Confusion reigns over sanctions and regulations

Confusion reigns over sanctions and regulationsHAVANA, Dec. 4th (cubastandard) So the Trump administration’s amended sanctions regulations, in addition to some more red tape and liability, now prohibit – as announced – individual travel under the “educational” category, the most-used of the 12 permitted categories by U.S. solo travelers.

Alaska Air argued that this is really bad for its business, and announced it will stop its daily Los Angeles-Havana flights due to this prohibition.

But in comes Airbnb, spends an unprecedented $250,000 on Cuba lobbying, and – surprise! – the new regulations include a provision that allows individual travel, under the “Support for the Cuban people” category.

Solo travelers, it seems, are OK as long as they stay in private homes or b&b’s and follow a full-time “support” schedule. Of course, everything now depends on how OFAC interprets “full-time support”. So whether the Airbnb loophole is big enough to sustain the current travel boom remains to be seen.

A lot of well being in Cuba – particularly among private business owners – depends on that. According to a leaked Cuban Tourism Ministry document, non-Cuban American U.S. travel through October this year was up a whopping 332%, and you can bet most of that was due to solo travelers.

If growth continues at this pace, the United States will surpass Canada as Cuba’s No. 1 source market as early as next year. Only Trump could stand in the way.

Confusion reigns on the Cuban side, as well, thanks to lack of transparency. Foreign Trade and Investment Minister Rodrigo Malmierca surprised everyone when he announced at the Havana International Fair that Cuba had secured $2 billion in foreign investment so far this year, and another billion dollars may be rolling in before the end of 2017.

Take these numbers with a spoonful of salt, because it seems that Malmierca’s big dollar figures reflect more wishful thinking than actual commitments. The hard truth is, most investors with green light from Cuban authorities are struggling to raise the funds they need for their mostly modest projects, no matter how meaningful and well-designed.

Unless you have Chinese partners or a high-rolling billionaire investor, or are a well-heeled multinational, it’s a steep uphill struggle.

Banks won’t touch Cuba. That’s partly due to fear of the wrath of U.S. sanctions enforcers, but also because Cuba is simply broke again, as it struggles to re-emerge from one-and-half years of recession and the most destructive hurricane in its history.

Cuba’s top trade official did not mince words in an interview with us: Credit for trade has collapsed.