New Cuba Legislation Must Avoid Graveyard & Self-Inflicted Wounds; Seek Support From Four U.S. Senators

The Curse Of The Legislative Graveyard

Why Pursue Self-inflicted Wounds

Challenge To Avoid Cuba = Venezuela + Nicaragua

An Amendment’s Coming; Get In Front Of It

Senators Rubio, Menendez, Cruz & Scott

Home BancShares Mystery Is Achilles Heel

Exporters Need To Be Public

Financial Institutions Need To Be Public 

There is an eighteen-year-old legislative graveyard filled with headstones of initiatives that were “on the cusp” of success.   

But for one brief moment in eighteen years, those legislative initiatives whose fates have been preordained and with headstones engraved in advance absent the date of internment were focused one country: Republic of Cuba.   

Perhaps during the first quarter of 2019, the goal once again will be to change United States law from requiring payment-of-cash-in-advance for exports to the Republic of Cuba to authorizing, but not requiring, exporters to extend payment terms and for financial institutions to provide financing/loans for exports to the Republic of Cuba. 

The Honorable Rick Crawford (R- Arkansas 1st District) wants to avoid the fate of the cemetery.  He can, but he and his supporters need to move past believing that they always have a “pathway forward” and reject those supporters who belittle whom Representative Crawford and his colleagues in the United States Congress will need if the legislative journey is to be successful; including within the Trump Administration.   

Supporters also need to accept the reality of the legislative marketplace with respect to the Republic of Cuba- the country is itself a commodity and supporters and opponents will need to negotiate an acceptable price for legislation to become law.  

Supporters will also need to have at the ready a response to: The government of the Republic of Cuba may not be blamed for weather.  However, the government of the Republic of Cuba can be blamed for not investing (or permitting viable direct foreign investment) in infrastructure to lessen the impact of weather upon the country’s ability to produce agricultural commodities and food products.   

How does Representative Crawford respond to the question from a colleague: Why should the Republic of Cuba have access to payment terms and financing when rather than seek assistance from the Russian Federation to improve consumable infrastructure, it seeks a reported US$50 million to finance the purchase of vehicles for use by the military?  What predicts the government will repay its obligations as contracted when it focuses upon increasing the mobility of the military rather than increasing the mobility of farmers by importing US$50 million in tractors?  The government should be making a choice to lessen its focus upon the military.” 

And, the nearer (economically, commercially and politically) the Republic of Cuba is or is perceived to be to Venezuela, the easier will be a “pathway forward” for members of the United States Congress and for the Trump Administration to disengage from any legislative effort to change United States statutes.   

Separating the Republic of Cuba from Venezuela and from Nicaragua will become increasingly challenging for Members of the United States Congress while becoming less problematic for the Trump Administration to maintain that connectivity due to actions deemed non-democratic by the respective governments as reported by media. 

There is also the impact of the decision by the Trump Administration relating to the implementation of Title III of the 1996 Libertad Act (“Helms-Burton”).  With some restrictions, Title III permits lawsuits in United States Federal Courts against those who are using (“trafficking”) an asset in the Republic of Cuba upon which compensation was not paid to the owner.   

On 16 January 2019, for the first time, Title III of the Libertad Act was suspended for less than six (6) months- as every occupant of the Oval Office has done since the inception of the statute in 1996.  Using forty-five (45) days rather than one hundred and eight days (180) presents a likelihood of an ominous commercial, economic and political landscape for the Republic of Cuba, European Union (EU)-member countries, members of the World Trade Organization (WTO) and members of the United Nations.  Once again, the Trump Administration has used weaponized potentiality to create uncertainty and, thus anxiety.  Precisely the intention.    

“Secretary’s Determination of 45-Day Suspension under Title III of LIBERTAD Act- The Secretary of State reported on January 16, 2019, to the appropriate Congressional committees that, consistent with section 306(c)(2) of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (22 U.S.C. 6021 - 6091) and the authority delegated to the Secretary by the President on January 31, 2013, the Secretary made a determination to suspend for forty-five days beyond February 1, 2019, the right to bring an action under Title III of the Act.  This extension will permit us to conduct a careful review of  the right to bring action under Title III in light of the national interests of the United States and efforts to expedite a transition to democracy in Cuba and include factors such as the Cuban regime’s brutal oppression of human rights and fundamental freedoms and its indefensible support for increasingly authoritarian and corrupt regimes in Venezuela and Nicaragua.  We call upon the international community to strengthen efforts to hold the Cuban government accountable for 60 years of repression of its people.  We encourage any person doing business in Cuba to reconsider whether they are trafficking in confiscated property and abetting this dictatorship.”   

On 17 March 2019 or 18 March 2019, likely that a lawyer representing a client will be entering a Federal Court in Miami, Florida, Newark, New Jersey, and Tampa, Florida to file a lawsuit against someone- company or person. 

There may be an opening for a mediation to resolve the certified claims; the private sector has shared a proposal with the Trump Administration: https://www.cubatrade.org/blog/2018/11/18/lojx6s6oe5epgonh6mub855d5ak143 

If Title III lawsuits are permitted, likely will be little legislative appetite to simultaneously promote legislation that will be deemed by detractors as beneficial to the government of the Republic of Cuba rather than pressure the government of the Republic of Cuba to resolve the certified claims. 

Lack Of Details From Exporters 

There is no lack of support for legislation from organizations.  However, some organizations (and their members) refuse to take positions with respect to specific components of legislation and regulations relating to the transaction process.  For example, providing payment terms, providing financing, and implementing Direct Correspondent Banking Agreements (DCBA).   

There is a lack of credibility when an organization supports legislation yet none of the members of the organization will support the legislation by specifically sharing how they would use the legislation if it became law. 

There is a lack of support by individual exporters- and having those exporters be specific as to how they would use the proposed legislation if that legislation became law. 

The lack of public support from specific exporting companies stating on-the-record (at hearings, in media releases, etc.) that they would today provide payment terms- and what those payment terms would be, to Republic of Cuba government-operated entities is harmful to any legislative effort.  

Will the exporter provide financing based upon the credit report provided by Republic of Cuba government-operated Empresa Cubana Importadora Alimentos (Alimport), under the auspice of the Ministry of Foreign Trade of Cuba (MINCEX)? 

Alimport has received up to two years to make payment for rice imported from Vietnam; and Alimport (and all Republic of Cuba government-operated entities) generally seek a minimum of 180-days with a preference for 360-days to make payment for imports.  

Important to note that in 1999 and 2000, United States exporters opposed including a provision within the Trade Sanctions Reform and Export Enhancement Act (TSREEA) that would authorize payment terms for agricultural commodity and food product exports from the United States to the Republic of Cuba.   

There were two reasons: First, United States exporters believed that if payment terms were authorized in the TSREEA, the first delay or default by any Republic of Cuba government-operated entity reported by the media would be disastrous for all exporters- and would likely result in an immediate halt of payment terms; and members of the United States Congress would have a choir of recrimination singing “I Told You So.”  Second, although the lack of payment terms might result in less revenues from exports to the Republic of Cuba, there would be no risk to United States exporters or to the Republic of Cuba; and the Republic of Cuba could be presented (and it has been for eighteen years) to naysayers as the “safest export market in the world for United States companies.”  Absent payment terms, the Republic of Cuba would be required to make purchases from the United States based upon quality of product and time of delivery for product along with whether such purchases would influence the political process in the United States.  

After eighteen (18) years of payment-of-cash-in-advance for purchases, the Republic of Cuba could make a legitimate argument that authorizing payment terms, even with limited “toe-in-the-water” transactions, would be reasonable. 

Philosophically, United States companies believe that their owners and managers should determine credit worthiness of a potential customer rather than the United States government.   

Lack Of Details From Financial Institutions 

There continues to be a lack of public support from financial institutions stating on-the-record (at hearings, in media releases, etc.) that they would today provide loans to Republic of Cuba government-operated entities based upon the credit profiles of those entities.   

Would today Greenwich Village, Colorado-based CoBank or New York, New York-based J.P. Morgan Chase & Co. provide financing to United States companies who seek to export agricultural commodities and food products to the Republic of Cuba?  Will CoBank or J.P. Morgan Chase & Co. provide financing based upon the financial statements provided by Republic of Cuba government-operated Empresa Cubana Importadora Alimentos (Alimport), under the auspice of the Ministry of Foreign Trade of Cuba (MINCEX)?  Will Alimport provide financial statements?  Will Republic of Cuba government-operated financial institutions provide financial statements? 

For perspective, review an article referencing a 14 September 2016 hearing before the Committee on Agriculture of the United States House of Representatives.  Significant to note that the individual quoted in an exchange with Representative Crawford is now Senior Director for Western Hemisphere Affairs at the National Security Council (NSC) in The White House: 

https://www.cubatrade.org/blog/2016/9/17/from-inside-us-trade-lawmaker-pledges-to-push-ahead-on-cuba-trade-bill-after-house-hearing?rq=cobank 

When New York, New York-based The Trump Organization transfers funds to the United States from one of the seven countries which host four of its hotels and seven of its golf clubs, The Trump Organization does not use a third country; it uses a straight line- a financial institution electronically transfers the funds from Canada, Dubai, Indonesia, Ireland or the United Kingdom to New York City.  The Trump Organization does not want to waste time or waste money.  The Trump Organization uses financial institutions with direct correspondent banking accounts.    

One United States-based financial institution has a partial DCBA with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA, created by Corporate Charter No. 49 on 29 October 1993 and commenced operation on 3 January 1994. 

However, because BICSA does not have an account with the United States-based financial institution, a fully-operational direct correspondent relationship does not exist, and a multi-country triangular payment process continues- financial institutions in third countries have received fees on more than US$5.8 billion in transactions during the last eighteen years.  

In 2015, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with BICSA.  Stonegate Bank provides commercial operating accounts for the Embassy of the Republic of Cuba in Washington, DC and the Permanent Mission of the Republic of Cuba to the United Nations in New York City; the financial institution also handles other types of OFAC-authorized transactions. 

In September 2017, Stonegate Bank was purchased by Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion) through its Centennial Bank subsidiary.   

The Obama Administration did not authorize BICSA under a general OFAC license or reportedly in the OFAC license issued to Stonegate Bank for it to have an account with Stonegate Bank, so Stonegate Bank has processed some transactions through Panama City, Panama-based Multibank, which has dealings with the Republic of Cuba.   

One signature from Ms. Andrea Gacki, Director of the OFAC, can permit two-way direct correspondent transactions rather than the three-way transaction process that has existed for seventeen years.   

The augmentation of the OFAC license would be consistent with the export-focused mandates from the Trump Administration to the United States Department of Agriculture (USDA) and United States Department of Commerce (USDOC). 

Previously, officials within the OFAC and United States Department of State shared that if a license application were submitted, the license application would likely be approved. 

That license would immediately benefit United States agricultural commodity and food product exporters from the first transaction- United States exporters will get paid more transparently, safer, faster and with less cost for each payment they receive from the Republic of Cuba.   

Ports in Alabama, Florida, Georgia, Louisiana, Mississippi, Texas and Virginia would also benefit by a more efficient transaction process and vessel departure schedule as United States exporters would have confirmation of payment delivery in a more consistent manner- paperwork delays would be fewer due to not having to await documentation from outside of the United States.  

To date, Home BancShares has refused to disclose the reason(s) it has not sought authorization from the OFAC for BICSA to have an account with Home BancShares- which is also an “Achilles heel” for any legislation in the United States Congress relating to changing TSREEA payment terms from cash-in-advance to authorizing payment terms and financing for agricultural commodity and food product transactions with the Republic of Cuba. 

If each financial institution had an account with the other, the implementation of direct correspondent banking services would be operable- meaning that third-country financial institutions would no longer receive a commission for each United States-Republic of Cuba transaction.  Direct correspondent banking saves money, saves time, is more transparent, and more safe.   

Ironically, the four (4) members of the House of Representatives and two (2) members of the United States Senate from Arkansas (exporter of poultry, rice, etc.) have not demonstrated an interest in public engagement with Home BancShares to implement DCBA.       

