Why did the US open up banking to Cuba’s personal sector – DW – 06/03/2024 | EUROtoday

The US Treasury’s regulatory modification to the so-called Cuban Assets Control Regulations, introduced on May 28, has brought about fairly a stir in Washington and past. For the primary time for the reason that revolution within the Fifties, Cuban entrepreneurs can open a checking account within the United States and entry it from Cuba.

The modifications are supposed “to promote internet freedom in Cuba, support independent Cuban entrepreneurs in the private sector, and expand access to certain financial services for the Cuban population,” the Treasury Department stated in an announcement.

Cuba’s personal sector has grown considerably for the reason that authorities in Havana established a authorized type for small and medium-sized enterprises (SMEs) in 2021. Over 11,000 personal firms, starting from mom-and-pop retailers to transportation and building corporations, have been based since then. These newly established SMEs have notably improved the island’s provide of products by their imports.

Measure to stem Cuban migration?

The Biden administration’s new measures will enable Cuban entrepreneurs to open financial institution accounts within the US and use US-based social media platforms, on-line cost websites, video conferencing, and cloud-based providers. This means they’ll conduct cash transactions by on-line cost platforms, eradicating a big hurdle.

Additionally, the brand new regulation permits Cuban software program builders to supply their apps for obtain in Apple or Google app shops, which was beforehand unattainable as a result of decades-long US blockade of the Communist-ruled nation.

The Treasury Department can also be reversing a Donald Trump-era measure that prohibited US banks from processing transactions between Cuba and banks in third international locations, referred to as U-turn transactions within the banking trade. This change will facilitate cash transfers for Cuban nationals so long as neither the sender nor the recipient is topic to US regulation.

However, direct banking with the US stays prohibited, that means that financing, investments, and funds should proceed to be routed by third international locations.

“Providing support for Cuba’s private sector will help to stem irregular migration from the island by creating more economic opportunity,” the US every day Miami Herald quoted an unidentified US authorities official.

US companies with hyperlinks to the Cuban authorities or navy entities stay restricted, and Cuban firms with ties to the federal government may also not profit from the brand new guidelines, the supply stated.

Resistance constructing within the US

According to US media experiences, the Treasury Department’s measures have been prepared as early as September however confronted resistance in Congress. Republican lawmakers expressed issues that there isn’t a free enterprise on the island, as the federal government nonetheless controls the personal sector.

Cuban-American Congresswoman Maria Elvira Salazar instantly criticized the measures, saying on X (previously Twitter) that the Biden administration’s determination would “make a mockery of American law, considering no progress has been made toward freedom on the Island and repression has intensified.”

In Cuba, in the meantime, Foreign Minister Bruno Rodriguez stated on the identical social media platform that the US measures have been “limited” and did not reverse the influence of the financial blockade imposed by that nation on the island.”

“These measures aim to divide Cuban society,” he added.

Skepticism prevails

Cuban economist Ricardo Torres from the American University in Washington, D.C. described the measures as “positive steps” that align with “the changing reality in Cuba.” He instructed DW that sectors like software program growth would profit and that easing monetary transactions was additionally a optimistic transfer.

“But there’s a difference between intention and practice,” Torres cautioned, stating that US banks and companies would possibly wish to shield themselves in opposition to potential future authorized claims since there may be “no certainty that a future US administration will maintain the measures.”

A younger entrepreneur from Havana, who wished to stay nameless, expressed cautious optimism.

“It would be a significant step,” she instructed DW, referring to the potential for opening a US checking account and utilizing on-line cost providers. “But we will see how it works in practice. Let’s wait and see how it develops.”

This article was initially written in German.