Implementing the "New" Cuba Policy: Considering the "National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba"

(Pix ©Larry Catña Backer 2017)

Like many others with opinions of their own (e.g., here, here, here, here, here, here, and here), I have been considering the changes in U.S. policy toward Cuba announced with a certain flourish by our 45th President at an assembly organized for that purpose in Miami on June 16, 2017. For my earlier posts on the Presidential speech announcing the change in policy and my thoughts on forgone alternative approaches see  HERE and for the Cuban response see HERE. 

In my last post I suggested that the realization of the principles announced in the speech would likely be the product of battles, likely already being undertaken, within the more or less opaque halls of the deeply embedded bureaucracies that have fed on conventional U.S. Cuba policy for more than a generation. The apparatus of those bureaucracies will now be engorged and empowered by the responsibilities vested in it as a consequence of the adoption of this new set of policies. Whether or not the new policies are the "better deal" the U.S. ought to expect from its leaders (a debatable point to be sure and one in which there is considerable disagreement), there is great irony that a President proud of his key objective to reduce and dismantle mindless bureaucracies has, in this case, authorized the augmentation of a bureaucracy which might acquire the functional authority of a Soviet style central planning ministry. But perhaps this is good policy in line with the aspirations and principles of this administration.  In any case, one will have to wait to measure the actual direct and indirect effects of this policy within and beyond the United States before one can conclude that the policy actually serves American interests as hoped.  

This post includes the text of the Presidential order directing the bureaucracy to revise and adopt regulations to implement and operate the new policy.  Entitled, National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba, the Memorandum is well worth reading, if only because it will likely be at the center of future litigation about the scope of jurisdiction of administrative agencies and their authority to enact regulatory changes in the forms they will put forward sometime soon. My brief observations about its contours and construction also follows.

The Memorandum starts with the usual introduction that provides a brief background and justification for the actions that follow. Yet this Section 1 it also suggests the extent of the scope of the authority to be delegated and the manner in which that delegated authority is to be exercised by subordinate administrative agencies. 

The aim of the order is to encourage regime change in Cuba to a form more to the liking of the United States (fair enough, at least in the traditional cultures of statecraft).  That encouragement is not meant to be an act of charity.  Indeed not; the decision to expend U.S  wealth on this endeavor (and to reduce the ability of U.S: economic interests to exploit global markets for the benefit of the American people) is grounded in national security.  That national security concerns and "foreign policy interests" is stated but not explained in any detail.  Perhaps the reasons are too sensitive for public consumption, though in this Republic  one might wonder at the liberality with which this self-restraint is here deployed. But so be it; also fair enough given the current political climate. To that end the policy to be announced appears to have one principle purpose: "we must channel funds toward the Cuban people and away from a regime that has failed to meet the most basic requirements of a free and just society."

The Memorandum concludes its introduction by reference to those habits and practices of the Cuban state that the current administration finds most offensive, and thus likely to be the markers used in fashioning the administrative regulations and the exercise of administrative discretion signaled in the body of the Memo. It then reminds its readers that the orders to follow will not end the matter: the Memo represents merely an initial action; there is likely more to come.

Section 2 then speaks to "policy" and Section 3 to "implementation." The policy section echoes the thrust of the President's Miami speech (here and here). There are just a few points worth mentioning. First the critical policy aimed at ending "economic practices that disproportionately benefit the Cuban government or its military, intelligence, or security agencies or personnel at the expense of the Cuban people" (Section 2(a)) leaves a lot of wiggle room, some of which is constrained by Section 3. It is not clear what is meant by "disproportionate benefit"; and it is not clear how one measures expenses borne by the Cuban people. Second, there is an interesting tension between Section 2(b) ("Ensure adherence to the statutory ban on tourism to Cuba") and Section 2(d) ("Amplify efforts to support the Cuban people through the expansion of. . . lawful travel").  Of course this signals a certain asymmetry that may be in the interests of the United States (e.g. more Cubans out, fewer Americans in) but its relation to the principles for which these policies are constructed remain elusive. Lastly Section (f) includes a potpourri of issues and initiatives, some of which are already the subject of ongoing normalization related negotiations (both formal and informal) that include political objectives wrapped around national security and health concerns. 

