Maybarduk: 'There won't be much investment in Cuba until Congress lifts the Helms-Burton sanctions'
US institutions will be able to open correspondent accounts in Cuban financial institutions. How will this impact the Cuban economy? How will the use of US credit and debit cards in Cuba by American travelers impact the Cuban economy?
Correspondent accounts will make payments between the two countries easier. A Cuban allowed to purchase from a supplier in the US will be able pay the money to a bank in Cuba. The Cuban bank will then instruct its correspondent bank in the US to pay the supplier. The US bank will then pay the supplier and subtract the payment for the Cuban bank’s account in the US bank. The process can happen in reverse as well.
The change is important because it will ease the difficulty of payments between the two countries, which until now have required the physical transfer of cash or complicated maneuvers through third countries while avoiding the New York banks that generally serve as the clearing house for international transactions. At times US financial controls have actually prevented the Cuban Interests Section in Washington from transferring consular fees back to Havana. It was probably a necessary change to allow Credit Card companies from transferring money back and forth between the two countries, but until the US Treasury announces the new procedures, we will not know the exact details of the new arrangements.
Correspondent banking could also become a way for small private Cuban firms to pay for imports now allowed under the new regulations. However, in the latter case, before the new rules could have much impact, Cuba will have to allow the private sector to import directly. I suspect this is a deliberate attempt by the Administration to encourage such a change.
I think it should be seen as a prelude to the lifting the Terrorist State designation, since the lifting of financial sanctions will allow for regularized inter-bank transfers.
It is not clear how the establishment of correspondent banking will affect third countries, which have long complained that US financial sanctions have made doing business in Cuba difficult and added to its costs. My guess is that this will not change until the financial sanctions are lifted.
Do you think that there will be a massive investment of US companies in Cuba?
No, there will be a lot of interest, but not much investment until Congress lifts the Helms-Burton sanctions and, even then, there will have to be much more economic reform by Cuban itself. Cuban’s new foreign investment law is a good start, but the just announced new labor law where the state will retain 92% of employee’s wages, will discourage an already reluctant Congress to lift the sanctions. Even if sanctions were lifted, the existing labor law would cause political problems for large US corporations. Cuba also needs to unify and devalue its exchange rates, before it will have much opportunity for exports.
The new port a Mariel is designed as a center for the development of a maquiladora industry,but to succeed it will need relatively inexpensive wages and potential markets.At the moment it has neither.Tourist hotels are likely to be an early investment and there could be excellent opportunities for home depot and hardware stores. Again, however, this will require a lifting of Helms-Burton sanctions, which seems unlikely.
However, I would expect a lot of small scale investment. It is already happening under the guise of providing remittances to relatives. With the new larger amount of allowed remittances and a lot more under the table, because the enforcement mechanism is being abolished, I would expect a great deal of investment in more restaurants, bed and breakfasts, and small construction contractors.
¿Qué significa revisar la definición del término legal “efectivo por adelantado”, que EEUU exige actualmente en las compras de alimentos, y que podría cambiar en lo adelante?
This appears to be a clarification of current policy. US exporters will likely be allowed to ship to Cuba before receiving full payment. However, their products might be placed in bonded warehouses and remain the property of the exporter until full payment is received. This may have previously been allowed, but this clarification should remove some uncertainty. Presumably the Cuban banks could issue letters of credit which would be paid on delivery. This was a likely necessity, because Helms-Burton prohibits exports to Cuba financed by credit.