Will Cable & Wireless Acquisition Impact Cuba's Internet?

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The Wall Street Journal
New York, New York
17 November 2015

Liberty Global to Buy Cable & Wireless Communications for $5.3 Billion
Move strengthens foothold in an emerging market ripe for consolidation

By Shalini Ramachandran

Cable tycoon John Malone’s Liberty Global PLC agreed to buy Caribbean cable operator Cable & Wireless Communications PLC for $5.3 billion, strengthening the acquisitive company’s foothold in an emerging market ripe for additional consolidation.

The companies said in a statement on Monday that the stock offer is valued at 78.04 pence ($1.19) a share—a 6% premium to Cable & Wireless’s Monday closing price in London, where it trades.

The deal also includes a special dividend of three pence a share that will be paid when the transaction closes, bringing the total consideration to 81.04 pence a share. Liberty Global said the full offer represents a 40% premium to Cable & Wireless’s closing share price on Oct. 21, the day before The Wall Street Journal first reported that the companies were in talks. Including net debt, the deal is valued at $8 billion.

Liberty Global Chief Executive Mike Fries in an interview on Monday touted the deal as a “unique platform to start looking at additional consolidation” of cable assets in the Latin American and Caribbean region, which he described as “fragmented” and “underpenetrated.” He also highlighted Cable & Wireless’s valuable and sprawling network of undersea cables in the region, which would allow Liberty Global to capitalize on rapidly increasing broadband data consumption.

Cable & Wireless, which has more than six million subscribers, offers pay-television, Internet, landline phone and wireless service—the so-called “quad play”—in the Caribbean, Panama, Monaco and the Seychelles, according to its website. Liberty Global executives have been focused on the need to offer a “quad play” eventually in all the company’s territories, which stretch across Europe, Latin America and the Caribbean. The combined company will have 10 million subscribers in the Caribbean and Latin America.

The pending deal, which offers Cable & Wireless shareholders a mix of Liberty shares, is subject to regulatory approval by different government entities in the Caribbean. The companies expect the transaction to close next year.

Recently Liberty Global created a separate tracking stock dubbed LiLAC for its Latin American and Caribbean holdings, which also include cable companies in Puerto Rico and Chile. The stock has dropped since its debut in July, though it has rebounded somewhat since the Journal reported on the talks. Cable & Wireless will be attributed to the LiLAC stock.

Liberty Global is offering Cable & Wireless shareholders three options to take different mixes of Liberty Global and LiLAC stock. Cable & Wireless’s board is recommending that shareholders accept the offer that doesn’t include LiLAC stock, according to a statement from the company. That offer is valued at roughly 87 pence, including the special dividend. The other offers available to Cable & Wireless shareholders would require investors to take on more risk in betting on LiLAC’s upside.

The deal will personally benefit Mr. Malone, Liberty Global’s chairman and largest voting shareholder with a 24% stake. About a year ago, Cable & Wireless struck a deal to buy Columbus International Inc., in which Mr. Malone owned a stake. The deal gave Mr. Malone a 13% voting stake in Cable & Wireless. Mr. Malone has recused himself from the talks between Liberty Global and Cable & Wireless.

Liberty Global has been on an acquisition spree over the past few years as it seeks to build an international media and cable powerhouse. A series of large acquisitions in recent years, including buying the U.K.’s Virgin Media Inc. and Dutch cable operator Ziggo NV, have made Liberty Global the largest cable operator in the world by subscribers, with 27 million customers across 14 countries.
Of late, Liberty Global has been snapping up stakes in content companies. In the past year, it has agreed to acquire Irish broadcaster TV3 and taken stakes in All3Media, British broadcaster ITV and Lions Gate Entertainment Corp.

Liberty Global is separate from Mr. Malone’s Liberty Broadband Corp. , which backs U.S.-based Charter Communications Inc., the company buying Time Warner Cable Inc. and Bright House Networks.

New York Times
New York, New York
17 November 2015

Liberty Global, the European cable and wireless operator controlled by John C. Malone, agreed on Monday to buy the British telecommunications company Cable & Wireless Communications for $5.5 billion.

The move follows an announcement last month that the companies were in discussions about a potential takeover that would expand Liberty Global’s presence across the Caribbean and Latin America.

Under the terms of the deal, Liberty Global said it had offered $1.32 for each Cable & Wireless share, including a one-time 4.5 cent dividend that would be paid once the transaction closed.
The deal represents a premium of roughly 50 percent on Cable & Wireless’s stock price before the potential takeover talks were first disclosed in October.