Section 3, of course, is the portion of the memorandum of most interest to administrative officials and lawyers.  It will largely shape the business climate by setting out the parameters of the administrative machinery that will be used to plan and control American economic relations with Cuba. First, the process appears to be open ended.  While officials are directed to start regulatory reform within 30 days (§§3(a) and (b)), there is no expectation of any "product" within a specified deadline. Section 3(a) deals with "transactions." It requires the American bureaucracy to create a proscription list of entities connected with the Cuban military, intelligence or security apparatus. This is interesting if only because of the politics involved (and the power vested in) the officials now charged with that task without, it seems, much in the way of accountability. But more important is in the "fine print;" the proscription applies only to "direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba."  Depending on how that is interpreted, it suggests that (1) indirect transactions (for example through subsidiaries organized elsewhere than the United States or with indirect entities ultimately controlled by offending bodies) remain unaffected; (2) direct financial transactions are still permitted with these proscribed entities as long as there is proof of no disproportionate benefit; and (3) the expense would have to be against the Cuban people or Cuban private enterprise, yet unless the regulations would also invalidate the entire legal structure of the Cuban  private sector,  there are very few areas in which such a calculation could be applied. More interesting still are the exceptions carved into §3(a)(iii). The problem here, of course, is that, the U.S. regulations would vest American administrative agencies with the same power that they find so detestable when exercised by the Cuban state council and its instrumentalities. like the State Council in Cuba.  Still, there is no doubt that there must be a difference when the American government is vested with the authority to approve waivers of policy in a case by case basis than when such authority is exercise by Cubans. Perhaps if the Cubans embraced the American model of §3(a)(iii) they might be thought to have taken an important step toward the goals specified in the Memorandum.

Lawyering these transactions, then, might become more complex (and profitable) but that hardly amounts to a ban.  Even if the ban were "complete" it would be difficult for regulators to keep up with the ability of lawyers to plan around any ban based on the production and maintenance of lists. Moreover writing regulations that seek to set the methods for calculating benefit and for defining "disproportionate benefit" may prove difficult--or they may just be arbitrary (and thus subject to likely litigation). Lastly, the Cuban private sector does not include anything beyond those occupations permitted through licensing.  Much of the economic life of the state is still managed by the public sector and much of that directly or indirectly by the offending organizations.  It is difficult to build structures to implement this principle unless the United States would also presume to ignore substantially all of the economic structure of the Cuban state.  But it is odd that the United States, seeking the triumph of the rule of law would unilaterally void practically the only real progress in rule of law articulation in Cuba. Still, political sausage making might require a bit of this sort of work. Fair as politics, perhaps, but more difficult otherwise. 

The tourism ban (§3(b)), of course has its own dynamic, the most ironic part is the focus on American educational institutions (§3(b)(i)).  The new regulations must "require that educational travel be for legitimate educational purposes."  It is not clear what the substance of this requirement means.  But it is clear that the invitation is for the administrative agencies to develop a host a transaction cost increasing reporting and justification obligations on educational agencies that will have the effect of substantially raising the costs of such trips (e.g., §3(b)(iii)).  But the, that may be its purpose. One must await the regulations to be sure.  But it would be surprising if the regulations did not gift regulators with an enhanced authority to (1) pre-approve travel; (2) require substantial pre and post trip disclosures; (3) and enhance both reporting and the fees charged therefor in connection with such trips. It is not clear how the new regulations will affect travel for research, including attendance at conferences and workshops or at meetings of scholarly associations. And imagine such travel where the object of study are those agencies on the American proscription lists. . . . . The obsession with travel is carried over to §3(c), which requires administrative agencies to regularly audit travel to Cuba "to ensure that travelers are complying with relevant statutes and regulations" with regular reports to the President.

Section 3(d) augments the proscription lists required under § 3(a)(i) to involve a variety of people in official positions. There is a bit of bathos to the list and one wonders who might have been sitting at the table working through the list. It includes everyone from those serving at the highest ranks of the state apparatus, to "members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution."  Clearly the object is to excise leading members of the Communist Party and apply an early effort at "de-communization." Yet it is likely that this approach produce both the benefits and the curious consequences of previous efforts, especially since 2003. 

