The United States has lifted certain financial constraints against Cuba in a bid to bolster private enterprises on the island. The announcement of these measures on Tuesday aims to empower independent entrepreneurs by granting them access to US bank accounts online to facilitate their businesses. Additionally, the initiative includes provisions to expand internet-based services and enhance private companies' capabilities to engage in specific financial transactions.
The US Department of the Treasury stated in a news release that these regulatory adjustments seek to promote internet freedom in Cuba, bolster independent Cuban private sector entrepreneurs, and broaden access to select financial services for the Cuban populace.
A pivotal change permits Cuban private business owners to open US bank accounts and subsequently manage them online from Cuba—a privilege previously unavailable to them. Moreover, the US has reinstated U-turn transactions, enabling the transfer of funds between countries via the US, a move intended to facilitate remittances and payments for transactions within Cuba's private sector.
The Trump administration had revoked permission for U-turn transactions in 2019. The updated guidance from the Treasury Department ensures that Cuban officials or prohibited members of the Cuban Communist Party do not benefit from these changes aimed at nurturing the country's emerging private sector.
Cuban officials estimate that approximately 11,000 private businesses in the country contribute to roughly one-third of its employment.
These policy adjustments coincide with Cuba grappling with one of its most severe economic and energy crises to date. The population faces extensive blackouts, escalating food shortages, and inflation. Consequently, hundreds of thousands of individuals have migrated, with many heading towards the US.
Relations between the US and Cuba have remained strained since the 1959 revolution led by Fidel Castro, which established a Communist government. While the US imposed a comprehensive economic embargo on Cuba in 1962 under President John F. Kennedy, a slight thaw in relations occurred during Barack Obama's presidency in 2017 when some restrictions were lifted. However, Trump reversed much of this bilateral cooperation, culminating in Cuba's redesignation as a "state sponsor of terrorism" and the imposition of new sanctions in the final days of his administration.
Meanwhile, Cuba has gradually expanded its economy to incorporate more privately owned enterprises. President Raul Castro initiated reforms in 2010, facilitating independent work for individuals. In 2021, Cuban authorities permitted the establishment of small- and medium-sized enterprises, known as "pymes" in Spanish, marking a significant milestone in the country's economic evolution.
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