has a Commerce export license, that would be essentially grandfathered, even if prospectively it wouldn't be approved if it came in later, after the regs became effective.

     Q    Yes, I’m Patrick Oppmann from CNN in Havana.  Wondering why the Four Points Sheraton, which is a U.S. hotel that is a joint venture with Gaviota, which, of course, is one of the companies that's prohibited, was left off the list?  Was that on purpose because Sheraton is a U.S. company?

     SENIOR ADMINISTRATION OFFICIAL:  Look, similar to the answer to the previous question, we assessed how listing identified hotels would affect the Cuban people and whether doing so advances the interests of the United States.  In coordination with OFAC, we made the determination that it wouldn't fall under it.

     Q    Hi, everyone.  It's Olivier Knox at Yahoo News.  I want to make this practical.  How does life change for an American who wants to visit Cuba aboard a cruise ship and bring $100 of rum and cigars?  And can you say whether the timing of this announcement is in any way connected to those sound attacks against American diplomats in Havana?

     SENIOR ADMINISTRATION OFFICIAL:  Look, this list and all of the regulations related to it have nothing to do with the acoustic incidents.  All of this is done in accordance with the requirements under the NSPM.

     SENIOR ADMINISTRATION OFFICIAL:  And from the Treasury perspective, the rules that you referenced didn't change.  You're still allowed to travel by the means that you mentioned.  You're still allowed to bring back under the 10 quantities that have been in our rules, as long as you're fitting within the revised travel categories that we put out in our regulations.

     Q    Hey, Josh Lederman, from the Associated Press.  Thanks for doing the call.

     I was wondering if you could tell us how you're going to police these new changes?  For instance, when an American comes back from Cuba, are there going to be OFAC inspectors that ask to see their itinerary to make sure they have sufficient support from the Cuban people?  And what are the potential repercussions for Americans who do not comply with the rules that you're outlining today?

     SENIOR ADMINISTRATION OFFICIAL:  So this is Treasury, again, OFAC.  The repercussions are the same as what they have been.  I'll start with that part first.  As we have enforcement authority, there are penalties.  And for willful violations, they can be referred for a criminal prosecution.  

     In terms of how we'll police it, we'll police it as we have.  And we have additional mechanisms in the regulations to ensure that we can.  So we rely on all sorts of information that we get from a variety of the agencies.  I wouldn't expect to see OFAC at every border point, but I think we can rely -- as we have relied on in the past -- on our interagency colleagues in Customs Border Patrol, all of the agencies that supply us information.

     We also have included in the regulations some additional requirements about certain travelers getting letters, making sure that there are documented reasons.  And everyone has to make sure that they retain records pursuant to our record-keeping requirements.  Because if we have concerns about travel or any other type of transaction that could potentially violate our regulations, then we can come to you and ask you for and review the transaction.
 
     SENIOR ADMINISTRATION OFFICIAL:  And then for Commerce, we continue to use our long-standing export enforcement authority to look at a variety of information to determine whether there are potential violations of the Commerce regulations on exports, re-exports to Cuba.

     Q    Hi, it's Karen DeYoung at the Washington Post.  Just following up on the previous question, in the past when restrictions were tighter than they have been in the last few years, the enforcement was -- I think it's fair to say -- fairly lax.  And I wonder if you plan on hiring new people to control borders, if travelers should expect to spend more time, if this is going to affect airline flights into government-owned airports for Cuba?

     SENIOR ADMINISTRATION OFFICIAL:  This is Treasury, OFAC again, I think I disagree with your characterization that our enforcement has been fairly lax.  I think when we've seen violations, we've gone after those violaters.  We continue to have Cuba-related penalties throughout administrations over time, and we will continue to do so when we see violations.  But I think I've already hit that part of your question in response to the previous one.
 
Thank you very much.

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"Rum" & "Coke" In Cuba Could Have A New Meaning... Coca-Cola and Pepsi?

Tropicola (the Republic of Cuba's version of Coca-Cola) and rum brands, Ron Caney and Ron Varadero, are listed in the United States Department of State List of Entities and Subentities Associated with Cuba [LINK].  

The summary references that "direct financial transactions will be generally prohibited" with such entities and subentities as they are affiliated with the Revolutionary Armed Forces (FAR) of the Republic of Cuba and "intelligence, or security services or personnel."

If an individual subject to United States jurisdiction purchases Tropicola, Ron Caney or Ron Varadero from an individual, privately-owned kiosk, cafe, or restaurant (paladar), would that transaction be permitted because it is not "direct" or would it be prohibited because its "fruit of the poisonous tree." 

Is the focus meant to be solely upon "commercial engagement" by United States companies relating to the export/import of the products?

Does this mean an individual subject to United States jurisdiction may not purchase and consume Tropicola, Ron Caney and Ron Varadero regardless of the location of the individual?  The honor system on steriods..... 

Will the regulations serve as a means to promote other Republic of Cuba government-owned beverage brands?  Or....

Could this be a (not-so) subtle means by the Trump Administration to promote exports to the Republic of Cuba by Atlanta, Georgia-based The Coca-Cola Company (2016 revenues exceeded US$41.8 billion) and Purchase, New York-based PepsiCo, Inc. (2016 revenues exceeded US$62.8 billion)?

Awaiting a response from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and from the United States Department of State.....   

