OFAC crackdown on P2P Cuba licenses frustrates once-optimistic travel firms
The 50-year-old U.S. travel ban against Cuba, along with Europe’s crippling economic crisis — which has denied thousands of would-be vacationers the chance to visit the island — has nevertheless failed to put a dent in Cuba’s tourism industry.
In fact, thanks to a steady stream of freezing Canadians flocking south in search of sun, sand and salsa, the numbers are up rather than down (see story, page 2). At the same time, more Cuban-Americans are visiting the island of their birth than ever before, thanks to U.S. regulations that encourage such trips even while making them difficult for Americans who lack family ties to Cuba.
Worldwide, the top sources of tourism to Cuba, said the government’s Oficina Nacional de Estadísticas (ONE), are Canada, Great Britain, Italy, France, Argentina, Germany, Russia, Spain and Mexico. Yet according to the latest government statistics from Havana, the island was visited by 397,886 Cubans living abroad — up from 375,431 in 2010 and 296,064 in 2009. Most of them are believed to be Cuban-Americans.
Add to that the thousands of Americans not of Cuban origin who visited the island, and it’s entirely possible — despite all the restrictions imposed by the Treasury Department’s Office of Foreign Assets Control — that U.S. citizens are now the most common foreigners in Cuba after Canadians.
“The only solution is to get OFAC out of it entirely,” said anti-embargo activist John McAuliff, executive director of the Fund for Reconciliation and Development. “There’s a general travel license for Cuban-Americans. Nobody asks if they ever see their family when they’re in Cuba. Nobody asks to prove that they actually have a cousin in Cuba. It’s a trust situation — a calculation that if 5% are cheating, the other 95% are to our benefit. Any university can send students, and any religious organization can send people without any bureaucracy.”
And while Washington does everything it can to discourage American tourists from lolling on Cuban beaches, “people-to-people” exchanges are something different.
Shortly after taking office, President Obama reversed policies that had been imposed by the Bush administration which restricted Cuban-Americans to visiting their families in Cuba to just once every three years.
Now, those with family on the island can visit as often and for as long as they wish. People-to-people travel to Cuba has also opened up, allowing Americans without family connections the possibility of visiting the communist-ruled island as long as they’re engaged in “purposeful travel” rather than outright tourism.
“The president, the secretary of state and myself obviously feel really strongly that people-to-people is the right thing to do — for U.S. citizens to be able to interact with Cuban citizens,” Roberta Jacobson, assistant secretary of state for Western Hemisphere affairs, told CubaNews an exclusive interview last month. “What we all want is a free and democratic Cuba. It is not subversion and it is not regime change, but an effort to open Cuba to the world and try very hard to engage the people of Cuba, because our engagement with the government of Cuba is fairly unproductive.”
Yet Senators Marco Rubio (R-FL) and Bob Menendez (D-NJ) have been outspoken in their demands that OFAC get tough with tour operators.
“This is tourism for Americans that, at best, are curious about Cuba and, at worst, sympathize with the Cuban regime,” Rubio recently told Fox News Latino.
Specifically, these lawmakers want the agency to crack down on companies that fly Americans down to Cuba not to spread democracy or learn history, but mainly to lounge on Varadero Beach, enjoy Havana’s spectacular nightlife and spend dollars in the island’s state-controlled economy
“There is no doubt there’s been some abuse of that opening,” said Jacobson. “OFAC has sanctioned organizations and will continue to sanction others if they are found to be promoting straight tourism to Cuba,” she promised. “I know Sens. Rubio and Menendez get upset about that, and we do too. We make a very clear distinction between purposeful travel and tourism.”
In fact, it was Rubio — a staunchly pro-embargo Republican from Florida — who threatened to derail Jacobson’s confirmation in the Senate until the White House promised to get tough with companies that were using their privileged Cuba travel licenses to bring Americans to Cuba for what he said were “questionable” purposes.
In May 2012, at the senator’s urging, OFAC tightened requirements for people-to-people license applications and renewals by making applicants submit an onerous explanation and itinerary of activities for their planned visits to Cuba.
Some of these applications ran over 100 pages. In one extreme case, Joe Scarpaci, director of the Virginia-based Center for the Study of Cuban Culture and Economy, originally submitted to OFAC a 17,000-word application for a license renewal, and had to file a 25,000-word revision before receiving his approval last summer.
Before Rubio’s intervention, a six-page application for such licenses — consisting of a sample itinerary and abbreviated explanation of trip activities — was sufficient.
Two months before OFAC’s stricter licensing requirements went into effect, the New York Times Travel Show became a showcase of the people-to-people policy, with agencies like Insight Cuba and C&T Charters promoting their Cuba travel services to eager would-be customers.
“We’re basically broke right now,” said Sandra Levinson, director of the New York-based Center for Cuban Studies, which has led educational trips to the island for decades. “We had 36 trips from November 2011 until June 2012. We can’t take any money until we get a new license.”
