Biden administration eases restrictions on Cuban small enterprise

The Biden administration announced a series of measures Tuesday to allow independent small businesses in Cuba access to the U.S. financial system and certain internet-based services, amid a deep economic crisis on the island.

The targeted relaxation in sanctions comes days after a fracas over a visit by Cuban officials to Miami International Airport and weeks after the United States removed Cuba from a list of countries not cooperating fully against terrorism but left the island on the State Sponsors of Terrorism list.

“We believe that the growth of an independent entrepreneurial private sector in Cuba is fully aligned with our values is the best hope for generating economic development and employment in Cuba,” a senior administration official told reporters Tuesday.

Under the new rules implemented by the Treasury’s Office of Foreign Assets Control (OFAC), Cuban small businesses will be able to access video conferencing, social media, maps and other online services, and U.S.-based entities will be allowed to provide cloud-based services to those companies.

OFAC is also expanding the definition of a “self-employed individual” in Cuba to include “independent private sector entrepreneur,” a move that will allow a greater number of companies to benefit from the reduced sanctions. Only companies, cooperatives and sole proprietorships of up to 100 employees, without partners who are government officials or Communist Party members, will be included in the program.

The benefitted companies will also have access to U.S. bank accounts and payment platforms, including for “U-turn” transactions, or operations through the U.S. financial system where neither party is under U.S. jurisdiction.

Cuban officials dismissed the changes as a U.S. attempt to drive a wedge between private and public enterprise to pursue regime change on the island.

“They are fickle measures with limited effects that seek to artificially segment the Cuban business sector. The private sector, the state-owned sector and the population in general will continue under the general effects of the economic blockade, of the presence of Cuba in the List of State Sponsors of Terrorism, and of a policy that seeks to depress standards of living for Cubans,” Cuban Deputy Foreign Minister Fernández de Cossío told The Hill.

But Biden administration officials said the moves are intended to ease economic suffering, as well as the migration that has come as a result.

“We know the Cuban economy is in dire straits amid recurring shortages of fuel, electricity, increasingly even food. It’s clear the communist experiment of Cuba has failed, the government is no longer able to provide for its citizens’ most basic needs. A country where there are no free elections, Cuban people are voting with their feet including by using dangerous irregular migration routes,” an administration official said.

Yet the measures are all but certain to have a limited effect on tourism, a key industry that’s taken a beating by Cuba’s inclusion on the State Sponsors of Terrorism list.

That designation, for instance, makes it harder for European travelers to go to the island and keep their U.S. visa exemptions.

After the State Department removed Cuba from the list of noncooperation on terrorism but maintained the country as a sponsor, Cuban officials criticized the unilateral designations.

“To recognize that a country cooperates with the anti-terrorist efforts of the United States, and at the same time to accuse them without evidence of sponsoring terrorism seems like a contradiction and it is one. The only explanation can be found in the arbitrary and political way in which the State department creates these rating lists,” said Fernández de Cossío in an email to The Hill.

Biden administration officials said the two lists respond to different internal processes — the State Department conducts an annual review for inclusion or removal of countries in the cooperation list, but inclusion in the sponsorship list is separately determined by “statutory criteria” established by an ad-hoc review.

Administration officials declined to provide updates on a review of Cuba’s presence in the State Sponsors of Terrorism list.

Removal from that list has explicitly been the Cuban government’s top priority in relations with the Biden administration.

Cuba was put on that list in the waning days of the Trump administration, in a move that forced the incoming Biden administration to choose between exerting economic pressure on the island — and spurring migration — or taking a major public measure supporting the communist regime.

The Biden administration has picked a cautious, middle of the road approach, collaborating with Cuba on routine bilateral issues while avoiding major moves like removal from the state sponsors of terrorism list.

Yet even that approach has drawn the ire of Republicans.

Last week, a visit by Cuban officials to Miami International Airport was met with severe criticism from Florida Sens. Marco Rubio (R) and Rick Scott (R), as well as Florida Reps. Mario Díaz-Balart (R) and Maria Elvira Salazar (R), who voiced their complaints in a letter to Homeland Security Secretary Alejandro Mayorkas and Transportation Security Administration Administrator David Pekoske.

But Cuban officials insisted the visit was routine and reciprocal, part of the two neighboring countries’ collaboration on civil aviation.

“The visit to the airport forms part of the existing bilateral cooperation geared toward making sure air traffic between the two countries is safe and in line with international regulations. It’s known that the Miami airport is the source of most traffic to Cuba from the United States and that most of the flights from Cuba to the United States head to Miami,” said Fernández de Cossío, adding that U.S. officials visited five Cuban airports in January and February 2023 as part of the same program.

—Updated May 29 at 9:56 a.m. ET