Today President Barack Obama made a stunning speech announcing steps the United States will take to reduce U.S. sanctions against Cuba. The announcement followed the release of two U.S. citizens held by the Cuban government. Alan Gross was detained by Cuban authorities in 2009 while working as a USAID subcontractor. Separately, a U.S. intelligence officer, not named in the announcement but described by the President as “one of the most important” U.S. intelligence agents in Cuba, had been imprisoned in Cuba for nearly two decades.
Easing Cuban sanctions reverses five decades of policy intended to isolate the island nation, dating back to the Castro revolution. In announcing the changes, President Obama said the new direction will “end an outdated approach” to Cuba. Over the last few years, U.S. sanctions policy has trended away from total economic embargoes such as the Cuba and Iran embargoes, and toward more targeted sanctions. The President described the Cuba embargo as having had “little effect.”
The announcement outlines three main categories of changes to U.S. policy toward Cuba, as follows:
1. Reestablish diplomatic relations. At the President’s direction, Secretary of State John Kerry will initiate discussions with Cuba to reestablish diplomatic relations between the two countries, and the United States plans to establish a U.S. Embassy in Havana.
2. Review designation as “state sponsor of terrorism.” Since 1982, the U.S. Department of State has listed Cuba as a state sponsor of terrorism pursuant to the Export Administration Act, the Arms Export Control Act, and the U.S. Foreign Assistance Act. A White House press release issued today states that President Obama has directed Secretary of State Kerry to review the designation of Cuba under the current facts and the applicable laws, and to report the results of that review to the President within the next six months.
3. Policy to authorize travel and commercial transactions. The United States will institute a policy of expanded travel authorizations and authorizations for financial and commercial transactions to Cuba. It remains to be seen how quickly and efficiently such a policy can be developed and implemented. The announcement does not take immediate effect; all aspects of the Cuban embargo (including prohibitions against travel and commercial transactions) are codified in regulations issued by the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) and by the U.S. Department of Commerce, Bureau of Industry and Security. Those agencies will take time to change the relevant regulations. Moreover, many parts of the embargo are codified in U.S. statutes. To change those prohibitions, new legislation must be passed. President Obama stated that he will engage Congress in an “honest and serious debate about lifting the embargo.” But the Republican-led 114th Congress, which takes office in January 2015, may not be expected to embrace change as enthusiastically as the President has.
The White House issued a press release today that includes greater detail about the changes announced by the President. For example, items authorized for export to Cuba under new regulations will include building materials, agricultural equipment, and telecommunication equipment, in order to help grow the Cuban private sector. U.S. financial institutions will be permitted to open correspondent accounts with Cuban banks to facilitate the processing of authorized transactions. Commercial sale of communications devices, software, applications, hardware, and services will be authorized. And U.S. telecommunications providers will be permitted to establish certain infrastructure in Cuba to provide commercial telecommunications and internet services.
Also today, the Office of Foreign Assets Control (“OFAC”) updated its FAQs on the Cuba embargo, which include the following:
Q. How will OFAC implement the changes to the Cuba sanctions program announced by the President on December 17, 2014? Are the changes effective immediately?
A. OFAC will implement the Treasury-specific changes via amendments to its Cuban Assets Control Regulations. The Department of Commerce will implement the remainder of the changes via amendments to its Export Administration Regulations. OFAC expects to issue its regulatory amendments in the coming weeks. None of the announced changes takes effect until the new regulations are issued.
President Obama’s announcement is encouraging for those in the United States and Cuba seeking improved relations. The proposed changes will also increase commercial opportunities for U.S. businesses. But the changes will not take place overnight. We will keep watch as policies and laws related to Cuba are updated. President Obama made clear that the decades-long isolation has not worked, and it is time for the United States to “cut loose the shackles of the past.” It will take time for everyone to adjust to Cuba’s new coordinates on the U.S. foreign policy map.