The acquisition of Cable & Wireless, which traces its roots to 1852, “will add significant scale and management depth to our fast-growing operations in Latin America and the Caribbean,” Liberty Global’s chief executive, Michael T. Fries, said in a statement on Monday.  Including Cable & Wireless’s outstanding debt, the deal is valued at $8.2 billion.

Cable & Wireless’s operations include television, broadband, mobile and land line telephone services in the Caribbean, Panama and the Seychelles. The acquisition represents a change for Liberty Global after the company acquired several telecommunications operators across Europe.

Those deals combined have been worth tens of billions of dollars, and included acquisition of Virgin Media, a British cable operator, and Ziggo, a Dutch telecommunications provider. Liberty Global also held early-stage talks with Vodafone, the British wireless giant, over a potential asset swap, though both companies announced recently that the discussions had not led to a deal.

Yet as European regulators increasingly frowned on further consolidation in the region’s telecom sector, Liberty Global shifted some of its focus to Latin America and the Caribbean.

In the summer, for example, Liberty Global created a new tracking stock called LiLAC to “exploit organic growth potential” for its operations in Latin America and the Caribbean.

The company said on Monday that it had “growing ambitions” in the region, and would use Cable & Wireless’s existing services to expand further there.

Mr. Malone already has a 13 percent voting stake in Cable & Wireless. That ownership came through an earlier deal in which Cable & Wireless paid about $1.9 billion in cash and stock for Columbus International, which was partly owned by Mr. Malone.


Cable & Wireless
London, United Kingdom
14 February 2011

CABLE & WIRELESS COMMUNICATIONS PARTNERS WITH CUBA AND VENEZUELA ON NEW FIBRE OPTIC CABLE

25 year tri-nation cable-landing agreement between LIME (Cable & Wireless Communications Caribbean operation) and TGC (owned by Telecom Venezuela and Transbit SA of Cuba)

Cable & Wireless Communications to provide TGC capacity to Europe Major upgrade to Cuba’s Internet and data transmission capability

Cable & Wireless Communications (CWC) announces that LIME, its operation in the Caribbean, has signed a multi-million dollar contract with Telecommunicaciones Gran Caribe (TGC), a joint venture between Cuba (Transbit SA) and Venezuela (Telecom Venezuela).

LIME will be the strategic landing partner in Jamaica for TGC’s planned 240-kilometre undersea cable segment from Cuba to Jamaica. As part of the agreement, Cable & Wireless Communications will also carry voice and data traffic from Cuba to Europe.

The TGC cable will run from Puerto de la Guaira in Venezuela to Santiago in Cuba, then to LIME’s landing station in Ocho Rios, Jamaica - an entire length of more than 1500 kilometres. Itis the first international telecoms cable connection to Cuba for several decades, and will facilitate a significant increase in access to telecoms and internet services for Cuba. Today Cuba relies on satellite capacity for all of its international connectivity. The ultra high bandwidth infrastructure is projected to provide Cuba with data download speeds up to 3000 times faster than satellite, and is expected to lower the cost of international phone calls.

The cable, which lands in Ocho Rios, Jamaica today, will provide direct connectivity between the countries for voice and data traffic, with greatly increased capacity.  CWC will also provide TGC with interconnect services and private leased circuit capacity between Jamaica and London.

Tony Rice, CEO of Cable & Wireless Communications said:  “Our footprint in the Caribbean is unique and I am delighted this has given us the opportunity to partner with TGC and play a role in developing telecommunications in Cuba.”

David Shaw, CEO of LIME said:  “LIME is delighted to have been chosen by TGC to be its partner in this very important venture. We are a genuine regional company and an important part of our mandate is to ensure that the entire region is served by the most modern telecoms technology available and our enterprise and carrier customers have access to world-class capability.”

Wilfredo Morales, President and Waldo Reboredo, Vice President of TGC said:  “We are delighted to be collaborating with LIME on this venture which is a breakthrough of enormous importance to the people of Cuba, Jamaica, Venezuela and several other countries in Latin America. It will bring significant improvement in the quality of communications, with a substantial increase in data transmission speed. It will also facilitate and improve long distance medical consultation and cultural and educational exchanges – that is, it will have an economic and social impact on these countries.”

