Trump's rollback of Obama's Cuba policies may harm the Cubans it means to help

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Despite major changes in the past few years, the rhythm of life in Cuba remains languid.

President Donald Trump appears set to walk back some aspects of the normalization of US-Cuba relations conducted by President Barack Obama during his final years in office.

According to a draft of an eight-page directive Trump is expected to sign on Friday during an event at Miami's Manuel Artime Theater - named for a leader of the failed Bay of Pigs invasion - the US government will restrict the number of reasons Americans can travel to the island and prohibit financial dealings with companies controlled by the Cuban military.

Americans will not be allowed to spend money in state-run hotels - mainly brand-name hotels - and restaurants that are linked to the military.

Travelers to Cuba will also be subject to audit by the Treasury Department to make sure their trips are within one of the permitted categories.

Trips for educational purposes will be required to travel with a guide from a US group sponsoring the trip, according to the Miami Herald, which obtained a draft of the directive. "People-to-people" visits for individual Americans will be prohibited.

The effect of the policy changes will likely be to "chill" trips to the island by Americans, a Trump administration aide told Yahoo News.

Desmond Boylan/Reuters

Cuban military officers walk after a tribute to revolutionary leader Che Guevara in front of the Cuban Interior Ministry in Havana's Revolution Square, October 8, 2013.

Commercial flights and cruises will still be allowed to stop in Cuba, and Americans can still send money to the island and rent private properties there, such as ones rented by Airbnb. Diplomatic relations, reestablished by Obama, will remain, as will Obama's revocation of the "wet foot, dry foot" policy that gave Cubans preferential immigration treatment.

The remarks seen by the Miami Herald and Politico cite human-rights concerns to justify the crackdown. And the directive - as well as major backers, including Sen. Marco Rubio and Rep. Mario Diaz-Balart - outlines a desire to support private businesses and citizens.

"If we're going to have more economic engagement with Cuba, it will be with the Cuban people," Rubio told the Herald.

AP Photo/John Raoux

Sen. Marco Rubio at a campaign event in Florida.

"We also very much want to see that kind of expansion of commercial interaction with Cuba," a senior White House official said. "That's entirely up to Raul Castro to make that happen."

White House officials also said Trump would lay out "very specific benchmarks" for the Cuban government to meet in order to negotiate with the US, including freeing political prisoners, free elections, and paying Cuban workers directly.

These new restrictions will burden the US government with the task of policing US travel to the island and of scrutinizing financial transactions there.

And while avenues to visit the long-isolated island will remain, the "chill" caused by the restrictions on which businesses Americans can patronize while there - as well as by the threat of audit by US authorities and requirements to maintain records of the trip - may in turn hurt Cuban businesses and entrepreneurs who've benefited from the recent opening of relations.

There has been an "acceleration" of some economic activity in Cuba, according to Emily Morris, an associate fellow at the University College London's Institute of the Americas.

This boost has been largely limited to Havana, "and it's heavily concentrated among the people, particularly in the private sector, who are catering to the new influx of US business," Morris said during an Atlantic Council conference call this week.

Moreover, an environment in which Americans are less interested in traveling to Cuba and limited in what they can do there may have negative consequences for the firms and people Trump's directive intends to aid.

"More than half my customers are Americans . . . the best tippers," Dionys Diaz, 33, who gives tourists rides along Havana's Malecon esplanade for $25 in a restored pink 1954 Chevy convertible, told The Washington Post.

Wikimedia Commons

El Malecón in Havana, Cuba.

"Obama's measures have in some ways awakened the hope of entrepreneurs," Enrique Nuñez, owner of La Guardia restaurant in Havana, told ABC 10 in Miami.

Nuñez and other business owners in Cuba are concerned that Trump's reversal will limit their access to US dollars, and they see Trump's move as a mistake, since it would restrict the flow of cash to private Cuban businesses, directing it back into the hands of the Cuban military.

