Fortune: Trump Should Think Twice Before Rolling Back Obama's Cuba Policy

Fortune

http://fortune.com/2017/06/15/donald-trump-cuba-policy-miami-us-travel-news/?mc_cid=8923f453fa&mc_eid=5c57dc9deb

After more than five months in office, President Donald Trump will unveil his new policy toward Cuba on Friday. The delayed announcement suggests that opposing forces have been tearing at the White House. On one hand, members of the Cuban-American congressional delegation, particularly Sen. Marco Rubio and Rep. Mario Díaz-Balart, have tirelessly lobbied for reversing Barack Obama’s rapprochement with Cuba. On the other hand, several business and political organizations, including the U.S. Agricultural Coalition for Cuba and Engage Cuba, have advocated maintaining the existing situation and lifting the U.S. embargo of the island.

It seems unlikely that Trump will revert all of Obama’s executive orders regarding Cuba, as the president promised at the end of the 2016 campaign. The mounting pressure from American businesses to preserve the economic benefits of normalizing U.S.-Cuba relations apparently outweighs the hard-liners’ insistence that only further isolation of the Cuban government can lead it to respect human rights and make concessions to U.S. interests.

Trump will probably not recommend putting Cuba back on the list of state sponsors of terrorism. He will not unilaterally break diplomatic ties with the island or close down the U.S. embassy in Havana. Almost certainly, Trump will not reinstate the “wet foot/dry foot” policy that allowed undocumented Cubans who arrived on U.S. soil to remain there, while returning those detained at sea to Cuba.

Trump’s approach instead will likely concentrate on restricting travel and trade with the island. This strategy might be a way to balance the conflicting demands between those who advocate either isolating or engaging Cuba.

The president is reportedly considering limiting visits by U.S. citizens (including Cuban Americans) to Cuba to one per year. According to the Miami Herald, Washington will ban U.S. businesses from conducting financial transactions with Cuban state entities controlled by the military. Travelers returning from Cuba may not be able to bring unlimited amounts of rum and cigars for personal consumption, as they could since the final months of the Obama administration.

A partial rollback in U.S. changes toward Cuba will probably have a chilling effect on the modest advances in trade, travel, communication, and other financial transactions between the two former Cold War foes. In turn, the new measures taken by the Trump administration might restrain the economic opportunities of U.S. companies in Cuba, especially those connected with the tourist industry.

Depending on the extent of the new regulations, the volume of U.S. travelers to Cuba could fall back to the levels registered prior to December 17, 2014, when Obama announced the beginning of the normalization of U.S.-Cuba relations. Before the Obama administration relaxed travel restrictions, the number of U.S. visitors who were not of Cuban origin to the island was 91,254 in 2014, but that figure had tripled to 284,837 in December 2016, according to statistics from the Cuban government. And that does not include Cuban-American travelers, which amounted to 329,496 in 2016. Just between January and May 2017, U.S. travelers to Cuba who were not of Cuban origin was 284,565, while the number of Cuban Americans was 166,455.

Reduced passenger traffic between the U.S. and Cuba would harm major American corporations such as American Airlines, Carnival Cruise Line, Starwood, Airbnb, ExpediaWestern Union, and AT&T, all of whom have an established foothold on the island. Engage Cuba has estimated that a rollback in U.S.-Cuba relations would represent a loss of $6.6 billion and 12,295 jobs in the U.S., including $512 million in revenues for commercial airlines and $200 million for cruise ship lines. The volume of U.S. exports to Cuba—especially poultry, rice, corn, wheat, and soy—currently allowed under the U.S. embargo could also plummet, since the Cuban government monopolizes import and export trade on the island.

A decreasing number of U.S. travelers to Cuba would hurt the fledgling private sector of the country’s economy, mainly composed of cuentapropistas, or self-employed workers. Cuba’s small independent businesses depend largely on the growth of the tourist industry, especially family-owned guesthouses, restaurants, and taxis.

From a U.S. business perspective, tightening sanctions on travel and trade with Cuba makes little sense. Yet Trump is politically indebted to conservative Cuban exiles in Miami who supported him in the past presidential election. Although most U.S. citizens, including Cuban Americans, have welcomed the normalization of U.S.-Cuba relations, Trump may undo some of the recent changes in U.S. policy toward Cuba because of domestic political concerns.