June 8, 2015

And Then There Were Three – The U.S. Department of State Removes Cuba from the State Sponsor of Terrorism List

by Jeremy Paner

The U.S. Department of State announced today that it removed Cuba from its list of State Sponsors of Terrorism. This removal followed a review of the designation criteria[1] and the submission of a report certifying that the Cuban government has not provided any support for international terrorism during the preceding six-month period, and that the Cuban government has provided assurances that it will not support acts of international terrorism in the future. Following today’s removal of Cuba, the list is limited to Iran, Syria, and Sudan.

Sanctions resulting from designation as a  State Sponsor of Terrorism include prohibitions on U.S. foreign assistance, a ban on defense exports and sales, controls on exports of dual-use items, and miscellaneous financial prohibitions. These include a requirement to actively oppose World Bank and International Monetary Fund loans, and prohibit financial transactions through U.S. banks.

This removal is wholly symbolic, and does not affect the broad U.S. embargo on Cuba. Congress codified the embargo through the Cuban Democracy Act of 1992, the Cuban Liberty and Democratic Solidarity Act of 1996 (Helms-Burton Act), and the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA). Specific examples include Section 102 of the Helms-Burton Act, which codifies the Cuban Regulations administered and enforced by the Office of Foreign Assets Control[2] (OFAC) in effect as of March 1, 1996, and Section 7209 of TSRA, which prohibits OFAC from licensing Cuban tourism.

Neither this removal, nor the January 2015 revisions to the OFAC and the Export Control Regulations fundamentally change the Cuban embargo prohibitions. U.S. persons, businesses, and foreign companies that “are subject to the jurisdiction of the United States” remain generally prohibited without a license from all dealings in which Cuba or a Cuban national has any interest. Recent high profile expansions into the Cuban market by U.S. businesses such as Airbnb, MasterCard, and Netflix do not evidence that Cuba is “open for business.” These companies entered Cuba pursuant to very narrow and explicit exceptions to the embargo. Furthermore, like the U.S. government’s action today, the foray into Cuba by these companies is largely symbolic.


 

[1] A State Sponsor of Terrorism designation is based on  section 6(j) of the Export Administration Act, section 40 of the Arms Export Control Act, and section 620A of the Foreign Assistance Act, which require a demonstrable reason to believe “that the government of that country has repeatedly provided support for acts of international terrorism.”

[2]This statutory codification  may be lifted following a presidential  submission setting forth “that a transition government in Cuba is in power.” Helms-Burton Act, Sec. 204.