Treasury, Commerce, and State Implement Changes to the Cuba Sanctions Rules

LINK TO MEDIA RELEASE
LINK TO OFAC REGULATIONS
& LINK TO OFAC FREQUENTLY ASKED QUESTIONS
LINK TO BIS REGULATIONS
LINK TO US DEPARTMENT OF STATE LIST

Treasury, Commerce, and State Implement Changes to the Cuba Sanctions Rules
11/8/2017

Amendments Implement President Trump's June 2017 National Security Presidential Memorandum (NSPM) Strengthening the Policy of the United States Toward Cuba

WASHINGTON – Today, the Department of the Treasury's Office of Foreign Assets Control (OFAC) and the Department of Commerce's Bureau of Industry and Security (BIS) are announcing amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), respectively, to implement changes to the Cuba sanctions program announced by the President in June.  The State Department is taking complementary steps to implement these policy changes that cumulatively seek to channel economic activities away from the Cuban military, intelligence, and security services, while maintaining opportunities for Americans to engage in authorized travel to Cuba and support the private, small business sector in Cuba.  The changes will take effect on Thursday, November 9, 2017, when the regulations are published in the Federal Register.

"We have strengthened our Cuba policies to channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people," said Treasury Secretary Steven Mnuchin.

For the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR) part 515, see here.  For the Commerce regulations, which can be found at 15 CFR parts 730-774, see here.  For the State Department list, which can be found on the State Department website and in the Federal Register, see here.  Major elements of the changes in the revised regulations include:

Financial Transactions

In accordance with the NSPM, the State Department is publishing a list of entities and subentities that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel and with which direct financial transactions would disproportionately benefit the Cuban military, intelligence, or security services or personnel at the expense of the Cuban people or private enterprise in Cuba – the State Department's List of Restricted Entities and Subentities Associated with Cuba ("Cuba Restricted List").  The Cuba Restricted List is maintained by the State Department and will be published and periodically updated as necessary in the Federal Register.

Persons subject to U.S. jurisdiction will now be prohibited from engaging in certain direct financial transactions with entities and subentities identified by the State Department on the Cuba Restricted List.  Certain transactions will be excluded from this prohibition pursuant to exceptions detailed in the NSPM.

Consistent with the Administration’s interest in avoiding negative impacts on American businesses and travelers, commercial engagements in place prior to the State Department’s listing of any entity or subentity will continue to be authorized, as will most previously arranged travel.

Trade and Commerce

In accordance with the NSPM, BIS is establishing a general policy of denial for license applications to export items for use by entities and subentities on the Cuba Restricted List unless the transaction is otherwise consistent with the NSPM.

Consistent with the Administration's policy to support free enterprise in Cuba, BIS is simplifying and expanding its license exception that authorizes certain license-free exports to the Cuban private sector.

People-to-People Travel
                                                                             
In accordance with the NSPM, OFAC is requiring that (1) all people-to-people nonacademic educational travel be conducted under the auspices of an organization that is subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, and (2) such travelers be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization.  Individual people-to-people nonacademic educational travel will no longer be authorized as announced by the President.

Consistent with the Administration's interest in avoiding negative impacts on Americans for arranging lawful travel to Cuba, certain people-to-people travel that previously was authorized will continue to be authorized where the traveler had already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to the President's June 16, 2017 announcement.

Educational Travel

In accordance with the NSPM, Americans engaging in certain authorized educational travel will now be required to do so under the auspices of an organization that is a person subject to U.S. jurisdiction.

These authorized educational travelers will now also be required to be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization, unless the traveler is the representative and obtains a certification letter from the sponsoring organization.

Consistent with the Administration's interest in avoiding negative impacts on Americans for arranging lawful travel to Cuba, certain educational travel that previously was authorized will continue to be authorized where the traveler has completed at least one travel-related transaction prior to the publication of the regulations on November 9.

Support for the Cuban People Travel

In accordance with the NSPM, OFAC is requiring that each traveler under this travel category engage in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba.  Such activities must also enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities.  Renting a room in a private Cuban residence (casa particular), eating at privately owned Cuban restaurants (paladares), and shopping at privately owned stores run by self-employed Cubans (cuentapropistas) are examples of authorized activities; however, in order to meet the requirement of a full-time schedule, a traveler must engage in additional authorized Support for the Cuban People activities.   

Prohibited Officials

In accordance with the NSPM, OFAC is amending the definition of the term prohibited officials of the Government of Cuba to include certain additional individuals.  BIS is making conforming changes to three license exceptions that include the same definition.  This definitional change will affect certain otherwise-authorized transactions with the expanded group of such officials.

IACC Reports On Visits Of Representatives Of TSA & FAA

Mr. Armando Lopez, president of the Republic of Cuba government-operated Institute of Civil Aeronautics of Cuba (IACC) which is "in charge of the management, execution and control of the State and Government Policy in reference to air transport, civil air navigation and their ancillary and related services," reports that representatives of the Transportation Security Administration (TSA) under the auspice of the United States Department of Homeland Security (DHS) have visited the Republic of Cuba on forty (40) occasions since 2003; and on seven (7) occasions since the resumption of regularly-scheduled commercial airline services in 2016.  The IACC also reports that representatives of the Federal Aviation Administration (FAA) have also visited the Republic of Cuba since 2000.

US Cruise Lines Continue To Add Capacity To Cuba, Revenue From Cuba, And Revenue To Cuba

As Of 25 October 2017, The Three Largest U.S. Cruise Lines Could For 2017/2018/2019:

Deliver 455,000 Passengers To Cuba

286 Sailings To Cuba

US$623 Million In Gross Revenues To The Companies

US$64 Million Spent In Cuba By Passengers

US$19 Million In Port Fees To Cuba

And, transporting, housing, and feeding those potential passengers could mean an additional US$125+ Million to United States airlines and US$55+ million to hotels and restaurants located in South Florida.  Gross United States airline revenues for 2017/2018/2019, excluding the cruise-related revenues, are projected to be US$172+ million for United States-Republic of Cuba routes.