Amendment Is Coming; Accept It Early  

Any proposed legislation to authorize payment terms and financing for exports of agricultural commodities and food products from the United States to the Republic of Cuba should include a prohibition provision relating to the Revolutionary Armed Forces of the Republic of Cuba (FAR) because The Honorable Marco Rubio (R- Florida), The Honorable Robert Menendez (D- New Jersey) and The Honorable Ted Cruz (R- Texas), each of Cuban descent, along with The Honorable Rick Scott (R- Florida) will seek to add, and succeed in adding an amendment to any legislation. 

If advocates believe that they can “roll” these four members of the United States Senate, they are delusional.  The most effective strategy is to negotiate early rather than risk an amendment, secondary amendment or “killer amendment.” 

The Republic of Cuba-related provision within the recently-enacted Farm Bill became law, somewhat ironically, because of one (1) United States Senator representing the State of Florida- who initially opposed the provision, but supported the provision when language was added which prohibited the use of United States taxpayer funds with entities in the Republic of Cuba controlled by the military.  The United States business community did not oppose that prohibition. 

The Farm Bill includes a provision authorizing the use in the Republic of Cuba of funding from the United States Department of Agriculture (USDA) for Market Access Program (MAP) and Foreign Market Development (FMD).  

The provision in the Farm Bill was co-authored by two members of the United States Senate: The Honorable Heidi Heitkamp (D- ND), who lost her 2018 re-election, and Senator Rubio.  

Senator Heitkamp agreed to include language submitted by Senator Rubio that would prohibit MAP and FMD funding to be used with Republic of Cuba entities that are controlled by the FAR, consistent with policies of the Trump Administration.   

The specific language: “(d) Cuba. — Notwithstanding section 908 of the Trade Sanctions Reform and Export Enhancement Act of 2000 ( 22 U.S.C. 7207 ) or any other provision of law, funds made available under this section may be used to carry out the programs authorized under sections 222 and 223 in Cuba. Funds may not be used as described in the previous sentence in contravention with directives set forth under the National Security Presidential Memorandum entitled ‘Strengthening the Policy of the United States Toward Cuba’ issued by the President on June 16, 2017, during the period in which that memorandum is in effect. 

Current Statistics 

United States agricultural commodity and food product exports to the Republic of Cuba continue to decline; 16.1% thus far in 2018 compared to the same period in 2017- and have done so when commodity inventories have been high, commodity prices have been low and there would have been political value in purchases during a time of pain for United States farmers.  Healthcare product exports have also declined; 44.1% thus far in 2018 compared to the same period in 2017. 

Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) exports (agricultural commodities and food products) since first use by the Republic of Cuba in December 2001 are US$5,849,925,838.00 through October 2018 (data for November 2018 delayed due to the inability of the United States government to publish export data): Clinton Administration: US$0.00. Bush Administration: US$2,697,501,426.00. Obama Administration: US$2,700,145,225.00. Trump Administration: US$452,279,187.00.  TSREEA requires that payments be made on a cash-in-advance basis; no other payment terms are permitted. 

LINK To Complete Analysis (including reference article) In PDF Format

Article For Reference 

https://www.cubatrade.org/blog/2016/9/17/from-inside-us-trade-lawmaker-pledges-to-push-ahead-on-cuba-trade-bill-after-house-hearing?rq=cobank 

Inside US Trade

Arlington, VA

14 September 2016

Lawmaker Pledges To Push Ahead On Cuba Trade Bill After House Hearing 

A Republican lawmaker from Arkansas will continue to push forward on his bill allowing private companies to extend credit to Cuba to purchase U.S. agricultural products following a Sept. 14 House Agriculture Committee hearing on trade with that country. 

Rep. Rick Crawford indicated during the hearing on trade with Cuba that he is willing to meet with opponents to discuss changes to a bill allowing the issuing of private credit to Cuba to purchase agricultural products from the United States. A staffer in Crawford's office said he's hopeful there's enough support to move the bill during a potential lame-duck session later this year, but added the congressman will offer the bill again next year if it fails to get a vote this year. 

The hearing comes after Crawford was promised a path forward for his bill in exchange for not proposing it as an amendment to a House financial services appropriations bill in July. That promise included a committee markup for the stand-alone bill. 

Members raised several issues with Crawford's bill, H.R. 3687, including that private money from the U.S. will go to the Castro brothers or the Cuban military; that U.S. agricultural products will be traded through ports and property seized from American companies by the Cuban government; and that the U.S. will not see enough economic concessions in return for easing the embargo. 

Agriculture Committee Chairman Michael Conaway (R-TX) and ranking member Collin Peterson (D-MN) both said they support the legislation. A handful of other members, both Republicans and Democrats, either specifically said they back Crawford's bill, or want their states' agricultural industries to have improved access to Cuba. 

Rep. Steve King (R-IA) was one of the most vocal opponents to the legislation on the committee, saying the bill does not create new demand for U.S. products, and instead the U.S. would supplant imports from another market. Critics also said the bill only shifts existing U.S. exports from one market to another. 

Crawford indicated he is willing to work with opponents of his bill to try strike a compromise on the language. 

During an exchange with witness Mauricio Claver-Carone, executive director of Cuba Democracy Advocates, Crawford asked if the anti-Castro activist was willing to continue discussing the legislation outside the hearing. Claver-Carone said he would be open to such discussions and reiterated that he believes the bill needs stronger language ensuring private credit does not end up in the hands of the Castro government, and is instead issued to private citizens and business. 

Such a policy would force Cuba to make significant economic changes, especially since all imports currently go through Alimport, a government-owned entity, and not through private companies. 

“With all the sincerity, would you be willing to continue the dialogue to bring this to the satisfaction to the folks in south Florida? If we can do that, we can move forward to reaching an agreement,” Crawford said. 

Claver-Carone cautioned the committee against voting for the bill in response to a drastic decrease in U.S. agricultural exports to Cuba since 2009. While several nations including China, Korea and Brazil allow the extension of credit that is backed by their respective governments, which gives their agricultural industries an advantage over the U.S., he added Cuba has a history of trying to influence foreign lawmakers through spending and changing its import practices to target specific congressional districts or industries. He added Cuba also has a history of failing to pay its bills on time. 

If the U.S. does scale back elements of its existing trade embargo, Claver-Carone said, it needs to see concrete changes in Cuban policies, such as lifting a current prohibition on U.S. companies working directly with privately owned businesses. 

“The Castro regime does not allow that currently,” Claver-Carone said. “We want to encourage that -- private ownership. If Congress sent that message to the regime, 'please allow your people to be independent entrepreneurs, have property rights and to trade freely with the United States'… if were going to export our principles, we should do it under the conditions and terms that are consistent with those principles.” 

A key question that was not answered during the hearing is whether private export companies or banks are willing to extend credit to Cuba. 

Witness Karen Lowe, senior vice president and agriculture export finance division head at CoBank ACB, a company that provides agriculture credit, said anyone issuing credit will want to know whether they are working with Alimport or another entity. U.S. companies will also want more access to financial and credit information, especially because any credit issued will not be backed by the U.S. government. 

That is a key difference between the U.S. and other governments, Lowe pointed out. Other governments have backed the credit their private industries extended to Cuba. 

“In the very short-term, the impact this bill has will be somewhat limited, but it does create a level playing field,” Lowe said. “More things need to happen -- particularly with the credit worthiness of the importing agency in Cuba.” 

John Kavulich, president of the U.S.-Cuba Trade and Economic Council, a group that analyzes U.S.-Cuban policies, said nothing new came out of the hearing regarding U.S.-Cuban relations. Kavulich maintained his position that lawmakers are wasting their time focusing on Crawford's bill, especially since no legislation on Cuba has passed in nearly 16 years. House Speaker Paul Ryan (R-WI) and key members of the Senate have also opposed easing the embargo. 

Instead, Kavulich said more pressure should be directed at the Obama administration to issue changes to the embargo as President Obama prepares to leave office in January, especially since Cuba will be a low priority under a new administration. 

It will also be easier for lawmakers to wait until 2018, when Raul Castro is expected to step down from power, in order to build support for any Cuba-centric legislation. Current law limits what can be done under the embargo as long as the Castros remain in power. 

“For many members of Congress, there are only two people that live on that 800-mile-long archipelago, and they're both named Castro,” Kavulich said, referring to brothers Raul and Fidel Castro, who have run the one-party communist state for decades. “That makes it easier for some members of Congress who are just vehemently opposed to what the Castros stand for, to help 11.3 million people whose names are not Castro.” -- Nate Robson

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Title III Suspended For 45 Days; First Time Less Than 6 Months. Omnious For Cuba

For the first time, Title III of the Libertad Act has been suspended for less than six months.  Using forty-five (45) days presents a likelihood of an ominous commercial, economic and political landscape for the Republic of Cuba, European Union (EU)-member countries, members of the World Trade Organization (WTO) and members of the United Nations.  Once again, the Trump Administration has used weaponized potentiality to create uncertainty and, thus anxiety.  Precisely the intention.    

Forty-Five days from today, quite likely that a lawyer representing a client will be entering  Federal Court in Miami, Florida, Newark, New Jersey, and Tampa, Florida, to file a lawsuit against someone- company or person.

There may be an opening for a mediation to resolve the certified claims; the private sector has shared a proposal with the Trump Administration: https://www.cubatrade.org/blog/2018/11/18/lojx6s6oe5epgonh6mub855d5ak143

For Immediate Release  

MEDIA NOTE

January 16, 2019  

Secretary’s Determination of 45-Day Suspension under Title III of LIBERTAD Act   

“The Secretary of State reported on January 16, 2019, to the appropriate Congressional committees that, consistent with section 306(c)(2) of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (22 U.S.C. 6021 - 6091) and the authority delegated to the Secretary by the President on January 31, 2013, the Secretary made a determination to suspend for forty-five days beyond February 1, 2019, the right to bring an action under Title III of the Act.  This extension will permit us to conduct a careful review of  the right to bring action under Title III in light of the national interests of the United States and efforts to expedite a transition to democracy in Cuba and include factors such as the Cuban regime’s brutal oppression of human rights and fundamental freedoms and its indefensible support for increasingly authoritarian and corrupt regimes in Venezuela and Nicaragua.   

We call upon the international community to strengthen efforts to hold the Cuban government accountable for 60 years of repression of its people.  We encourage any person doing business in Cuba to reconsider whether they are trafficking in confiscated property and abetting this dictatorship.” 

LINK To Text Of Libertad Act Of 1996

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White House Expected Today To Decide Upon Implementation Of Title III Of Helms-Burton

Decision Today For Of Title III Of The Libertad Act Of 1996 

The Trump Administration is to report whether to continue a suspension of Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (“Libertad” or “Helms-Burton”).  Codified in Title 22, Sections 6021-6091 of the U.S. Code.  P.L. 104-114.    

The most important question for the Trump Administration- Is a policy decision crafted to resolve an issue or maintain an issue; create disruption or bring about a resolution?  When mediation is an option, should blunt force trauma be the preferred method of engagement?  

An outline [LINK] for mediation to compensate the 5,913 certified claimants has been presented to the Trump Administration. 

Perhaps, the Trump Administration may issue a sharply-worded conditional signing statement in conjunction with a further six-month suspension of Title III.  Or, partially or fully permit the implementation of Title III. 

The Libertad Act is known widely as “Helms-Burton” for its authors: The Honorable Jesse Helms (R- North Carolina) of the United States Senate and The Honorable Dan Burton (R- Indiana) of the United States House of Representatives.  Senator Helms retired in 2003 and died in 2008 and Representative Burton retired in 2013. 

Title III authorizes individuals subject to United States jurisdiction as of 13 March 1996 to file lawsuits in United States District Courts against individuals and companies that are using (“trafficking”) in property located in the Republic of Cuba which was expropriated without compensation by the government of the Republic of Cuba.  Unique to the statute is the lawsuits may not be dismissed.   

For purposes of legal trajectory, a lawsuit could be filed in a United States District Court (likely primarily in Miami, Florida and Newark, New Jersey where the majority of individuals of Cuban descent reside).  If a lawsuit is lost, the appeal would be to the United States Circuit Court of Appeals.  If that appeal is lost, the next venue would be in the United States Supreme Court. 

