Why did US open up banking to Cuba’s non-public 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 precipitated 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 meant “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 mentioned in an announcement.

Cuba’s non-public 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 non-public firms, starting from mom-and-pop outlets to transportation and development corporations, have been based since then. These newly established SMEs have notably improved the island’s provide of products by way of their imports.

Measure to stem Cuban migration?

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

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

The Treasury Department can be reversing a Trump-era measure that prohibited US banks from processing transactions between Cuba and banks in third nations, often called 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 legislation.

However, direct banking with the US stays prohibited, which means that financing, investments, and funds should proceed to be routed by way of third nations.

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

US companies with hyperlinks to the Cuban authorities or army entities stay restricted, and Cuban firms with ties to the federal government can even not profit from the brand new guidelines, the supply mentioned.

Resistance constructing

According to US media studies, the Treasury Department’s measures had been prepared as early as September however confronted resistance in Congress. Republican lawmakers expressed issues that there isn’t any free enterprise on the island, as the federal government nonetheless controls the non-public sector.

Cuban-American Congresswoman Maria Elvira Salazar instantly criticized the measures, saying on platform X the Biden administration’s choice 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 Rodríguez mentioned on the identical social media platform that the US measures had been “limited” and did not reverse the affect 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 DC described the measures as “positive steps” that align with “the changing reality in Cuba.” He informed 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 need to defend themselves towards potential future authorized claims since there’s “no certainty that a future US administration will maintain the measures.”

A younger entrepreneur from Havana, who needs to stay nameless, expressed cautious optimism. “It would be a significant step,” she informed DW, referring to the potential of opening a US checking account and utilizing on-line fee 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.