The three (3) largest United States-based cruise lines (through their multiple brands) have announced more than 286 itineraries amongst their brands for the 2017, 2018 and 2019 sailing seasons which include the Republic of Cuba.  Additional itineraries are expected to be announced.  And, smaller cruise lines are also operating in the Republic of Cuba marketplace.   

Miami, Florida-based Norwegian Cruise Lines Holdings Ltd

Miami, Florida-based Carnival Corporation & plc

Miami, Florida-based Royal Caribbean Cruises Ltd

In 2016, the three cruise lines combined operated a fleet of approximately 144 vessels, managed approximately 14 brands, earned approximately US$28.8 billion in gross revenues, and employed approximately 218,000 men and women.

If each vessel sails at capacity, a total of more than 455,000 passengers will visit the Republic of Cuba from 2017 through 2019.

The gross revenues to the cruise lines from the 286 Republic of Cuba sailings would be projected to exceed US$623 million from 2017 through 2019.

The 455,000 passengers would be projected to spend approximately US$64 million while in the Republic of Cuba [approximately US$140.00 per person in expenditures and organized/non-organized excursions including cost(s) for tour(s), meals (government-operated and privately-operated), ground transportation (privately-operated classic car tours), sundries and souvenirs (including spirits, coffee, tobacco, artwork and crafts)].  Some passengers could spend considerably more (cigars for example) given the United States duty-free personal exemption of US$800 per person.  

Vessel port charges in the Republic of Cuba may exceed US$19 million, ranging up to approximately US$79,000.00 for the largest vessels (684-passenger to 2,744-passenger).

COMPLETE REPORT IN PDF FORMAT

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U.S. Companies & Cuba Direct Foreign Investment (DFI) Update

There is horizontal Direct Foreign Investment (DFI) in the Republic of Cuba by United States-based companies as represented by:

Bethesda, Maryland-based Marriott International (hotel management)
Moline, Illinois-based John Deere (distribution center)
Peoria, Illinois-based Caterpillar (distribution center)
Chicago, Illinois-based United Airlines (operations/ticket office)
Fort Worth, Texas-based American Airlines (operations/ticket office)
Long Island City, New York-based Jet Blue Airways (operations/ticket office)
Atlanta, Georgia-based Delta Air Lines (operations/ticket office)

Since 17 December 2014, two (2) horizontal DFI proposals in the public domain were rejected by the government of the Republic of Cuba: Alabama-based Cleber LLC (a facility in the Republic of Cuba that would use parts manufactured in the United States and delivered to the Republic of Cuba to assemble tractors for the domestic market and for export) and Florida-based Florida Produce of Hillsborough County (distribution center in the Republic of Cuba featuring food and other products imported from the United States).   

Definition Of DFI (from Investopedia)

Foreign direct investments can be made in a variety of ways, including the opening of a subsidiary or associate company in a foreign country, acquiring a controlling interest in an existing foreign company, or by means of a merger or joint venture with a foreign company.

The threshold for a foreign direct investment that establishes a controlling interest, per guidelines established by the Organization of Economic Cooperation and Development (OECD), is a minimum 10% ownership stake in a foreign-based company, typically represented for the investor acquiring 10% or more of the ordinary shares or voting shares of a foreign company. However, that definition is flexible, as there are instances where effective controlling interest in a firm can be established with less than 10% of the company's voting shares.

Foreign direct investments are commonly categorized as being horizontal, vertical or conglomerate in nature. A horizontal direct investment refers to the investor establishing the same type of business operation in a foreign country as it operates in its home country, for example, a cell phone provider based in the United States opening up stores in China. A vertical investment is one in which different but related business activities from the investor's main business are established or acquired in a foreign country, such as when a manufacturing company acquires an interest in a foreign company that supplies parts or raw materials required for the manufacturing company to make its products. A conglomerate type of foreign direct investment is one where a company or individual makes a foreign investment in a business that is unrelated to its existing business in its home country. Since this type of investment involves entering an industry the investor has no previous experience in, it often takes the form of a joint venture with a foreign company already operating in the industry.

 

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US$1 Trillion Is Combined Global Revenues Of The 52 U.S. Companies With A Presence In Cuba

U.S. Companies With A Presence In Cuba Since 17 December 2014
No Manufacturing/Assembly; Limited DFI
Licenses Issued By OFAC/BIS Not Yet Disclosed & Implemented

With the Republic of Cuba, United States-based companies engage in the export of products, import of products, provision of services and horizontal Direct Foreign Investment (DFI).  

The global gross revenues of the fifty-two (52) listed companies exceeds US$1 trillion and the companies employ approximately 2 million within the United States and other countries; not including revenue/employees from the United States Postal Service (USPS).  

The list does not include travel agents and tour operators, most of whom have arrangements with Republic of Cuba government-operated Havanatur Celimar, Asistur, Gaviota and other Republic of Cuba government-operated companies to market itineraries.  

This list does not include United States-based companies that have exported food products and agricultural commodities (Trade Sanctions Reform and Export Enhancement Act of 2000; TSREEA) and medical equipment, medical instruments, medical supplies, medicines, and pharmaceutical products (Cuban Democracy Act of 1992; CDA).  

There is horizontal DFI in the Republic of Cuba by United States-based companies as represented by Marriott International, John Deere, Caterpillar, United Airlines, Delta Air Lines, Jet Blue Airways, and American Airlines.  

