How Important Are U.S. Remittances for Cuba’s Economy?
Fincimex, the military company that controls remittances to Cuba, said Oct. 27 that it is unwilling to shift the processing of the money transfers to nonmilitary entities and that new U.S. sanctions will mean the closure of more than 400 Western Union offices across the island. Western Union has said it is “exploring ways to comply with the new rules,” which go into effect in late November. How much have U.S. sanctions curtailed the flow of remittances to Cuba? What trends will remittances to the country see in coming years, and how will U.S. politics play a role? To what extent does Cuba’s military benefit from its current role in processing remittances?
Fernando X. Donayre, chief investment officer and founder of INCA Investments in Miami: “This latest, and last, measure of the Trump administration is a continuation of a policy intended to force regime change via the strangulation of the Cuban economy. It is the perpetuation of a hardline policy, that apart from the opening with Cuba under the Obama administration, has not succeeded for 50-plus years. The further shutdown of remittances will hurt the Cuban military, as a partner of the Cuban government and the most important economic player on the island, in its ability to control the country’s hard currency reserves. However, it will once again be the Cuban people that will be most negatively affected by further diminishing their ability to obtain food and other basic goods. This measure will not move the Cuban government any closer to changing its political model, which is underscored by its response to the measure. Instead of resolving this issue by changing the commercial relationship with Western Union from a…”Read More
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Covering Latin America’s banking and insurance sectors, remittances trends and data, micro lending issues, new technologies in the industry, anti-money laundering regulations, and much more, the Inter-American Dialogue’s biweekly Financial Services Advisor, a sister publication of the Latin America Advisor, gives readers fresh insight and diverse viewpoints from financial sector leaders. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at firstname.lastname@example.org.