Collapsing PDVSA Amplifies Obama Administration's Failures In Cuba; Another Dose Of Pepto-Bismol

Collapsing PDVSA Amplifies Obama Administration's Failures In Cuba; Another Dose Of Pepto-Bismol

While the Obama Administration is not culpable in totality for the government of the Republic of Cuba redirecting, again and again, towards the Russian Federation and People's Republic of China for its energy and financial and commercial requirements, had the Obama Administration engaged commercial and economic changes sought by the United States business community, there would have existed, albeit perhaps marginally, opportunities for United States taxpayers and shareholders of United States companies. 

The Republic of Cuba seeking assistance from Venezuela, Russian Federation and People's Republic of China was not, and is not with a purpose of transforming the Republic of Cuba from its existing commercial, economic and political infrastructure- the goal was and remains to seek reinforcement, preservation and barriers to change.

From The New York Times (28 December 2017):

https://www.nytimes.com/2017/12/27/world/americas/venezuela-oil-pdvsa.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news

https://www.nytimes.com/2017/12/27/world/americas/venezuela-maduro-brazil-canada.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news

Cuba Constricting Success Of Self-Employed; Not Fault Of Trump Administration

Cuba tightens regulations on nascent private sector

Reuters
21 December 2017

HAVANA (Reuters) - A government official announced tighter regulations for Cuba’s private sector on Thursday as part of a review of market reforms stemming from complaints about excess accumulation of wealth, tax evasion and other practices.

The number of self-employed Cubans has more than tripled to around 580,000, about 12 percent of the total workforce, since President Raul Castro in 2010 launched his plan to expand private enterprise.

In August, however, Cuba suspended issuing new licenses for cooperatives and certain private-sector activities from bed-and-breakfasts to restaurants until it had implemented new measures to curb wrongdoing such as tax dodging.

Private cooperatives will now be limited to the province where they were located and levels of income capped for their leaders at no more than three times the average wage of members, state-run media quoted Marino Murillo, head of the Cuban Communist Party’s reform commission, as saying on Thursday.

Business licenses will be limited to a single activity per entrepreneur, he said. Currently some restaurant owners also run bed-and-breakfasts or cafeterias and cooperatives often operate in more than one province. This would no longer be possible.

In Cuba, only certain types of small businesses and private activities are allowed.

Murillo, speaking to a closed-door session of the National Assembly, was quoted as stating those activities would be reduced and in some cases consolidated, for example manicurist would now fall under a general expanded beauty salon license.

Small business tax policy was also under review, he said.

The measures come even as Cubans say their businesses are already suffering from travel restrictions and warnings issued by the Trump administration.

The government earlier had also definitively stopped issuing licenses for wholesale and retail sellers of agricultural goods, vendors of CDs or DVDs, and operators of recreation equipment.

The backtracking on the private sector hints at unease among some in the ruling Cuban Communist Party that free market reforms may have gone too far, amid a broader debate about rising inequality on the island.

The average state monthly wage is $30, the same sum a B&B owner can charge visitors for a night’s stay.

Castro, speaking to the National Assembly in July, said the government had detected wrongdoings in the sector, from tax evasion to the use of goods of illicit provenance, that it needed to curb.

“We are not renouncing the development of the self-employed sector,” said Castro. “However, it is necessary to ... resolutely confront the illegalities and other deviations from the established policy.”

National Security Strategy Includes Cuba (Page 52)

National Security Strategy of the United States of America
Washington DC
December 2017

Page 52:

In Venezuela and Cuba, governments cling to anachronistic leftist authoritarian models that continue to fail their people. Competitors have found operating space in the hemisphere.

We look forward to the day when the people of Cuba and Venezuela can enjoy freedom and the benefits of shared prosperity, and we encourage other free states in the hemisphere to support this shared endeavor.

Complete Document In PDF Format

President Trump Comments Upon 3rd Anniversary Of Obama Administration Re-Engagement With Cuba

17 December 2017

POTUS: “Hopefully everything will normalize with Cuba, but right now, they are not doing the right thing. And when they don’t do the right thing, we’re not going to do the right thing. That’s all there is to it. We have to be strong with Cuba. The Cuban people are incredible people. They support me very strongly. But we’ll get Cuba straightened out.”

President Trump Deserves Opportunity To Right An Obama Administration Wrong: SFTCP & DCB

President Trump Deserves Opportunity To Right An Obama Administration Wrong

Support SFTCP With DCB

A Syringe That Six Members Of Congress Should Prefer

OFAC And Banks Would Benefit 

With the publication of regulations on 8 November 2017, the Trump Administration removed, revised, reversed and left undisturbed Republic of Cuba-related initiatives.