Since 17 December 2014, two (2) horizontal DFI proposals in the public domain were rejected by the government of the Republic of Cuba: Alabama-based Cleber LLC (a facility in the Republic of Cuba that would use parts manufactured in the United States and delivered to the Republic of Cuba to assemble tractors for the domestic market and for export) and Florida-based Florida Produce of Hillsborough County (distribution center in the Republic of Cuba featuring food and other products imported from the United States).   

There are a reported twenty (20) to more than seventy (70) licenses issued in 2016 (before and after the 8 November 2016 presidential election to 20 January 2017; and issued subsequent to 20 January 2017) by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and/or Bureau of Industry and Security (BIS) of the United States Department of Commerce, that have not been disclosed by the licensee, have not been implemented by the licensee, have been implemented by the licensee but not disclosed, and/or in some instances confirmed by the government of the Republic of Cuba but not by the licensee.  OFAC licenses are generally valid for up to two years.

1.    Alabama- Gulfwise LLC (2016 contract export of one piece of equipment; not delivered)
2.    California- Airbnb (residential reservations)
3.    California- Cisco Systems (donated no-cost networking academy)
4.    California- Google (donated products for interactive display; donated servers)
5.    California- Viking River Cruises (cruises)
6.    Colorado- Frontier Airlines (flights; ended service 2017)
7.    Colorado- Western Union (funds transfers- commenced before 2014)
8.    Connecticut- Booking.com [owned by Priceline] (accommodation reservations)
9.    Connecticut- Pearl Seas Cruises (cruise ships)
10.    Connecticut- Starwood Hotels & Resorts Worldwide (hotel management)
11.    District of Columbia- United States Postal Service (delivery services)
12.    Florida- Crowley Liner Services (container shipping)
13.    Florida- Eastern Airlines (flights)
14.    Florida- Fogo Premium Hardwood Lump Charcoal (import of charcoal)
15.    Florida- Natbank (Mastercard)
16.    Florida- Norwegian Cruise Line Holdings (cruise ships)
17.    Florida- Premier Automotive Export (export of electric vehicles/chargers)
18.    Florida- Royal Caribbean Cruises, Ltd. (cruise ships)
19.    Florida- Silver Airlines (flights; ended service 2017)
20.    Florida- Spirit Airlines (flights; ended service 2017)
21.    Florida- Stonegate Bank (Mastercard & ½ correspondent banking agreement)
22.    Florida-Carnival Corporation & PLC (cruise ships)
23.    Georgia- Delta Airlines (flights & ticket office)
24.    Illinois- Caterpillar (authorized distributorship; donated product)
25.    Illinois- John Deere (distribution center; donated product)
26.    Illinois- United Airlines (flights & ticket office pending)
27.    Kansas- Sprint (roaming agreement)
28.    Massachusetts- General Electric (parts & equipment for a power plant)
29.    Massachusetts- TripAdvisor (hotel reservations)
30.    Minnesota- Sun Country Airlines (flights)
31.    Netflix- (video streaming)
32.    New Jersey- Advanced Solar Products (export of electric vehicle chargers)
33.    New Jersey- IDT Corporation (direct long distance)
34.    New Jersey- Wyndham Worldwide (hotel management)- Agreement Cancelled
35.    New York- Colgate-Palmolive (oral education program- early 2014)
36.    New York- Infor (software technology)- Announced/No Further Action
37.    New York- JetBlue Airlines (flights & ticket office)
38.    New York- Mastercard International (credit/debit branded cards)
39.    New York- Nestle Nespresso USA (coffee imports)
40.    New York- Roswell Park Cancer Institute (vaccine clinical trial)
41.    New York- Starr Companies (letter of intent- insurance)
42.    New York- Verizon (roaming agreement)
43.    Puerto Rico- Banco Popular de Puerto Rico (Mastercard)
44.    Rimco (Caterpillar distributor)
45.    Tennessee- FedEx (cargo)
46.    Texas- American Airlines (flights & ticket office)
47.    Texas- AT&T (roaming agreement)
48.    Texas- Southwest Airlines (flights)
49.    Virginia- Cuba International Network (production agreement & office presence)
50.    Washington- Alaska Airlines (flights)
51.    Washington- Expedia, Inc. (accommodation reservations)
52.    Washington- T-Mobile (roaming agreement)

LINK To Complete Document In PDF Format

 

John Deere Could Provide US$30 Million In Financing For U.S. Exports To Cuba

LINK: U.S. Companies With A Presence In Cuba

LINK: U.S. Companies Exporting To Cuba

Text Of 2003 Letter From John Deere To AEM Supporting Equipment Exports To Cuba

Moline, Illinois-based John Deere (2017 revenues approximately US$27 billion) has reported the company will establish a distribution center in the Republic of Cuba, joining San Juan, Puerto Rico-based Rimco, the Republic of Cuba distributor for Peoria, Illinois-based Caterpillar Inc. (2017 revenues approximately US$38 billion) whose distribution center will be located within the Special Development Zone of Mariel (ZEDM).  The announcements were made during the 35th Havana International Fair (FIHAV 2017).

Neither John Deere nor Caterpillar have issued media releases or posted information on their respective Internet sites.

John Deere Financial Services will be providing payment terms/financing for the exports, primarily Series 5000 (price range US$25,000.00 to US$80,000.00) with a limited quantity of Series 7000 (price range US$219,000.00 to US$280,000.00).

