US-Backed Canadian Mine in Guatemala Threatens Water Supply for Millions

Activists vow to fight the Cerro Blanco mine, which threatens a water supply for millions in Guatemala and El Salvador.

By Michael Fox

May 28, 2024

Source: Truthout


A boy and a girl step out of the Lempa River in El Salvador. The Lempa is the country’s largest river. MICHAEL FOX

Asunción Mita is a town of roughly 40,000 people in the hills of southeastern Guatemala, near the border with El Salvador. It’s dusty and hot in the dry season — located in the Central American dry corridor, which is particularly vulnerable to climate disasters. And it has become the center of a battle over the future of mining in Guatemala.

In January, the outgoing Guatemalan government gave the green light for the Cerro Blanco open-pit gold mine in the hills outside of Asunción Mita. The mine is run by Canadian corporation Bluestone Resources, which expects to produce over 300,000 ounces of gold per year. Bluestone says it will bring jobs and opportunities to the local community.

But most locals don’t buy it.

Yony Barrera is one of them. He’s the host of the local radio show “Good Night Mita” and a member of the Permanent Environmental Committee of Asunción Mita, which was launched in March 2023 to fight against the mine.

Barrera doesn’t fit with your image of a typical environmentalist. He’s a middle-aged dad who runs a hardware store and rides a motorcycle. But he is passionate about protecting his community.

“Yeah, they say they’ll bring development and jobs,” says Barrera. “And we’re a poor country. We need work, but sustainable, responsible work. Not jobs that bring destruction. You have to look at the cost of that development.”

On a clear weekday morning in March, he gave me a ride up the dirt road to the mine. His motorcycle wound through the brown hills of eastern Guatemala, past parched vegetation and clouds of dust kicked up from oncoming traffic.If the open pit Cerro Blanco mine goes through, it will engulf the entire area around the front gate to the mine.Michael Fox

There isn’t much to see of the mine right now. There’s a long fence, covered in barbed wire running alongside the dirt road. Just inside is a little booth for security, and several other rectangular cream-colored buildings set back from the road. This mine was actually operational for several years, underground. But the company ran into trouble from thermal groundwater that it kept having to pump out.

Now, the mine has the go ahead to be an open pit. If it goes through, the entire area where I’m standing will be gone: the trees, the forest and the hillside.

“The open pit would be right here,” motions Barrera, astride his motorcycle. He wears a black baseball cap, jeans and a red polo shirt. “They would eliminate this road. And the community up there would have to go all the way around to get back to Asunción Mita.”

He looks around. A soft, warm breeze blows the trees beside us. Birds chirp just off the road.

Y

ony Barrera stares at the front gate of Cerro Blanco mine in Eastern Guatemala. He says the mine would devastate the local ecosystem and community.Michael Fox

“The impact of this mine would be immense,” he says. “Not just for the environment, but also the lives of so many thousands of people. It’s sad. It’s sad that the ambitions of a few are worth more than the well-being of millions of people.”

Barrera’s point of view is commonly held in the region.

Nearly 88 percent of the population of Asunción Mita that participated in a town consultation process two years ago voted against the mining project. The referendum was held at the request of the local municipality and accompanied by dozens of organizations including the local Catholic church and environmental organization Madre Selva. After hearing the results, hundreds of residents celebrated in the town square.

But the mine and the then-government said it didn’t count. In a statement, Guatemala’s Ministry of Energy and Mines said the municipal government didn’t have the authority to hold the referendum.

Cars travel on the Panamerican Highway, which runs through Asuncion Mita.Michael Fox

“The issue put before the residents of Asunción Mita is not within the jurisdiction of the municipality. It corresponds to the Central Government,” the statement reads. “In this sense, the Asunción Mita Municipal Council is legally prevented from making a decision related to the installation and operation of a mining project in its jurisdiction, therefore, consulting the neighbors over this issue is inadmissible.”

Bluestone also responded to the vote, stating, “Anti-mining groups formed a commission to organize a consultation of neighbors that, in the eyes of the public, unfairly portrayed future mining activities within municipal limits.”

“This consultation process was clearly illegal,” said Bluestone’s Guatemala director, Robert Gill.

The company has promised big things for Guatemala and the local community. According to a 2022 sustainability report, Bluestone said, when operational, the mine would provide more than 400 direct jobs and thousands in indirect employment. It stated that the project would generate payments to the Guatemalan government “of approximately USD $300 million.”

“We behave in a responsible and sustainable manner, working together and showing respect for our people and the community,” the company wrote.

Not everyone is entirely against the mine. Juan Pablo Muñoz wears a big cowboy hat and drives a pickup truck. He’s in town picking up supplies for his community, up the hill near the mine. He asked that his real name not be used for fear of reprisals from those either for or against the mine.

“The mine has brought both good and bad things for the community,” he says. “Because we had a lot of community members working there. But we know about the harm that it could cause tomorrow, for our children and for other populations. So, it might help some people, financially, now. But it will also bring destruction for the future.”

Resident Giovanni Ramirez is concerned for the impact the Cerro Blanco mine could have on the community and the environment.Michael Fox

“Some people will benefit,” says community member Giovanni Ramírez, who’s eating breakfast at a roadside taco stand in Asunción Mita. “But when we think about our children and the next generation, what forest are we leaving for them? There will be no more forest left.”
U.S. Lobby

Still, the Cerro Blanco mine has had powerful support. In March, the Guatemalan outlet Prensa Comunitaria reported that in 2023, the U.S. embassy lobbied the Guatemalan government of former President Alejandro Giammattei in support of the mine.