For United States companies, and for individuals subject to United States jurisdiction seeking commercial connectivity with entities (government and non-government) in the Republic of Cuba, the Trump Administration has expanded one crucial, but often neglected and underappreciated component of engagement established during the Clinton Administration and continued through the Bush Administration and Obama Administration…. Support for the Cuban People (SFTCP).

The government of the Republic of Cuba detests this component as its primary objective, cloaked in a non-too-obvious manner by the government of the United States, is disruption, dismantling and destruction of existing commercial, economic and political (infra)structure of the Republic of Cuba.

However, the government of the Republic of Cuba, when discerning opportunity and leverage, accepts SFTCP when perceiving that SFTCP serves value; this does not indicate that the government of the Republic of Cuba is correct in their assumption, it’s their perception…. and that matters.  

For example, introducing private ownership of paladars (restaurants), self-employed categories (extremely limited to date), roles for shareholder-owned cooperatives, services provided using platforms created by San Francisco, California-based Airbnb, expanding availability of wireless technologies (and access to social media platforms) each has connectivity to elements of goals for SFTCP.  Note: Last week, Republic of Cuba government-operated ETECSA announced that international texting has become operational at US$.60 per message.  

No rational individual should be offering a high-five to the government of the Republic of Cuba for these decisions, but there need be an acknowledgement of their significance and usefulness- although there will be debate as to the reasons for the actions.   

For the six (6) Members of the United States Congress who are of Cuban descent, three in the United States Senate and three in the United States House of Representatives, SFTCP, while not ideal in terms of desired goals achieving desired objectives in a timely manner, is the most visible and probative syringe by which to penetrate the Republic of Cuba.  

SFTCP doesn’t work singularly; it’s designed to impact the governmental immune system over time- puncture by puncture.

Which brings about the necessity for a change in regulation (actually adding the 50% that the Obama Administration failed to include) relating to sending/receiving funds which will positively impact SFTCP and, with added benefit to the Trump Administration, is a regulation the Obama Administration failed to grasp and then change (factually, they permitted 50%, but without the other 50% their action amounted to 100% of nothing)- to the determent of providing opportunities for the 11.3 million residents (or hostages as some Members of Congress would define them) of the Republic of Cuba. 

The government of the Republic of Cuba permits, on a selective basis (meaning there is opportunity for expansion), individuals and entities to have accounts at Republic of Cuba government-operated financial institutions.  

Through these accounts, individuals and entities can be permitted to send and receive funds relating to their operations.  

The owner of a paladar (restaurant), owner of an Airbnb property, an artist/musician, a cooperative (coffee/charcoal, etc.), should have the means to send funds securely, efficiently and transparently directly from Havana to the United States for purchases of items necessary for their businesses; and the importation of agricultural commodities, food products and healthcare products from the United States would also be advantaged.       

One slight imperfection to this calculus: The Obama Administration, without explanation, did permit United States-based financial institutions to have accounts at Republic of Cuba government-operated financial institutions.  

However, the Obama Administration did not permit Republic of Cuba government-operated financial institutions to have accounts with United States-based financial institutions.  Thus, no applicable direct correspondent banking (DCB).

Without an addition to this regulation, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more timely (same day versus two or more days), and less costly.  

In 2015, the Obama Administration authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.5 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercio SA (BICSA).  There is also Republic of Cuba government-operated Banco Financiero Internacional SA (BFI) which handles international payments.  Unfortunately, because BICSA (and BFI) are not permitted to have an account with Stonegate Bank, funds have been sent and received through Panama City, Panama-based Multibank, which has extensive dealings with the Republic of Cuba.  

Since December 2001, the Republic of Cuba has transferred US$5.4 billion to United States-based companies for the purchase of agricultural commodities, food products and healthcare products; approximately US$180 million went to third-country financial institutions (primarily on the European Continent) to process those payments.

Additional effort.  Additional time.  Additional expense.  And, additional reasons for the government of the Republic of Cuba to avoid United States-based companies.

What the Obama Administration asked: Applaud us for authorizing funds to be sent to the Republic of Cuba… never mind that we won’t authorize those funds to arrive to the Republic of Cuba.  But, please remember to applaud us for our legacy-building efforts.  That was commercial malpractice. 