Non-Cuban American visitors to the island jumped 74% in 2016, facilitated by the return of commercial flights. The 615,000 visitors from the US in 2016 was a record number for Cuba (though it was still a minority of the island's 4 million visitors).

Alexandre Meneghini/Reuters

Though Cuba's overall economy has slowed in recent years, in part because of external factors, the restoration of US-Cuba relations gave a vigor to some on the island that Trump's Cuba policy may dampen.

"It's cultural activity. It's an openness, it's an excitement about the possibilities that could happen," Morris said of happenings in Cuba.

"Now clearly at the moment people are worried. People are worried who engage in the activity, and people are worried even who aren't engaged in it but feel that it opened up possibilities for the future," she added. "So there's a kind of nervousness about what happens next."

Trump's directive mainly targets the Grupo de Administracion Empresarial, SA, or GAESA, which is the Cuban military's enterprise for state-controlled businesses.

It is a sprawling conglomerate, and John Kavulich, president of the US-Cuba Trade and Economic Council, estimated that it controls as much as 80% of Cuba's tourism industry and 60% of the island's total economy.

Trump's new policy will reportedly direct US government agencies to create regulations limiting US financial dealings with companies connected to the Cuban military.

Thomson Reuters

The hotel Four Points by Sheraton in Havana, Cuba, May 22, 2017.

Trump aides told Yahoo News that exceptions may be carved out for US hotel chains to operate on the island, in effect barring American from using foreign-run hotels. A White House official told Reuters that the policy change was not meant to "disrupt" established business deals with Cuba, like Starwood Hotels' agreement to run a Hotel in Havana.

While Trump's order prohibits financial dealings with such state-run businesses, the restrictions it imposes may still funnel money to the government.

The order "reinstates requirement for Americans to come only with tour groups, which are, on Cuban end, controlled by government," Michael Weissenstein, the Associated Press news director for the Caribbean, said on Twitter, adding that Cuba mandates tours be on state buses with state guides.

Thomson Reuters

Tourists take pictures in Havana

"So unless I'm missing something, the effect will be redirecting [money] of tens of thousands of Americans from Cuban private sector to the Cuban state," Weissenstein said.

The tour requirement was also criticized by Tomas Bilbao, the managing director of Avila Strategies who led a public-policy campaign prior to Obama's 2014 opening to Cuba and works on social projects on the island.

"Anyone who has been to Cuba in last [50 years] knows that forcing US travelers to go in tour groups is a guaranteed way to hurt entrepreneurs," Bilbao tweeted.

"Cuban [Airbnb operators] can't accommodate group tours, forcing tour operators to use Cuban [government] hotels," he added. "[Individual travelers] are lifeblood of entrepreneurs."

Efforts to enforce restrictions on dealings with the Cuban military's businesses could be further confounded by attempts to obscure those businesses' connections, such as by establishing a new, ostensibly civilian-controlled, holding company in the future.

Moreover, while Trump and those backing the policy change have invoked human-rights concerns to justify it, some human-rights groups have warned that a more hardline policy could benefit the government, empowering hardliners who thrive on contentious relations with the US.

Enrique de la Osa/Reuters

A man uses the internet via public Wi-Fi in Havana, Cuba.

Trump's walk back of Obama's policies comes after a nearly six-month-long review. And Trump, who appeared ambivalent about US relations with Cuba in the early part of his campaign, became much more harsh in his rhetoric toward the island in the latter stages of his presidential run. That shift did not go unnoticed.

"Obama incentivized entrepreneurship," Dioslans Castillo, a 53-year-old hairdresser in Havana, told the AP. "His visit influenced society because the people saw the so-called opening, despite it happening in slow steps compared to the rhetoric. But with Trump, it's all going to crash."

Obama's opening was not without critics in Cuba, mainly among dissidents who want more pressure on the Castro government than Obama or Trump have applied. Others, after a half-century of tension, are ready for a wholesale change.

"The best thing that can happen for the two countries is for all of these problems to end, for everything to be normal," Yosvani Reinoso, a 42-year-old locksmith in the Cuban port city of Mariel, told the AP.