LIME also recently completed the installation of its new East-West Cable connection, linking Jamaica, Dominican Republican and the British Virgin Islands. The East West Cable completes LIME’s Caribbean “network ring” and will substantially increase the region’s available bandwidth.

About Cable & Wireless Communications

Cable & Wireless Communications is a global, full-service communications business. We operate leading telecommunications businesses through four regional units – the Caribbean, Panama, Macau and Monaco & Islands. Our services include mobile, broadband and domestic and international fixed line services in most of our markets as well as pay-TV, data centre and hosting, carrier and managed service solutions. Our operations are focused on providing our customers – consumers, businesses, governments – with world-class service. We are the market leader in most products we offer and territories we serve.

About LIME

LIME is the Caribbean’s leading telecommunications company, focused on building products and services that make Caribbean people’s lives better. LIME’s aim is to deliver the best communication services across the board, full stop. LIME is part of Cable & Wireless Communications, one of the world’s leading international communications companies.

NOTE:

19 November 2015: From Investor Relations at Cable & Wireless- "We already possess various permits previously issued from OFAC and see no impact from the transaction."

Low Prices May Challenge Cuba's Deep-Water Exploration

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From AFP

9 November 2015: “Cuba is organising a new search for oil in the Gulf of Mexico after four earlier exploratory wells failed to make commercially viable finds, a state official said Monday.

The new round of drilling in Cuba's exclusive economic zone in the Gulf of Mexico is set to begin in late 2016 or early 2017, said Osvaldo Lopez, head of offshore exploration at state oil company Cupet.

He told state television that Venezuela's PDVSA and Angola's Sonangol will drill for oil at depths of 1,500 meters (4,900 feet).  "We have evidence there are deeper areas generating that oil. What we're trying to do is find a way to get to it," he said.

International experts say the area probably holds five to nine billion barrels, while the government estimates there are as many as 15 billion barrels in untapped reserves.  Cuba's exclusive economic zone in the Gulf of Mexico covers 112,000 square kilometers (43,250 square miles).

PDVSA, Spain's Repsol, Russia's Gazprom Neft and Malaysia's PC Gulf have previously drilled offshore wells, but concluded they were not commercially viable.

Cuba produces about 25 million barrels of oil a year from wells on land and offshore, but that covers less than half the island's consumption.  The rest it imports from Venezuela on favourable terms of payment.

Cuban crude is for the most part extra-heavy and used only for electric power generation and the production of cement, lubricants and asphalt.  Last month, Cupet said it was open to negotiating exploration deals with US oil companies.”

From The Wall Street Journal

16 November 2015: “Oil prices are currently trading slightly above $40 a barrel- their lowest levels since August- and more investment banks, energy companies and analysts don’t see the price rising above $60 a barrel until 2017.  The International Energy Agency said Tuesday oil prices would slowly rise to $80 a barrel by 2020, but also outlined a scenario in which they stayed at $50 a barrel.”

From an oil industry observer:

“The dependency for oil by the Republic of Cuba on Venezuela (US$1.8 billion cash flow) continues to be a concern on both sides of the Florida Strait.  Regrettably, after four failed attempts in 2012, deep-water oil exploration is not going to be the solution.

There remain “expectations” that Angola’s Sonangol will drill sometime in 2016-2017.  However, Sonangol is not a deep-water operator- they own 40% of Angola’s deep-water production, but are not the operators.  Chevron, Total, Exxon ENI and others are the IOC (international oil company) operators and they each have deep-water drilling expertise.

The Republic of Cuba also faces the challenge of low oil prices as deep-water (1,500 meters or more) generally requires a breakeven per barrel price of approximately US$72.00 and competition from Mexico, where their Gulf of Mexico geology is well-known and costs can be shared by IOC’s operations in the U.S. Gulf of Mexico.”

New Economic Eye On Cuba Newsletter

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ECONOMIC EYE ON CUBA©

November 2015

 

USCTEC Has New Design For Internet Site- 1

Restrictions Upon Cuba’s Use Of The U.S. Dollar For International Transactions To Be Altered- 1

United States Secretary Of Agriculture Visits Cuba- 1

Article In The WSJ About Delegation Importance Requires Clarification- 1

U.S. Lobbyists Now Have A Hard Target Date- 839 Days… Saturday, 24 February 2018- 2

Food/Ag Exports For September Increase 42%; Year To Date 38% Decrease- 3

Cuba Ranks 59th of 227 Food/Ag Export Markets Thus Far In 2015- 3

US$721,272.00 Increase In Healthcare Product Exports- 4

U.S. Port Export Data- 13

Updated Speaking Schedule- 14

 

 

Restrictions Upon Cuba's Use Of The U.S. Dollar For International Transactions To Be Altered

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Representatives from 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, United States Department of State, United States Department of Justice, and The White House (National Security Council) are discussing (individually and collectively) ways to implement changes to regulations that restrict the use of the U.S. Dollar by the government of the Republic of Cuba for international transactions. 