According to the company, several hundred tractors, parts and accessories may be exported from the United States to the Republic of Cuba during the next four years, with the first deliveries (for testing and evaluation) scheduled for mid-November 2017.

The potential value of the several hundred products exported from the United States to the Republic of Cuba that would be financed could range from US$9 million to US$30 million.

Without the provision of substantial discounts in conjunction with extended payment terms and low-interest financing, United States companies remain at a competitive disadvantage as the government of the Republic of Cuba and Republic of Cuba government-operated companies prefer government-to-government transactions and government-to-government financing agreements.

For example, the governments of the People's Republic of China, Russian Federation, Japan, Belarus, France and India provide substantial long-term financing for durable product exports to the Republic of Cuba; and those financing agreements are generally extended when repayment is problematic, which is often.

Due to inaction by the Obama Administration throughout its two terms in office, despite repeated requests from representatives of the United States business community, payments from the Republic of Cuba to John Deere and Caterpillar will be routed through financial institutions located in third countries.

The Triangular Payment Problem

The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury does not authorize Republic of Cuba government-operated financial institutions to have correspondent accounts with United States-based financial institutions.  However, the OFAC does authorize United States financial institutions to have correspondent accounts with Republic of Cuba government-operated financial institutions.

Without a change to this OFAC regulation, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more timely (same day versus two or more days), and less costly.  

In 2015, the OFAC authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.5 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercio SA (BICSA).  There is also Republic of Cuba government-operated Banco Financiero Internacional SA (BFI) which handles international payments.  Unfortunately, because BICSA (and BFI) are not permitted to have an account with Stonegate Bank, funds are sent and received through Panama City, Panama-based Multibank, which has extensive dealings with the Republic of Cuba.

Additional effort.  Additional time.  Additional expense.  And, additional reasons for the government of the Republic of Cuba to avoid United States-based companies.

Why should Stonegate Bank, which on 13 October 2016 reported having sixty (60) United States-based companies that are or would like to engage in commercial transactions with Republic of Cuba-based entities, need to share its business (and lessen benefits to its shareholders) with a financial institution located in Panama?

ZEDM

Since 2013, an increasing number of vessels from the United States and other countries have been calling at the port of Mariel, located approximately forty (road) miles from Havana.  The port of Mariel is managed by Singapore-based PSA International.

The container terminal at the port of Mariel sits within the 180-square-mile ZEDM.  The facility 2,300 feet of jetty and four quay cranes which can accommodate 13,000 TEU Neo-Panamax vessels.  

Salvador, Brazil-based Odebrecht (2016 revenues approximately US$30 billion) was the primary contractor for the port of Mariel and ZEDM.  Approximately US$683 million in primary financing was provided by the National Bank of Economic and Social Development (BNDES) of Brazil.  Institutions in China and Venezuela also provided financing.  

Two new rail-mounted gantry cranes from Shanghai, China, arrived in September 2016.  Currently, the port of Mariel has an average of one train per day.

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Caterpillar's Distributor To Establish Distribution Center In Cuba For Sales, Service & Rentals

LINK TO PDF OF US COMPANIES WITH PRESENCE IN CUBA

NOTE: There are no United States Government statutory, regulatory or policy prohibitions upon Peoria, Illinois-based Caterpillar Inc. (2017 revenues exceeded US$38 billion) from providing, directly or indirectly, payment terms and/or financing for equipment exports from the United States to the Republic of Cuba.

Without the provision of substantial discounts in conjunction with extended payment terms and low-interest financing, United States companies remain at a competitive disadvantage as the government of the Republic of Cuba and Republic of Cuba government-operated companies prefer government-to-government transactions and government-to-government financing agreements.

For example, the governments of the People's Republic of China, Russian Federation, France, Belarus, Japan and India provide substantial long-term financing for durable product exports to the Republic of Cuba; and those financing agreements are generally extended when repayment is problematic, which is often.

The Special Development Zone of Mariel (ZEDM) is affiliated with the Revolutionary Armed Forces (FAR) of the Republic of Cuba. 

The Trump Administration has posited that it will use regulations and policies administered by the United States Department of State, Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, and Bureau of Industry and Security (BIS) of the United States Department of Commerce to discourage United States companies from engagement with FAR-related entities, although some engagement may be grandfathered once regulations are issued, which was expected to be in September 2017 subsequent to a speech by The Honorable Donald Trump, President of the United States, in June 2017.

Neither John Deere nor Caterpillar have issued media releases or posted information on their respective Internet sites.

Neither Rimco nor Caterpillar have provided information as to financing/payment terms for any products exported from the United States to the Republic of Cuba.

Rimco has reported that the company will rent, sell and service Caterpillar equipment, including power generation systems.

The Triangular Payment Problem

Due to inaction by the Obama Administration throughout its two terms in office, despite repeated requests from representatives of the United States business community, payments from the Republic of Cuba to John Deere and Caterpillar will be routed through financial institutions located in third countries.

The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury does not authorize Republic of Cuba government-operated financial institutions to have correspondent accounts with United States-based financial institutions.  However, the OFAC does authorize United States financial institutions to have correspondent accounts with Republic of Cuba government-operated financial institutions.

Without a change to this OFAC regulation, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more timely (same day versus two or more days), and less costly.  

In 2015, the OFAC authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.5 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercio SA (BICSA).  There is also Republic of Cuba government-operated Banco Financiero Internacional SA (BFI) which handles international payments.  Unfortunately, because BICSA (and BFI) are not permitted to have an account with Stonegate Bank, funds are sent and received through Panama City, Panama-based Multibank, which has extensive dealings with the Republic of Cuba.

