U.S. companies test limits of Cuba embargo

U.S. companies test limits of Cuba embargo

The embargo, Cuban obstacles and uncertainty in electoral year hold back
banks and corporations.
NORA GÁMEZ TORRES
ngameztorres@elnuevoherald.com

U.S. residents who travel to Cuba will be able to use a MasterCard
issued by Florida-based Stonegate, the bank announced this month. But
what happens if they use the card in a hotel owned by the Cuban military
or a property seized by the Cuban government from U.S. owners in the 1960s?

For now, nothing. Since January 2015, the Obama administration has
allowed authorized U.S. visitors to use credit and debit cards in Cuba.
One day before President Barack Obama arrived in Havana March 20, the
administration also licensed Starwood hotels to administer two Cuban
hotels and spend money remodeling them.

One of those hotels, the Quinta Avenida Habana, is owned by the Gaviota
Tourism Group, a company owned by Cuba's Revolutionary Armed Forces.
Gaviota dominates the island's tourist industry, with more than 20,000
hotel rooms.

Details of the Starwood deal have not been made public, and neither the
company nor Stonegate replied to el Nuevo Herald requests for comment on
this story.

But critics of the new Obama policy toward Cuba believe that both the
credit card and hotel agreements violate the U.S. embargo and are not in
line with the administration's declared policy of "empowering the Cuban
people."

Former U.S. Rep. Lincoln Diaz-Balart said the use of credit cards by
authorized travelers is allowed, but would violate Section 103 of the
1996 Helms-Burton law if the transactions involve properties seized by
the Cuban government from U.S. owners.

The Obama administration "tries to justify legal actions by pointing to
one part of the law, but they are violating other parts," said
Diaz-Balart. "When you talk about offering financing and stolen
properties, I think you are violating the law."

Mauricio Claver-Carone, executive director of the U.S.-Cuba Democracy
PAC, said Section 103 "has no exceptions as written." The Obama
administration, he added, has been "stretching" embargo rules to
introduce new "exceptions" that derive from previous exceptions but are
"inconsistent" with other parts of the law.

Claver-Carone, who follows Cuba policy closely on his blog, Capitol Hill
Cubans, said the license issued to Starwood is "inconsistent" with the
policy of "empowering the Cuban people" because it would benefit the
military, not private business people.

In the case of Stonegate, he said, the U.S. Treasury Department should
require the bank to set up a system to certify that transactions with
its credit card will not involve confiscated U.S. properties.

A Treasury statement sent to el Nuevo Herald said its Office of Foreign
Assets Control "does not consider the use of credit cards by authorized
travelers in Cuba to be transactions subject to the prohibition in
Section 103."

Pedro Freyre, a lawyer at Miami-based Ackerman Senterfitt who advises
companies interested in doing business in Cuba, said the
administration's interpretation of Section 103 "is the correct one."

"I believe that Congress did not intend to limit credit card
transactions to authorized travel," he said. "If you go to the law
itself, in the definition of trafficking [with confiscated properties]
there is a specific exemption for travel-related transactions. That
indicates the intent of Congress when it approved the law."

Diaz-Balart, a Miami Republican who was one of the drafters of
Helms-Burton, said that although the law does include that exemption,
the intent of Congress was to outlaw any form of investments on the
island and financing for the government. "The law has not changed, and
the embargo has not been lifted," he said.

Legal studies generated by both sides of the policy debate over Cuba
have reached different conclusions, but all agree that Section 103 would
take precedence.

The law firm of Steptoe & Johnson LLP concluded in January of 2015 that
the new rules allowing the use of debit and credit cards "were
inconsistent with the prohibitions in the U.S. law related to indirect
financing of confiscated properties in Cuba."

A report commissioned by the Cuba Study Group from the law firm Hogan
Lovells in 2011 on executive branch powers concluded the president could
allow U.S. banks to offer Cuba financing for transactions linked to the
provision of authorized services.

"Any such authorizations, however, would be subject to the prohibitions
set forth in Section 103" and other laws "on the provisions for
transactions involving property confiscated by the Cuban government."

Source: U.S. companies test limits of Cuba embargo | In Cuba Today -
http://www.incubatoday.com/news/article86212852.html