WOLA: Advocacy for Human Rights in the Americas
27 Nov 2013 | Commentary

U.S. Cuba Policy Undermining U.S. Policy on Cuba

By Marc Hanson

In recent weeks, President Obama and Secretary of State John Kerry have spoken directly about the need to “update” U.S. policy towards Cuba. This week, we’ve learned that beyond being out of date and anachronistic, U.S.-Cuba policy might be better understood as incoherent, at odds with itself, and undermining the national interest.

The event that encapsulates this is the recent suspension of consular services by the Cuban Interests Section in Washington. Called a “startling move” in the Miami Herald, the decision is more accurately described as the result of cold calculation of political and financial risk made by the American banking sector.

In July of this year, M&T Bank informed the Cubans that it would no longer provide banking services to foreign missions and provided a window of time for the Interests Section and the Cuban Permanent Mission to the United Nations to find a new bank and open new accounts. Apparently, no banks were willing to take the Cubans on as clients due to onerous regulations and exposure to increasingly aggressive and highly politicized enforcement actions by the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC). After a US$612 million settlement against it last year, financial services firm ING closed its representative office in Cuba, and this month OFAC leveled its largest ever sanction against a non-bank business for their involvement with the Cuba oil sector.   

Nevertheless, in an attempt to fulfill their legal responsibilities articulated in a 1977 interest section agreement with Cuba, the U.S. State Department has reportedly approached banks and has been working with the Cuban authorities to identify new banking options. However, with no authority to compel banks to provide such services, the State Department has been frustrated in finding a resolution to the matter. This has left the Cubans with dwindling cash reserves such that the Interest Section determined it needed to suspend services to conserve funds.

What’s at stake?

In addition to inserting needless additional stress in the seasonal travel plans of thousands of Cuban-Americans hoping to visit their families, the suspension of consular and travel visa services will also stall a highly successful Obama foreign policy that is beginning to show positive results.

In 2009 and 2011, among other reforms, the Obama administration eased travel restrictions and remittances allowing more Americans and cash to go Cuba. In part, the policy logic was that exposure to American travelers and the private exchange of money would help inform independent thinking on the island and lay a foundation for an evolution towards a more open political system.

Last week, Secretary Kerry underscored the centrality of American travel to Cuba to our national interest stating, “Each year, hundreds of thousands of Americans visit Havana, and hundreds of millions of dollars in trade and remittances flow from the United States to Cuba. We are committed to this human interchange, and in the United States we believe that our people are actually our best ambassadors. They are ambassadors of our ideals, of our values, of our beliefs.”

In a Kafkaesque twist of bureaucratization run amok, blindly zealous enforcement actions by OFAC are actually undermining the State Department’s ability to conduct foreign policy and execute legal diplomatic obligations.

There is no simple answer to unwinding the thicket of regulation and exposure to investigation that prevent U.S. banks from providing Cuban diplomatic missions the services they require to reopen consular activities and sustain continued U.S. travel to Cuba. Instead, there are a range of steps the White House could take immediately to change political climate and alter the banks’ calculations of risk.

These steps include making public statements that banks will be protected from legal peril for providing these services and seeking input from the banks about what OFAC would need to do to reassure them; moves to ease the threat of investigation from overly aggressive enforcement actions by OFAC; and removing the obsolete designation of Cuba as a State Sponsor of Terrorism are a good place to start.  

These would, of course, be sensible steps independent of current circumstance, but in this context, they might help persuade the banks and restart our travel policy.