Officials of the Obama Administration often spoke of “planting seeds” which is political code for absolving them of accountability within their term in office.

By permitting direct correspondent banking and thus completing the commercially critical pathway that the Obama Administration was incapable of comprehending, the Trump Administration would be creating additional pressures upon the government of the Republic of Cuba by encouraging the transformation of the self-employed from optically beneficial to materially impactful, and thus furthering the disruption of the status quo in the Republic of Cuba.  Another puncture, but perhaps larger in diameter.

Direct correspondent banking is not a provision of credit, of payment terms.  Rather, it reduces the time between when the sender sends and the receiver receives.

Not permitting direct correspondent banking was just one of too many areas of neglect (certified claimants, only coffee (Nespresso) and charcoal (Fogo), continued restrictions upon international financial transactions, etc.) by the Obama Administration relating to the implementation of rules, regulations and policies that would have provided additional means for United States companies engage with the Republic of Cuba and to specifically use SFTCP as a means for that engagement.  

Direct correspondent banking will also permit authorized purchasers in the Republic of Cuba to transmit payments directly to United States companies for the products (including high-priced durable equipment) and services they provide by statute and by executive branch decision.  A piece of farm equipment awaiting export has languished in Alabama since 2016.  

That means more revenues for individuals and companies in the United States- and hopefully additional employment opportunities throughout the United States for those exporters.  Thus, the cost to import and the cost to export will be reduced; and this will benefit importer and exporter.  The Trump Administration appreciates the necessary arithmetic.

The government of the Republic of Cuba may not happily digest the merits of direct correspondent banking and its relativeness to SFTCP; that doesn’t matter.  If accepted terrific.  If not, one less impediment to the bilateral relationship will be functional for future use.

For Members of Congress seeking more, they need be practical rather than aspirational, or delusional; there will be no expansionary legislation becoming law without substantive commercial, economic and political changes to the Republic of Cuba.  The focus should be upon making existing regulations workable.

Direct correspondent banking strengthens SFTCP opportunities by ensuring accountability, transparency, flexibility, and recourse that third-party, often cash transactions, lack.  

These benefits are what financial institution executives seek as do attorneys and policy makers at the United States Department of the Treasury, United States Department of Commerce, United States Department of State, United States Department of Defense, Federal Reserve and Securities and Exchange Commission (SEC).

Complete Analysis In PDF Format

Delta Air Lines Terminating Six Flights Per Week From JFK To Havana; Retains One Flight; Seeks One MIA-HAV Flight

8 December 2017

Mr. Brian Hedberg
Director, Office of International Aviation Department of Transportation
1200 New Jersey Avenue SE Washington, D.C. 20590

Re: 2016 U.S.-Cuba Frequency Allocation Proceeding (Docket DOT-OST-2016-0021)

Dear Mr. Hedberg:

In the Department’s 2016 Allocation Proceeding, Delta Air Lines, Inc. (“Delta”) was awarded frequencies to operate daily service from New York to Havana (JFK-HAV), along with service to Havana from Miami (MIA) and Atlanta (ATL). (DOT Order 2016-8-38). Delta has invested significant resources to establish and support its new service to Havana and appreciates the time and effort the Department put into this proceeding. However, recent regulatory changes have resulted in lower demand for travel to Cuba from areas outside of South Florida. In particular, traffic on Delta’s service to Havana from JFK has diminished substantially.

Effective February 1, 2018, Delta will terminate service on Sunday to Friday and return those frequencies to the Department. Delta will continue to maintain and operate once-weekly, Saturday round-trip service between JFK-HAV.

In light of the Department’s ongoing 2017 Allocation Proceeding, Delta wished to notify the Department and other interested parties of its plans. For the sake of administrative efficiency and to maximize the utilization of these assets for the traveling public, Delta would have no objection if the Department reallocates the six once-a-day frequencies being returned as part of its current Proceeding. If awarded, Delta also remains excited about starting a second daily flight from Miami to bring additional service to this important gateway.

Respectfully submitted,

Alexander Krulic
Associate General Counsel Regulatory & International Affairs
DELTA AIR LINES, INC.

Complete Text In PDF Format

Supplemental  Filing Seeking One MIA-HAV Route

United States and Cuba Hold Biannual Migration Talks in Washington, DC

Media Note
Office of the Spokesperson
Washington, DC
December 11, 2017

The United States and Cuba held the 31st biannual Migration Talks in Washington, DC on Monday, December 11. Deputy Assistant Secretary of State for Western Hemisphere Affairs John Creamer and Deputy Assistant Secretary of State for Consular Affairs Ed Ramotowski led the U.S. delegation. The Cuban delegation was led by Josefina Vidal, the Foreign Ministry’s Director General for U.S. Affairs.

