U.S. Eases Restrictions on Travel to Cuba and Bank Transactions
WASHINGTON — The Obama administration announced Tuesday that it would allow individuals to travel to Cuba for “people to people” educational trips and lift limits on the use of American dollars in transactions withCuba, wiping away stiff restrictions on travel and commerce as President Obama prepares to make a trip to Havana next week.
The actions are some of the most significant regulatory changes the Treasury and the Department of Commerce have made on the way toward normalization that Mr. Obama and President Raúl Castro of Cubaannounced in December 2014. They come days before Mr. Obama will land in Cuba, the first visit by a sitting American president in 88 years and a marquee element of his foreign policy.
While Americans are permitted to make educational visits to Cuba in tour groups, a tourism ban has barred individuals from traveling there under most circumstances.
Under Tuesday’s revisions, Americans who plan a trip with a full schedule of educational exchange activities, including interacting with Cuban people, will for the first time in decades be able to travel on their own to Cuba without special permission from the United States government.
The change punctures a major element of the American embargo against Cuba, which remains in effect despite Mr. Obama’s repeated calls for its repeal — the Republican-led Congress has shown little interest in lifting it. While tourism is still barred by statute, the new rules amount to permission for any American who wants to travel to Cuba to plan an educational sojourn there, as long as they keep records of their activities for five years.
Travelers who fill their days with museum visits, cultural sightseeing and conversations with Cubans about their society, and keep a daily journal, could meet the requirements. American officials suggested that there would be little policing of the comings and goings of those making people-to-people trips.
“We have enormous confidence in the American people as ambassadors for the things that we care about,” said Benjamin J. Rhodes, Mr. Obama’s deputy national security adviser for strategic communications and his point man on opening relations with Cuba. “There’s no shortage of opportunities for Americans to build that type of meaningful schedule of people-to-people engagement while they go to Cuba. We believe that’s the best way to connect the Cuban people with the wider world.”
But Representative Ed Royce, Republican of California and the chairman of the House Foreign Affairs Committee, said the actions would prop up a government with a long record of human rights abuses. “While the Castros and their agents are given access to the U.S. financial system, the suffering Cuban people will still get paid in funny money — if at all,” he said.
John Caulfield, who served as the chief of the United States mission in Cuba from 2011 to 2014, said the change would expose Americans to a more authentic experience in Cuba than they have been able to get on organized tours.
Many of the existing tours have evolved into a formulaic itinerary that can be heavily influenced by Cuban state-run companies, involving a relatively closed circle of architects, performers, economists and organic farmers who cycle through American tour groups, often receiving money for the visits.
“In our diligence to make sure people were doing people-to-people, we allowed them to fall into the trap of the Cuban propaganda machine,” Mr. Caulfield said in an interview. “Basically it was the Potemkin tour of Cuba, where the Cubans could exert control.”
He added, “This allows a lot more flexibility for the travelers.”
The rules announced on Tuesday will also allow Cuban citizens to earn a salary in the United States and make it easier for dollars to be used in financial transactions with United States banks, something government officials in Havana have long pressed for. They come on the heels of an agreement last month between American and Cuban officials to restore direct commercial flights between the countries.
The changes reflect a major behind-the-scenes effort by American and Cuban officials to strike a series of deals before Mr. Obama’s visit to ensure that the trip is seen as a success.
Removing these barriers “is recognition that the Cuban people, particularly the growing number of Cubans who run their own small businesses, benefit when Americans travel to the island,” said Senator Jeff Flake, Republican of Arizona, who supports lifting the embargo and will make the trip with Mr. Obama. “Increased travel by Americans will lead to more Cuban entrepreneurs who are less dependent on the Cuban government. This is a great thing.”
While administration officials argued that lifting the sanctions would serve United States interests, making it less expensive and easier for Americans to travel to Cuba and do business there, they also acknowledged on Tuesday that the Cubans must make their own regulatory modifications to allow the changes to take hold. The Cuban government still imposes a penalty of 10 percent to exchange American dollars in Cuba, Mr. Rhodes noted, and does not allow foreign firms to hire Cubans directly.
Cuban officials routinely contend that there can be no true move to normalization until the United States repeals the embargo, and many American companies are fearful of running afoul of the statute even with the latest revisions.
As part of the action on Tuesday, the Treasury Department, which enforces the embargo through its Office of Foreign Assets Control, said it would allow so-called U-turn transactions, in which money from Cuba or a Cuban citizen can be cleared through a United States bank and transferred back in dollars. They would also allow American banks to process dollar-denominated transactions from Cuba, and to open accounts for Cubans that they could use to receive payment in the United States and send money back to Cuba.
But United States banks may still worry about being penalized, now or in the future, for touching such transactions, said Carlos M. Gutierrez, the Havana-born secretary of commerce under President George W. Bush, who is a convert to Mr. Obama’s policy change and will make the trip next week.
“These are regulations — these are done by executive authority, so they can be undone by executive authority,” said Mr. Gutierrez, now chairman of the Albright Stonebridge Group and the U.S.-Cuba Business Council. “We have to get rid of the embargo for this to actually take hold.”
By JULIE HIRSCHFELD DAVIS MARCH 15, 2016