Additional effort.  Additional time.  Additional expense.  And, additional reasons for the government of the Republic of Cuba to avoid United States-based companies.

Why should Stonegate Bank, which on 13 October 2016 reported having sixty (60) United States-based companies that are or would like to engage in commercial transactions with Republic of Cuba-based entities, need to share its business (and lessen benefits to its shareholders) with a financial institution located in Panama?

1 November 2017: HAVANA (Reuters)- Rimco, Caterpillar Inc’s dealer for Cuba, said on Wednesday it would open a distribution center for the U.S. heavy equipment maker at Havana’s Mariel special development zone, making it the first U.S. company to open up shop there.

The deal, signed this week, came as worsening U.S.-Cuban political relations curb U.S. business interest in the Communist-run island of 11 million inhabitants in the wake of the historic 2014 detente.

The United States voted against a U.N. General Assembly resolution that was passed on Wednesday calling for the lifting of the decades-old U.S. economic embargo against Cuba, reversing an abstention by Washington last year.

“We are going to set up a warehouse and distribution center at Mariel and we will be distributing Caterpillar equipment,” Caroline McConnie, Vice President of the privately-held Puerto Rican company Rimco, said in a news conference at Cuba’s annual trade fair. “We have a license from the commerce department and other agencies.”

A license from the Treasury Department’s Office of Foreign Assets Control (OFAC), which handles economic and trade sanctions, was not necessary, she said.

Mariel Director Ana Teresa Igarza said at the news conference that Rimco hoped to open up shop in 2018, and the deal was one of 30 projects, including 11 Mariel had signed off on this year.

Cuba created the zone, just west of Havana, three years ago to attract foreign capital with tax and customs breaks to boost its anemic economy. It hopes the port there could become a hub for the Caribbean and Central and South America.

It is controlled by Almacenes Universales, a company belonging to the Armed Forces Business Enterprises Group (GAESA), which could prove problematic for U.S. companies.

U.S. President Donald Trump in June ordered a ban on business dealings with the military as part of a tightening of trade and travel restrictions.

The new regulations, including that ban, have yet to be unveiled. The Trump administration has said that any deals signed before then would be grandfathered in.

Caterpillar has been building relations with Cuba, which needs to update its ageing infrastructure, and lobbying to lift the U.S. embargo on the country.

Former Chief Executive Doug Oberhelman visited in May last year to meet with the government and make a donation to the foundation that preserves the heritage of U.S. writer Ernest Hemingway in Cuba.

FOR IMMEDIATE RELEASE
February 10, 2016

Caterpillar Names Rimco Official Dealer for Cuba

PEORIA, Ill. – Caterpillar Inc. (NYSE: CAT) today announced that it has selected Rimco, a privately owned Puerto Rico-based company, to be the Cat dealer for Cuba. Currently, Rimco serves as the Cat dealer for Puerto Rico and the Eastern Caribbean. Upon easing of trade restrictions, customers in Cuba will be able to purchase Cat products through Rimco in accordance with U.S. and Cuba regulations.

“We’re pleased to take this important step with our longtime partner, Rimco,” said Philip Kelliher, vice president with responsibility for the Americas & Europe Distribution Services Division. “Cuba needs access to the types of products that Caterpillar makes and, upon easing of trade restrictions, we look forward to providing the equipment needed to contribute to the building of Cuba’s infrastructure. This momentous announcement is part of our preparations in anticipation of the United States lifting its 55-year-old trade embargo on Cuba.”

Caterpillar, an advocate for change in policy toward Cuba for nearly two decades, will continue its work with the Administration and Congress to end the embargo.

“We’re exceptionally proud of our 34-year relationship with Caterpillar,” said Richard F. McConnie, President of Rimco. “There is great affinity between Cuba and Puerto Rico as a result of our shared language, culture and traditions. Rimco will be honored to serve the Cuba market once the United States and Cuba re-establish commercial relations.”

On December 17, 2014, President Obama announced that the United States would move to normalize relations with Cuba. Since that historic day, embassies have opened in each nation and there have been gradual steps to open diplomatic and economic ties between the two countries.

While steps remain until relations are fully normalized, including lifting the embargo, Rimco and Caterpillar will continue preparations to best serve the Cuban marketplace with construction and mining equipment, power systems, marine and industrial engines.

About Caterpillar

For 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent.  Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets.  With 2015 sales and revenues of $47.011 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.  The company principally operates through its three product segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment.  For more information, visit caterpillar.com.  To connect with us on social media, visit caterpillar.com/social-media.

About Rimco

Rimco is the Caterpillar dealer for Puerto Rico, the U.S. Virgin Islands, the British Virgin Islands, Barbados and the Eastern Caribbean Islands. It is a privately-held Puerto Rico company founded by the McConnie family in 1981. The company has built a strong reputation in the industry with its superior sales, rental and product support capabilities. Rimco sells construction equipment, power systems and engines to its customers in the construction, quarry & aggregates, waste, industrial, commercial and marine segments. Rimco also has a complete fleet of equipment and power systems available for rental through its 5 Cat Rental Stores located in Puerto Rico and Barbados. Additional information about the Rimco organization, its products and services can be found at www.rimcocat.com.  

Paul Manafort Visited The Republic Of Cuba Within The Last Twelve Months

According to a document (see page 12) released on 31 October 2017 by the United States Department of Justice, Mr. Paul J. Manafort Jr. visited the Republic of Cuba during the last twelve months.

"Within the last year, Manafort has traveled to Dubai, Cancun, Panama City, Havana, Shanghai, Madrid, Tokyo, and Grand Cayman Island."

