Reuters (Poor and Irresponsible) "Analysis" of Cuba's Banking Woes

Friday, November 29, 2013
Reuters "news" agency has published a so-called "analysis," which loosely claims that U.S. sanctions are at fault for Cuba's inability to secure private banking services in the U.S.

Unfortunately, Reuters' piece is neither "news" or "analysis."

It's a de facto op-ed, which conveniently omits key facts, contains mistakes and relies solely on sanctions foes who make false (and unchallenged) assertions.

To begin, Reuters omits the key fact that the Castro regime has a long-standing, Treasury-licensed exemption from U.S. sanctions for banking transactions related to the operation of the Cuba's Interests Section in Washington, D.C. and its U.N. Mission in New York.

Thus, U.S. sanctions do not prohibit these types of banking transactions.

Moreover, the U.S. is not totalitarian Cuba, where all banks are the personal piggy-banks of the Castro brothers. Banks in the U.S. are not owned by the U.S. government, nor can they be compelled to do pro-bono work for the U.S. government or the Cuban dictatorship.

Banks are businesses, whose sole legal duty is to act in good faith to earn value for its shareholders. Thus, if no U.S. banks want to conduct business with Cuba's dictatorship, it's because they don't find it to be of commercial value. Too bad, so sorry.

As to how Cuba's U.S. banking woes may affect Cuban-American travel to the island, Reuters fails to ask:

Why are Cuban-Americans being charged by the Castro regime to travel back to their birth-land in the first place?

If the Castro regime cared about Cuban-Americans visiting their relatives for the holidays, then how about not charging them exorbitant fees? Or just charge them at Havana airport?

Because this is not about families or travel.

The Castro regime has perceived this as an "opportunity" to coerce the U.S. government, which is why it waited until the holiday season to wage a public battle over an issue that arose back in June.

So it's now "threatening" to further separate Cuban families unless the U.S. further eases sanctions. That's called coercion.

But rather than providing balance or reporting the facts, Reuters chose to solely quote "experts" who have either fallen for -- or support -- Castro's coercion, making all sorts of irresponsible and unfounded claims.

First, U.S. Rep. Joe Garcia (D-FL) claims Cuba's banking woes are a result of "arcane" and "cumbersome" rules "created three decades ago."

Not sure what rules Congressman Garcia is referring to, but if he's referring to the bipartisan U.S. laws that regulate financial institution's transactions with "state-sponsors of terrorism," these have been created by the Clinton, Bush and Obama Administrations since 1996 -- and they are far from "arcane" and "cumbersome."

They have actually been very effective in curbing transactions by regimes and rogue actors who risk the safety and integrity of the U.S. banking system. We'd also point out that Cuba's banking system does not meet minimum international standards of money laundering enforcement and transparency.

And yet, despite this concern, Cuba's diplomatic missions are still explicitly licensed and exempted by the Treasury Department to conduct their banking activities in the U.S.

Next, a nameless Miami lawyer claims that this matter could be resolved by "the Office of the Controller of the Currency, which regulates all national banks."

Note to Reuters: It's "Comptroller of the Currency" not "Controller" -- remember, in the U.S. the government doesn't "control" banks, so don't get too caught up in the spin of your "experts."

(It's unbelievable that not a single editor from any newspaper that run this story has caught Reuters' glaring mistake.)

Furthermore, M&T Bank, which dropped Cuba's business, is not a national bank, so it's not even regulated by the Comptroller of the Currency. M&T Bank's primary regulator is the Fed. Get your banking law straight.

Finally, there's the Brookings Institution's Richard Feinberg, who recently wrote about his dreams of another "business-friendly" dictatorship in Cuba.

Never missing an "opportunity" to advocate for such a dictatorship, Feinberg argues that Cuba is suffering the unintended consequences of broader U.S. sanctions -- "a heightened sanctions compliance regime in recent years was more directed at Iran, North Korea and Syria, [Feinberg] noted, but Cuba suffered the consequences by being stuck in the same boat."

In other words, not only do Iran, North Korea, Syria and Cuba share brutal dictatorships. Not only do they collect and exchange intelligence among themselves. Not only do they provide each other political, economic and diplomatic support. But they also share the same unscrupulous business partners and practices.

It isn't a coincidence that banks and companies caught by Treasury violating Iran, Syria and North Korea sanctions, are usually also violating Cuba sanctions. It's actually a cause for even greater concern.

Feinberg probably also believes that Cuba should be excused for its weapons trafficking to North Korea, in blatant violation of U.N. sanctions.

(We already know that Reuters -- in another recent "analysis" -- believes the "pragmatic" thing for the U.S. to do is sweep this illegal weapons shipment under the rug.)

After all, the U.N. sanctions are aimed at North Korea, Cuba's weapons were just "stuck in the same boat."

Perhaps Reuters should re-focus on being an honest arbitrator of news -- or at least of facts, for that matter.