US eases restrictions on Cuba

US eases restrictions on Cuba
By Vincent Bevins
Published: September 4 2009 12:59

Americans with relatives in Cuba can visit and send remittances without
limit, according to rules announced by the US Treasury on Thursday that
relax some aspects of the trade embargo and lay the legal groundwork for
banking and telecommunications ties between the two countries.

The announcement, which came four months after Barack Obama's executive
order to relax restrictions in April, does not affect the general
embargo on trade and travel for non-Cuban Americans, but could trigger a
flow of cash into the island from the large Cuban community in the US.

Previously, relatives could only visit once a year and were limited to
sending $1,200 per person. Without such limits, the 1.5m Cuban-Americans
living in the US could provide a significant boost to the economy of the
cash-strapped country. Crucially, the new regulations allow US banks to
set up arrangements with Cuban institutions to handle the transfers,
easing what was often seen as an impediment to sending money.

The rules also allow US telecoms companies to set up fibre-optic cable
and satellite links and enter mobile phone roaming service agreements
with Cuba, leading some analysts to see the basis for future trade links.

Washington attorney Robert Muse, who specialises in Cuba embargo
regulations, said he was encouraged by the provisions.

"If they have allowed the US telecommunications industry to actually
provide real technology in pursuit of telecommunications projects in
Cuba, then ... it opens a market for US suppliers that had been shut out
of Cuba," he added.

A large inflow of cash could provide a lifeline to Cubans hurt by the
global downturn and isolation from the world's largest economy, but
could also accentuate tensions within the country's socialist system.

Since Cuba returned to tourism in the 1990s to compensate for the
disappearance of communist allies, a stark class system has re-emerged –
not based on skills or official ties, but rather on access to foreigners
and the crucial dollars they might provide in the form of gifts from
relatives or tips from tourists. Though the Castro government takes a
significant commission on remittances, large inflows could widen these
divisions and boost the black market economy.

The idea that increased economic engagement with Cuba could be a more
effective strategy than the embargo, which for almost 50 years has
failed to topple the Cuban government, has led to sizable bipartisan
support in the US for removing it. A Miami Herald poll of Florida
Cuban-Americans, traditionally extremely conservative and the strongest
supporters of the policy, found on Tuesday that the community was split
on continuing the embargo.

Since April, however, Obama has made no new significant policy
announcements on Cuba.

FT.com / In depth - US eases restrictions on Cuba (4 September 2009)
http://www.ft.com/cms/s/0/a4a280d6-993d-11de-ab8c-00144feabdc0,dwp_uuid=3d806e42-a627-11db-937f-0000779e2340.html?nclick_check=1