According to reports published this week, the Trump Administration is preparing to release the results of its policy review on Cuba in the “coming weeks.” We don’t have a crystal ball (or a leaking insider). But we continue to believe that when you eliminate the impossible, what you have left (however improbable) may be the truth. That adage, from Conan Doyle, has guided our predictions of many Trump administration policies.
Our bold predictions are based on our knowledge of Obama Administration policy, our reading of Candidate Trump’s words, and our thinking about what the current Administration is most likely to consider in the interest of the United States.
What were the Obama policies?
As we reported here, President Obama eased Cuba sanctions, but retained the overall embargo and the tourism ban. The big changes were in the following areas, mostly effected through Presidential Executive Order (for this abbreviated list, we just picked the ones we like the best):
- Restoration of diplomatic relations and reopening of the U.S. embassy in Havana
- Removal of Cuba as a State Sponsor of Terrorism
- Expansion of travel categories to allow Americans to travel to Cuba legally without much restriction;
- Resumption of commercial flights and cruise ship travel
- Travel services: expansion of authority for travel agents, tours, and travel-related financial services
- Increased exports of telecommunications and internet items
- Licensing of certain transactions “in support of the Cuban people”
- Financial transactions: Authorizing U.S. credit cards on the island (though in practice not much progress has been made); increasing remittances; authorizing opening of bank accounts
- Contingent contracts: U.S. businesses may negotiate and enter into contracts with Cuban parties as long as the agreements are contingent on OFAC authorization
- Infrastructure: permission to provide services, including developing, repairing, maintaining, and enhancing Cuban infrastructure to support the Cuban people
- Increased authorization of scientific and medical collaboration:
- Increased trade in consumer goods online
- Certain Imports authorized: coffee, textiles, goods from Cuban entrepreneurs, and All the Cigars You Can Fit in Your Hand– goods by Cuban entrepreneurs, whatever can fit in your baggage; Cuban origin software and apps.
What did Candidate Trump say?
- On October 12, 2016 Candidate Trump tweeted that “the people of Cuba have struggled too long. Will reverse Obama’s Executive Orders and concessions towards Cuba until freedoms are restored.”
- On November 28, 2016, President-Elect Trump tweeted: “if Cuba unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate deal.”
What will President Trump do?
Cuba continues to hold cultural, strategic, and economic interest to the United States. We note that Mr. Trump did not say he would reverse all the Executive Orders (nor did he specify what “deal” he might terminate). Moreover, many of the Obama-era changes have garnered bipartisan support in the United States. And some want to open up even further to Cuba (for example, last week 55 Senators re-introduced bipartisan legislation that would end the Cuba travel ban altogether). Nevertheless, we know there is extreme pressure on the Administration to shake up the status quo on Cuba. What could he do?
- We think it unlikely he will return to the pre-Obama embargo, particularly given the intense activities of China and Russia in Cuba in recent years.
- It would be hard to reverse the enormously popular changes on remittances and travel.
- He could very well keep the main travel policies in place, but increase enforcement to ensure Americans are lawfully traveling under the authorized categories of travel.
- We think President Trump could downgrade diplomatic relations with Havana and condition the reopening of the Embassy on advances in human rights protection by the Castro government.
These intense debates within the Administration on Cuba are (perhaps improbably) now reportedly coming to an end. If that is accurate, we may learn in weeks, not months, which direction President Trump will take. Look for a splashy announcement in South Florida if the new policy will be a severe rollback. We anticipate a more subdued announcement, perhaps on a Friday in the near future, if it will be a more nuanced approach.