The Cuban government announced last week that for the first time since the early days of the Cuban Revolution, Cuban nationals living abroad can invest in and own private businesses on the island.
The Cuban minister of external enterprises and external investment, Óscar Pérez-Oliva Fraga, said in a lengthy interview on state television that the move is intended to “open the door” to Cubans across the globe to invest at home. The statements were directed at the Cuban diaspora, of which the largest population lives in Florida.
In Cuban-American circles of South Florida, the announcement was met with a collective scoff. Republican Congressman Carlos Gimenez said: “If you are crazy, go ahead, invest in Cuba.”
The congressman said that the Cuban economy is “completely destroyed,” and it is all due to internal factors, not the U.S. Embargo on Cuba or the ongoing U.S. fuel blockade that has deepened a humanitarian crisis.
Cuba is “always blaming the U.S. embargo, but it is their own incompetence, their own corruption” that is the cause of the current situation, said Gimenez.
“ It's kabuki theater. They're signaling to the U.S. government. They know that those investments are not allowed under U.S. law.”Jeremy Paner, former U.S. sanctions investigator
The Cuban announcement has nonetheless laid bare a reality that many refuse to acknowledge: the U.S. trade embargo on Cuba creates layers of restrictions for Cubans in Florida, even if they were “crazy” enough to want to invest in their nation of birth.
“U.S. law is nowhere near authorizing those investments. I mean, it's just not even – it's not a close call,” Jeremy Paner, a former sanctions investigator at the federal Office of Foreign Assets Control, told WLRN, referring to the Cuban announcement.
Paner, now a partner in private practice at Hughes Hubbard & Reed, said the Cuban announcement was in reality meant to signal to the U.S. government that it is willing to play ball and negotiate a solution to the ongoing geopolitical standoff. But in order to get anywhere meaningful on the economic front, those negotiations could require U.S. actions as well.
“ It's kabuki theater,” said Paner. “They're signaling to the U.S. government. They're not signaling to potential investors in Miami because they know – I know that they know – that those investments are not allowed under U.S. law.”
More opportunity in Spain
The U.S. restrictions on doing business in Cuba pertain to any currency transactions that use the U.S. dollar. A whopping 89% of global currency transactions use the U.S. dollar, according to an Atlantic Council monitor.
The remaining 11% leaves room for people using other currencies like the Euro. In reality, it likely means that Cubans living in Spain — which has become the growing preference for Cuban migration after pathways to the U.S. have been cut — could have more opportunity to invest in Cuba than those living in Florida.
“If Cubans living in Spain want to invest in Cuba, then there is no [Office of Foreign Assets Control] jurisdictional hook, then they could do that,” said Paner. “ OFAC can kind of play in the margins of the existing dollar prohibitions, but they cannot get rid of the prohibitions.”
Following the announcement on opening investment in Cuba up to nationals who live abroad, Secretary of State Marco Rubio said it was “not dramatic enough. It's not going to fix it."
READ MORE: Rubio calls for new Cuban leaders as latest blackout underscores deepening economic crisis
The comments echoed many others he has made in recent weeks, where he focused on the Trump administration’s wishes for deep economic reforms on the island.
“The only way Cuba is going to have a better future is if it has a different economic model,” he told Caribbean leaders at a meeting last month. Rubio has also recently stated that political changes are needed on the island, something he has pushed for his entire career in public life.
The New York Times recently reported that the Trump Administration is pushing Cuba to remove President Miguel Diaz-Canel while potentially keeping much of the rest of the communist government’s infrastructure intact, so long as serious economic reforms take place. President Trump has repeatedly praised how a similar model of reform is taking place in Venezuela.
Transitional government
A potential way to get around the U.S. side of the economic sanctions would be for President Trump to declare that a “transitional” government is in place on the island to ease the restrictions. But that kind of declaration can not happen on a whim.
“The word ‘transition government’ is an important thing. It’s not that the government is suddenly pro-democracy or whatever. It’s a new government,” said Paner. “If the [Cuban] government puts in the grand nephew as the new leader, or someone that has a familiar relation to Castro, that’s the same government. It’s not a transitional government.”
Secretary Rubio has called the New York Times report “fake,” while the paper stands behind its reporting.
Another way around the restrictions would be for Congress to repeal the U.S. Embargo on Cuba in order to open up business relations. The sanctions on Cuba are the only sanctions in the world that can not be quickly changed at the discretion of the President. Congress enshrined the sanctions on Cuba into law in 1996, following the Cuban Air Force shot down two civilian U.S. planes, killing four people.
It means that even if Cuba reaches a “deal” with the Trump Administration, as President Donald Trump has repeatedly suggested is being sought, the President would require the help of Congress to open up opportunities for U.S. businesses.
“The executive branch is very limited as to what it can do,” said Paner. “Cuba remains the strictest comprehensive sanctions program that the United States has ever had. You'd think, you know, North Korea, Iran. No. It's still Cuba.”
