US to Increase Restrictions on Travel to Cuba

Update June 16, 2017: As expected, the President made his announcement Friday confirming the details outlined below. Additionally, there will be no new restrictions on what Americans can bring back from Cuba into the US, including rum and cigars.

Tomorrow, President Trump will announce his administration's plan to restrict travel and business interactions with Cuba. Relations with the island nation had been gradually opened to American travelers and businesses under the Obama administration starting in 2014.

According to a draft of the presidential policy directive obtained by Politico, new rules will make it much harder for Americans to travel to the country and for American businesses to interact with any companies that are controlled by the Communist government's military regime. Many of Cuba's hotels and tour agencies are controlled by the business wing of the Cuban military, called the Grupo de Administración Empresarial S.A. or GAESA, and the new policy states that American travelers and businesses will be unable to spend money in any state-run hotels and restaurants connected to the military. Up to 80% of Cuba's tourism sector is controlled by the Cuban military, according to John S. Kavulich, president of the US–Cuba Trade and Economic Council.

The Obama administration's easing of rules surrounding travel to Cuba didn't abolish an existing ban on tourism to the nation, though many Americans visited under one of the 12 official categories of approved travel. Exact reasons for travel were rarely vetted thoroughly.

The new policy, however, will require travelers to keep detailed records of all financial transactions made in Cuba for five years as well as supply a full-time schedule of activities that, according to the draft Politico obtained, "enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities, and that the travel must result in a meaningful interaction between the traveler."

The directive further explains that the Treasury Department must conduct audits of travel to Cuba to make sure Americans are not spending money at any institution tied to GAESA.

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Not all hope is lost for US travelers — the new directive doesn't ban transactions with private vendors like those who rent out Casa Particulares, Airbnbs and private restaurants. As reported by Politico, fines can be issued to visitors who don't maintain meticulous notes of their transactions. This could also mean trouble for US-based companies like Marriott, which was in the process of buying and renovating three Cuban hotels and turning them into new branded properties.

The new restrictions could lead to even more capacity reductions in commercial airline service to the island — many US Airlines had cut service to Cuba after realizing the demand for flights wasn't as strong as originally forecasted. It'll be interesting to see how the cruise industry, which has been booming in Cuba lately, will be affected by these changes.

The directive also requires that new rules must be issued by the Secretary of the Treasury 90 days after it is issued tomorrow (June 16).

H/T: Politico