US says working with Cuba to solve banking issue

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Associated Press

Posted on November 27, 2013 at 3:03 PM

Updated Thursday, Nov 28 at 3:05 AM

HAVANA (AP) — Washington said Wednesday it is working with Cuba to find a new bank for its diplomatic accounts in the United States, after a banking cutoff forced the Caribbean nation to halt nearly all U.S. consular services just ahead of the busy holiday travel season.

The U.S. State Department said in an emailed communique that the U.S. bank which had handled Cuba's accounts severed the relationship due to a "business decision," and that the government does not have the power to interfere or order any bank to handle a foreign mission's account.

It added that Cuba's situation is not unique, saying the closure of embassy accounts can hurt operations at other diplomatic outposts.

"The U.S. government seeks to help foreign missions in the United States that have trouble obtaining banking services, while ensuring the continued security of the U.S. financial system including through appropriate regulatory oversight," the State Department said. "We would like to see the Cuban missions return to full operations."

On Tuesday, Cuba stopped providing almost all consular services including passport and visa processing at both the Cuban Interests Section in Washington and its Permanent Mission to the United Nations in New York.

It blamed the banking difficulties on the 51-year-old U.S. embargo, which outlaws most financial transactions with the Communist-run country. Havana said it had tried unsuccessfully to move its accounts to other banks, and expressed regret for the "negative impact" that slashing consular services will have for people planning trips to the island.

Analyst Emilio Morales of the U.S.-based Havana Consulting Group said an estimated 557,000 U.S. travelers will visit Cuba this year carrying about $2 billion, a huge boon for individual families and the broader economy.

Most are Cuban-Americans who bring cash to relatives, and there are also smaller numbers of visitors on academic, religious and "people-to-people" cultural exchanges allowed under embargo rules. The year-end holidays see a big bump in Cuba travel.

"If there is no prompt solution to the measures taken by the government of Cuba on the suspension of consular services ... the Cuban people could be severely harmed economically by their relatives being unable to travel," Morales said. "It would also mean million-dollar losses for agencies that sell airline tickets and for the Cuban government."

Morales projected that each month of delay could cost $158 million in lost remittances and $23 million in losses for travel companies.

Two travel operators said all their clients for the next month already have their paperwork in order, so they're not worried about missing out on the holiday bonanza.

"Everybody is panicking, of course, because people who have pending trips are nervous," said Tessie Aral, president of ABC Charters, which runs flights to Cuba. But "as far as I'm concerned, with the customers I have, we're not going to have a major impact in December."

Tom Popper, director of tour operator Insight Cuba, is continuing to book tours and said he's optimistic a solution will be found. He said finding a bank for the Cuban missions would be ideal, but the country could also issue tourist cards at the point of entry as happens in many other nations.

"There's an interest on both sides ... to create a workable solution," Popper said.

Cuba analyst Marc Hanson of the Washington Office on Latin America, a think tank that criticizes the embargo, called the case a "Kafkaesque" example of U.S. policy on Cuba undermining U.S. policy on Cuba.

The strict embargo rules designed to discourage institutions from doing business with Cuba have in this case jeopardized the White House's goal of using Americans on people-to-people tours as an army of unofficial cultural ambassadors, he said in an essay on the group's website.

The suspension of Cuba's consular and travel visa services will "stall a highly successful Obama foreign policy that is beginning to show positive results," Hanson wrote.

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Associated Press writer Christine Armario in Miami contributed to this report.

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Peter Orsi on Twitter: www.twitter.com/Peter_Orsi

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