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U.S. President Barack Obama before delivering his speech at the Grand Theater of Havana, Cuba, March 22, 2016 (AP photo by Desmond Boyland).

Despite Loosened Embargo, Bankers’ Fears Block U.S. Commerce With Cuba

Tuesday, May 24, 2016

One of U.S. President Barack Obama’s most significant measures to promote commerce with Cuba isn’t working. Last March, a few days before the president’s trip to Havana, Washington announced a new package of regulatory reforms loosening the U.S. embargo—the fourth since December 2014. One element of that package licensed U.S. financial institutions to process international transactions between Cuba and non-U.S. parties, so-called “u-turn” transactions. Because most dollar-denominated transactions are cleared through U.S. banks, the ban on these transactions severely hampered Cuban trade.

In fact, lifting that prohibition was at the top of Cuba’s agenda last February when Cuban Minister of Foreign Trade and Investment Rodrigo Malmierca met with U.S. Secretary of Commerce Penny Pritzker for the second round of regulatory talks. If the ban was lifted, Malmierca said, Cuba would end the 10 percent surcharge on the exchange of U.S. dollars for Cuban convertible pesos, which had been imposed to cover the transaction costs Cuba incurred trying to use dollars in foreign trade. When the March regulatory reforms lifted the prohibition, Cuban Foreign Minister Bruno Rodriguez announced that Cuba would lift the surcharge, if the regulatory change was effective. ...

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