The changes are likely to be implemented by the end of 2015.  

With increasing examples of United States-based financial institutions blocking and/or delaying payments received from the Republic of Cuba or sent to the Republic of Cuba, the Obama Administration has determined that a change is required both to correct the current issues and to further create national and international pressure(s) upon the government of the Republic of Cuba to authorize the implementation of the regulations issued thus far in 2015 by the BIS and OFAC.

The decision has been made; the focus now is to determine the scope of the regulatory changes- will all restrictions be removed, will there be sector-by-sector changes, or will there be a stepped-approach dependent upon reciprocity (i.e. commence and/or increase purchases of exports from the United States, provision of services, etc.) by the government of the Republic of Cuba.

The efforts by the Obama Administration continue to be energized by the desire for a visit in 2016 by President Obama to the Republic of Cuba.

United States Secretary of Agriculture Thomas Vilsack To Visit Cuba

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The Honorable Thomas Vilsack, United States Secretary of Agriculture, will visit the Republic of Cuba from 11 November 2015 to 14 November 2015.  He will be accompanied by United States Senator Jeff Merkley (D- Oregon), and three Members of the United States House of Representatives- Terri Sewell (D- Alabama), Susan DelBene (D- Washington) and Kurt Schrader (D- Oregon).

“This trip will be an opportunity to support the administration’s commitment to normalizing relations and empowering the Cuban people through bilateral agricultural engagement,” Vilsack says in a news release.

“Food and agricultural goods are the dominant U.S. exports to Cuba and agriculture can serve as a bridge to foster cooperation, understanding and the exchange of ideas," he says. "Expanding markets for American agriculture has been a priority for this administration, and relationships like the one we aim to build with Cuba are crucial to continuing the momentum we have seen over the past six years."

Banking Woes Ground Some Charter Flights To Cuba- Miami Herald (11/9/15)

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Banking Woes Ground Some Charter Flights To Cuba- Miami Herald (11/9/15)

By Mimi Whitefield

Last month as it always does, Island Travel & Tours, which offers air charter service between three Florida cities and Cuba, asked its local bank to request a $35,000 wire transfer to pay the Cuban government $194 per passenger for landing fees and for mandatory health insurance for travelers.

Although the route of the money is a bit circuitous because of the embargo — the local bank asks a major correspondent bank to transfer the money to a Cuban account in a third country — it’s a procedure that Bill Hauf, president of the charter company, has been following for years. The money, he said, generally arrives in a day or two at most.

But this time, he said, four, then five days passed and the wire transfer still hadn’t been completed. Because he had other flights coming up and the Cuban government wants payment in full before a charter flight lands, he also requested transfers of $65,000, $100,000 and $50,000 to cover them. Those transfers also were delayed.

Hauf said it took numerous phone calls to the U.S. Treasury’s Office of Foreign Assets Control, his local bank and Chase — the correspondent bank that handles the transfers — before the problem was resolved. While he was waiting for a solution, he had to cancel a week of flights to Cuba because his payments hadn’t arrived in time.

And he is not alone. Other companies that need to transfer money to Cuban accounts to pay for flights, hotels, guides and rental cars also complain that since the rapprochement between the United States and Cuba, their wire transfers to Cuba have slowed to a snail’s pace and they have been peppered with extraneous questions about passengers, flights and itineraries that can further delay money transfers.

Under the opening toward Cuba outlined in December by President Barack Obama, Americans who fall into 12 categories ranging from those on educational and humanitarian activities to those taking part in sports and cultural events are allowed to visit Cuba without seeking prior approval from OFAC. (Cuban Americans are allowed to travel freely to the island as long as the Cuban government approves their visas.)

The onus of deciding whether Americans were authorized travelers used to fall to the air carriers. Under the new rules, the burden of proof as to whether travelers fit into the 12 categories falls on them — although all they have to do is check off a box on a form certifying which category they are traveling under.

