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The Trump admin has waged war on #Cuban family remittances for months. They, of course, deny this. They say they're only seeking to force the military out of the remittance business. What they don't say is they're ready to shut down all legal remittance channels if necessary.../1
...to force the Cubans to bend to their will. Nor will they admit they don't truly expect the Cuban gov't to bend to their will (because Cuba never has), but are fine with it so long as remittance cuts unleash chaos in the island. Chaos has always been the hardline's strategy. /2
In June, The State Department added Fincimex to its Cuba Restricted List, which is mostly comprised of entities run by the Cuban military. Fincimex is the MINFAR-affiliated financial institution that contracts with foreign remittance transmitters to process remittances. /3
Adding Fincimex to the CRL didn't prohibit remittances per se. But it did put int'l remittance transmitters on notice that their business with Cuba could soon land them in the crosshairs of US sanctions. /4
The June announcement caused chaos on the ground in Cuba; with huge lines forming outside of WU offices out of fear the service would soon shut doors. /5 https://mailchi.mp/3b6aa2433f5f/cuba-review-playing-fast-and-loose-with-family-remittances-4836828
In July, the tighter sanctions environment led French bank Credit Mutuel to halt its business with Fincimex, forcing remittance agencies VaCuba and CubaMax to suspend remittance transfers to Cuba. /6 https://www.miamiherald.com/news/nation-world/world/americas/cuba/article244596682.html
In September, State added another Cuban military-affiliated remittance processor AIS to CRL. AIS is one of several entities that enable family abroad to make USD deposits into relatives' bank accounts in Cuba via VaCuba & Cubamax. More panic ensued. /7 https://www.miamiherald.com/news/nation-world/world/americas/cuba/article246067595.html
By then, much of the chaos was the market responding to signals by the Trump administration that pain was coming their way. Technically speaking, remittance transmitters could still do legal business with Fincimex. One more regulatory tweak was needed to outlaw the practice. /8
That fix came last Friday, when the State Dept changed OFAC regulations so that as of ~Nov. 22, US remittance transmitters will risk hefty fines for transacting with Cuban entities listed on the CRL. /9 https://www.state.gov/removing-cubas-military-from-the-remittance-process/
That means the new restriction is not yet in effect, but will be post-election (you can guess why). Any reporter or pundit claiming it's a lie that WU or other remittance transmitters doing biz w/ Fincimex have been already blocked is arguing a strawman to mislead the public. /10
Some of the same pundits like to claim that through Fincimex, the Cuban military steals real foreign currencies sent through remittances (USD, Euro) and gives recipients fake money (Cuban CUCs). This argument is cute by a mile. /11
Yes Cuba is trying to shore up forex reserves in preparation for a long-delayed currency unification, under which the CUC will be phased out. The Trump admin doesn't want the extremely difficult & painful currency unification process to succeed because, again, chaos. /12
But CUCs remain a viable currency, tho dropping in value. Also, other remittance co's like VaCuba and Cubamax (tho not WU) can deposit USD directly into Cuban bank accounts, but these remittance channels are also at risk of ending up completely blocked under Trump sanctions. /13
Under US demands (no actual diplo talks have taken place to negotiate solutions), Cuba has 2 options: 1) provide a non-military fin institution to contract w/ remittance transmitters. But Cuba knows if they offer a non-military state option, the US will move the goal post. /14
2) allow a private company to contract with remittance companies and get the state out of the business altogether. In a perfect world, this would be the ideal outcome. In the real world, it is a fantasy because Cuban officials would rather die than give in to US bullying. /15
Thus the most likely outcome is that Cuba embarks on a sophisticated shell game of setting up new entities to contract w/ foreign financial institutions while State plays whack-a-mole adding them to CRL. Cuba will muddle through this round of US aggression at it always has. /16
We share the view that the Cuban state should get out of the remittance business and allow private parties to take over. But history has proven time and again that U.S. strong-arming only causes the Cuban government to dig its heels deeper. This time won't be any different. /17
Tragically, that is a lesson that is lost on all supporters of Trump's #Cuba policy, particularly those in the Cuban-American community who are as proud and stubborn and averse to imposition as their brothers and sisters on the island. /18
Today some in Miami are making hay out of #Cuba announcing WU's departure, not the US or WU. If Cuba did it to spread fear, that's deplorable. But it doesn't change the underlying truth:
The Trump admin has been setting the table to end formal remittances to Cuba since June.
The Trump admin has been setting the table to end formal remittances to Cuba since June.