Every six months, the Libertad Act requires the President to either suspend the implementation of Title III or permit the implementation of Title III.  Since the inception of the Libertad Act, every President has suspended the implementation of Title III, including The Honorable Donald Trump, President of the United States, on three occasions (2017, 2018, and 2018).  The current suspension expires on 31 January 2019.   

The President, or his designee (the United States Secretary of State since 2013), must notify relevant committees of the United States Congress fifteen (15) days prior to a decision to suspend or implement.  Those committees are the United States House Committee on Foreign Affairs, United States House Committee on Appropriations, United States Senate Committee on Foreign Relations, United States Senate Committee on Appropriations. 

From the text of the statute: "(2) Additional suspensions.--The President may suspend the effective date under subsection (a) for additional periods of not more than 6 months each, each of which shall begin on the day after the last day of the period during which a suspension is in effect under this subsection, if the President determines and reports in writing to the appropriate congressional committees at least 15 days before the date on which the additional suspension is to begin that the suspension is necessary to the national interests of the United States and will expedite a transition to democracy in Cuba." 

The Certified Claims 

There are 8,821 claims of which 5,913 awards were certified by the United States Foreign Claims Settlement Commission (USFCSC- https://www.justice.gov/fcsc) at the United States Department of Justice which are valued at US$1,902,202,284.95.  

The first asset to be expropriated by the government of the Republic of Cuba was an oil refinery in 1960 owned by White Plains, New York-based Texaco, Inc., now a subsidiary of San Ramon, California-based Chevron Corporation (USFCSC: CU-1331/CU-1332/CU-1333 valued at US$56,196,422.73).

The largest certified claim (Cuban Electric Company) valued at US$267,568,413.62 is controlled by Boca Raton, Florida-based Office Depot, Inc.  The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is controlled by Bethesda, Maryland-based Marriott International.  The smallest certified claim is by Sara W. Fishman in the amount of US$1.00 with reference to the Cuban-Venezuelan Oil Voting Trust. 

The two (2) largest certified claims total US$449,377,207.76, representing 24% of the total value of the certified claims.  Thirty (30) certified claimants hold 56% of the total value of the certified claims.  This concentration of value creates an efficient pathway towards a settlement.   

The USFCSC permitted interest to be accrued in the amount of 6% per annum; with the current value approximately US$9 billion

The Foreign Claims Settlement Commission of the United States (FCSC) is a quasi-judicial, independent agency within the Department of Justice which adjudicates claims of U.S. nationals against foreign governments, under specific jurisdiction conferred by Congress, pursuant to international claims settlement agreements, or at the request of the Secretary of State. Funds for payment of the Commission's awards are derived from congressional appropriations, international claims settlements, or liquidation of foreign assets in the United States by the Departments of Justice and the Treasury.” 

Certified claimants with current or recent activity within the Republic of Cuba include: New York, New York-based Colgate-Palmolive, Moline, Illinois-based Deere & Company, Atlanta, Georgia-based Delta Air Lines, Boston, Massachusetts-based General Electric, Bethesda, Maryland-based Marriott International, Chicago, Illinois-based University of Chicago, Denver, Colorado-based Western Union and New Haven, Connecticut-based Yale University among others. 

The Obama Administration deemed a resolution of the certified claims as a “top priority,” but had only three (3) discussions (not negotiations) with representatives of the government of the Republic of Cuba in 2,923 days (766 days if calculated from 17 December 2014); this was woefully inadequate.  President Trump can correct this failure of leadership. 

Options 

Continuing suspension of Title III will preserve for President Trump his ability to negotiate a settlement on behalf of the 5,913 certified claimants- United States citizens and United States companies.  Any effort to constrain the President from directly or indirectly guiding his negotiating team erodes the unique powers of the Executive Branch to conduct foreign policy.  And, negotiating a settlement based upon US$1.9 billion or US$8 billion is far less complicated than attempting to bridge restitution for what could approach US$100 billion or more by those who do not have certified claims if Title III is enabled. 

If Title III is not suspended (or partially suspended) there would not only be a disruption to the ability of President Trump to negotiate a settlement on behalf of the certified claimants during his first term, but the disruption would extend through his second term and through the terms of his successors.  The reason would be potentially hundreds of thousands of claims that would become eligible to be heard by United States Federal Courts.  Most impactful, is Title III prohibits the dismissal of claims proceedings in United States Federal Courts once they are filed.  As most of the proceedings would be filed in the State of Florida, the impact upon the judicial process would be substantial, crippling; and would result in more non-related significant cases being delayed from adjudication.  

Implementation of Title III would prohibit President Trump from engaging his DNA- to negotiate a deal.  And, this prohibition would not solely be for the remaining 735 days of President Trump’s first term, nor the 1,460 days of this second term… it would likely be in perpetuity as the current and future government of the Republic of Cuba would never have the financial capacity to absorb the judgements issued by United States Federal Courts- even if they were inclined to do so. 

Unlike his predecessors, President Trump should issue a sharply-worded conditional signing statement in conjunction with a further six-month suspension of Title III. 

The signing statement should create a six-month “window of opportunity” within which The White House staff would engage directly with representatives of the thirty (30) certified claimants with the largest values of assets expropriated without compensation.  A third-party United States-based negotiator would be retained to represent the interests of the certified claimants to the government of the Republic of Cuba.   

LINK To PDF

Blog Post Links: 

https://www.cubatrade.org/blog/2018/11/18/lojx6s6oe5epgonh6mub855d5ak143 

https://www.cubatrade.org/blog/2017/7/11/memo-from-nsc-to-potus-this-week-for-title-iii-suspension-capitulate-incapacitate-or-negotiate?rq=Title%20III 

http://kavulich-john.squarespace.com/blog/2017/2/6/update-on-title-three-suspension-of-libertad-act-helms-burton 

http://www.cubatrade.org/blog/2017/1/12/h2uudthnn6be8hfgxifqsrdo4aqpb0?rq=claims

Will Trump Administration Permit Marriott To Purchase Supplies From New Military-Affiliated Company In Cuba?

Will The Trump Administration Object To Marriott Hotels Purchasing Products From New Hotel Supply Company Affiliated With Cuba’s Military? 

The Same Company Owns Hotel Marriott Manages And The Hotel It Will Manage 

Palma de Mallorca, Spain-based Iberostar Group has commenced operation of Logistica Hotelera del Caribe S.A. (LHC), a 32,000 square foot hotel product distribution center located within the Mariel Special Development Zone (ZEDM), forty minutes south-west of the city of Havana, Republic of Cuba.  Link to Iberostar Media Release 

LHC is providing products to the nine (9) properties in the Republic of Cuba that are managed by Iberostar Group.  Eventually, LHC will offer products to hotels throughout the Republic of Cuba.  Initially, LHC has approximately five hundred (500) products from fifty (50) suppliers

The partner in LHC is A.T. Comercial S.A., a subentity of Grupo de Administracion Empresarial S.A. (Enterprise Management Group), or GAESA, which is, in turn, controlled by the controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR).  

Managed by the United States Department of State: “The Cuba Restricted List contains entities and subentities controlled by the Cuban military, intelligence, and security services or personnel. Direct financial transactions with these entities and subentities are generally prohibited because they would disproportionately benefit those services or personnel at the expense of the Cuban people or private enterprise in Cuba. For more information on the Cuba Restricted List, please refer to Treasury regulations at 31 Code of Federal Regulations (CFR) part 515, here, and to Commerce regulations at 15 CFR parts 730-774, here.  Link To List: https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/287349.htm”  A.T. Comercial S.A. is on the Cuba Restricted List. 

From Iberostar: 

Question: Does LHC also sell its products to non-Iberostar-managed properties in the Republic of Cuba?  Meaning, can Starwood, Accor, Sol Melia, Gaviota, etc. also purchase products from LHC at the same prices as Iberostar properties?  

Yes, although in a first phase we will focus on hotels managed by Iberostar.  The reason is to guarantee the correct functioning of the operation.  

Question: May I have a list of the 500 products and 50 suppliers to LHC?  

The importer can import any item a hotel requires.  Nowadays, it has focused on the improvement of buffets, working with suppliers that the Iberostar Group traditionally works.  

Will the United States Department of State authorize Bethesda, Maryland-based Marriott International (2018 revenues exceeded US$23 billion), whose subsidiary manages one property in the Republic of Cuba and will add a property in December 2019, to purchase products from LHC?   

Since Gaviota S.A. owns both properties in the Republic of Cuba and Gaviota S.A. is a shareholder in LHC, are activities with LHC considered “grandfathered” and thus permitted due to shared ownership?  Will LHC be permitted to import hotel products (including food products and agricultural commodities) from the United States for use exclusively at Marriott/Starwood-managed properties or for any property in the Republic of Cuba? 

Since 2016, Marriott International, initially through Stamford, Connecticut-based Starwood Hotels and Resorts Worldwide LLC which was acquired by Marriott International in 2016, has managed the 186-room Four Points By Sheraton Havana in the Republic of Cuba.  The property is owned by Gaviota S.A.   

In March 2016, Marriott International reported that the company would manage the 83-room Hotel Inglaterra, also owned by Gaviota S.A.  Subsequently, the company reported that the property would be under management in December 2017 and then in December 2019.  No reason(s) have been provided for the thirty-six (36) month delay.  The Hotel Inglaterra will be amongst the company's 122-property The Luxury Collection.  

On 16 March 2016, the company reported signing a Letter of Intent to manage a third property, the 27-room Hotel Santa Isabel, also owned by Gaviota S.A.  There has been no mention of the property by the company since the 16 March 2016 announcement.   

Due to the acquisition of Starwood Hotels and Resorts Worldwide, Marriott International gained control of certified claims in the Republic of Cuba.  Marriott International is now the second-largest certified claimant against the government of the Republic of Cuba.

LINK To PDF

MLB Might Consider Three Options To Obtain Support For Agreement With Cuba

New York, New York-based Major League Baseball (MLB) reported an agreement with Republic of Cuba-based Federacion Cubana de Beisbol (FCB).  Terms of the agreement include payments to FCB.   

Members of the United States Congress, the most notable being The Honorable Marco Rubio (R- Florida), and the Trump Administration have expressed displeasure with the agreement.   

The displeasure is less about the usefulness of the agreement than about the terms of the agreement (payment of release fees to FCB).  There are options: 

First.  MLB believes that the agreement is permitted under general license provisions implemented during the Obama Administration by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC.  Those who oppose the agreement believe that the agreement is not permissible within the general license guidelines; and, even if it was permitted during the Obama Administration, such an agreement should not be permitted under the Trump Administration as the agreement as written is now “not consistent with United States policy.”  MLB should reformat the agreement and seek a two-year (which is normal) license from the OFAC.  

Second.  The MLB agreement is for two years (ending on 31 October 2021).  The annual release fee payments to FCB have been speculated to be from US$2 million to US$25 million to US$50 million to US$100 million.  The lower value estimates seem reasonable.  Instead of MLB making payment to FCB in currency, FCB would provide MLB with a shopping list of equipment equal to the value of the payments due.  This would satisfy those who oppose the agreement- because the government of the Republic of Cuba would not have access to currency.  By using the purchasing power of MLB, the FCB would be receiving the lowest pricing for equipment- thus maximizing the value of every payment.  Members of the United States Congress and the Trump Administration would be supportive of an agreement that provides benefits to United States sporting equipment-focused companies. 

“The Release Fee owed to the FCB by the MLB Club that signs an FCB Player is calculated using the same formula embodied in MLB's agreements with the NPB, KBO, and CPBL (i.e., between 15% and 20% of the total guaranteed value for Major League contracts, and 25% of the signing bonus for Minor League contracts). In addition, Supplemental Release Fees may be owed if a contract with an FCB Player contains bonuses, escalators, or options that are later triggered. The Release Fee (and any Supplemental Release Fee) paid by the MLB Club is in addition to the compensation agreed to by the MLB Club to the FCB Player in the player's contract, which will be paid by the MLB Club directly to the FCB Player.” 

One benefit of using product as payment rather than currency as payment is avoiding the use of a third-country financial institution for MLB to send payments to FCB; currently there are not operational direct correspondent banking agreements which would permit direct electronic transfers from the United States to the Republic of Cuba.  Thus, third-country financial institutions receive fees for every transaction.  Members of the United States Congress and the Trump Administration oppose third-countries unnecessarily benefiting from bilateral commercial transactions.  