Section 3(e) limits the discretion of the U.S. Secretary of State and the U.S: U.N. representative with respect to embargo related activities in the international sphere.  But the direction is ambiguous enough to permit a certain exercise of discretion, depending on how it is interpreted.  And in any case, decisions are likely to be made ad hoc as situations arise.  Still, from the administration's position, it makes a point through a legislative like gesture. That must yield some measurable value to someone. Sections (f) through (k) then direct implementation of specific policies--from the interdiction of immigration, to the enhancement of U.S. projection of its broadcasting power into Cuba. Section 3(l) then serves as an elegant end to this implementation roadmap--a reminder that American official, should exercise their authority "in a manner that furthers the interests of the United States, including by appropriately protecting sensitive sources, methods, and operations of the Federal Government." The provision is not merely hortatory; it serves also to signal that much of the operation of the regulations--from its drafting to its implementation, to the exercise of administrative discretion, may be clothed in secrecy. 

Sections 4 and 5 then are directed to "clean-up".  The first with respect to prior Presidential actions; the second with respect to compliance and scope of power issues. Taken together, though, the Memorandum produces an important, complex and sometimes subtle set of challenges.  These challenges are not just to the issue of regulation and policy, but to the actual operation of the rule of law in our Republic as well.  One can only hope that those charged with the task are up to the challenge, including those whose responsibilities as citizens impose obligations of vigilance and accountability in the time honored ways that are foundational to the principles of this Republic.

Even this brief review of the regulatory mandate suggests both the ambiguities (and opportunities) inherent in the mandate, as well as the scope of the bureaucratic machinery that will be necessary to operate this centralized state control system that, ultimately, will be founded on the exercise of administrative discretion by those effectively insulated from effective accountability structures. Even those areas of policy left untouched (for example educational travel through American universities with the appropriate license) will likely be affected by the emergence of a more stringent reporting regime applicable to all programs. And the power to compel reporting carries with it (at least latently) the power to approve or disapprove (and thus the power to suggest behaviors that qualify as "safe harbors"). As to the collateral effects on the private sector (especially the adoption of prophylactic measures to avoid governmental investigation or entanglements--that can be expected as well). 

__________

The White House
Office of the Press Secretary

For Immediate Release
June 16, 2017

National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba

MEMORANDUM FOR THE VICE PRESIDENT
THE SECRETARY OF STATE
THE SECRETARY OF THE TREASURY
THE SECRETARY OF DEFENSE
THE ATTORNEY GENERAL
THE SECRETARY OF THE INTERIOR
THE SECRETARY OF AGRICULTURE
THE SECRETARY OF COMMERCE
THE SECRETARY OF HEALTH AND HUMAN SERVICES
THE SECRETARY OF TRANSPORTATION
THE SECRETARY OF HOMELAND SECURITY
THE DIRECTOR OF NATIONAL INTELLIGENCE
THE DIRECTOR OF THE CENTRAL INTELLIGENCE AGENCY
THE CHAIRMAN OF THE JOINT CHIEFS OF STAFF
THE ASSISTANT TO THE PRESIDENT AND CHIEF OF STAFF
THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
THE ASSISTANT TO THE PRESIDENT FOR NATIONAL SECURITY AFFAIRS
THE ASSISTANT TO THE PRESIDENT FOR HOMELAND SECURITY AND COUNTERTERRORISM
THE COUNSEL TO THE PRESIDENT
THE ASSISTANT TO THE PRESIDENT FOR ECONOMIC AFFAIRS
THE UNITED STATES TRADE REPRESENTATIVE
THE DIRECTOR OF THE OFFICE OF SCIENCE AND TECHNOLOGY POLICY
THE REPRESENTATIVE OF THE UNITED STATES TO THE UNITED NATIONS
THE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION
THE ADMINISTRATOR OF THE UNITED STATES AGENCY
FOR INTERNATIONAL DEVELOPMENT
THE DIRECTOR OF THE OFFICE OF PERSONNEL MANAGEMENT

Section 1. Purpose.

The United States recognizes the need for more freedom and democracy, improved respect for human rights, and increased free enterprise in Cuba. The Cuban people have long suffered under a Communist regime that suppresses their legitimate aspirations for freedom and prosperity and fails to respect their essential human dignity.

My Administration's policy will be guided by the national security and foreign policy interests of the United States, as well as solidarity with the Cuban people. I will seek to promote a stable, prosperous, and free country for the Cuban people. To that end, we must channel funds toward the Cuban people and away from a regime that has failed to meet the most basic requirements of a free and just society.

In Cuba, dissidents and peaceful protesters are arbitrarily detained and held in terrible prison conditions. Violence and intimidation against dissidents occurs with impunity. Families of political prisoners are not allowed to assemble or peacefully protest the improper confinement of their loved ones. Worshippers are harassed, and free association by civil society organizations is blocked. The right to speak freely, including through access to the internet, is denied, and there is no free press. The United States condemns these abuses.