The delegations discussed the significant reduction in irregular migration from Cuba to the United States since the implementation of the January 2017 Joint Statement. Apprehensions of Cuban migrants at U.S. ports of entry decreased by 64 percent from fiscal year 2016 to 2017, and maritime interdictions of Cuban migrants decreased by 71 percent. The United States confirmed it met its annual commitment in fiscal year 2017 to facilitate legal migration by issuing a minimum of 20,000 documents under the Migration Accords to Cubans to immigrate to the United States. The U.S. delegation also raised the need for increased Cuban cooperation in the return of Cubans with final orders of removal from the United States.

A strong migration policy is vital to the United States’ national security. The Migration Talks, which began in 1995, provide a forum for the United States and Cuba to review and coordinate efforts to ensure safe, legal, and orderly migration between Cuba and the United States. The talks were last held in April 2017.

From The Ministry of Foreign Affairs of the Republic of Cuba

Washington, December 11, 2017.- A new round of migration talks was held between Cuban and US delegations, presided over respectively by Josefina Vidal Ferreiro, Director-General of the US Division at the Ministry of Foreign Affairs; and John Creamer, Deputy Assistant Secretary of State for Western Hemisphere Affairs.

The Cuban delegation expressed deep concern over the negative impact that the unilateral, unfounded and politically motivated decisions adopted by the US Government in September and October of 2017 have on migration relations between both countries.

The Cuban delegation once again warned about the negative effect resulting from the suspension of the granting of visas by the US Consulate in Havana.  The decision to discontinue the processing of visas applied for by Cubans willing to visit or migrate to that country is seriously hampering family relations and all kinds of exchanges between both peoples.

Likewise, the Cuban delegation reiterated its rejection of the arbitrary expulsion of a considerable group of officials from the Cuban embassy in Washington, which has seriously affected the functioning of the diplomatic mission, particularly the Consulate and the services it offers to Cubans residing in the United States, as well as US citizens who continue to be interested in traveling to our country.

It also noted the counterproductive effect that the decision to cancel the visits of official delegations from the United States to Cuba is having on cooperation in the field of migration, which has led to the postponement of several mutually beneficial exchanges that had been previously scheduled. Should the current situation persist, exchanges in this and other areas will be even more affected.

Regarding the implementation of the migration accords in force, the Cuban representatives urged the US Government to comply with its obligation to grant no less than 20 000 travel documents every year for Cuban citizens willing to migrate to that country. Likewise, the Cuban delegation once again expressed its concern over the enforcement of the Cuban Adjustment Act, which continues to encourage irregular migration and whose abrogation will be crucial to the establishment of normal migration relations between the two countries.

Both delegations agreed to recognize the positive impact that the Joint Statement signed on January 12, 2017 has had, particularly the elimination of the “wet foot/dry foot” policy and the “Cuban Medical Professional Parole Program”, in reducing irregular migration from Cuba to the United States. Likewise, both delegations agreed on the usefulness of the exchange between the Cuban Border Guard and the U.S. Coast Guard Service held in July and the technical meeting on trafficking in persons and migration fraud held in September, which will be followed up on December 12, 2017.

The Cuban delegation reiterated its willingness to continue holding new rounds of migration talks. (Cubaminrex)

US Food/Ag Exports To Cuba Decrease 3%

ECONOMIC EYE ON CUBA©
December 2017

October 2017 Food/Ag Exports To Cuba Decreased 3%- 1
Healthcare Product Exports US$319,637.00- 2
Humanitarian Donations US$639,222.00- 2
Obama Administration Initiatives Exports Continue To Increase For Airlines/Hotel- 3
U.S. Port Export Data- 14

OCTOBER 2017 FOOD/AG EXPORTS TO CUBA DECREASED 3%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in October 2017 were US$21,436,667.00 compared to US$21,994,945.00 in October 2016 and US$13,407,640.00 in October 2015.  