Third.  MLB would agree to publish real-time data as to when a payment is made to FCB, the value of payment, and what products have been purchased with the payments.  

LINK To PDF

LINK To English Text Of MLB Agreement

LINK to Spanish Text Of MLB Agreement

Blog Post: https://www.cubatrade.org/blog/2018/12/20/uppblm8km7qmk28ly7ilzjz7xgty54

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The Trump Organization Uses Direct Correspondent Banking In Five Countries

When New York, New York-based The Trump Organization transfers funds to the United States from one of the five countries which host four of its hotels and seven of its golf clubs, The Trump Organization does not use a third country; it uses a straight line- a financial institution electronically transfers the funds from Canada, Dubai, Indonesia, Ireland or the United Kingdom to New York City.  The Trump Organization does not want to waste time or waste money.  The Trump Organization uses financial institutions with direct correspondent banking accounts.   

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Southwest Airlines Abandons Effort For Another Route To Cuba; Will Focus On Hawaii

Dallas, Texas-based Southwest Airlines has rescinded its request to the United States Department of Transportation (USDOT) for an additional route from the United States to the Republic of Cuba.

LINK To Letter From Southwest Airlines To USDOT

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Updates To List Of U.S. Companies With A Presence In Cuba

U.S. Companies With A Presence In Cuba Since 17 December 2014

Eight Sales Offices

One Hotel Management Contract

One Healthcare Joint Venture

No Manufacturing/Assembly Operations

Licenses/Authorizations Issued By OFAC/BIS/OLA 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 sixty (60) listed companies with a presence 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).

LINK To List

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FedEx Abandons 3-Year Negotiations For Direct Service To Cuba

FedEx On 14 December 2018: 

“FedEx will not be filing for an extension of the start-up date for U.S. – Cuba cargo air service between Miami and Varadero (VRA.) We are evaluating alternative all-cargo service options to Cuba.” 

FedEx On 17 December 2018

“FedEx is returning its five weekly frequencies for Miami-Matanzas/Varadero air service, effective immediately, as it evaluates alternative all-cargo service options to Cuba.”

 Link To Text Of FedEx Letter To USDOT

Bloomberg News

New York, New York

2 January 2019 

(Bloomberg) -- FedEx Corp. dropped a plan to begin cargo flights to Cuba, as an opening between the U.S. and the communist country has foundered. 

The courier “will not be filing for an extension of the startup date for U.S.– Cuba cargo air service between Miami and Varadero,” FedEx said in a statement Wednesday. The company is abandoning its right to fly five weekly frequencies and evaluating “alternative all-cargo service options to Cuba,” according to a letter to the U.S. Department of Transportation. 

FedEx’s withdrawal ends more than two years of effort to start service to Cuba, which began as former President Barack Obama sought to normalize ties with the island. Relations have chilled under President Donald Trump, whose administration enacted new restrictions in 2017 on Americans traveling to Cuba and on the ability to do business with a list of government-controlled businesses. 

The Memphis, Tennessee-based company won U.S. approval for cargo flights to Cuba in 2016. The following year, FedEx cited a series of obstacles to starting the service, including finding local partners and securing airport ground services. Cuba currently is listed by the carrier as among the countries it doesn’t serve.

 

Air Caro News

Surrey, United Kingdom

3 January 2019 

FedEx has dropped plans to start a five-times-a-week freighter service between Miami and Matanzas/Varadero in Cuba.  

In a letter to the US Department of Transportation the express giant said it is returning its five-weekly frequencies "effective immediately" as it evaluates alternative all-cargo service options to Cuba.

The express firm had applied for several extension to the stipulated start-up date of services as it struggled to secure providers of air operation support services, Customs clearance and ground delivery.  

"The company must ensure these service providers would appropriately complement the express delivery services for which FedEx is world-renowned while simultaneously remaining within the limits of the existing, relevant US and Cuban laws, regulations and policies," it said in its latest extension request, dated June 14.  

FedEx was originally given permission in July 2016 to launch services between Cuba and the US, with a specified start date of April 2017.  

Relations between the US and Cuba have cooled since then after President Barack Obama, who sought to build a closer relationship with the country, left office. His successor, President Donald Trump, has brought in tighter controls on doing business in Cuba.  

LINK to previous post:

https://www.cubatrade.org/blog/2018/12/15/failure-of-agreement-between-fedex-amp-cuba-is-a-problematic-and-oft-repeated-symbol

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BNDES In Brazil Details Cuba Debt From Port Of Mariel

From BNDES (2 January 2019): 

We clarify that, through its lines of support for the commercialization of goods and services abroad, the BNDES does not finance projects in other countries, but exports of goods and services produced in Brazil, aiming at increasing the competitiveness of Brazilian companies, the generation of employment and income in the country, and the inflow of foreign exchange (contributing to the improvement, among other indicators, of the trade balance).

In any of the export support modalities, there is no remittance of funds abroad. The disbursements of funds are made in Reais (Brazilian currency), in Brazil, directly to the Brazilian exporter, based on the exports actually carried out and proven. The importer, when receiving the goods and services exported by the Brazilian company, instead of making the cash payment, direct to the exporter, recognizes the debt corresponding to the goods and services exported and authorizes BNDES to disburse the resources to the exporter, in his name in Reais and in Brazil. In disbursing the funds to the exporter, the BNDES becomes the creditor of the importer, who will repay the debt to BNDES, as disciplined in the financing agreement.

Five financing agreements were signed between the BNDES and the Republic of Cuba (the debtor of the operations), with the exporter, the Construction and Infrastructure Company (COI), a subsidiary of Construtora Norberto Odebrecht, the financing of exports of engineering goods and services to the Port of Mariel in Cuba, as described below:

Tranche 1: US$43,435,000.00 with annual interest 6.91%

Tranche 2: US$108,715,000.00 with annual interest 4.83%

Tranche 3: US$150,000,000.00 with annual interest 4.68%

Tranche 4: US$150,000,000.00 with annual interest 4.44%

Tranche 5: US$229,910,550.00 with annual interest 5.06%

Total: US$682,060,550.00

As mentioned in the previous response, financial collaboration contracts are denominated in US dollars. It is worth noting once again that, once Brazilian exports have been made and proven, the BNDES proceeds with the release of resources in Reais, in Brazil, directly to the Brazilian exporting agent.

The financing operations related to the Port of Mariel are intended to enable the export of Brazilian goods and services, within the scope of the BNDES-Exim Post-Shipment Financing Line, buyer's credit modality, to be used in the expansion and modernization works of the Port of Mariel and its access infrastructure.

Additionally, we would like to inform you that all export financing of goods and services for the construction of the Port of Mariel is guaranteed by the Export Credit Insurance (SCE), with BNDES being the beneficiary, granted by the Federal Government, through the International Affairs - SAIN of the Ministry of Finance, with funds from the Export Guarantee Fund (FGE).

It is important to note that the Export Credit Insurance is granted upon payment of a premium to the Union, whose costs are borne by the debtor in the Financing Agreement. In addition, we clarify that the SCE's coverage of exports financed by the BNDES is approved, for each operation, by the Export Financing and Guarantee Committee (COFIG), a collegiate body part of the Foreign Trade Chamber of the Presidency of the Republic -CAMEX.

There are portions of export financing for the Port of Mariel in arrears (due between June and October 2018), in the total amount of US$20.2 million. In 2019, BNDES has another US$70 million to receive.

For further information access the following links:

https://www.bndes.gov.br/wps/portal/site/home/transparencia/consulta-operacoes-bndes/contratos-exportacao-bens-servicos-engenharia

http://www.bndes.gov.br/wps/portal/site/home/transparencia/consulta-operacoes-bndes/consulta-a-financiamentos-de-exportacao-pos-embarque/

http://www.bndes.gov.br/wps/portal/site/home/transparencia/centraldedownloads

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Brazil's Likely New Role... And How It May Impact Cuba

Due to the expansive indebtedness of the government of the Republic of Cuba to public sector entities and private sector entities in Brazil, H.E. Jair Bolsonaro, President of the Federative Republic of Brazil, has a platform from which to say to H.E. Miguel Diaz-Canel, President of the Republic of Cuba, “You can’t pay your debts because you are refusing to make changes; that lack of practical governance does not make you one to support, rather it makes you one to denounce and pressure.”   

The key to a successful approach by Brazil is whether it will focus upon the refusal by the government of the Republic of Cuba to change rather than an inability by the government of the Republic of Cuba to change. 

The government of the Republic of Cuba could spay much of the impact of regulatory and policy changes by the Trump Administration to Obama Administration regulatory and policy changes by engagement with Obama Administration regulatory and policy changes that the government of the Republic of Cuba refused to authorize during the final two years of the Obama Administration. 

President Bolsonaro believes, correctly, that criticism of the Republic of Cuba has a shallow downside domestically but has a robust upside internationally as the Republic of Cuba’s adhesion to Venezuela, support for Nicaragua, symbiotic relationship with North Korea, and commercial, military and political dependency upon China and Russia will inoculate Brazil from criticism while promoting Brazil as a critical component of resolving, managing and containing conflict. 

The Trump Administration will continue its embrace of President Bolsonaro and is expected to increase the expansiveness of that embrace particularly with respect seeking Brazil’s support for efforts for “regime-change” in Venezuela, Cuba and Nicaragua.  “Regime-change” officially defined as change in the behavior of those in the regime rather than a change in those in the regime.

Brazil will likely accept a prominent role at the Organization of American States (OAS) to serve as a catalyst for a more activist reach for the OAS. 

Unsurprising will be the Trump Administration inviting President Bolsonaro, and H.E. Ivan Duque Marquez, President of the Republic of Colombia, H.E. Mauricio Macri, President of the Argentine Republic, H.E. Andres Manuel Lopez Obrador, President of the United Mexican States, H.E. Martin Vizcarra, President of the Republic of Peru, and H.E. Sebastian Pinera, President of the Republic of Chile to The White House for a Summit to discuss regional solutions to regional issues.

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116th Congress Will Have Cuba Legislation: Boxing Match May Look Like This

The 116th United States Congress will have Republic of Cuba-related legislation introduced in the United States House of Representatives and in the United States Senate. 

If legislation becomes law, it will be a result of mixing the perspectives of two members of the United States Congress: 

The Honorable Marco Rubio (R- Florida): “What the Cuban government is trying to do is they are trying to create an economic dictatorship to build on the military one and the political one.”  

The Honorable Rick Crawford (R- Arkansas 1st District): “I applaud my Senate colleagues for working to get this provision into their bill and I worked hard to make sure it made it into the final conference report. The Heitkamp amendment is an important first step towards exporting American agriculture goods into Cuba… We look forward to building on this momentum in the 116th Congress.” 

The unknowns for the legislative contest in the 116th United States Congress are a) what will be in the initial legislative language b) what will be in the final legislative language and c) will any of the legislative language become law. 

The likely legislative match-up will include one boxer supporting language to re-authorize United States companies and United States financial institutions to provide, should they believe in their interests to do so, payment terms and financing to Republic of Cuba government-operated entities for purchase of agricultural commodities and food products from the United States.  The other boxer will be supporting language that 1) prohibits- or rather does its best to do so, any benefit to the Revolutionary Armed Forces of the Republic of Cuba (FAR) and its commercially-focused entities 2) provides greater benefits for purchases by non-Republic of Cuba government-operated entities (i.e. private cooperatives, private farms, self-employed) and 3) requires a stipulated settlement process for the 5,913 certified claimants- who want prompt support from the Trump Administration. 

The legislative language guide will be based upon a provision in the recently-enacted H.R. 2 (The “Farm Bill”) which authorized the use in the Republic of Cuba of funding from the United States Department of Agriculture (USDA) for Market Access Program (MAP) and Foreign Market Development (FMD).  The provision in the Farm Bill was co-authored (reluctantly) by two members of the United States Senate: The Honorable Heidi Heitkamp (D- ND), who lost her 2018 re-election, and Senator Rubio.  Senator Heitkamp agreed to include language submitted by Senator Rubio that would prohibit MAP and FMD funding to be used with Republic of Cuba entities that are controlled by the FAR, consistent with policies of the Trump Administration.  That is the reason the provision became law.   