The initial actions set forth in this memorandum, including restricting certain financial transactions and travel, encourage the Cuban government to address these abuses. My Administration will continue to evaluate its policies so as to improve human rights, encourage the rule of law, foster free markets and free enterprise, and promote democracy in Cuba.

Sec. 2. Policy.

It shall be the policy of the executive branch to:

(a) End economic practices that disproportionately benefit the Cuban government or its military, intelligence, or security agencies or personnel at the expense of the Cuban people.

(b) Ensure adherence to the statutory ban on tourism to Cuba.

(c) Support the economic embargo of Cuba described in section 4(7) of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (the embargo), including by opposing measures that call for an end to the embargo at the United Nations and other international forums and through regular reporting on whether the conditions of a transition government exist in Cuba.

(d) Amplify efforts to support the Cuban people through the expansion of internet services, free press, free enterprise, free association, and lawful travel.

(e) Not reinstate the "Wet Foot, Dry Foot" policy, which encouraged untold thousands of Cuban nationals to risk their lives to travel unlawfully to the United States.

(f) Ensure that engagement between the United States and Cuba advances the interests of the United States and the Cuban people. These interests include: advancing Cuban human rights; encouraging the growth of a Cuban private sector independent of government control; enforcing final orders of removal against Cuban nationals in the United States; protecting the national security and public health and safety of the United States, including through proper engagement on criminal cases and working to ensure the return of fugitives from American justice living in Cuba or being harbored by the Cuban government; supporting United States agriculture and protecting plant and animal health; advancing the understanding of the United States regarding scientific and environmental challenges; and facilitating safe civil aviation.

Sec. 3. Implementation.

The heads of departments and agencies shall begin to implement the policy set forth in section 2 of this memorandum as follows:

(a) Within 30 days of the date of this memorandum, the Secretary of the Treasury and the Secretary of Commerce, as appropriate and in coordination with the Secretary of State and the Secretary of Transportation, shall initiate a process to adjust current regulations regarding transactions with Cuba.

(i) As part of the regulatory changes described in this subsection, the Secretary of State shall identify the entities or subentities, as appropriate, that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel (such as Grupo de Administracion Empresarial S.A. (GAESA), its affiliates, subsidiaries, and successors), and publish a list of those identified entities and subentities with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba.

(ii) Except as provided in subsection (a)(iii) of this section, the regulatory changes described in this subsection shall prohibit direct financial transactions with those entities or subentities on the list published pursuant to subsection (a)(i) of this section.

(iii) The regulatory changes shall not prohibit transactions that the Secretary of the Treasury or the Secretary of Commerce, in coordination with the Secretary of State, determines are consistent with the policy set forth in section 2 of this memorandum and:

(A) concern Federal Government operations, including Naval Station Guantanamo Bay and the United States mission in Havana;

(B) support programs to build democracy in Cuba;

(C) concern air and sea operations that support permissible travel, cargo, or trade;

(D) support the acquisition of visas for permissible travel;

(E) support the expansion of direct telecommunications and internet access for the Cuban people;

(F) support the sale of agricultural commodities, medicines, and medical devices sold to Cuba consistent with the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 7201 et seq.) and the Cuban Democracy Act of 2002 (22 U.S.C. 6001 et seq.);

(G) relate to sending, processing, or receiving authorized remittances;

(H) otherwise further the national security or foreign policy interests of the United States; or

(I) are required by law.

(b) Within 30 days of the date of this memorandum, the Secretary of the Treasury, in coordination with the Secretary of State, shall initiate a process to adjust current regulations to ensure adherence to the statutory ban on tourism to Cuba.

(i) The amended regulations shall require that educational travel be for legitimate educational purposes. Except for educational travel that was permitted by regulation in effect on January 27, 2011, all educational travel shall be under the auspices of an organization subject to the jurisdiction of the United States, and all such travelers must be accompanied by a representative of the sponsoring organization.

(ii) The regulations shall further require that those traveling for the permissible purposes of non academic education or to provide support for the Cuban people:

(A) engage in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities; and

(B) meaningfully interact with individuals in Cuba.

