US Eases Restrictions on Cuba to Support Private Businesses

The United States has lifted several financial restrictions on Cuba, aiming to bolster private businesses on the island. The measures, announced on Tuesday, will enable independent Cuban entrepreneurs to open and access US bank accounts online, facilitating their business operations. Additional steps will also enhance internet-based services and expand the ability of private companies to conduct certain financial transactions.

“These regulatory amendments update and clarify authorisations in support of 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 US Department of the Treasury stated in a news release.

A significant change allows Cuban private business owners to open bank accounts in the US and access them online from Cuba. The US will also reinstate U-turn transactions, permitting money to be transferred between foreign countries via US banks. This authorisation aims to aid the Cuban people by facilitating remittances and payments within the private sector.

The previous administration under President Donald Trump had removed permission for U-turn transactions in 2019. The updated guidance from the Treasury Department specifies that these changes are designed to benefit Cuba’s emerging private sector, excluding Cuban officials or prohibited Communist Party members.

Cuba is currently grappling with severe economic and energy crises, with widespread blackouts, food shortages, and inflation prompting mass migration, predominantly to the US. Approximately 11,000 private businesses in Cuba account for about one-third of the island’s employment.

US-Cuba relations have been strained since the 1959 revolution, which led to a Communist government and the nationalisation of large companies. The US imposed a full economic embargo on Cuba in 1962. While former President Barack Obama made efforts to ease tensions and lift some restrictions in 2017, President Trump reversed many of these policies, reinstating Cuba as a “state sponsor of terrorism” and imposing new sanctions.

In response to the economic challenges, Cuba has slowly opened its economy to more private enterprises. In 2010, President Raul Castro initiated reforms to expand independent work for individuals. In 2021, Cuba permitted the establishment of small- and medium-sized companies, known as “pymes.”