Obama to Drop Cuba from List Of State Sponsors of Terrorism

Bloomberg BNA's weekly International Trade Reporter provides rapid, reliable notification of the most significant developments affecting U.S. trade and international business policy and the...

By Toluse Olorunnipa and Nicole Gaouette

April 14 — President Barack Obama notified Congress that he intends to remove Cuba from a list of state sponsors of terrorism, less than a week after meeting with Cuban President Raul Castro in Panama.

The move is the most significant act by the administration since Obama began restoring diplomatic relations with Cuba in December after more than a half century of estrangement. Cuba was put on the terrorism list in 1982.

“The government of Cuba has not provided any support for international terrorism during the preceding 6-month period,” Obama said in the certification sent to Congress today. “The Government of Cuba has provided assurances that it will not support acts of international terrorism in the future.”

Cuba's designation as a sponsor of terrorism barred the country from access to banks in the U.S. and made banks in other countries that have branches in the U.S. wary of doing business with the Cubans because of the risk they'd be fined. It has been one of the stumbling blocks in negotiations to reestablish ties.

Obama's action gives Congress 45 days to respond.

Lower Risks

“It's a key stepping stone in the process of renewing the relations,” Pedro Freyre, chairman of the international practice of Akerman LLP in Miami, said in an interview. “It opens the way for financial institutions to take a second look at Cuba because it lowers the risk and the regulatory burden for banks.”

Obama announced the shift less than a week after the State Department sent him a recommendation advising the change. In its most recent annual report on terrorism, the department highlighted Cuba's history of harboring members of separatist groups such as Basque Fatherland and Liberty and the Revolutionary Armed Forces of Colombia, or FARC. Those ties have grown distant and Cuba has hosted peace talks between FARC and the Colombian government, the report said.

Obama's recommendation didn't come as a surprise. Cuba's listing as a government that backs terrorism was at odds with the rapport that Obama and Castro showed as they met at the Summit of the Americas in Panama last week.

Trading Compliments

Speaking through a translator in a speech before the meeting, Castro called Obama an “honest man.”

“I admire him and his life and I think that his behavior has a lot to do with his humble background,” he said. Obama also had kind words for Castro.

“I want to thank President Castro for the spirit of openness and courtesy that he has shown during our interactions,” Obama said during the meeting, while seated next to the 83-year-old Cuban leader.

The two pledged to work toward agreement on issues such as human rights and press freedom, and pledged to open embassies in Havana and Washington. Obama said he'd push Congress to end a trade embargo against Cuba that has been in place for more than 50 years.

Obama's decision to remove Cuba from a group of terrorism sponsors that includes Iran, Syria and Sudan paves the way for those actions to move forward as the U.S. normalizes relations with its neighbor less than 90 miles away.

Opponents in Congress

Some members of Congress have spoken out against Obama's policy shift.

“It is a grave mistake to de-list Cuba from the state sponsors of terrorism list, one that will further embolden the regime to step up their actions against America's interests,” Florida Senator Marco Rubio, a candidate for the 2016 Republican presidential nomination, said in an April 9 statement.

Several sticking points remain as the governments work to set up embassies and fully restore diplomatic relations. Castro has called for the U.S. to return the military base at Guantanamo and end the half-century trade embargo against Cuba, which was imposed by Congress and must be rescinded by lawmakers.

The two countries are also at odds over how many embassy staff will be allowed to be stationed in Havana and how freely they'll be able to travel within the country.

To contact the reporters on this story: Toluse Olorunnipa in Washington at tolorunnipa@bloomberg.net; Nicole Gaouette in Washington at ngaouette@bloomberg.net

To contact the editor responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net

 ©2015 Bloomberg L.P. All rights reserved. Used with permission