Trump Deconstructs Obama’s Cuba Bridge-Building on Tourism, Trade

MIAMI—President Donald J. Trump today deconstructed the bridge-building engineered by his predecessor Barack Obama regarding Cuba, rolling back key supports that have helped bolster travel and tourism to the island nation from the United States.

“The previous administration’s easing of restrictions on travel and trade does not help the Cuban people. They only enrich the Cuban regime. The profits from investment and tourism flow directly to the military. The regime takes the money and owns the industry. The outcome of the last administration’s executive action has been only more repression and a move to crush the peaceful, democratic movement,” said President Trump.

“Therefore, effective immediately, I am canceling the last administration’s completely one-sided deal with Cuba.”

Trump signed a new policy that he said would seek a “much better deal” for the Cuban people and for the United States. “We do not want U.S. dollars to prop up a military monopoly that exploits and abuses the citizens,” he said.

The U.S. trade embargo, which has been in place since the Eisenhower administration in the late 1950s, will remain in effect. The U.S. Embassy in Cuba, which reopened almost two years ago in Havana under the Obama administration, will remain open.

The new policy signed by Trump as part of today’s address, would begin by “strictly enforcing U.S. law,” said the chief executive, who went on to give a laundry-list of changes the current regime under Raúl Castro would need to accomplish in order for his administration to consider lifting sanctions.

“We will not lift sanctions on the Cuban regime until all political prisoners are free; freedom of assembly and expression are respected; all political parties are legalized and free; and internationally supervised elections are scheduled,” said Trump, also calling for the extradition of fugitives wanted for alleged crimes in the U.S.

“We will very strongly restrict American dollars flowing to the military, security and intelligence services that are the core of the Castro regime,” said Trump. “We will enforce the ban on tourism; we will enforce the embargo; we will take concrete steps to ensure that investments flow directly to the people so they can open private businesses and begin to build their country’s great, great future; a country of great potential.”

The chief executive did not say what steps or measures would be taken to direct such investments to the Cuban people.

The president said his action today bypasses the military and the government to help the Cuban people themselves to form businesses and “pursue much better lives.”

In the same breath, Trump said, “We will keep in place the safeguards to prevent Cubans from risking their lives [with]unlawful travel to the United States. They are in such danger the way they have to come to this country and we are going to be safeguarding those people. We have to. We have no choice.”

Trump said he was challenging Cuba to come to the table with a new agreement that is “in the best interest of both their people and our people and also of Cuban-Americans.

“And, we will work for the day when a new generation of leaders brings this long reign of suffering to an end. And I do believe that end is in the very near future,” said Trump.

Cuban President Raúl Castro has said he would step down and retire in 2018 from the position he took up close to 10 years ago, following his older brother Fidel’s almost 50 years in power (Fidel Castro died in November 2016).

Many observers felt it was the younger Castro who was looking to create change on the island.

In March 2014, Cuba’s National Assembly passed the so-called Foreign Investment Law aimed at bringing capital into the communist country across a range of sectors, such as real estate development, to lift its economy, and offered a variety of incentives, including significant tax breaks, depending on the investment model. 

While the U.S. maintained an economic embargo on the Republic originally set in place October 1960 under the administration of President Dwight D. Eisenhower, and which was then broadened in February 1962 by President John F. Kennedy—thereby preventing investment by American companies—in late 2014 former President Barack Obama in his efforts to normalize relations with Cuba had the U.S. government issue a series of new regulations that eased the restrictions on certain travel, financial and trade activities.

Since then, several U.S. airlines, including Delta and JetBlue, have established routes to Cuba and Americans have been able to cruise from the U.S. aboard a number of ships.

And despite Americans not being able to travel strictly as tourists to Cuba—U.S. visitors must qualify within 12 government categories—some 613,000 visitors traveled to Cuba last year, 74% more than in 2015, making them the second largest group behind historic leader, Canada. Additionally, during the first two months of 2017 (latest figures available), U.S. visitors increased by 125% compared to the same period last year.

Overall, four million tourists went to Cuba in 2016 and in first-quarter 2017 there was a 15% increase in the number of total arrivals compared to Q1 2016.

According to Janet Ayala Diaz, director of promotion and communication, Ministry of Tourism of Cuba, as of Q1, North America represented 45% of all visitors, Europe 33% and Latin America 16% (the remaining 6% was not defined).

Both independent and branded non-U.S. hotel companies have had a presence on the island for a long time, largely invited by the Cuban government, and that footprint is increasing.

Where President Trump’s new policy leaves the hopes of U.S. lodging companies remains to be seen.

Many American hoteliers have been holding out hope the embargo would be lifted, thus allowing for the potential to grow distribution on the island nation, although how that would have worked would have remained up for discussion, since traditionally it is the Cuban government that invites investment and U.S. companies would need to partner with one of a handful of government-controlled hotel companies.

—Stefani C. O’Connor