LINK TO DOCUMENT IN PDF FORMAT

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US Food/Ag Exports To Cuba Increase 66%

ECONOMIC EYE ON CUBA©
October2017

August 2017 Food/Ag Exports To Cuba Increased 66%- 1
Healthcare Product Exports US$191,581.00- 2
Humanitarian Donations US$266,111.00- 2
Obama Administration Initiatives Exports Continue To Increase For Airlines/Hotel- 3
U.S. Port Export Data- 14

AUGUST 2017 FOOD/AG EXPORTS TO CUBA INCREASED 66%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in August 2017 were US$28,627,776.00 compared to US$17,227,854.00 in August 2016 and US$2,254,957.00 in August 2015.  

Complete Report In PDF Format

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President Trump And Vice President Pence Speak About Cuba

The Honorable
Donald Trump
President of the United States

16 October 2017
Press Conference
Rose Garden
The White House

Q General Kelly said just last week that you believe that Cuba could stop the attacks against Americans. Do you believe them, that Cuba is -- do you believe Cuba is responsible?

THE PRESIDENT: I think Cuba knew about it, sure. I do believe Cuba is responsible. I do believe that. And it's a very unusual attack, as you know, but I do believe Cuba is responsible, yes.

United States Department of State
Briefing
17 October 2017

QUESTION: Can I just talk quickly about the Cuba attack?

MS NAUERT: Yeah.

QUESTION: Yeah.

QUESTION: The President answered yesterday a question about whether or not he believes that Cuba is responsible for the attacks on U.S. personnel in the affirmative. And he said, “It’s a very unusual attack, as you know, but I do believe Cuba is responsible, yes.”

MS NAUERT: Yeah.

QUESTION: That runs counter to what you have told us so far, that the investigation is ongoing and that while you hold Cuba responsible for the safety of these diplomats you don’t hold them responsible for the attacks. Does the President know something --

MS NAUERT: Well, we’ve been clear in saying that an investigation is ongoing. I think what the President was saying and also what his Chief of Staff General Kelly was saying last week is the same thing that we have been saying, in that Cuba is responsible for protecting our U.S. embassy personnel, our diplomats who are serving down there, under the Vienna Conventions. That has been very clear all along. They have that responsibility. That is what they are supposed to do. They have not ensured the protection and the safety and security of our personnel down there, and that position hasn’t changed. That’s where we stand.

QUESTION: But with all due respect, that’s not what the President said.

MS NAUERT: Well, that’s what the intent was. We’ve not changed our view on that. The administration has not changed its view on that. The investigation remains ongoing. But we’ve also been clear about this, and at the State Department we tend to be super, super, super, super cautious about some of the things we say. But to anyone who knows anything about the Cuban Government and the past of the Cuban Government, it’s hard to imagine that certain things wouldn’t be known that were taking place on that island right there. Okay.

QUESTION: But you do acknowledge, though, that the President --

QUESTION: Regarding the (inaudible), Ms. Nauert.

QUESTION: -- that the President’s comments caused some confusion. I mean, otherwise why did the department feel it necessary to send a cable to all the embassies and consulates around the world titled, “Clarifying the Cuban Stance,” after the comments were made --

MS NAUERT: Well, we always --

QUESTION: -- and in which that cable says specifically that we have not assigned --

MS NAUERT: We always do send out cables that explain any kind of changes in U.S. policy, and my understanding that that cable was anticipated. That was something that we had --

QUESTION: Just coincidence that it was (inaudible)?

MS NAUERT: No, no, no. That is something that we had planned for in working on a cable that would go out across the world to alert people to some of the health concerns and areas and symptoms that people were experiencing. Okay, guys?

QUESTION: But still --

MS NAUERT: We got to leave it there. Thank you.

QUESTION: But hold on. That was – but that last thing you said, though --

MS NAUERT: Yes?

QUESTION: -- and it’s something that you said last Thursday for the first time that it’s a small island and there’s no way that the regime wouldn’t know --

MS NAUERT: Yeah.

QUESTION: Are you now at least implicating that they’re complicit somehow in the attacks?

MS NAUERT: I am not saying that. An investigation is underway, but I will just highlight that people who know about the background of the Cuban Government, it would be hard to imagine that folks wouldn’t know exactly what would be going on with them that’s on borders. Okay?

QUESTION: But that sounds like you’re saying you have someone in Cuba, in the Cuban Government --

MS NAUERT: Guys, I’m going to leave it at that. Okay? Thank you.

The Honorable
Mike Pence
Vice President of the United States

11 October 2017
Naval Observatory
Washington, DC
Hispanic Heritage Month

"US dollars will no longer prop up a monopoly that exploits" Cubans, and added: "Que viva Cuba libre!".

 

Statement By The Ministry Of Foreign Affairs Of The Republic Of Cuba

On September 29, 2017, the US Secretary of State Rex Tillerson announced the decision to significantly downscale the diplomatic staff of the US embassy in Havana and withdraw all their relatives, claiming that there had been “attacks” perpetrated against US Government officials in Cuba which have harmed their health.

Once again, on October 3, the US Government, in an unwarranted act, decided that 15 officials of the Cuban Embassy in Washington should depart from the United States, claiming that the US had reduced their diplomatic staffing levels in Havana and that the Cuban Government had failed to take all appropriate steps to prevent “attacks” against them.

The Ministry of Foreign Affairs strongly protests and condemns this unfounded and unacceptable decision as well as the pretext used to justify it, for it has been asserted that the Cuban Government did not take the appropriate measures to prevent the occurrence of the alleged incidents.