But now Daniel French, general manager of Blanco International, a Miami charter company that had two of its Cuba flights canceled because of a delay in wire transfers, says that with all the questions they ask, it seems like the banks are taking it upon themselves to decide who is authorized to travel to Cuba.

“I keep telling myself [restoration of diplomatic relations with Cuba] is really great; we’ve been working for it for a long time. But what’s going on with the banks is very contradictory, and it’s a potential stumbling block in the process of normalization,” said Bob Guild, vice president of New Jersey-based Marazul Charters, which offers charters from Miami to various Cuban cities.

Guild said that Marazul has “certainly had similar problems” with wire transfer delays but that it has never reached a point where a Marazul flight had to be canceled. “We call up the banks and try to find out what’s going on and then we call the attorneys and ask them to intervene,” he said. “The last couple weeks have been relatively smooth for us. Will it happen again? I wouldn’t bet against it.

“Under the opening toward Cuba, the administration advised us that we would be able to make direct payments to Cuba and use U.S.-issued credit cards in Cuba. All those things have been talked about but it hasn’t happened,” Guild said.

Only Pompano Beach-based Stonegate Bank, which signed a correspondent banking deal with a Cuban bank in July, has availed itself of the new possibilities.

“Obama may have changed the banking and travel regulations but I don’t think the word has gotten down the pipeline to the banks,” said Vivian Mannerud, who books travel services to Cuba. She said she’s even heard of banks asking for a travel provider’s OFAC license number before transferring money. Under the new rules, specific licenses are no longer required and no one has a license number.

French, of Blanco International, which has been offering charter flights to Cuba for the past 20 years, said wire transfers involving Cuba have always been slow. What has changed in his view is the Cubans’ attitude toward tardy payments.

Cuba used to be more accepting about wire transfer delays, he said, and as long as Havanatur Celimar knew a payment was in progress, there wasn’t a problem with landing rights. But now, French said, “The Cuban goodwill has run out; they are enforcing the contracts.”

During a United Nations speech on Oct. 27, just before the U.N. overwhelmingly voted to support a resolution condemning the U.S. embargo, Cuban Foreign Minister Bruno Rodríguez mentioned not only U.S. banks’ holding up payments by charter companies but also said that the first payment to Cuba by Sprint to begin direct roaming service on the island had been delayed and that SWIFT, a global messaging network that financial institutions use to transmit instructions and information securely, had recently canceled its contract with Cuba.

Even though the United States has removed Cuba from its list of state sponsors of terrorism, which eliminates some financial sanctions against the island, and Obama has said he wants to work with Congress to lift the embargo, Rodríguez said: “We shouldn’t confuse reality with the desires and expressions of goodwill. Matters such as these can only be judged by actions. Ten months after the announcement of Dec. 17, there hasn’t been any tangible, substantial modification in the application of the blockade.”

The day after Rodríguez’s U.N. speech, French said he received an email from the Cuban Embassy letting him know that payments had to be made on a timely basis. “Cuba’s position is they won’t provide services if money doesn’t arrive on time,” he said. At 5 p.m. Oct. 30, French was informed that Blanco International’s landing rights for its Sunday flight had been canceled. His Monday flight was canceled for the same reason.

“I’ve seen Chase hold up a lot of our clients’ monies,” said Augusto Maxwell, a Miami lawyer who heads Akerman’s Cuba practice. “But they usually release them in a few days after they get a greater degree of certainty.”

Hauf said other banks also are asking charter companies questions that aren’t on point, delaying wire transfers. Chase, he said, asked for passengers’ itineraries in Cuba. “We take many Cuban Americans on our flights. We don’t ask them where they are having breakfast with their families,” Hauf said. “Every question can hold up the payments four or five days at a time.”

Cuban authorities canceled the first Island Travel flight on Oct. 21 and the payment problem wasn’t resolved until Oct. 28 when the company’s flights resumed.

Blanco International also is back in the air, but French said he’s now trying to send money 15 to 20 days in advance and is exploring doing business with a bank that doesn’t use Chase as its correspondent bank.

“Our reputation is being affected by this wire transfer problem,” French said. Not all of his U.S.-bound passengers could immediately be rebooked, leaving some stranded in Havana for a few days, he said. “The panic happens in Havana when people are trying to get home.”

When Hauf informed travelers at Miami International Airport that their Island Travel flights had been canceled, he had a police escort. “People were very upset; they were angry,” he said. “I sold them the tickets, so I had to try to make it right — even though it wasn’t our fault.”

