Obama chips away at Cuba embargo, easing business and travel rules

 The Obama administration announced wide-ranging new rules on Friday to further ease trade, travel and investment restrictions with Cuba, the latest effort to chip away at the long-standing U.S. economic embargo amid a thaw between the former Cold War foes.

Washington: The Obama administration announced wide-ranging new rules on Friday to further ease trade, travel and investment restrictions with Cuba, the latest effort to chip away at the long-standing U.S. economic embargo amid a thaw between the former Cold War foes.

The changes will allow certain U.S. companies to establish offices on Cuba for the first time in decades, expand banking and Internet activities and eliminate limits on the amount of money that can be taken to the Communist-ruled island, U.S. officials said.

Aides to President Barack Obama touted the moves, which he implemented with his executive powers in defiance of critics in Congress, as a way to boost business and promote economic and political reform in Cuba.

Critics of Obama`s detente slammed the move as another reward to Cuba with no corresponding concessions from Havana, especially on the human rights front.

The changes, while significant, stop short of allowing across-the-board investment by U.S. companies or general U.S. tourism, activities banned under the broader embargo.

They come as Washington and Havana inch toward normal relations after more than half a century of hostility that followed Cuba`s 1959 revolution. The two countries restored diplomatic ties and reopened embassies earlier this summer.

Set to take effect on Monday, the new regulations build on others Obama announced in January to begin lowering economic barriers with Cuba.

But only Congress has the power to fully lift the 53-year-old economic embargo against Cuba, the main stumbling block to full normalization of ties. Republicans who control Congress are considered unlikely to do so despite Obama`s appeals. The president also faces resistance from some fellow Democrats, although most support rapprochement.

The announcement came just as Pope Francis, who played an instrumental role in the diplomatic opening late last year, prepares to visit Cuba this weekend before heading to the United State next week. The Vatican has long condemned the embargo against Cuba.

"A stronger, more open U.S.-Cuba relationship has the potential to create economic opportunities for both Americans and Cubans alike," U.S. Treasury Secretary Jacob Lew said.

"By further easing these sanctions, the United States is helping to support the Cuban people in their effort to achieve the political and economic freedom necessary to build a democratic, prosperous, and stable Cuba," he said.

Obama`s term ends at the start of 2017 and his unilateral steps to loosen the embargo also appear aimed at advancing the normalization process far enough that any future Republican president would be unable to reverse it.

U.S. officials said the full impact of the eased restrictions will depend on whether Cuba makes economic reforms of its own. Some White House aides have privately accused Havana of dragging its feet on such changes for fear of losing its grip on the state-run economy and Cuban society.

There was no immediate word from the Cuban government on the changes. President Raul Castro`s government has welcomed efforts to normalize relations while calling for a full lifting of the embargo and the return of the U.S. naval base at Guantanamo Bay on the eastern tip of the island. U.S. officials have said Guantanamo is not under discussion.

The initial reaction from the American business community was cautious. U.S. companies have shown interest in exploring opportunities in Cuba, but many executives remain wary of the risks. The two countries` outstanding legal claims against each other remain a key source of uncertainty.

Bacardi, the largest privately held spirits maker in the world, was among the most successful companies in Cuba before its Cuban assets were seized by the government and its founders exiled in the 1960s.

The company said on Friday it was "way too early" to talk about any possible return to the island. "We will need to wait and see what the impacts are," Bacardi said in a statement. "We hope for meaningful improvements in the lives of the Cuban people and will follow any changes with great interest."

American Express said it was "planning on initiating business activities in Cuba" consistent with Obama`s regulatory changes, but added: "We don’t have a timeline for when all this will happen or when AXP cards will be able to work in Cuba."

Seth Eisen, a spokesman for MasterCard said: "People (are) starting to think about the market and it will take time for the infrastructure to develop, from phone lines to Internet access to the terminals themselves."

Starbucks Corp said it had no plans to enter Cuba.

Critics accused Obama of making concessions to a country that was not reciprocating. 

"The Obama administration continues to naively fuel expectations of a non-existent new Cuba," said U.S. Representative Ileana Ros-Lehtinen, a Cuban-American lawmaker from south Florida.

U.S. Senator Marco Rubio, another Cuban-American and a Republican candidate for next year`s presidential election, said "President Obama`s eagerness to please the Castro regime knows no bounds."

Under the rules released by the U.S. Treasury and Commerce Departments, certain companies can establish subsidiaries or joint ventures as well as open offices, stores and warehouses in Cuba. They also allow for telecommunications and Internet services between the nations. 

Although the regulations do not change who can travel to Cuba - meaning general tourism is still not allowed - the rules do ease movement of authorized travellers by licensing transportation providers.

The regulations also abolish the cap on remittances and allow the travellers to open and maintain bank accounts there. But it keeps in place prohibitions on any of those funds going to the Cuban government or Communist Party officials. 

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