HAVANA — Hanging in the office of a mechanics garage in central Havana, where Julio Álvarez has made a living off of renovating classic American cars and chauffeuring tourists around the island, a round yellow sign reads: “We use genuine Chevrolet parts.”
But those words do little to convey how hard Álvarez works behind the scenes to obtain American goods from the United States — a chronic challenge facing many Cubans despite a series of regulatory changes from President Obama designed to ease restrictions on trade and commerce between the U.S. and Cuba.
While Obama made it legal for Cuban nationals to open bank accounts in the U.S. last March, private Cuban businesses were not authorized to set up their own financial accounts in the country. There are also limited services and restrictions on the allowed transactions for Cubans who do have U.S. accounts.
Speaking through a translator, Álvarez explained that he has to purchase automobile parts in America using U.S. dollars, but as a business owner, he isn’t allowed to have his own bank account in the country. That means he has to borrow someone else’s credit card in the U.S. — a process that he says ends up costing him 20 percent more.
“The only way I can restore all these cars is importing parts from the U.S. … But I don’t have a credit card or bank account to pay the people who sell the parts,” Álvarez said. “So I need to use a credit card from a friend. And normally people charge you to use their card.”
“It’s very expensive to give life to these cars,” he added.
One month after President Trump announced that he was reversing some of Obama’s efforts to thaw relations between Washington and Havana, it’s clear that things still haven’t even fully melted yet.
Cuban entrepreneurs, economists and officials — who support lifting the embargo — acknowledged during a three-day visit to Cuba’s capital by The Hill that some of Obama’s policy changes toward the country didn’t go as far as they could have.
Part of the reason is that the Obama administration had only been implementing changes for two years before Trump took over. But it’s also because Obama, who was eager to push ahead with the historic rapprochement, made changes unilaterally, meaning some of his policies lacked the teeth to be fully realized.
One example is the promise that American cash and credit would flow through the country.
In an effort to make it easier for Americans to travel to Cuba, Obama made it legal for banks to allow U.S. travelers to use debit and credit cards while visiting. Yet years after the move, only a small Florida-based bank has actually followed through.
Nervous financial institutions have been afraid to operate in Cuba because they are worried that Obama’s policies, which were all done through executive order, could just as easily be undone by Trump.
The failure to allow the transactions has created headaches for American travelers, who have to carry around huge wads of cash in Cuba. It’s also an issue for U.S. companies trying to do business there.
U.S. hotels that have opened up in Cuba have to use third-party banks to secure the necessary financing.
And Airbnb, which considers Cuba its fastest-growing market, uses intermediaries to pay Cuban hosts. Sometimes that involves delivering money directly to a host’s doorstep, a process that can take 15 days and may be impractical.
“They pay us in cash. Airbnb sends money to all the Cubans,” said Julia de la Rosa, co-owner of La Rosa de Ortega B&B, which is listed on Airbnb. “It is a very complex mechanism.”
In his package of regulatory changes announced last year, Obama also allowed so-called U-turn transactions, which would permit U.S. banks to process international transactions between Cuba and other non-U.S. parties. That has been a top priority for Cuba, since most dollar-denominated transactions are cleared through the U.S. financial system.
But even though the banks are allowed to process such transactions, they aren’t required to do so, and thus have been reluctant to handle them amid the cloud of uncertainty.
The banks are likely wary of facing hefty fines. The U.S. has penalized international banks in the past for violating U.S. sanctions because of processing Cuban financial transactions.
“Former President Obama issued a measure to make it possible, the use of the U.S. dollar, the U.S. currency, in international transactions related to Cuba. … It couldn’t be implemented,” said María de la Luz B’Hamel, director of North American commercial policy for Cuba’s Ministry of Foreign Trade and Investment.
“Because at the same time, the Treasury Department did not stop announcing and applying sanctions and measures against companies and banks because of transactions that they had in the past. … By nature, [banks] are conservative, but if they are threatened in that way, it’s even worse.”
Even before Trump was sworn into office, Cubans had been pressing the White House to offer more flexibility when it comes to bank accounts and to provide greater assurances to U.S. financial organizations that have been too scared to engage with Cuba.
“We had been discussing this when Obama’s administration came,” Álvarez said. “We have talked to two banks, but nothing has been done.”
Challenges in shipping
Another knotty issue is allowing goods and packages to be shipped to Cuba from the U.S.
The U.S. Postal Service resumed direct mail service to Cuba last March, but packages and gifts are subject to weight restrictions, and their retail value can’t exceed $800. That’s why it is common to see people in the airport lugging toys, home goods and other U.S. products onto Cuba-bound flights.
The Obama administration did, however, authorize sending direct cargo. FedEx got approval to start scheduled flights to Cuba beginning this April. But the cargo company had to get an extension until October 2017, citing “operational challenges.”
“The extension … is needed in order to address operational challenges in the Cuban market,” FedEx said in a statement to reporters at the time. “FedEx is continuing to work to establish ground support services necessary for express delivery services for our customers.”
Cubans are thus still facing hurdles in trying to obtain goods from the U.S.
Álvarez, whose fleet of classic cars includes a black 1959 Chevy Impala and pink 1955 Chevy Bel Air, says he can’t always fly to America to personally pick up automobile parts that he has purchased. In that case, Álvarez has to first have the parts shipped to Panama and then shipped to Cuba, which he says can slow down his business.
“It can take at least six months to get parts in Cuba,” Álvarez said.
While Cubans had pressed for more changes, those who were involved in the policymaking said they believe the Obama administration went as far as it legally could without violating the embargo — something only Congress could lift.
“In the Obama administration, we went as far as the law would allow in making it easier to travel to and engage in commerce with Cuba,” said Mark Feierstein, Obama’s senior director for Western Hemisphere affairs at the National Security Council.
“Now it’s up to Congress, which has the authority to lift the embargo and end a policy that hurts the Cuban people and disadvantages American companies and workers.”