Island scrambled to get passengers booked on other charters — no easy task because many flights are full during the high season, or refund their fares. Also adding to his costs were attorney fees and putting up out-of-town passengers at hotels until their rebooked flights departed.

“Why are the banks doing this when OFAC has told them this travel is legal?” Hauf said. “It’s a serious problem.”

JPMorgan Chase declined to comment.

“The challenge for banks is two-fold,” Maxwell said. “On one hand, they’ve been so drilled to avoid Cuba because the fines against some banks have been so staggering. Then on the other hand, the rules are brand-new and somewhat open-ended, giving some banks vertigo.”

In some cases, he said, bank software set to flag Cuba transactions and bank staff still need to be updated on the new regulations governing banking and commerce with Cuba.

“I’m not really terribly surprised [that banks’ are holding up wire transfers],” said Fernando Capablanca, managing director at Whitecap Consulting Group. “Once a bank starts to prevent something from happening, it’s very difficult to unwind.”

The volume of money being sent to Cuban accounts and the number of companies making payments also have increased, perhaps adding to banks’ queasy factor, Maxwell said.

Meanwhile, analysts said perhaps the biggest reason banks are wary of Cuba business are the huge — and recent — fines aimed at banks that have done business with sanctioned countries. Just last month, France’s Crédit Agricole bank paid nearly $800,000 to U.S. state and federal agencies to settle allegations it tried to hide or obscure references to transactions involving U.S.-sanctioned nations, including Cuba.

Maxwell said it is his understanding that the ongoing settlements have to do “with egregious violations that occurred in the past. These are long-standing investigations that are working their way through the system.”

In 2011, Chase agreed to pay more than $88 million to settle an OFAC investigation into wire transfers to Cuban nationals in late 2005 and early 2006 that totaled around $178.5 million.

“The banks are scared and I don’t blame them either,” French said. But in the meantime, he said, OFAC needs to provide very clear instructions on how banks should proceed with matters related to Cuba travel and payments.

“We continue to work with financial institutions and industry to clarify our regulations so that they can appropriately comply with our regulations,” the Treasury said in response to a Miami Herald inquiry. “In line with the president’s policies, OFAC’s regulatory changes over the past year underscore our commitment to empowering the Cuban people. As part of this, we are focused on facilitating authorized travel and commerce, to enhance engagement between Americans and Cubans, and improve the lives of the Cuban people. As with all of our regulations, it is our priority to make them as effective as possible.”

In his recent remarks at the United Nations, Ronald Godard, U.S. senior area adviser for Western Hemisphere Affairs, said progress had been made in the U.S.-Cuba relationship. Still, he said, “fully normalizing our bilateral relationship will require years of persistence and dedication on both sides.”

 

Read More

U.S. Lobbyists Now Have A Hard Target Date- 839 Days... Saturday, 24 February 2018

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On 7 November 2015, Venezuela-based teleSUR reported that 84-year-old H.E. Raul Castro, President of the Republic of Cuba, will retire on 24 February 2018, upon completion of his current term in office:

 “I will not become the great-grandfather nor the great-grandson as then the Cubans would get bored of me… I will step down on February 24, 2018,” President Castro said, as quoted by El Financiero.

The Obama Administration’s new and revised regulations issued on 18 September 2015 by the Office of Foreign Assets Control (OFAC) of the United States Department of Commerce and Bureau of Industry and Security (BIS) of the United States Department of Commerce resulted in an evisceration of legislative efforts to change statutes and regulations and policy using the United States Congress; and a reallocation of funding resources away from Washington, DC-based advocacy organizations working in support of legislative efforts

United States-based companies are again viewing the “end the embargo” landscape during the remaining months of the Obama Administration as exclusively a focused exercise upon the issuance of new regulations and the revision of existing regulations. 

There is little value in funding legislative efforts when there is unlikely to be legislation enacted into law before 20 January 2017.  Some advocacy groups have begun tacking their focus (while blaming the Obama Administration) from the 114th United States Congress to the 115th United States Congress and to the next occupant of The White House; that’s not going to work- too many unknowns and too few resources better directed elsewhere.  Members of Congress may see their efforts to obtain contributions from United States-based companies lessen or evaporate.

There are unlikely to be changes in United States law relating to the Republic of Cuba until at minimum 2018, the retirement of President Castro as that moment fulfills a provision of the Libertad Act which conditions a government which does not include President Castro or former President Fidel Castro.  This could change, but that would require the government of the Republic of Cuba to not only authorize, but embrace initiatives offered by the Obama Administration. 