Levinson’s office is now forced to conduct fund-raising drives to keep the lights on in her office until OFAC eases its licensing policy.
“A handful of new or renewed people-to-people licenses were issued at the beginning of June, and then a freeze went into effect for the months of July and August,” said Bob Guild, vice-president of Marazul Charters Inc., a New Jersey-based company that since 1979 has operated direct charter flights to Havana from both Miami and New York. “After the situation became publicized at the end of August, another handful of renewed licenses has been issued over the past two weeks. “
Guild added: “It is a day-to-day situation for the dozens of organizations with pending license applications. Each week we are forced to release hotel and flight space for groups which have not yet received their licenses 60 days prior to their scheduled arrival in Cuba. Hundreds of travelers have had their trips cancelled as a result.”
It appears, however, that OFAC is now lightening up.
In late September, Insight Cuba received its renewal license and plans more than 100 departures for the remainder of 2012 and 2013. The New Rochelle, N.Y., tour operator had brought about 3,000 Americans to Cuba between August 2011 and June 2012, said president Tom Popper, but eventually cancelled 150 trips and laid off 22 staffers when its OFAC license lapsed.
In addition, several other companies have received OFAC’s blessing to extend or inaugurate Cuba tours, including Friendly Planet, Grand Circle Foundation, Geographic Expeditions and MotoDiscovery.
Canadians face no obstacles from their own government when attempting to visit Cuba, which is why planeloads full of tourists continue to arrive in Havana and Varadero every day nonstop from Toronto, Montreal, Calgary, Vancouver and Winnipeg. It also helps that the Canadian economy is relatively strong, with the country’s GDP likely to finish 2012 with growth around 4%.
That’s certainly not the case throughout much of Europe.
While British, French and German visitors keep flocking to Cuba (and those three countries enjoy the strongest economies in Western Europe), tourist arrivals from Spain and Italy have dropped off dramatically. In Spain’s case, arrivals in the first eights months of 2012 tumbled by a whopping 23%. It’s no coincidence that Spain now struggles with a jobless rate of 25% — the highest in Europe — with no end in sight to the suffering.
To keep pace with increasing tourism, the Cuban government plans to add 5,500 rooms in four- and five-start hotels in the northern keys of Villa Clara, Ciego de Avila and Camagüey provinces. And that’s just part of an ambitious development plan that will include more than 45,800 hotel rooms throughout the northern coast by 2030.
The Jardines del Rey tourist hub, centered on Cayo Coco and Cayo Guillermo, now ranks third in Cuba after Havana and Varadero. It has 4,660 rooms — or about 7.2% of Cuba’s entire hotel capacity — and hosts about 200,000 visitors per year, up from 150,000 in 2000.
Tourism Minister Manuel Marrero, speaking at the recent 32nd annual Feria Internacional de Turismo in Havana, said the island now has 58,626 rooms, of which 63% are in four- and five-star hotels. Of that total, 71% are dedicated to sun-and-beach tourism, 23% to city tourism and 2% to ecotourism.
The state now has 30 joint ventures operating 6,000 rooms, not including 62 management and sales contracts with 13 international chains that manage 47.4% of the island’s hotel rooms. The military’s Gaviota hotel wing owns the largest piece of the state tourism industry, with 30.7% of the total.
A growing number of those hotel rooms are being filled by locals. Government statistics report 579,924 domestic tourists in 2011, up a whopping 111% from 439,581 the year before. According to official figures, 5,027 rooms are being rented privately, though unofficial estimates suggest the number is closer to 15,000. The island also has 1,618 paladares or private restaurants.
The Cuban government is currently making major investments to modernize and expand airport services at José Martí (Havana), Juan Gualberto Gómez (Varadero) and Abel Santamaría (Santa Clara). There’s no question that the current hotel expansions taking place in Cayos de Villa Clara and Jardines del Rey — north of Ciego de Avila and Camagüey — are aimed at a soon-to-be massive flow of U.S. tourists.
In fact, a recent study by expert Rafael Romeu of the International Monetary Fund indicates that “if restrictions on travel were removed, perhaps 3.5 to 5 million U.S. residents would visit Cuba annually.”
A more immediate concern is the November elections.
Mindful of Florida’ 29 electoral votes and its perennial importance in national elections, few presidential candidates dare to advocate lifting — or even easing — the embargo while campaigning in the Sunshine States. But after the elections are over, President Obama — assuming he’s re-elected — could decide to relax the regulations further, allowing more and more Americans to travel there.
Yet the Republicans specifically oppose easing U.S. travel restrictions to Cuba as long as the Castro family remains in power.
“Mitt Romney has committed himself to the hardest line pro-embargo people in Miami,” said McAuliff, warning that “if Romney wins, it’s a disaster.”
New York-based freelance journalist Vito Echevarría contributed significantly to this story.
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