In the meeting that, at the proposal of the Cuban side, was held with Secretary of State Rex Tillerson, the minister of Foreign Affairs of the Republic of Cuba, Bruno Rodríguez Parrilla, warned him against the adoption of hasty decisions that were not supported by evidence; urged him not to politicize a matter of this nature and once again required the effective cooperation from the US authorities to clarify facts and conclude the investigation.

It is the second time, after May 23, 2017, that the State Department orders two Cuban diplomats in Washington to abandon the country; that the US Government reacts in a hasty, inappropriate and unthinking way, without having evidence of the occurrence of the adduced facts, for which Cuba has no responsibility whatsoever and before the conclusion of the investigation that is still in progress.

Just as was expressed by the Cuban Foreign Minister to Secretary of State Tillerson on September 26, 2017, Cuba, whose diplomatic staff members have been victims in the past of attempts perpetrated against their lives, who have been murdered, disappeared, kidnapped or attacked during the performance of their duty, has seriously and strictly observed its obligations under the Geneva Convention on Diplomatic Relations of 1961 referring to the protection and integrity of diplomatic agents accredited in the country, in which it has an impeccable record.

As was informed by the Ministry on August 9 last, since February 17, 2017, when the US embassy and State Department notified the alleged occurrence of incidents against some officials of that diplomatic mission and their relatives as from November 2016, arguing that these had caused them injuries and other disorders, the Cuban authorities have acted with utmost seriousness, professionalism and immediacy to clarify this situation and opened an exhaustive and priority investigation following instructions from the top level of the Government. The measures adopted to protect the US diplomatic staff, their relatives and residences were reinforced; new expeditious communication channels were established between the US embassy and the Diplomatic Security Department and a committee of experts was created to make a comprehensive analysis of facts, which was made up by law enforcement officials, physicians and scientists.

In the face of the belated, fragmented and insufficient information supplied by the US, the Cuban authorities requested further information and clarifications from the US embassy in order to carry out a serious and profound investigation.

The US embassy only delivered some data of interest on the alleged incidents after February 21, when President Raúl Castro Ruz personally reiterated to the Chargé d’Affairs of the US diplomatic mission how important it was for the competent authorities from both countries to cooperate and exchange more information. Nevertheless, the data supplied later on continued to be lacking in the descriptions or details that would facilitate the characterization of facts or the identification of potential perpetrators, in case there were any.

In the weeks that followed, in view of new reports on the alleged incidents and the scarce information that had been delivered, the Cuban authorities reiterated the need to establish an effective cooperation and asked the US authorities for more information and insisted that the occurrence of any new incident should be notified in real time, which would provide for a timely action.

Besides all of the above and in the interest of contributing to the investigation and legal process established by virtue of the Cuban Criminal Procedural Law, the US received from Cuba some requests for information as part of the inquiry procedure.

The information delivered by the US authorities led the committee of Cuban experts conclude that this was insufficient and that the main obstacle to clarify the incidents had been the impossibility to have direct access to the injured people and the physicians who examined them; the belated delivery of evidence and their deficient value; the absence of reliable first-handand verifiable information and the inability to exchange with US experts who are knowledgeable about this kind of events and the technology that could have been used, despite having repeatedly stating this as a requirement to be able to move forward in the investigation.

Only after repeated requests were conveyed to the US Government, some representatives of specialized agencies of that country finally traveled to Havana on June last, met with their Cuban counterparts and expressed their intention to cooperate in a more substantive way in the investigation of the alleged incidents.  They again visited Cuba in August and September, and for the first time in more than 50 years they were allowed to work on the ground, for which they were granted all facilities, including the possibility of importing equipment, as a gesture of good will that evidenced the great interest of the Cuban government in concluding the investigation.

The Cuban authorities highly assessed the three visits made by the US specialized agencies ,which have recognized the high professional level of the investigation started by Cuba and its high technical andscientific component, and which, as a preliminary result, concluded that, so far, according to the information available and the data supplied by the United States, there were no evidence of the occurrence ofthe alleged incidents or the causes and the origin of the health disorders reportedby the US diplomats and their relatives.  Neither has it been possible to identify potential perpetrators or persons with motivations, intentions or means to perpetrate this type of actions; nor was it possible to establish the presence of suspicious persons or means at the locations where such facts have been reported or in their vicinity.  The Cuban authorities are not familiar with the equipment or the technology that could be used for that purpose; nor do they have information indicating their presence in the country.

The Ministry of Foreign Affairs categorically rejects any responsibility of the Cuban Government in the alleged incidents and reiterates once again that Cuba has never perpetrated, nor will it ever perpetrate attacks of any sort against diplomatic officials or their relatives, without any exception. Neither has it ever allowed nor will it ever allow its territory to be used by third parties with that purpose.

The Ministry emphasizes that the US Government announced decision to reduce Cuba’s diplomatic staff in Washington without the conclusive results from the investigation and without evidence of the incidents that would be affecting their officials in Cuba has an eminently political character.

The Ministry urges the competent authorities of the US Government not to continue politicizing this matter, which can provoke an undesirable escalation and would rarify and reverse even more bilateral relations, which were already affected by the announcement of a new policy made in June last by President Donald Trump.

The Ministry reiterates Cuba’s disposition to continue fostering a serious and objective cooperation between the authorities of both countries with the purpose of clarifying these facts and conclude the investigation, for which it will be essential to count on the most effective cooperation of the US competent agencies.

Havana, October 3, 2017.

(Cubaminrex)

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