The specific language: “(d) Cuba. — Notwithstanding section 908 of the Trade Sanctions Reform and Export Enhancement Act of 2000 ( 22 U.S.C. 7207 ) or any other provision of law, funds made available under this section may be used to carry out the programs authorized under sections 222 and 223 in Cuba. Funds may not be used as described in the previous sentence in contravention with directives set forth under the National Security Presidential Memorandum entitled ‘Strengthening the Policy of the United States Toward Cuba’ issued by the President on June 16, 2017, during the period in which that memorandum is in effect. 

Penalizing the government of the Republic of Cuba for permitting the FAR to have a substantive role in the commercial, economic and political infrastructure throughout the country of 11.3 million citizens is unlikely to have opposition in the United States Congress (and certainly not within The Trump Administration) and unlikely to have opposition from United States companies, United States financial institutions and rational advocacy organizations. 

There is a legislative inevitability to re-authorizing (a change in United States law is required) United States companies and United States financial institutions to provide, should they believe in their interests to do so, payment terms and financing to Republic of Cuba government-operated entities for purchase of agricultural commodities and food products from the United States.   

Management of United States companies and United States financial institutions believe they, not the United States government, should determine whether a customer is worthy of payment terms or financing and worth the risk of incurring a delay or default.   

A change in United States law will expectantly arise a response from the government of the Republic of Cuba similar to that after the Trade Sanctions Reform and Export Enhancement Act (TSREEA) was enacted in 2000- that it would not purchase a grain of rice or a kernel of corn because payment terms and financing were not re-authorized.   

United States companies and United States organizations, after expending two years advocating for the TSREEA, were appalled by the position of the government of the Republic of Cuba and, as a result, substantially decreased their collective focus upon the Republic of Cuba.  United States exporters had quietly opposed a provision to the TSREEA to include payment terms and financing for fear a delay or default would doom future legislative and regulatory changes; the goal was to construct a multi-year track record from which future legislation would emerge.   

More than one year later, in December 2001, the government of the Republic of Cuba made its first purchases (US$4,318,906.00) of corn and poultry under TSREEA; stating the purchases were a “one-off” to supplement requirements after a hurricane and there should be no expectation for additional purchases. 

Since December 2001, the Republic of Cuba has purchased, on a cash-in-advance basis, more than US$5.8 billion in agricultural commodities and food products from United States companies.   

For United States companies, most believe that an eighteen-year track record of purchases suffices for shifting to the next stage in re-developing the bilateral commercial landscape between the United States and the Republic of Cuba.  And, that next stage necessarily means having a choice of accepting commercial transaction risk.  The government of the Republic of Cuba is expected to argue that after eighteen years of payments as required, and spending more than US$5.8 billion, aren’t they entitled, haven’t they earned the right to move beyond cash-and-carry? 

However, the government of the Republic of Cuba is likely to respond to any legislative change (including that within the Farm Bill although that provision is about spending funds in the Republic of Cuba, which would logically incur favor rather than scorn) soon after learning that payment terms and financing terms from United States companies and United States financial institutions are not as expansive as required given the abject perilousness of payment reliability by Republic of Cuba government-operated entities, by reducing (but not eliminating) purchases from the United States until it has access to programs which provide United States government payment guarantees to United States exporters and their customers.  Senator Rubio is likely to require there be no such access in any legislation.  Access to the following programs are the “holly grail” for the Republic of Cuba and in many respects is the final chapter for re-stablishing the bilateral commercial transaction process:   

United States Department of Agriculture (USDA)
Commodity Credit Corporation
Export Credit Guarantee Program
Facilities Guarantee Program 

Export-Import Bank (ExIm)
Export Working Capital Program
Working Capital Guarantee Program
Loan Guarantee Program
Direct Loan Program
Finance Lease Guarantee Program 

Overseas Private Investment Corporation (OPIC)
Direct Loans and Loan Guarantees 

Small Business Administration (SBA)
Export Express Program
International Trade Loan Program 

For reference: The “pathway forward” for Republic of Cuba-focused (more accurately, Republic of Cuba-benefiting) legislative initiatives in the 116th United States Congress, may follow a pathway similar to the following:   

On 3 June 2015, The Honorable Marco Rubio (R- Florida), a member of the United States Senate, introduced S. 1489, the “Cuban Military Transparency Act.”  

S.1489 — 114th Congress (2015-2016) Cuban Military Transparency Act Sponsor: Sen. Rubio, Marco [R-FL] (Introduced 06/03/2015) Cosponsors: (8) Committees: Senate - Foreign Relations Latest Action: Senate - 06/03/2015 Read twice and referred to the Committee on Foreign Relations.  

On 25 June 2015, The Honorable Devin Nunes (R- California), a member of the United States House of Representatives, introduced H.R. 2937, the “Cuban Military Transparency Act.”  

H.R.2937 — 114th Congress (2015-2016) Cuban Military Transparency Act Sponsor: Rep. Nunes, Devin [R-CA-22] (Introduced 06/25/2015) Cosponsors: (49) Committees: House - Foreign Affairs, Financial Services Latest Action: House - 06/25/2015 Referred to the Committee on Foreign Affairs, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee.  

On 13 January 2017, The Honorable Rick Crawford (R- Arkansas), a member of the United States House of Representatives, introduced H.R. 525, the “Cuba Agricultural Exports Act.”   

H.R. 525 115th Congress (2017-2018) Cuba Agricultural Exports Act Sponsor: Rep. Crawford, Eric A. “Rick” [R-AR-1] (Introduced 01/13/2017) Cosponsors: (66) Committee: House - Foreign Affairs, Financial Services, Agriculture Latest Action: House - 01/13/2017 Referred to the Committee on Foreign Affairs, and in addition to the Committees on Financial Services, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of. 

Current Statistics 

United States agricultural commodity and food product exports to the Republic of Cuba continue to decline; 16.1% thus far in 2018 compared to the same period in 2017- and have done so when commodity inventories have been high, commodity prices have been low and there would have been political value in purchases during a time of pain for United States farmers.  Healthcare product exports have also declined; 44.1% thus far in 2018 compared to the same period in 2017. 

Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) exports (agricultural commodities and food products) since first use by the Republic of Cuba in December 2001 are US$5,849,925,838.00 through October 2018: Clinton Administration: US$0.00. Bush Administration: US$2,697,501,426.00. Obama Administration: US$2,700,145,225.00. Trump Administration: US$452,279,187.00.  TSREEA requires that payments be made on a cash-in-advance basis; no other payment terms are permitted.

LINK To PDF Of Analysis

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President Trump Mentions Cuba When Signing Farm Bill.... And It Wasn't Positive

The Agriculture Improvement Act of 2018 (H.R. 2) is valued at US$867 billion, to be expended during a five-year period; the document is more than 600 pages.

Yet The White House, when issuing a two-paragraph statement by the President of the United States, determined important to mention a provision within H.R. 2 which relates to the Republic of Cuba.

The background to the insertion of mention of the Republic of Cuba is relevant for those who believe there is a “pathway forward” and momentum for the 116th Congress in 2019 to pass legislation that will further expand the commercial relationship between the United States and the Republic of Cuba; specifically, authorizing the provision of payment terms and financing for agricultural and food product exports from the United States to the Republic of Cuba.

For the statement about the Republic of Cuba to be inserted into a public document relating to a bill signing, it would likely have been specifically requested by the National Security Council (NSC) and Office of Legislative Affairs; and perhaps at the request of a Member of the United States Congress.

So, advocates need be sober and appreciate the peril arising from believing that after A will automatically come B. The last B took eighteen years to follow A.

Office of the Press Secretary

FOR IMMEDIATE RELEASE
December 20, 2018

STATEMENT BY THE PRESIDENT

Today, I have signed into law H.R. 2, the "Agriculture Improvement Act of 2018" (the "Act").  Section 12303 of the Act requires the Secretary of Agriculture (Secretary) to establish a Tribal Advisory Committee (Committee), predominantly composed of individuals appointed by Members of Congress, to advise the Secretary on matters relating to tribal and Indian affairs.  My Administration supports the policy aims of this Committee.  Because it includes legislative branch appointees, however, the Committee cannot be located in the executive branch, consistent with the separation of powers.  I will therefore instruct the Secretary not to establish this Committee.  I will, however, instruct the Secretary to work with the Congress to revise section 12303 to permit a properly constituted committee to be established within the Department of Agriculture to perform similar functions.  My Administration will also take additional steps to further develop and advance its important relationships with tribal leaders.
 
In addition, section 3201 permits the Department of Agriculture to use funds to carry out certain programs in Cuba.  The Act prohibits such funds from being used in contravention of the policy outlined in National Security Presidential Memorandum 5 of June 16, 2017, (Strengthening the Policy of the United States Toward Cuba).  I appreciate the recognition of the Congress that these funds must not be used to undermine the foreign policy of the United States with respect to Cuba.  As such, my Administration will not use any taxpayer funds from these Department of Agriculture programs to benefit the Cuban regime.
 
DONALD J. TRUMP

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Another Obama (Ben Rhodes) Administration Legacy Decision Harms Major League Baseball

Ben Rhodes Again Takes Credit; Leaves Orphaned Failure About Payments 

MLB Challenge: Prove No Funds Benefiting Cuba’s Military 

Trump Administration Challenge: Ending Third-Country Benefit For MLB Transactions 

Once again, Mr. Ben Rhodes, Assistant to the President and Deputy National Security Advisor for Communications at the National Security Council (NSC) during the Obama Administration has offered his perspective on a commercial transaction involving the United States and the Republic of Cuba.  And, as expected, leaves unspoken his role in a third-country receiving financial benefits when there is no reason for doing so. 

From Mr. Rhodes: “Huge deal. We spent the end of the Obama Administration trying to set the conditions to make this possible, including Obama and Raul attending an MLB game in Havana. At a time of political division baseball is something that can bring Americans and Cubans together.” 

New York, New York-based Major League Baseball (MLB) has announced an agreement with Republic of Cuba-based Federacion Cubana de Beisbol (FCB) a component of which will require potentially tens of millions of dollars payments by electronic transfer from MLB to FCB. LINK To English Text & LINK to Spanish Text.

The current process: MLB will transfer funds from a United States-based financial institution to a financial institution located in a third-country and then that third-country financial institution will transfer the funds to a Republic of Cuba government-operated financial institution in the Republic of Cuba.  Third-country financial institutions will receive commissions for every transaction from MLB to FCB. 

The Trump Administration and Members of the United States Congress have expressed qualifications about the MLB/FCB agreement.  They want to know how MLB will ensure no funds delivered to FCB are directed to entities controlled by or affiliated with the Revolutionary Armed Forces of the Republic of Cuba (FAR).  The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury may require MLB and FCB to certify, in writing, that no funds delivered from MLB to FCB will be subject to the influence of FAR.  For the government of the Republic of Cuba to put that type of clause into a document may be problematic.  And, the Trump Administration may require FCB to certify, subject to audit, that no payments from MLB will be used by the government of the Republic of Cuba to make payments on non-athletic-related debt or be used for Venezuela-related and Nicaragua-related transactions.  

MLB will look to the Trump Administration, and specifically to the NSC and then to the OFAC to solve the electronic payment process issue.  The solution is a simple one.  No regulation needs to be changed.  OFAC just issues the 50% of a license that it previously issued 2015 to a financial institution located in Florida and which is now owned by a financial institution in Arkansas.  

Had Mr. Rhodes (and the Obama Administration) thought more about, or more accurately, listened to what others were urging from 20 January 2009 through 20 January 2017, what was required to re-establish a United States-Republic of Cuba bilateral commercial infrastructure, the Obama Administration would have fully-implemented Direct Correspondent Banking (DCB) for authorized transactions.   

The Trump Administration appreciates that DCB benefits United States entities: It’s faster, It’s less expensive and it requires increased transparency on the part of the Republic of Cuba government-operated financial institutions.  DCB means less time for United States entities to be paid and less cost to receive those payments; and less cost, less time and more transparency for those United States entities which send payments to the Republic of Cuba.  It also means that financial institutions in Canada, Europe and in The Americas will not be receiving commissions on every transaction. 

