Embargo or Not, Vehicle Trade from US to Cuba is Thriving

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Embargo or Not, Vehicle Trade from US to Cuba is Thriving

10 / mayo / 2024

Data on vehicle imports to Cuba from the United States showed an uptick of about 65% during January and February 2024. Despite the lack of public information currently available, other less specific indicators seem to indicate a similar trend in these operations for March and April.

Cuban-American businessman Alejandro Martinez, who is very active on social media, is the visible face of the Maravana Cargo company, with a license to export vehicles to Cuba. In his declarations, he confirmed that the general length of time between the receipt of cars in their installations, and their delivery to Cuba was a matter of mere days.

The truth of Martinez’ claims can be verified by monitoring some of the cargo ships used to transport goods between Cuba and the US. According to information on such social media profiles as @FalconEyes on X – an online site dedicated to monitoring maritime traffic to and from Cuba – a boat named Linda delivers vehicles from the US to Cuba nearly weekly.

Linda is a ship that sails under the Panamanian flag. According to the site “Marine Traffic,” it’s a boat termed “Ro-Ro” (roll-on / roll-off) – ships that transport rolling cargo, be it automobiles, trucks, trailers or industrial vehicles. This type of boat has ramps in the stern or bow of the vehicle (these can also be fixed on land) to make it much easier to load (roll-on) and unload (roll-off) the merchandise.

According to a report from @FalconEyes, from November 2023 to March 31, 2024, Linda made 21 voyages from Miami to the Cuban port of Mariel. A report from the online site 14ymedio indicates that there was another voyage on April 9, 2024; and El Toque was able to confirm on the “Marine Traffic” platform that it left South Florida once again on April 17, arriving in Cuba the next day.

How is it possible for a boat to make so many trips between Cuba and the US over such a short time, if the United States embargo specifies that a ship that docks in a Cuban port can’t dock again in the US until six months have passed?

It’s clear that this “180-day regulation” forms part of the provisions of the US embargo against Cuba. It prohibits any ship that enters a Cuban port to commercialize goods or services, from reentering a US port to load or unload merchandise for six months after their departure from Cuba.

Nonetheless, in 2016, the US government established certain exceptions to the rule; for example, that ships dedicated to transporting merchandise as the result of a licensed interchange, or one authorized by the US Office of Foreign Assets Control (OFAC), or by the US Commerce Department, don’t have to comply with the 180-day rule.

OFAC and the US Bureau of Industry and Security – a branch of the US Commerce Department – have authorized several companies to export and re-export vehicles from the US to Cuba. As a result, the ships that are used to transport vehicles to the island through these companies are exempt from the 180-day rule and can come and go directly from Cuba as often as they wish.

Venezuela: laboratory for used vehicle imports

The boom in used vehicle imports from the US that Cuba is experiencing today had its precedent in Venezuela under the Maduro government. Venezuela’s tactics – both economic and repressive -have become in many ways a laboratory for the Cuban regime.

Beginning in 2019, after the violent cycle of protests the year before, Nicolas Maduro’s regime initiated a process of “liberalizing” the Venezuelan economy in his ownfashion. Among the reforms, the most noteworthy were partial dollarization of the economy and the transfer of assets. These reforms served to deepen still further the social differences, and to empower a new economic elite in the country. The measures also generated an induced and ephemeral “bonanza,” marked among other things by an explosion of luxury restaurants, and different businesses promoted by online models and influencers.

The bonanza that followed the Venezuelan “liberalization” was also expressed in an increase in the importation of vehicles. Since 2014, the Venezuelan regime had allowed the import of vehicles “acquired with personal foreign currency.” Together with the drastic collapse of the national assembly plants for automobiles, that opening meant that by 2019 there was a market for individual imports of new cars into the country. The market, especially for vehicles from the US exploded after 2019, when Maduro authorized the import of used cars under the condition – identical to that in Cuba – that they’d been manufactured in the five years previous to their entrance into Venezuela.

The US sanctions against Venezuela are sectorial, concentrated principally against the gas and oil industries. They don’t include a general prohibition of imports and exports, as in Cuba. That situation meant that the Maduro government’s unilateral elimination of the prohibition against importing used cars, produced a large increase in the flow of automobiles, especially from South Florida where a large part of the Venezuelan emigrants are concentrated.

With their eyes on the general sanction system, the Cuban authorities waited for the US government to issue the first vehicle export licenses for Cuba, before they authorized the individual import of vehicles under nearly identical conditions to those that Venezuela established in 2019.

According to an investigation by the Venezuelan publication Armando Info, by 2019 in the Doral loading zone in west Miami-Dade county, there were at least 26 companies offering vehicle shipping services to Venezuela.

The report notes that, thanks to these businesses, “some brilliantly colored Tacoma’s, 4Runners, Mustangs and Wranglers made by Toyota, Ford and Jeep are circulating on the Venezuelan streets in fantastic shades and the latest models, right beside those dented vehicles that are barely limping along.”

However, as the business of importing vehicles to Venezuela began growing – an important signal for the Cubans – the companies began to be implicated in corrupt networks tied to the Madurogovernment.

In July 2020, the US Department of Homeland Security (DHS) carried out a special operation, during which it confiscated 81 vehicles destined for Venezuela. DHS identified businessman Raul Gorrin as one of those tied to the vehicle acquisition. Gorrin figures on a US list of the most wanted criminals, for crimes of money laundering and corruption.

A spokesperson for the Office of Customs and Border Patrol mentioned that the investigation began when agents noticed that many of the purchasers of the vehicles were “phantoms,” which made it nearly impossible to identify the individuals or companies really involved in the transactions. Customs spokesperson also indicated that the reason for their impounding was that the vehicles were destined for close associates of Nicolas Maduro.

The spokesperson also commented that the owners of the shipping concessions had to fulfill certain responsibilities for “the orders.” (…) They are supposed to report when a vehicle worth over US $10,000 is being exported. He recalled that if they fail to do so, the automobile can be confiscated.

If the Cuban model for importing vehicles from the US continues to follow the pattern of the Venezuelan government, the consequences of that experiment should also serve as a warning for those wishing to replicate the business in Cuba, as well as for the United States authorities.

This article was translated into English from the original in Spanish.
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INFORMAL FOREIGN EXCHANGE
MARKET IN CUBA (REAL TIME)

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1 EUR
330.00 CUP
-5
1 USD
315.00 CUP
-5
1 MLC280.00 CUP
-5
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