Another intended or unintended consequence of the 18 September 2015 regulatory changes was Members of Congress and advocacy groups reversed their pre-September 2015 mantra that the United States must do more to obtain more from the government of Cuba and re-adopted the 2001 through 2014 perspective that the government of the Republic of Cuba needs change its policies and its laws and its regulations to authorize United States-based companies to commercially engage; and reverse the decline of food product and agricultural product cash-only imports permitted by the TSREEA- made more efficient through regulatory changes and revisions since December 2014. 

In October 2015 at the United Nations in New York City, H.E. Bruno Rodriguez, Minister of Foreign Affairs of the Republic of Cuba, said “We should not confuse reality with wishful thinking or expressions of goodwill,”…  “We can only judge based on facts.” Since December 2014, there has been “no tangible, substantial modification.”

If the government of Cuba continues to respond in this way to each overture from the Obama Administration, the result will be a continued period of expectation, rather than implementation.   

When Retaining An Attorney....

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When you retain the services of an attorney, make certain that your attorney knows more than you do... A client should not pay to educate a law firm....  That's their responsibility.

Ask for examples of their working on licensing issues (and obtaining licenses when required) with 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, Office of Cuban Affairs at the United States Department of State.

Ask for examples of their working on commercial issues, and obtaining a result, with the government of the Republic of Cuba- Ministry of Foreign Affairs, Ministry of Foreign Trade, etc.

 

 

Article In The Wall Street Journal About Size Of US Chamber Delegation Not Correct

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From The Wall Street Journal (11/6/15)

"The Chamber of Commerce group included more than 60 representatives from 32 companies such as Boeing Co. BA -0.02 % , Amway, Sprint Corp., American Airlines Group, AAL -0.57 % Caterpillar, Morgan Stanley MS 4.52 % and others. It was the largest U.S. business group to travel to the island at least since the 1959 revolution."

The statement is not correct.

In 2002, 923 representatives of United States companies visited the Republic of Cuba to attend the U.S. Food & Agribusiness Exhibition organized by Connecticut-based PWN Exhibicon International.  The licensing process took more than three years.  The statistics from the event:

Number of product export licenses processed by United States Department of Commerce Bureau of Industry and Security (BIS): 225

Amount of cargo transported to Cuba (dry, chilled, frozen): 154,000 pounds

Cargo aircraft: 4

Exhibitors: States, District of Columbia, Commonwealth of Puerto Rico: 35

Exhibitors receiving contracts/agreements: States and Commonwealth of Puerto Rico: 21

Exhibition booths: 218

Exhibitors: 291

Individual representatives of exhibitors: 923

Visitors: 16,000

Non-Republic of Cuba-based media representatives with accreditation: 92

Governor (Minnesota): 1

Lieutenant Governor (North Dakota): 1

Secretary/Commissioners of Agriculture (Georgia, Kentucky, Iowa, Maryland, Minnesota, North Dakota, Virginia).  The Departments of Agriculture of Illinois, Missouri, North Carolina, and Texas were also represented: 7

It was much more of an effort to make that event happen in 2002 than it was in 2015....

 

Reuters: U.S. Might Take More Steps To Relax Embargo, Official Says

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By Daniel Trotta

HAVANA Nov 3 (Reuters) - U.S. President Barack Obama could further relax the U.S. trade embargo of Cuba, a senior State Department official said on Tuesday, adding that Washington would not first demand human rights progress from Havana.

Obama has twice used executive authority to ease the embargo as part of his opening to Cuba, and more such regulatory changes could come if Cuba can absorb those made to date, said David Thorne, a senior adviser to Secretary of State John Kerry.

"We are making progress. We are making regulatory changes. We'll make more," Thorne told Reuters in an interview.

Obama has eased travel restrictions on Americans, authorized telecommunications companies to operate in Cuba, and permitted trade with Cuba's small but growing private sector, among other measures.

But Cuba has been slow to embrace U.S. business, citing its inability to use dollars or receive U.S. credits under the embargo. In one notable exception, Cuban state telecommunications monopoly Etecsa on Monday signed a roaming agreement with U.S. carrier Sprint Corp.

"The pace is really going to be set by the Cubans and we are satisfied with how they want to do this," said Thorne, who did not specify what changes might come.

Obama reversed the course of 10 previous presidents last December when he agreed with Cuban President Raul Castro to end Cold War-era animosity and restore diplomatic relations.

