Cuban Financial Opportunities Improve: U.S. Removes Designation as State Sponsors of Terrorism
Friday, May 29, 2015 the United States officially lifted its designation of Cuba as a state sponsor of terror. The designation became final 45 days after the President's initial recommendation, because Congress did not formally oppose or block the recommendation that Cuba be removed from the list. The designation brings the U.S. and Cuba one step closer to full diplomatic relations between the countries, including the reestablishment of embassies, which have remained closed since 1961. Equally as significant, but far less reported, the designation also has an important legal effect on Cuba's financial and banking opportunities.
Now that Cuba is off the US list of state sponsors of terrorism, Cuba should have more access to international banking and financial assistance. Banks providing Banking services with Cuba now have less regulation governing their institutions. Further, United States Secretary of Treasury is also no longer required to use its "voice and vote" against aid to Cuba under the Foreign Assistance Act. This change is important because the United States has significant voting power and influence in many international financial institutions. In most instances, the United States will still be required to withhold aid to Cuba as a result of the Cuban Liberty and Democratic Solidarity Act of 1996 (Helms–Burton), but nonetheless Cuba's options have increased. The change should allow Cuba to seek much needed financial assistance from additional sources.
Since the revolution, Cuba has historically not wanted the assistance of international financial institutions. But, in 2011, Cuba seemed to revise its position, indicating that it might be interested in the assistance of, and membership in, international financial institutions. In fact, in late 2013 Cuba signed a loan with the International Fund for Agricultural Development (IFAD) for rural development. Cuba’s recent policy shift demonstrates that Cuba is searching for additional sources of capital for growth and development. As U.S. and Cuban diplomatic relations improve, so should Cuba’s access to funds. That in turn should improve Cuba’s development and trade—hopefully with Louisiana.
Saul Reinaldo Newsome practices in the areas of international trade, foreign direct investment, and business transactions. Saul is an attorney in the Baton Rouge, Louisiana office of the law firm Breazeale, Sachse & Wilson, L.L.P. For more information, please contact Saul Reinaldo Newsome at email@example.com or (225) 381-8033.