Complete Report In PDF Format

Moody's changes Cuba's outlook to stable from positive; Caa2 rating affirmed

https://www.moodys.com/research/Moodys-changes-Cubas-outlook-to-stable-from-positive-Caa2-rating--PR_373378

Rating Action: Moody's changes Cuba's outlook to stable from positive; Caa2 rating affirmed
Global Credit Research - 08 Nov 2017

New York, November 08, 2017 -- Moody's Investors Service has today affirmed Government of Cuba's Caa2 foreign currency issuer rating, assigned a Caa2 local currency issuer rating, and changed the rating outlook to stable from positive.

The key drivers of the change of outlook are:

1) The rapprochement process with the United States has stalled resulting in a reversal of measures to ease the economic embargo, and in recent months US-Cuba relations have deteriorated

2) Moody's expectations of continued reform momentum and favorable macroeconomic performance have not materialized due to a series of climate shocks, strained relations with the US and the upcoming domestic political transition

Cuba's Caa2 sovereign rating reflects credit weaknesses that include limited access to external financing, structural inefficiencies, political transition risk, and importantly, limited data transparency. The rating also incorporates the economic impact of the growing tourism sector, nickel-related mining activities, and the potential for future economic diversification.

Cuba's long-term local-currency country risk ceilings and the foreign currency bond ceiling remain unchanged at Caa2. The foreign-currency bank deposit ceilings is also unchanged at Caa3. The short-term foreign currency bond and deposit ceilings remain at NP (Not Prime).

RATINGS RATIONALE

RATIONALE FOR THE OUTLOOK CHANGE TO STABLE

The positive outlook on Cuba's Caa2 rating was based on increased prospects for rapprochment with the US as well as for domestic economic reforms. The principal drivers of Moody's decision to change the outlook to stable from positive are the stalled process of rapprochement with the US, and the dimmer prospects for further economic reform on the island.

Restrictions on travel to Cuba, which the previous US administration had loosened, have been tightened. Regulations effective 9 November rescind the travel authorization for individual "people-to-people" exchanges, a broad category increasingly used by Americans under the previous administration to conduct legally authorized travel to the island without the need to participate in organized group exchanges. The tightened controls also include a provision applicable to persons that are otherwise authorized to engage in Cuban travel or other Cuba-related activity, prohibiting them from engaging in most direct financial transactions with 180 entities linked to the Cuban military, which controls a broad swath of the tourist economy.

While the tightened travel authorizations only reinforce the longstanding statutory tourism ban on Cuba, these changes and new sanctions targeting the Cuban military highlight a reversal of the previous rapprochement efforts undertaken by Cuba and the previous US administration. Although a number of relevant measures taken by the previous US administration remain in place, Moody's believes that the changes to be adopted on 9 November will curtail the flow of American visitors to Cuba and diminish impetus for investment into the country, primarily into tourism projects, but also into other sectors that were expecting a further opening up of the Cuban economy.

More recently, diplomatic relations between the US and Cuba have become strained by alleged sonic attacks on US embassy and government personnel in Havana, resulting in the US recalling the majority of the staff from its embassy in Cuba and expelling Cuban diplomats from Washington. These developments will likely constrain further economic or diplomatic openness between the two nations.

Despite recent growth in the tourism sector, Cuba's economic outlook remains challenging following climate and commodity price shocks, and negative spillovers from the economic crisis in Venezuela. The country has been hit by two major hurricanes since late-2016. This caused widespread destruction and affected economic activity. Agriculture, food production, construction and healthcare likely posted a significant contraction owing to the various shocks faced by the economy. Key export prices for nickel have recovered but remain short of the highs achieved in 2008 and 2011, and sugar prices remain near 2015 lows.

Moody's estimates that the Cuban economy contracted 0.9% in 2016 despite a 13.3% increase in visitor arrivals. Moody's forecasts that the economy will contract once again in 2017 by 0.5% before returning to moderate growth of 1.1% in 2018. Nevertheless, prospects for recovery remain fragile and the upcoming political transition will limit the pace of reforms that could support economic recovery.

President Raul Castro will step down at the end of his second five year term in February 2018. This will be the first time since 1959 that a member of the Castro family will not rule Cuba, potentially posing risks to political stability and increasing uncertainty over economic policy and prospects. Moody's believes that risks to economic liberalization are substantial given the state's wavering commitment to private enterprise and Cuba's lack of experience with implementation of market policies.

WHAT COULD MOVE THE RATING UP/DOWN

There could be upward pressure on Cuba's rating if there is a further easing of US economic sanctions or domestic reforms that have a material impact on Cuba's economic prospects. More clarity over the political transition at the end of President Raul Castro's current term would ease concerns over political and social instability. Enhanced data timeliness and transparency would also be credit positive.

