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Closure of Cuba’s Consular Services, and Steps Washington Can Take to Avoid This Again

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Author: Noah Montague

In recent years, the Obama administration has taken many positive steps in re-shaping US-Cuba policy, especially in regards to travel of Americans to the island nation. In recent remarks made by both President Obama and Secretary of State John Kerry, Cuba policy is something in which the administration continues to search for ways to update and broaden the exchange between Cubans and U.S. citizens – something that the President considers to be the cornerstone of relations and change between the US and Cuba. While the actions and recent statements of the administration have been steps forward in changing US-Cuba relations, there is much more action that the President can take in order to improve outdated Cuba policy – a fact highlighted by the recent debacle regarding the closure of consular services at the Cuban Interests Section (CIS).

On November 26, 2013 the Cuban Interests Section in Washington, DC notified the public that M&T Bank, the bank handling its financial accounts had closed its operations with diplomatic entities and would no longer be able to service the accounts of the CIS. The closure of the bank accounts of the CIS meant that it would no longer be able to process any payments for consular transactions and as a result all consular functions – issuing of passports, visas, and other official documents – would immediately cease to exist. The inability of the CIS to provide consular functions left many groups without access to documents they needed to travel between the United States and Cuba: Passports for Cuban citizens residing in the United States, visas for Americans wishing to travel to Cuba for academic, religious, people-to-people or other exchanges, and both sets of documents for the largest group traveling between the two countries, Cuban-Americans, many of whom lacked the necessary documents to travel to Cuba to visit loved ones during the holiday season and one of the busiest US-Cuba travel periods of the year.

Luckily, through negotiations with M&T Bank, the CIS has been allowed to continue financial transactions at the bank until Feb. 17th, 2014, at which time the bank will finally close the Cuban Interests Section’s accounts. When that date arrives, the CIS will once again be forced to cease its consular functions unless it is able to find another bank willing to handle its accounts. While the CIS was originally given months to locate a new bank for its accounts and has been given again until February to do so, the difficulty the CIS has had in locating a new bank stems from the regulations that US economic sanctions have placed upon Cuba, even though supporting these financial transactions is completely legal.

The economic sanctions placed on Cuba by the United States make finding a new bank extremely difficult if not almost impossible for the CIS given the high cost of financial transactions with the Cuban state. Given the recent and heavy fines levied by the U.S. government on foreign banks and corporations for violating US economic sanctions, banks within the US are even more hesitant to conduct business with Cuba at the fear of violating one of these sanctions and being at greater scrutiny and subject to fines from the US government. These fears, expressed in news articles with titles such as “U.S. sanctions make Cuba’s bank account too toxic for banks,” demonstrate the real challenge that the CIS faces in trying to find a new financial institution.

While the Obama Administration itself does not have the authority to remove the economic sanctions, there are powerful and effective steps it can take in resolving the CIS banking crisis and ensure that Cuba has consular representation in the US as afforded by the Vienna Convention on Consular Relations. Through simple dialogue White House, State Department, Treasury Department and U.S. financial institutions, the government can better ascertain the fear that banks have in dealing with the Cuban Interests Section. These fears may then be properly addressed by the U.S. government to create a safe environment for U.S. banks in which they can remain confident they will not be arbitrarily fined for providing legal transactions to the Cuban Interests Section.

Cuban Americans throughout the United States also support these steps to resolve the banking issue. A group of 18 prominent Cuban-American organizations sent a letter to the White House, State Department, and Treasury Department voicing their concerns about the inability of the CIS to find a new bank. The letter called for the State and Treasury to “take steps so that U.S. banks are not worried they will be fined or punished for handling banking matters for the Cuban Interests Section in the United States. They can clarify the rules for the banking community, meet with them and make necessary adjustments, shift the tone of sanctions enforcement, or take other steps.”

The Obama Administration has been on the right path towards re-evaluating US policy towards Cuba, and as the CIS banking problem has cleared itself up – for now, the Administration can take the further steps called for by both Americans and Cuban-Americans alike to facilitate the process in finding a new bank for the Interests Section in the future. A failure of the White House to take further action to ensure that a financial institution will be available for the CIS come February 17th, would ultimately mark a huge step backward in US-Cuba policy and virtually eliminate the efforts that President Obama and the Administration have taken thus far for greater U.S.-Cuba engagement.