DCB Background 

For the last seventeen years, financial institutions in Canada, Europe and in The Americas have received a commission on every authorized United States export to the Republic of Cuba; that’s a percentage on more than US$5.8 billion since December 2001.  It’s the equivalent of winning a bank lottery. 

This triangular payment process has remained in force because the Obama Administration (channeling Mr. Rhodes) instructed the OFAC to only issue 50% of a license to Pompano Beach, Florida-based Stonegate Bank

The Obama Administration provided a license to a U.S. bank to have an account at a bank in Cuba but did not provide a license for the bank in Cuba to have an account at the U.S. bank.  Thus, no DCB.   

In September 2017, Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion) through its Centennial Bank subsidiary purchased Stonegate Bank.  In 2015, the OFAC authorized Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA, created by Corporate Charter No. 49 on 29 October 1993 and commenced operation on 3 January 1994.  Stonegate Bank also provides commercial operating accounts for the Embassy of the Republic of Cuba in Washington, DC. 

Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) exports (agricultural commodities and food products) since first use by the Republic of Cuba in December 2001 are US$5,849,925,838.00 through October 2018: Clinton Administration: US$0.00. Bush Administration: US$2,697,501,426.00. Obama Administration: US$2,700,145,225.00. Trump Administration: US$452,279,187.00 (through October 2018).  TSREEA requires that payments be made on a cash-in-advance basis; no other payment terms are permitted. 

With DCB, the Republic of Cuba-based entity would transfer funds (using SWIFT codes) from its account at BICSA directly to Stonegate or would use existing funds at the BICSA account at Stonegate.  The funds would then be transferred from Stonegate to the financial institution selected by the United States-based company.  The process generally can be confirmed in hours; and the transfer costs are substantially less. 

Why did the Obama Administration refuse to issue the 50% of the license that would be required to implement DCB?  Because the Obama Administration did not comprehend what companies require to engage globally.  They were so excited about doing something, that there was little focus upon the consequences of what they did. 

After the OFAC issued the 50% of the license to Stonegate Bank, representatives of the United States business community pleaded with the Obama Administration to issue the complete license.  Their response was “we have done as much as we can do.”   

The Trump Administration can eliminate a three-way payment process and create a two-way payment process resulting in more efficiency and less cost to United States entities; and, important to the Trump Administration, removing an unnecessary seventeen-year (17) multi-million-dollar revenue stream for third-country financial institutions that the Obama Administration unwisely permitted to remain in place. 

An unnecessary and painful and egregious irony that the Obama Administration’s lack of follow-through negatively impacts “America’s Greatest Pastime.”  Another mind-meld gone awry.    

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Congress Should Encourage U.S. Companies To Import Products From Cuba

Instead of focusing upon legislation, Members of Congress should encourage United States companies in their states and districts to import authorized products from Cuba; and Cuba should do more to present those opportunities. 

The Obama Administration authorized specifically-sourced agricultural commodities, food products and non-food products to be exported from the Republic of Cuba directly to the United States.   

From the United States Department of State: To be eligible for import into the United States, a listed 515.582 product must be produced by independent Cuban entrepreneurs, as demonstrated by documentary evidence.  Persons subject to US jurisdiction engaging in import transactions involving goods produced by an independent Cuban entrepreneur pursuant to 515.582 must obtain documentary evidence that demonstrates the entrepreneur's independent status, such as a copy of a license to be self-employed issued by the Cuban government, or in the case of an entity, evidence that demonstrates that the entity is a private entity that is not owned or controlled by the Cuban government. 

Although the Trump Administration has not instituted changes to Obama Administration eligibility requirements, not unreasonable to expect importers to certify that the Republic of Cuba-based exporter is not be controlled by or affiliated with the Revolutionary Armed Forces of the Republic of Cuba (FAR). 

Thus far, charcoal and coffee have been sourced in the Republic of Cuba and then exported (or re-exported) from the Republic of Cuba to the United States. 

Links To Previous Posts: 

https://www.cubatrade.org/blog/2016/6/20/nespresso-to-indirectly-import-coffee-from-cuba-to-usa?rq=nespresso 

https://www.cubatrade.org/blog/2016/7/14/update-hecho-en-cuba-begins-to-mean-something-obama-administration-will-help-accept-certification-from-cuba?rq=nespresso 

https://www.cubatrade.org/blog/2016/6/26/nestle-sa-positioning-to-be-an-importer-of-consumables-from-cuba-with-obama-administration-assistance?rq=nespresso 

https://www.cubatrade.org/blog/2017/1/5/charcoal-joins-coal-to-become-second-commodity-exported-from-cuba-to-the-united-states?rq=Fogo 

https://www.cubatrade.org/blog/2018/10/23/fogo-in-florida-reports-2nd-charcoal-purchase-from-cuba-two-20ft-containers?rq=Fogo 

HAVANA, July 7 (Xinhua) – [EXCERPTS]: Cuba seeks to increase exports of non-conventional agricultural products like honey, charcoal, coffee and pine resin to various markets around the world and contribute to the government's strategy of diversification of foreign markets. 

According to top officials at the island's Agroforestry Group (GAF), part of the Ministry of Agriculture, the group plans to generate 34 million U.S. dollars through the export of its leading products.  "Our plan this year is to exceed the 30 million dollars the group exported in 2017 and continue helping the Cuban economy reduce imports by manufacturing goods here with our own resources," said Arturo Forteza, GAF's first vice president, at a recent press conference. 

Forteza explained that beekeeping and the products derived from it, like honey, wax and royal jelly, generate the most income to the group, with an average of 28 million dollars in exports each year. 

These sound returns are the reason that investments are heavily concentrated on the industry, specifically in the installation of honey processing plants and smaller product packaging. 

"We seek to create added value for our beekeeping industry that goes beyond the production of honey. We want to develop our own marketing and production structures," Forteza said. 

Mercedes de la Cruz, acting director of marketing at GAF, said that the main market for Cuban honey is Europe, with Germany in the highest demand.  The group is also exploring markets in other countries, such as Canada, Costa Rica, Colombia and China. 

"The goal is to increase the added value of our products by producing smaller and more varied formats that sell for a higher price. In the case of honey, the price is above 4,000 dollars per ton," De la Cruz said.  Cuba currently exports its honey in large formats to various markets in Europe. 

Lazaro Garcia, director of honey producer Apicuba, explained that each year Cuba produces about 8,000 tons of honey, of which around 95 percent is destined for exports. 

The producer's intention, according to Garcia, is to have a total of 220,000 hives, increasing production in the near future to 15,000 tons of honey annually. If current prices are maintained, the honey production could generate 61 million dollars. 

Another promising product of the group is charcoal, with exports of more than 28,000 tons, mostly sent to Europe, particularly Turkey, Greece, Spain and Italy.  De la Cruz said that currently seven state companies are producing charcoal, which is expected to reach 130,000 tons for export this year. 

These favorable results came from the diversification of charcoal production from highly valued hardwoods and African marabou which is abundant in Cuba. 

Increasing coffee production on the island is another objective of the agricultural group, which is expected to grow substantially.  According to Forteza, the group is collaborating with Vietnam to develop high-quality coffee after last year's all-time low production rate because of storms. 

"We want to develop our own high-quality Arabica coffee in Vietnam and their robust coffee here in Cuba. This project is focused on the eastern provinces of Granma and Santiago in Cuba and we plan to extend it to other areas," he said. 

Despite the industry's setbacks, significant steps have been taken, such as the introduction of ecological coffee bean pulpers.  "We also improved the technology in the two plants we have in Guantanamo and Santiago in Cuba, which has raised the quality of our strongest product," Forteza said.  Currently Japan is the main market for Cuban Arabica coffee, purchasing the product for around 10,000 dollars per ton. 

Cuba is also engaged in diversifying and expanding production of other items like pine resin, cocoa, coconut and henequen plant fibers to bring in foreign currency and replace imports.

LINK To Complete Document In PDF Format

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President Trump To Sign Farm Bill; It Will Include Cuba Provision. Is It Significant?

The Honorable Donald J. Trump, President of the United States, will sign into law legislation known as the “Farm Bill” passed by the United States Congress. 

For the first time since 28 October 2000- more than eighteen (18) years (6,622 days) ago, legislation which includes the Republic of Cuba will become law.  

The Republic of Cuba-related provision within the Farm Bill will become law, somewhat ironically, because of one (1) United States Senator representing the State of Florida- who initially opposed the provision, but supported the provision when language was added which prohibited the use of United States taxpayer funds with entities in the Republic of Cuba controlled by the military.  The United States business community did not oppose that prohibition. 

The Farm Bill includes a provision authorizing the use in the Republic of Cuba of funding from the United States Department of Agriculture (USDA) for Market Access Program (MAP) and Foreign Market Development (FMD).  

The provision in the “Farm Bill” was co-authored by two members of the United States Senate: The Honorable Heidi Heitkamp (D- ND) and The Honorable Marco Rubio (R- FL).  

Senator Heitkamp agreed to include language submitted by Senator Rubio that would prohibit MAP and FMD funding to be used with Republic of Cuba entities that are controlled by the Revolutionary Armed Forces of the Republic of Cuba (FAR), consistent with policies of the Trump Administration.   

The specific language: “(d)  Cuba .— Notwithstanding section 908 of the Trade Sanctions Reform and Export Enhancement Act of 2000 ( 22 U.S.C. 7207 ) or any other provision of law, funds made available under this section may be used to carry out the programs authorized under sections 222 and 223 in Cuba. Funds may not be used as described in the previous sentence in contravention with directives set forth under the National Security Presidential Memorandum entitled ‘Strengthening the Policy of the United States Toward Cuba’ issued by the President on June 16, 2017, during the period in which that memorandum is in effect. 

Is provision optically significant?  Yes, it is.  How United States organizations seek to use the funds and how the government of the Republic of Cuba permits the funds to be used will be the baseline for determining effectiveness.  If the funds are disproportionally purposed to make payments for travel to the Republic of Cuba and for larger booths at trade shows in the city of Havana, likely will be scrutiny by members of the United States Congress.  If the Republic of Cuba permits funds to be used for what would not be expected to be authorized- permitting activities perceived in the United States as bold, members of the United States Congress and those within the Trump Administration would take positive note.      

Will the provision result in an increase in agricultural commodity and food product exports from the United States to the Republic of Cuba?  There is no straight-line calculation which justifies that belief.  United States agricultural commodity and food product exports to the Republic of Cuba continue to decline; 16.1% thus far in 2018 compared to the same period in 2017- and have done so when commodity inventories have been high, commodity prices have been low and there would have been political value in purchases during a time of pain for United States farmers.  Healthcare product exports have also declined; 44.1% thus far in 2018 compared to the same period in 2017. 

Is there value in spending United States taxpayer funds to promote corn, dairy, poultry, rice, soy and wheat in the Republic of Cuba?  Arguable given there is one contracting entity in the Republic of Cuba, cash-in-advance payment terms remain unchanged and the Republic of Cuba seeks payment term of up to two years due to its chronic shortage of foreign exchange.  Unlikely a significant number of the United States organizations (approximately eighty-one in fiscal year 2018) applying for USDA reimbursement will shift previously-allocated country-targeted funds to the Republic of Cuba for fiscal year 2019.   

Does the inclusion of the provision suggest a “pathway forward” and “momentum” for additional Republic of Cuba-related legislation to become law, specifically relating to authorizing private-sector payment terms and private-sector financing for agricultural commodity and food product exports to the Republic of Cuba?  Uncertain, as there is an eighteen-year-old legislative graveyard filled with headstones of initiatives that were “on the cusp” of success.   

