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Biden Faces Backlash for Supporting Small Businesses in Cuba: "More Lifeline for the Dictatorship"

Wednesday, May 29, 2024 by Isabella Rojas

The changes announced this Tuesday by the Biden Administration, which include access for the private sector to the U.S. banking system among other measures, have sparked criticism in many sectors of South Florida, enthusiasm in a few, and skepticism in others. Many believe that Biden's announcement will have no positive impact on the everyday lives of Cubans nor on the path toward democracy on the island.

Critics argue that these measures provide a lifeline to the Cuban regime and create loopholes for it to continue its governance. "This shouldn't need to be explained again. This should be accumulated wisdom," lamented Nick Gutiérrez, president of the National Association of Cuban Landowners. He pointed out that the Cuban government is finding ways to bypass the embargo. "They've opened exceptions that the Cuban government is more than capable of exploiting," he added.

Cuban-American congressman Carlos Giménez also opposed the announcement. "As I said, now we’re going to see more and more openness with the communist regime of Cuba. Giving access to private companies in Cuba to the U.S. banking system for capital access, etc., is insane," Giménez told America Tevé. "There are no private companies in Cuba. Do you really think there are private companies in Cuba with up to a hundred employees? It's an excuse for more and more openness with this regime that has oppressed its own people for 60 years," added the legislator.

Gelet Martínez, founder and director of the portal ADN Cuba, expressed similar concerns to Telemundo 51. "We have reported dozens of small and medium-sized enterprises (SMEs) that have public ties with the Cuban regime, operated by intelligence agents, former diplomats, and retired military personnel," Martínez said. "These small businesses, to function, must obey the State. You have to stay silent, obey and ignore what's happening in the country if you want to maintain your business," she added.

On the other hand, attorney Pedro A. Freyre sees the measure as positive and believes it represents an opportunity for Cubans to access financial services without depending on the government. "When you have a small business owner, you don’t depend 100 percent on the government, and that’s the most important aspect of this announcement," said Freyre, who represents several U.S. companies with interests in the island. "This offers freedom of operation, freedom of movement, and above all, freedom of thought," he added, emphasizing that it exponentially increases "opportunities."

"If you’re an entrepreneur, you can say: I have my bank account, and from there, we can make transactions, from purchasing raw materials to exporting products," Freyre pointed out. Regarding the concern that individuals close to the government might infiltrate the SMEs, Freyre acknowledged it as a "legitimate" concern but argued that the vast majority "are ordinary Cubans." "Some people might take advantage of this who shouldn't, but we need to weigh the benefits and risks, and in this case, I believe the benefit is greater. In a very profound way, SMEs are changing many dynamics within the country," he added.

However, the banking measure might face resistance from some entities unwilling to open these accounts. "Banks are always weighing risks and benefits, and so far, Cuba has been more risk than benefit," Freyre admitted.

Economic Opening for SMEs

The amendments, which will take effect after publication in the Federal Register on May 29, 2024, include key measures like authorizing cloud-based services to facilitate internet communication and expanding services for telecommunications equipment installation and repair. Additionally, the export and re-export of Cuban-origin software and mobile applications from the U.S. to third countries will be permitted.

Another significant change is the redefinition of "independent private sector entrepreneurs," now excluding prohibited Cuban government officials and Communist Party members. This new definition covers not only self-employed workers but also cooperatives and other private businesses with up to 100 employees. However, it has been shown that several Cuban SMEs are composed of relatives of Castro regime leaders, officials, and even regime deputies.

Furthermore, authorization for "U-turn" transactions has been reinstated, allowing banks to process fund transfers involving Cuba, provided these transactions originate and terminate outside the U.S. and do not involve persons subject to U.S. jurisdiction. This means Cuban private sector entrepreneurs can access U.S. bank accounts and conduct financial transactions from third countries (U-Turn transactions) to send remittances and other payments to people on the island. The reporting process for telecommunications-related transactions has also been updated, eliminating the need to send faxes and allowing reports to be sent via email.

Frequently Asked Questions About Biden's Policy on Cuban SMEs

Here are some common questions and answers about the recent policy changes announced by the Biden Administration regarding small and medium-sized enterprises (SMEs) in Cuba.

What are the main changes introduced by Biden's new policy on Cuban SMEs?

The main changes include access for Cuban private sector entrepreneurs to the U.S. banking system, authorization for cloud-based services, and the redefinition of private sector entrepreneurs to exclude Cuban government officials and Communist Party members.

Why are some people critical of these changes?

Critics argue that these measures provide a lifeline to the Cuban regime, allowing it to exploit exceptions and continue its governance, while not significantly benefiting the everyday lives of ordinary Cubans or promoting democracy.

What are "U-turn" transactions and how do they affect Cuban SMEs?

"U-turn" transactions allow banks to process fund transfers involving Cuba, provided the transactions originate and terminate outside the U.S. and do not involve persons subject to U.S. jurisdiction. This enables Cuban private sector entrepreneurs to access U.S. bank accounts and conduct financial transactions from third countries.

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