Obama has also called on the Republican-controlled U.S. Congress to end the trade embargo, in place since 1962, but legislation to lift it has stalled.

Opponents of detente say the United States should continue to pressure Cuba over its one-party political system and repression of political opponents.

Thorne said Washington was not expecting rapid change on human rights.

"As in other parts of the world, we are really trying to also say: Let's find out how we can work together and not always say that human rights are the first things that we have to fix before anything else," Thorne said.

"We have to figure out how we can help each other, work together, create a sense of shared prosperity. And then we think that what comes along with that is an increasingly open environment for the discussion on human rights," he added.

Cuban police held 1,093 political activists in short-term detention in October, the highest monthly total this year, according to the dissident Cuban Commission of Human Rights and National Reconciliation.

Thorne, on a three-day visit to Havana, met with Foreign Trade Minister Rodrigo Malmierca and Cubans working in the private sector as small business owners or in cooperatives. He also attended the inaugural meeting of the U.S.-Cuba Business Council, an initiative of the U.S. Chamber of Commerce.

What To Watch For Next

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Cuentapropista/Private Cooperative-Only Stores In Cuba?

United States companies potentially benefiting: Illinois-based Grainger, Wisconsin-based ABC Supply, Georgia-based Home Depot, North Carolina-based Lowe’s, Texas-based Sysco, Ohio-based Sherwin-Williams, New York-based Restaurant Depot, Texas-based Sally Beauty Supply, Tennessee-based Tractor Supply Company, Virginia-based Advance Auto Parts, Wisconsin-based SC Johnson, Missouri-based Graybar and California-based Square amongst others. 

Republic of Cuba nationals have one of the highest awareness and highest preference for United States brands of any country.

To accommodate one of President Obama’s regulatory initiatives, the government of the Republic of Cuba would establish stores, owned and managed by a Republic of Cuba government-operated company, which would sell products on a wholesale basis exclusively to Republic of Cuba nationals registered within the (current) 201 categories of cuentapropistas and to members of private cooperatives.  To access the stores, a cuentapropista/private cooperative representative would present his/her license when entering and again at check-out.

The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and Bureau of Industry and Security (BIS) of the United States Department of Commerce currently authorize United States-based companies to export directly products to cuentapropistas and to private cooperatives. 

The government of the Republic of Cuba does not permit cuentapropistas and private cooperatives to directly import products; requiring products be purchased through Republic of Cuba government-operated wholesale/retail channels. 

With wholesale-only cuentapropista/private cooperative-only stores, the OFAC and BIS might authorize direct exports to the Republic of Cuba government-operated company managing the wholesale-only cuentapropista/private cooperative-only stores because the products sold would be solely destined for use by the Cuentapropistas/private cooperatives.  The government of the Republic of Cuba would maintain its requirement to manage product imports.

Creation of the stores would provide opportunities for another Obama Administration initiative, United States-based companies engaging in, depending upon credit worthiness, payment terms, loans and leases to cuentapropistas/private cooperatives because there will exist specific products to match with opportunities.

Since the products offered by wholesale-only cuentapropista/private cooperative-only stores would be restricted, perhaps the OFAC and BIS would also permit United States-based companies to provide payment terms (including consignment), loans and leases directly to the Republic of Cuba government-operated company that is managing the wholesale-only cuentapropista/private cooperative-only stores provided that the products are sold exclusively to cuentapropistas/private cooperatives.

The Republic of Cuba government-operated company managing the wholesale-only cuentapropista/private cooperative-only stores should have an account with Republic of Cuba government-operated Banco Internacional de Comercio SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA.

Pompano Beach, Florida-based Stonegate Bank has a Direct Correspondent Banking Agreement with BICSA permitting a more cost-effective and efficient means of receiving payments for, payments from and payments to United States-based companies.  To enable greater transactional efficiencies, BICSA should have OFAC authorization to establish an operating account with Stonegate Bank.

Currently, many products for cuentapropistas/private cooperatives are imported to the Republic of Cuba by individuals traveling on the charter flights operating from the United States to the Republic of Cuba; the government of the Republic of Cuba is not preventing these deliveries.

With wholesale-only cuentapropista/private cooperative-only stores, friends and relatives of Republic of Cuba nationals who reside outside of the Republic of Cuba, particularly within the United States, will have an efficient means of directing remittances and loans in support of cuentapropistas/private cooperatives.