Export controls

Iran, Cuba, and dreams of hanging out in Havana

The recent thaw in US-Cuba relations is predicted to bring significant changes to Cuba. But the easing of political tensions doesn’t mean that we can let our guard down on export controls.

The hottest holiday destination

I know it’s not so long since I returned from summer vacation. But, hey, it doesn’t hurt to start dreaming about the next one already… ;).

Like many people, I have a mental bucket list of destinations I’d love to visit over the coming years. Cuba has always been high on my list but – if travel journalists are to be believed – the country has become the hottest must-see-now destination anywhere on the planet. Cuba’s days as a country frozen in time since the 1950s appears to be coming to a close. There now seems to be an urgency to experience its old-style charm and unique identity before it disappears forever.

I’m dreaming of hanging out in a bar with a mojito in hand and listening to Buena Vista Social Club-style music while people dance the mambo, rumba, or salsa. In the street outside, those classic American cars – Studebakers, Pontiacs and Oldsmobiles – cruise past colorful but crumbling colonial-style buildings. I’m sure lots of people must have such mental images of Cuba – a country caught in a time-warp that has made it some kind of open-air museum of the mid-twentieth century.

Of course, the key reasons for these iconic anachronisms relate to Cuban Revolution which saw Fidel Castro taking power in 1959 and the subsequent introduction of US sanctions. And whilst I hanker to see the unspoilt heritage this situation has preserved, it’s easy to see that it has caused significant hardship for the Cuban people and held back economic development.

Winds of change…

However, changes in the relationship between the United States and Cuba are already well underway. In his 2015 State of the Union address, President Obama said “In Cuba, we are ending a policy that was long past its expiration date. When what you’re doing doesn’t work for fifty years, it’s time to try something new… And this year, Congress should begin the work of ending the embargo.”

The two countries restored diplomatic relations – which had been severed in 1961 during the Cold War – on July 20, 2015, reopening embassies in each other’s capitals. The process of normalization of relations has also included the rescission of Cuba’s designation as a State Sponsor of Terrorism (announced in the Federal Register on July 22) and removal from Country Group E:1, which makes Cuba eligible for a general 25 percent de minimis level and portions of four license exceptions under the EAR.

On September 21, further important changes were announced in the Federal Register by the Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security (BIS) which – inter alia – facilitate the free flow of information and further relax travel restrictions to Cuba.

…are not just blowing in Cuba

In parallel to the thawing of relations with Cuba, there have been historic developments taking place elsewhere in the world. On July 14, the P5+1 and Iran finally announced that they had reached an agreement concerning Iran’s nuclear program. Iran’s acceptance of strict limits on its nuclear program should result – providing the agreement holds up and Iran meets the conditions – in a gradual relaxation of sanctions and the release of a significant amount of frozen Iranian assets.

These are very positive developments that are likely to reduce sanctions against both countries and ease political tensions. But, this should not lull us into a false sense of security.

The geopolitical landscape is changing. In his 2002 State of the Union address, George W. Bush talked of the Axis of Evil, weapons of mass destruction and state-sponsors of terrorism. How things have changed. Not only is the rhetoric different when we compare the Bush address with Obama’s from earlier this year: the world is a changed place.

Sure, North Korea remains something of a concern (and Russia, too), but these days pariah states are less in focus. Non-state actors (especially the terrorist group Islamic State), failed states (such as Syria and Libya), and rogue individuals now pose the primary sources of concern.

What this means for your trade controls

So, having a rigorous export controls and compliance program in place is as important as ever – perhaps even more so given that “the enemy” is now often not a state. Restricted-party screening, embargo checks, and verification of license requirements for exporting goods are still crucial. Political tensions with Cuba and Iran may be easing, but now is not the time to drop our guard on export controls and compliance due diligence.

Maybe we can’t yet relax on export controls and compliance but it doesn’t mean I have to stop thinking about relaxing with that mojito. If, like me, you’re dreaming of a land with no McDonalds and no Starbucks, wonderful charm, fascinating culture and an iconic history, then take the opportunity to go to Cuba soon. It might not be the same for much longer…

If you have any comments or remarks, I’d be happy to exchange with you via LinkedIn.