Legislative initiatives suffer from 1) lack of public support from specific exporting companies stating on-the-record (at hearings, in media releases, etc.) that they would today provide payment terms- and what those payment terms would be, to Republic of Cuba government-operated entities and 2) lack of public support from financial institutions including Greenwich Village, Colorado-based CoBank stating on-the-record (at hearings, in media releases, etc.) that they would today provide loans to Republic of Cuba government-operated entities based upon the credit profiles of those entities.  In addition, Conway, Arkansas-based Home BancShares, which has an authorized account with a Republic of Cuba government-operated financial institution, has refused to comment as to why it has not sought authorization from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury for the Republic of Cuba government-operated financial institution to have an account with Home BancShares.  If each financial institution had an account with the other, the implementation of Direct Correspondent Banking (DCB) services would be operable- meaning that third-country financial institutions would no longer receive a commission for each United States-Republic of Cuba transaction.  DCB saves money, saves time, is more transparent, and more safe.  Ironically, the four (4) members of the House of Representatives and two (2) members of the United States Senate from Arkansas (exporter of poultry, rice, etc.) have not demonstrated an interest in public engagement with Home BancShares to implement DCB.         

Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) exports (agricultural commodities and food products) since first use by the Republic of Cuba in December 2001 are US$5,849,925,838.00 through October 2018: Clinton Administration: US$0.00. Bush Administration: US$2,697,501,426.00. Obama Administration: US$2,700,145,225.00. Trump Administration: US$452,279,187.00.  TSREEA requires that payments be made on a cash-in-advance basis; no other payment terms are permitted.

LINK To PDF Format

Failure Of Agreement Between FedEx & Cuba Is A Problematic And Oft-Repeated Symbol

That Memphis, Tennessee-based FedEx Corporation (2017 revenues exceeded US$60 billion) and the government of the Republic of Cuba have not been successful during more than two years of discussions/negotiations to create a viable delivery infrastructure is a highly visible and thus impactful symbol that dissuades United States-based companies from seeking commercial engagement with the Republic of Cuba.

Memphis Business Journal

Memphis, Tennessee

14 December 2018 

It’s a no-go for FedEx’s scheduled service to Cuba.  

The Memphis-based logistics and delivery giant received approval from the Department of Transportation (DOT) in July 2016 to be the first all-cargo airline to start service to Cuba. That approval was followed by multiple launch date extensions filed by FedEx Corp. — with the latest set for Saturday, Dec. 15.  

With that date approaching, the Memphis Business Journal asked FedEx if service would, in fact, begin this weekend.  FedEx provided the following statement Dec. 14, in response:  

“FedEx will not be filing for an extension of the start-up date for U.S. – Cuba cargo air service between Miami and Varadero (VRA.) We are evaluating alternative all-cargo service options to Cuba.” 

The original plan was for FedEx to run flights, Monday through Friday, from Miami to Matanzas/Varadero starting in April 2017. The extension pushed that to Oct.15, 2017, then to June 15, 2018, and then finally to the Dec. 15.  

Posts About FedEx And The Republic Of Cuba: 

https://www.cubatrade.org/blog/2018/6/16/fedex-seeks-another-delay-from-usdot-to-initiate-services-to-cuba?rq=FedEx 

https://www.cubatrade.org/blog/2016/7/19/dot-approves-fedex-for-first-scheduled-all-cargo-service-to-cuba?rq=FedEx

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Troika To Negotiate Settlement Of Certified Claims Against Cuba? Kushner, Greenblatt & Feinberg

Troika To Negotiate Settlement Of Certified Claims Against Cuba?

Kushner, Greenblatt & Feinberg

The Process: Briefings, Lunch, Travel

It’s Primarily About Real Estate; So Why Not Use Real Estate Executives?

Two Largest Claims Account For 24%; Thirty Account For 56% Of Total

President Trump Can Negotiate A Deal That Eluded Eleven Of His Predecessors  

Settlement Is Possible Without Cuba Putting Up Cash

Every Country Cuba Owes Will Benefit From A Settlement

EU Should Be Advocating For A Swift Agreement 

The Trump Administration has created the political moment for tag-team negotiators Mr. Jason Greenblatt (DOB 1967; Assistant to the President and Special Representative for International Negotiations) and Mr. Jared Kushner (DOB 1981; Senior Advisor to the President & Director- Office of American Innovation) to expand their bilateral portfolios to include the Republic of Cuba.   

Why Mr. Kushner? 

Irrespective of one’s thoughts as to the appropriateness of a role at The White House for the son-in-law of the president of the United States, what matters is the level of confidence by the President of the United States in his son-in-law.  Nearing two years into a four-year term, Mr. Kushner retains a prominent presence in Trump Administration.   

On 30 November 2018, while at the signing ceremony for the U.S.-Mexico-Canada Agreement (USMCA) in Buenos Aires, Argentina, The Honorable Donald Trump, President of the United States, began his remarks with thanking six (6) people by name; the first was the United States Trade Representative and the second was Mr. Kushner- before the United States Secretary of State, the United States Secretary of the Treasury, Director of the National Trade Council and Director of the National Economic Council.    

Prior to the signing ceremony for the USMCA, Mr. Kushner received the highest civilian award, Order of the Aztec Eagle, from the government of Mexico for his work relating to the USMCA.  During the presentation, Mr. Kushner shared that his experience working for the USMCA was the equivalent of earning a “PhD in Trade.”  President Trump attended the presentation- but the event was not on his public schedule.  

At the first meeting of the leaders of the G20 in Buenos Aires, President Trump was accompanied by two individuals: The United States Secretary of the Treasury and Mrs. Ivanka (Trump) Kushner. Not the United States Secretary of State, United States Trade Representative, Director of the National Trade Council or Director of the National Economic Council.   

At an evening dinner for leaders of the G20, President and Mrs. Trump were accompanied by Mr. and Mrs. Kushner; and included the couple in official photograph opportunities with H.E. Mauricio Macri, President of Argentina and Mrs. Macri. 

On 1 December 2018, Mr. Kushner was a member of the official delegation at the working dinner with President Trump and H.E. Xi Jinping, President of the People’s Republic of China.

On 1 December 2018, Mrs. Kushner was a member of the official United States delegation, accompanying The Honorable Mike Pence, Vice President of the United States, attending the inauguration of the president of Mexico. 

On 27 November 2018, H.E. Eduardo Bolsonaro (34 years of age), a two-term member of the National Congress of Brazil and son of the president-elect of Brazil, H.E. Jair Bolsonaro, met with Mr. Kushner at The White House; and departed with a baseball cap with “Trump 2020” printed on the front.  According to media reports, the two discussed a plan to relocate the Brazil Embassy in Israel and undisclosed subjects.   

The Trump Administration has identified Mr. Kushner as having a significant role in portfolios that include the Middle East, relocating the United States Embassy in Israel, China, Mexico, trade and prison reform among others.    

Issue Importance 

Senior-level officials within the Trump Administration confirm that resolution of the certified claims, and only the certified claims, is a focus and the United States Department of State, United States Department of the Treasury, United States Department of Commerce, and National Security Council (NSC) at The White House are committed to dedicating necessary resources.   

The United States government retains broad discretion to negotiate a settlement on behalf of the claims certified by the United States Foreign Claims Settlement Commission (USFCSC).  There exists a highly-motivated pre-positioned constituency among the certified claimants in support of a prompt resolution. 

However, identification of the causes for health-related issues impacting United States government personnel located in the city of Havana, Republic of Cuba, remains the primary focus of the Trump Administration and lack of resolution, until which the United States Embassy in Havana will operate at a less than optimal level of personnel, will continue to contaminate all aspects of the bilateral relationship.  Within the Trump Administration there exists a confidence that negotiations to resolve the certified claims can develop independent of a resolution to other bilateral issues

There is bipartisan political party support and bipartisan ideological support within the United States Congress for a robust and sustained effort to obtain a resolution to the certified claims, particularly from those who represent exporters whose expansion of commercial engagement with the Republic of Cuba remains infringed: agricultural commodities, food products and healthcare products and providers of travel-related services.  

The Obama Administration deemed resolution of the certified claims was a “top priority,” but had only three (3) discussions (not bilaterally confirmed negotiations) with representatives of the government of the Republic of Cuba in 2,923 days (766 days if calculated from 17 December 2014- the date upon which the United States and the Republic of Cuba announced an intention to re-establish diplomatic relations).  During a 20 July 2016 background briefing by a senior official of the United States Department of State:  

REPORTER QUESTION (Miami Herald):  My question has to do with the property rights issue. I wonder if you could give us any details there.  And two, whether Cuba still has outstanding property rights issues with any other countries, and is there a target number we’re looking for, like settling on 20 cents on the dollar, 10 cents on the dollar, whatever?   

SENIOR STATE DEPARTMENT OFFICIAL:  As I mentioned, property claims is one of our top priorities.  We had an initial – or first-round meeting with the Cubans on this issue last December in Havana.  We will have a second round of talks here in Washington at the end of this month.  We certainly have not laid out any kind of – the details which you’ve described.  That will emerge from the negotiations, but we’re committed to pursuing all of the registered claims, as well as other claims that U.S. citizens have against Cuba.  So it’s a process.  We had a good round last December.  We hope to make further progress this month in moving forward on the issue. 

The Certified Claims 

There are 8,821 claims of which 5,913 awards were certified by the United States Foreign Claims Settlement Commission (USFCSC- https://www.justice.gov/fcsc) at the United States Department of Justice which are valued at US$1,902,202,284.95.  

The largest certified claim (Cuban Electric Company) valued at US$267,568,413.62 is controlled by Boca Raton, Florida-based Office Depot, Inc.  The second-largest certified claim (International Telephone and Telegraph Co, ITT as Trustee, Starwood Hotels & Resorts Worldwide, Inc.) valued at US$181,808,794.14 is controlled by Bethesda, Maryland-based Marriott International.  The smallest certified claim is by Sara W. Fishman in the amount of US$1.00 with reference to the Cuban-Venezuelan Oil Voting Trust. 

The two (2) largest certified claims total US$449,377,207.76, representing 24% of the total value of the certified claims.  Thirty (30) certified claimants hold 56% of the total value of the certified claims.  This concentration of value creates an efficient pathway towards a settlement. 

The USFCSC permitted interest to be accrued in the amount of 6% per annum; with the current value approximately US$9 billion

The Foreign Claims Settlement Commission of the United States (FCSC) is a quasi-judicial, independent agency within the Department of Justice which adjudicates claims of U.S. nationals against foreign governments, under specific jurisdiction conferred by Congress, pursuant to international claims settlement agreements, or at the request of the Secretary of State. Funds for payment of the Commission's awards are derived from congressional appropriations, international claims settlements, or liquidation of foreign assets in the United States by the Departments of Justice and the Treasury.” 

Certified claimants with current or recent activity within the Republic of Cuba include: New York, New York-based Colgate-Palmolive, Moline, Illinois-based Deere & Company, Atlanta, Georgia-based Delta Air Lines, Boston, Massachusetts-based General Electric, Bethesda, Maryland-based Marriott International, Chicago, Illinois-based University of Chicago, Denver, Colorado-based Western Union and New Haven, Connecticut-based Yale University among others. 

Real Estate Experience Helps 

The 5,913 certified claims consist primarily of real estate- so who better equipped to negotiate essentially a multi-party real estate deal than two real estate executives?  One individual from a multi-generational real estate family.  The other a former senior-level executive of a real estate company.  Each a hardened negotiator.  Each having the confidence of the president of the United States.  Each appreciating the focus by the President upon tackling (and resolving) problems left unresolved by predecessors.  A fifty-eight (58) year-old unresolved bilateral issue self-defines as a lip-smacking, saliva-creating opportunity for the Trump Administration.  

The Trump Administration has less than 800 days during which to identify, commence and complete initiatives that by 12:00 pm on Wednesday on 20 January 2021 will be defined as legacy achievements.  The Trump Administration would complete what eleven (11) presidential administrations could not achieve. 

The Day-To-Day Guy 

The Kushner/Greenblatt tag-team would become a troika with the addition of Mr. Kenneth Feinberg (DOB 1945), the Washington DC-based attorney (www.feinberglawoffices.com) specializing in mediation and alternative dispute resolution, who served as Special Master for the September 11th Victim Compensation Fund and TARP Executive Compensation; Administrator of the BP Deepwater Horizon Disaster Victim Compensation Fund; retained to assist in the General Motors recall response and compensation for Volkswagen owners.  Mr. Feinberg, who could be appointed a Special Envoy, appreciates the singular importance of deadlines.  He is positioned to coordinate the day-to-day discussions and negotiations with the government of the Republic of Cuba. Mr. Feinberg has confirmed his interest in assisting with the settlement negotiations.

