WASHINGTON — The US on Tuesday lifted some financial restrictions on Cuba in an effort to boost private businesses on the island.
The measures allow independent entrepreneurs to open and use U.S. bank accounts online to support their businesses. Other measures include steps to open up more Internet-based services and expand the ability of private companies to use certain financial transactions.
“These regulatory changes update and clarify authorizations to support Internet-based services to promote Internet freedom in Cuba, support independent Cuban private sector entrepreneurs, and expand access to certain financial services for the Cuban people” , the Ministry of Finance said in a press release. .
One of the most significant changes would allow Cuban private business owners to open bank accounts in the United States and then access them online once they get back to Cuba – something they couldn’t do before. The US is also once again allowing so-called U-turn transactions, where money is transferred from one country to another but routed through the United States.
“This reinstated authorization is intended to assist the Cuban people, including independent private sector entrepreneurs, by facilitating remittances and payments for Cuban private sector transactions,” the press release said.
The Trump administration had revoked authorization for the U-turn transactions in 2019.
The Treasury Department’s updated guidance Tuesday also changed the terminology the agency uses to clarify that Cuban officials or banned members of the Cuban Communist Party did not benefit from the changes aimed at the country’s emerging private sector.
About 11,000 private companies in Cuba are responsible for about a third of the island’s employment, Cuban officials say.
The changes come as Cuba grapples with one of the worst economic and energy crises in its history. Cuban citizens are facing waves of power outages that have gotten worse in recent weeks and are frustrated about food shortages and inflation. Hundreds of thousands of people have migrated, many of them heading to the United States.
Ties between the US and Cuba were effectively frozen after the 1959 revolution, which saw Fidel Castro come to power and install a communist government. There was a wave of nationalizations of large companies, although some small private companies were allowed to remain open until 1968.
The US imposed a complete economic embargo on Cuba in 1962 under President John F. Kennedy.
It wasn’t until former President Barack Obama was elected that relations began to thaw a bit, with some restrictions lifted in 2017. After Obama, then-President Donald Trump largely halted Obama’s bilateral cooperation. In the waning days of the Trump administration, his administration again labeled Cuba a “state sponsor of terrorism” and hit the country with new sanctions.
Cuba has also slowly opened its economy to more private enterprise.
In 2010, President Raúl Castro began reforms that expanded self-employment for individuals, but not for companies. In 2021, Cuban authorities allowed the creation of the first small and medium-sized companies – called Pymes in Spanish.
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Rodriguez contributed from Havana, Cuba.