(iii) The regulations shall continue to provide that every person engaging in travel to Cuba shall keep full and accurate records of all transactions related to authorized travel, regardless of whether they were effected pursuant to license or otherwise, and such records shall be available for examination by the Department of the Treasury for at least 5 years after the date they occur.
(iv) The Secretary of State, the Secretary of the Treasury, the Secretary of Commerce, and the Secretary of Transportation shall review their agency's enforcement of all categories of permissible travel within 90 days of the date the regulations described in this subsection are finalized to ensure such enforcement accords with the policies outlined in section 2 of this memorandum.

(c) The Secretary of the Treasury shall regularly audit travel to Cuba to ensure that travelers are complying with relevant statutes and regulations. The Secretary of the Treasury shall request that the Inspector General of the Department of the Treasury inspect the activities taken by the Department of the Treasury to implement this audit requirement. The Inspector General of the Department of the Treasury shall provide a report to the President, through the Secretary of the Treasury, summarizing the results of that inspection within 180 days of the adjustment of current regulations described in subsection (b) of this section and annually thereafter.

(d) The Secretary of the Treasury shall adjust the Department of the Treasury's current regulation defining the term "prohibited officials of the Government of Cuba" so that, for purposes of title 31, part 515 of the Code of Federal Regulations, it includes Ministers and Vice-Ministers, members of the Council of State and the Council of Ministers; members and employees of the National Assembly of People's Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub–Director Generals and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors, and deputy editors of Cuban state-run media organizations and programs, including newspapers, television, and radio; and members and employees of the Supreme Court (Tribuno Supremo Nacional).

(e) The Secretary of State and the Representative of the United States to the United Nations shall oppose efforts at the United Nations or (with respect to the Secretary of State) any other international forum to lift the embargo until a transition government in Cuba, as described in section 205 of the LIBERTAD Act, exists.

(f) The Secretary of State, in coordination with the Attorney General, shall provide a report to the President assessing whether and to what degree the Cuban government has satisfied the requirements of a transition government as described in section 205(a) of the LIBERTAD Act, taking into account the additional factors listed in section 205(b) of that Act. This report shall include a review of human rights abuses committed against the Cuban people, such as unlawful detentions, arbitrary arrests, and inhumane treatment.

(g) The Attorney General shall, within 90 days of the date of this memorandum, issue a report to the President on issues related to fugitives from American justice living in Cuba or being harbored by the Cuban government.

(h) The Secretary of State and the Administrator of the United States Agency for International Development shall review all democracy development programs of the Federal Government in Cuba to ensure that they align with the criteria set forth in section 109(a) of the LIBERTAD Act.

(i) The Secretary of State shall convene a task force, composed of relevant departments and agencies, including the Office of Cuba Broadcasting, and appropriate non-governmental organizations and private-sector entities, to examine the technological challenges and opportunities for expanding internet access in Cuba, including through Federal Government support of programs and activities that encourage freedom of expression through independent media and internet freedom so that the Cuban people can enjoy the free and unregulated flow of information.

(j) The Secretary of State and the Secretary of Homeland Security shall continue to discourage dangerous, unlawful migration that puts Cuban and American lives at risk. The Secretary of Defense shall continue to provide support, as necessary, to the Department of State and the Department of Homeland Security in carrying out the duties regarding interdiction of migrants.

(k) The Secretary of State, in coordination with the Secretary of the Treasury, the Secretary of Defense, the Attorney General, the Secretary of Commerce, and the Secretary of Homeland Security, shall annually report to the President regarding the engagement of the United States with Cuba to ensure that engagement is advancing the interests of the United States.

(l) All activities conducted pursuant to subsections (a) through (k) of this section shall be carried out in a manner that furthers the interests of the United States, including by appropriately protecting sensitive sources, methods, and operations of the Federal Government.


Sec. 4. Earlier Presidential Actions.

(a) This memorandum supersedes and replaces both National Security Presidential Directive-52 of June 28, 2007, U.S. Policy toward Cuba, and Presidential Policy Directive-43 of October 14, 2016, United States-Cuba Normalization.

(b) This memorandum does not affect either Executive Order 12807 of May 24, 1992, Interdiction of Illegal Aliens, or Executive Order 13276 of November 15, 2002, Delegation of Responsibilities Concerning Undocumented Aliens Interdicted or Intercepted in the Caribbean Region.

Sec. 5. General Provisions.

(a) Nothing in this memorandum shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This memorandum shall be implemented consistent with applicable laws and subject to the availability of appropriations.

(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

(d) The Secretary of State is hereby authorized and directed to publish this memorandum in the Federal Register.

DONALD J. TRUMP