The troika would be the Trump Administration’s effort to conclude what the Obama Administration failed to do- and what previous occupants of The White House have failed to do on behalf of those 5,913 individuals and companies whose assets were expropriated without compensation by the government of the Republic of Cuba, beginning with an oil refinery owned by White Plains, New York-based Texaco, Inc., now a subsidiary of San Ramon, California-based Chevron Corporation (USFCSC: CU-1331/CU-1332/CU-1333 valued at US$56,196,422.73). 

How to begin? A Lunch   

The task for Messrs. Kushner, Greenblatt and Feinberg is to directly engage in negotiations with representatives of the government of the Republic of Cuba with the singular goal of obtaining a settlement of the 5,913 individual and company claims against the government of the Republic of Cuba certified by the USFCSC- and only those claims. 

First, the troika would convene a series of intimate briefings with representatives of the United States business community, specifically those with certified claims along with their respective legal counsels.  As two (2) certified claimants represent 24% of the total value of the certified claims and thirty (30) certified claimants represent 56% of the total value of the certified claims, briefings with each of the primary stakeholders would not be an unreasonable effort to undertake within a thirty (30) day period.   

Second, would be an invitation to lunch at The White House extended from the troika to H.E. Jose Ramon Cabanas Rodriguez, Ambassador of the Republic of Cuba to the United States or his successor.  The purpose of the lunch would be to establish a personal rapport and create a reasonable and measurable timeline towards resolving the issue of the certified claims; thirty (30) days to create a timeline should be adequate.   

Third, would be a visit to the Republic of Cuba by the troika within thirty (30) days of completion of the timeline.   

The troika would complete an effort of engagement with the Republic of Cuba awkwardly commenced by Mr. Ben Rhodes, Assistant to the President and Deputy National Security Advisor for Communications at the National Security Council (NSC) during the Obama Administration. 

The youthful Mr. Kushner, of reserved demeanor; reared in the oft-described bitter chill of New York City real estate politics, appreciating the role of financial institutions, contracts, loan values, payback periods, incentives, and, most significantly, the development of creative financing packages, would bring a skill set to a bilateral dialogue which has been lacking in successive presidential administrations.  Mr. Greenblatt is his perfect partner.  Mr. Feinberg brings along the practical experience. 

Important that the negotiations have a timeline- a beginning and an end.  Six (6) months is more than adequate. 

Imperative there be no intermediaries between the governments; no third-parties arranging meetings or serving as couriers for messages.  Not a triangle.  A straight line of communication.  No meetings in third countries. 

Structure Of A Resolution 

A certified claims settlement should be based upon the payment of 100% of the value of each certified claim.  Even with a full settlement based upon principal and interest, the annual rate of inflation has substantially diminished the value of each certified claim.   

Opportunities for settlement include, but are not limited to, 100% compensation, debt-for-equity swaps and substitution investments (one structure for another; one piece of land for another, etc.).  

Portions of monies owed could be transformed into tradable equity positions which a certified claimant could use or could redirect or could market to a third-party. 

In combination with or separately from compensation formats, the government of the Republic of Cuba could provide transferable values to the certified claimants including: 

·       Income tax holidays

·       Import duty exemptions

·       Reduced energy rates

·       Property tax credits

·       Earned income tax credits

·       Issuance of commercial paper 

Resolution is the means to the goal in whatever form such resolutions may take for the largest United States corporate claimants (e.g. debt-for-equity swaps for new direct foreign investment opportunities, or property restitution combined with re-investment in once-owned properties, or the sale of development rights to third parties, United States-based or non-United States-based).  The goal is closure. 

Importance For Diaz-Canel Administration 

If the Trump Administration unleashed this troika, H.E. Miguel Diaz-Canel, President of the Republic of Cuba, would understandably be required to seriously consider the effort and promptly dedicate members of his team to the negotiations- rather than reply upon holdovers from previous administrations. 

Resolving the issue of the certified claims would cement the Trump Administration and the Diaz-Canel Administration firmly into legacy-claiming territory. 

Resolving the issue of the certified claims is the foundation for six decades of United States laws, regulations and policies. 

A re-normalized bilateral commercial, economic and political relationship would benefit the 11.3 million citizens of the 800-mile archipelago and the approximately two million individuals of Cuban descent residing in the United States, primarily in the State of Florida and State of New Jersey.  

For the Diaz-Canel Administration, resolving the issue of the certified claims would materially benefit the governments and the private sectors within those countries who have supported the Republic of Cuba- and in far too many instances, found their loans, rescheduling of loans, commercial credits, government-to-government assistance, and private sector investments habitually subject to multi-year and sometimes multi-decade disappointment.  Success in the Republic of Cuba has always strained to obtain enough oxygen to provide for consistent and positive performance. 

Not institutionally sustainable, nor fair, for the Republic of Cuba to not seek to resolve the one issue with the United States that most negatively impacts those to whom it owes much: European Union (EU)-member countries, Brazil, China, Mexico, Russia, Venezuela and Vietnam among others. 

Without the issue of the certified claims, the United States would be expected to remove much of the onerous, and for the commercial partners of the Republic of Cuba, extraterritorial financial sanctions infrastructure managed by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, Bureau of Industry and Security (BIS) of the United States Department of Commerce, and Office of Legal Advisor (OLA) of the United States Department of State.    

The OFAC, BIS, and OLA-administered sanctions against the Republic of Cuba inflict collateral damage to countries who directly engage with the Republic of Cuba and to countries which may tangentially engage with the Republic of Cuba.  All parties would be jubilant if the Diaz-Canel Administration would negotiate a settlement which resulted in an elimination of the sanctions

No government should build a long-term strategy of victimization when there exists means to remove a problem.  Both the United States and the Republic of Cuba have been guilty of such strategies with respect to their bilateral relationship.  The history may not be fair; the process for resolution may feel unjust.  Governments need weigh the cost of maintaining political pride against the impact upon their citizens (their shareholders) of not resolving an action taken by the government. 

The Republic of Cuba should not need to continue to define success by how much others will provide to it for the maintenance of commercial, economic and political systems which are neither self-sufficient nor sustainable.  The Republic of Cuba must not be perceived as an exhibit in a museum; and as a symbol of what only functions if others continue to fund it and fuel it. 

Resolution of the certified claims will not, on their own, transform the commercial, economic and political infrastructure of the Republic of Cuba.  However, it will remove a highly-visible pillar of resistance used to forestall provision of choice, of opportunities to its citizenry. 

The government of the Republic of Cuba would wisely accept the advances of the troika for Mr. Kushner, not dissimilar from Mr. Rhodes during the Obama Administration, maintains an intimate working relationship with the President of the United States where the distance between is often immeasurable; and Mr. Kushner has the additional bona fides of proximity due to marriage- which should not be undervalued. 

There is in the United States and within other countries an increasing lack of empathy for the Republic of Cuba.   

There is a shift of accountability from all that is unsound in the Republic of Cuba is the fault of the United States to its primarily the fault of the Republic of Cuba.  A shift from the United States should repair it to the Republic of Cuba should repair it.  This dynamic may not be fair, but it is a reality.  And successful negotiations are about reality rather than wishful thinking. 

For the bilateral relationship with the Republic of Cuba to re-normalize, there must be a resolution of the certified claims; there are no reasons the Trump Administration and Diaz-Canel Administration can’t make it happen during the next 700-plus days.

It’s important to exceed expectations… 

LINK TO ANALYSIS IN PDF FORMAT & LINK TO CERTIFIED CLAIMS LIST

 

Posts About Certified Claims & Trump Administration 

31 August 2018

https://www.cubatrade.org/blog/2018/8/29/ouktsdg4gyrblq7zudchikvdd6abdo?rq=certified%20claims 

14 June 2018

https://www.cubatrade.org/blog/2018/6/14/trump-administration-may-be-focusing-upon-certified-claims-unlike-obama-administration?rq=certified%20claims 

17 July 2017

https://www.cubatrade.org/blog/2017/7/11/memo-from-nsc-to-potus-this-week-for-title-iii-suspension-capitulate-incapacitate-or-negotiate?rq=certified%20claims 

29 May 2017

https://www.cubatrade.org/blog/2017/5/29/0t6ts1bv3by20ot3mi9bydvdqv3e86?rq=certified%20claims 

1 January 2017

https://www.cubatrade.org/blog/2017/1/12/h2uudthnn6be8hfgxifqsrdo4aqpb0?rq=certified%20claims 

1 December 2016

https://www.cubatrade.org/blog/2016/12/1/zigs56x0gme3a9rqg7aecx9vf2gqgk?rq=certified%20claims 

13 September 2016

https://www.cubatrade.org/blog/2016/8/6/obama-administration-wont-seek-dismissal-of-civil-judgements-against-cuba-to-help-certified-claimants?rq=certified%20claims

U.S. Food/Ag Exports To Cuba Decrease 54.7% In October; Decrease 16.1% Thus Far For Year

October 2018 Food/Ag Exports To Cuba Decrease 54.7%- 1

16.1% Decrease Year-To-Year-5

Cuba Ranks 55th Of 224 U.S. Food/Ag Export Markets- 2

October 2018 Healthcare Product Exports US$156,321.00- 2

October 2018 Humanitarian Donations US$829,293.00- 3

Obama Administration Initiatives Exports Continue To Increase- 3

U.S. Port Export Data- 15

OCTOBER 2018 FOOD/AG EXPORTS TO CUBA DECREASE 54.7%- Exports of food products and agricultural commodities from the United States to the Republic of Cuba in October 2018 were US$9,698,149.00 compared to US$21,436,667.00 in October 2017 and US$21,994,945.00 in October 2016.

For the period January 2018 through October 2018, exports were US$197,629,030.00 compared to US$235,558,893.00 for the same period in 2017.

TSREEA exports since first use by the Republic of Cuba in December 2001 are US$5,849,925,838.00 through October 2018.

Clinton Administration: US$0.00. Bush Administration: US$2,697,501,426.00. Obama Administration: US$2,700,145,225.00. Trump Administration: US$452,279,187.00.

LINK To Complete Report

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3G Internet Access Expanding In Cuba

From ETECSA: 

Internet service is extended in Cuba with access through the mobile network (3G) December 4, 2018  

The Telecommunications Company of Cuba SA (ETECSA) informs that as of December 6 of this year, the commercialization of the Internet access service will begin through the third generation (3G) mobile network for prepaid customers.

At the time of launching the service, it will be available to users with terminal equipment that supports 3G technology in the 900MHz frequency, duly configured with the Nauta Access Point Name (APN) and whose line has been identified as having used Data , on some previous occasion, about this Network.

Subscribers already recognized by the network with these characteristics will be able to acquire the package of their preference without having to go to a commercial office, dialing * 133 # from their own telephone and following the menu options, with discount of the main account of the mobile service.

From December 6, users will progressively receive a notification according to the numbering when their service is ready to proceed to acquire the package:  

December 6th day: 52xxxxxx and 53xxxxxx

December 7th day: 54xxxxxx and 55xxxxxx

December 8th day: 56xxxxxx and 58xxxxxx  

After these days, you can do any numbering with the conditions mentioned above, that is, those lines that use a terminal with access to 3G technology in 900MHz frequency and that have accessed Data in said technology.  

For users who use a cell phone with those characteristics and who have not made a connection so far, if they are interested in accessing the service; they must configure the Nauta APN, activate the data from a 3G coverage and make a first connection. It is suggested, taking into account that they are free ETECSA portals, access http://www.etecsa.cu, https://portal.nauta.cu or http://mi.cubacel.net.  From that moment on, it will be validated; after which a notification message will be sent in the next 48 hours, announcing that the desired offer can already be purchased.

In the first days of operation of this service, incidents could be experienced in certain areas or areas. In this sense, ETECSA is grateful to the clients that if there is any inconvenience with their service, they inform the company through the institutional channels.  

With this opening, the Company continues to expand the possibilities of access to the Internet as part of the process of computerization of Cuban society.  

The details of the offer, prices and other information can be obtained by the 118, 5264-2266, accessing the portals www.etecsa.cu or http://mi.cubacel.net.