Conversely, evidence of increased stress on Cuba's external finances along with deteriorating economic prospects due to external shocks or reform reversal would result in downward pressure on Cuba's rating.

GDP per capita (PPP basis, US$): $7,700 (2016 Actual) (also known as Per Capita Income)

Real GDP growth (% change): -0.9% (2016 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 3.1% (2016 Actual)

Gen. Gov. Financial Balance/GDP: -6.8% (2016 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: 0.7% (2016 Actual) (also known as External Balance)

External debt/GDP: 23.4% (2016 Actual)

Level of economic development: Low level of economic resilience

Default history: No default events (on bonds or loans) have been recorded since 1983.

Note: Numbers have been updated to 2016 (from 2014), which is what was used for committee purposes.

On 06 November 2017, a rating committee was called to discuss the rating of the Cuba, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have materially decreased. The issuer's institutional strength/ framework, have not materially changed. The issuer's governance and/or management, have not materially changed.

The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Jaime Reusche
VP - Senior Credit Officer
Sovereign Risk Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Atsi Sheth
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Cuba Becoming A Billion Dollar Travel Marketplace For The United States

Cuba Becoming A Billion Dollar Travel Marketplace For The U.S.
U.S. Cruise Lines Add Capacity, Revenue From Cuba, Revenue To Cuba
U.S. Airlines Gain From Cruise Passengers

As of 4 December 2017, with an additional 115,474 potential passengers (43,384 from changes to vessels and 72,090 from forty-five (45) new itineraries that include the Republic of Cuba) by Miami, Florida-based Royal Caribbean Cruises Ltd, cruise lines operating from the United States could for the cumulative period 2017/2018/2019:

Deliver 570,000+ Passengers To Cuba
335+ Sailings To Cuba
US$761+ Million In Gross Revenues To The Companies
US$80+ Million Spent In Cuba By Passengers
US$21+ Million In Port Fees To Cuba

US$228+ Million To U.S. Airlines
US$105+ Million Hotels/Restaurants/Ground Transportation In Florida

Transporting, housing, and feeding these 570,000+ travelers could result in an additional US$228+ Million to United States airlines transporting passengers to South Florida port gateways and US$105+ million to hotels, restaurants and ground transportation services located in South Florida.  

The three (3) largest cruise lines (through their multiple brands Oceana Cruises, Azamara Club Cruises, Regent Seven Seas Cruises, and Holland America Line among others) and smaller cruise lines (through their multiple brands) have approximately 335 itineraries which include the Republic of Cuba for the cumulative 2017, 2018 and 2019 sailing seasons.  Additional itineraries are expected.  The largest three:  

Miami, Florida-based Norwegian Cruise Line Holdings Ltd
Miami, Florida-based Carnival Corporation & plc
Miami, Florida-based Royal Caribbean Cruises Ltd

NOTE: In 2016, the three-largest cruise lines combined operated a fleet of approximately 144 vessels, managed approximately 14 brands, earned approximately US$28.8 billion in gross revenues, and employed approximately 218,000 men and women.

If each vessel sails at capacity, more than 570,000 passengers would visit the Republic of Cuba from 2017 through 2019.

The gross revenues to the cruise lines from the approximately 335 sailings that include the Republic of Cuba could cumulatively exceed US$761 million for the period 2017 through 2019.

The 570,000 passengers would be projected to spend approximately US$80+ million while in the Republic of Cuba [averaging approximately US$140.00 per person in expenditures and organized/non-organized excursions including cost(s) for tour(s), meals (government-operated and privately-operated), ground transportation (privately-operated classic car tours), sundries and souvenirs (including spirits, coffee, tobacco, artwork and crafts)].  Some passengers could spend considerably more (alcohol, cigars and coffee for example) given the United States duty-free personal exemption of US$800 per person.  

Vessel port charges in the Republic of Cuba may exceed US$21 million, ranging up to approximately US$79,000.00 for the largest vessels (684-passenger to 2,744-passenger).

Analysis In PDF Format

OFAC 2016 Terrorist Assets Report Shows No Cuba Blocked Assets

TERRORIST ASSETS REPORT
Calendar Year 2016
Twenty-Fifth Annual Report to the Congress on Assets in the United States Relating to Terrorist Countries and International Terrorism Program Designees

The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, DC, continues to hold US$243.5 million blocked assets relating to the Republic of Cuba.

See Complete 2016 Report

Reports From 2006 To 2016

Reports From 1994 To 2005