The embassy wrote two letters to then-Environment Minister Gersón Barrios Garrido, reminding him that Cerro Blanco mine was backed with “substantial capital from investors of origin from the United States of America.”

“For the U.S. Embassy in Guatemala it is very important to continue promoting the attraction of American capital investment in Guatemala, so we consider it important to continue working hand in hand with Guatemalan authorities to generate new job opportunities for Guatemalans, and to develop rural areas of the country,” reads the second letter, written on June 6, 2023. The letter specifically mentioned Cerro Blanco.

Since the 2000s, mining has been a big business in Guatemala. Much of it has been driven by Canadian and increasingly U.S. mining companies. But it has also created violent conflicts with local communities. Around the country, community residents and anti-mining activists have faced death threats, violence and killings from both private and state security. In 2018, Guatemala was one of the most dangerous countries per capita in the world for environmental activists.

“In Guatemala, it is not possible to operate a large-scale mine … without participating and benefitting from human rights violations and repression, corruption and impunity,” wrote editors Grahame Russell and Catherine Nolin in the conclusion to their 2021 book Testimonio: Canadian Mining in the Aftermath of Genocides in Guatemala.

Concerns about the Cerro Blanco mine go far beyond Guatemala.
Poisoning El Salvador

Children play in the Lempa River, under the Cuscatlan Bridge in El Salvador.Michael Fox

On a warm Sunday morning in El Salvador’s department of San Vicente, children swim in the Lempa River, under the watchful eye of their mothers, who sit on the rocks and boulders that cover the riverbank. The kids’ excited voices and splashing of the water echo off the Cuscatlan Bridge, which hangs far above them. Downstream, a group of men are fishing. Over it all bathes the warm sound of a choir of voices. Parishioners from a local evangelical church stand around a pickup truck, where a preacher is leading them in song. They are there to baptize the newest member of their church, a little girl embraced gently by her father

.

Members of a local church hold a service for a baptism of a little girl on the banks of the Lempa River in El Salvador.Michael Fox

The Lempa, El Salvador’s largest river, provides water to half the country. But environmental activists say the Cerro Blanco mine will threaten it all.

That’s because Guatemala and El Salvador share the Guija Lake, just downstream from the Cerro Blanco mine. The waters from that lake then run into the Lempa River. They say the environmental impact of runoff from the mine could be disastrous.

In late January, anti-mining and environmental activists from both El Salvador and Guatemala held a press conference in San Salvador to denounce the approval of the Cerro Blanco mine and to demand action to block it.

“The company says that in order to leach gold from the ore, it’s going to need to use eight tons of cyanide a day, and that will be deposited in the environment. Can you imagine eight tons of cyanide for 10 years?” the coordinator of the Central American Alliance Against Mining, Pedro Cabezas, told the cameras. Behind him was a large green and white banner for El Salvador’s National Front Against Mining. “This will end up in the water basins of El Salvador. It will be a true tragedy, for decades.”

Anti-mining activist Pedro Cabezas speaks into the mic at a press conference denouncing the Cerro Blanco Mine in San Salvador.Michael Fox

In particular, the anti-mining activists expressed concerns for the size of the tailings and waste pile included in the plans for the Cerro Blanco mine. The waste pile would be one of the largest in the country, and at risk of runoff and collapse during the rainy season, which often sees heavy downpours.

“The mine will mean death,” Nelly Rivera from the Association of Women Environmentalists told Truthout after the meeting. “The Lempa River provides water for 3 million Salvadorians. This water has been a source of work, of sustenance, of life. And if they don’t have this, what do they have left? They will have to leave.”

The potential impact is compounded by the fact that mining is currently prohibited in El Salvador. The national Congress banned metal mining in landmark legislation in 2017. And yet, El Salvador’s water could still be impacted by the Guatemalan mine.

But it is not a done deal yet.

Guatemala City

Guatemala’s new president, Bernardo Arévalo, was sworn in on January 15, after a protracted fight with Attorney General Consuelo Porras, who repeatedly tried to first block his candidacy and then his electoral victory.

Arévalo is the son of the country’s first democratically elected president, Juan José Arévalo, who ran the country from 1945 to 1951. He is credited with ushering in what is known as the Guatemalan Spring, with unprecedented reforms that granted the country’s citizens greater democratic rights than ever before. This experience, however, was abruptly ended by a U.S.-backed coup in 1954, that was, in part, pushed by the U.S. banana corporation United Fruit.

Now, President Bernardo Arévalo has promised to renew his father’s dream. He’s also committed to reviewing all mining licenses approved under the previous administration.

One morning in March, Yony Barrera and a small delegation from Asunción Mita — including three other members of the Asunción Mita Environmental Committee, and Julio González, from the Madre Selva Ecologist Collective — drove to Guatemala City to meet with members of Arévalo’s new government.

The meeting was held at the offices of congressional representative José Alberto Chic Cardona, of the small center-left party VOS (Will, Opportunity and Solidarity), on the second floor of legislative offices in downtown Guatemala City, around the corner from Congress. Chic was impassioned and direct, in a dark suit, with short hair, a mustache and goatee. He’s expressed grave concerns over the mine. In attendance were José Rodrigo Rodas, the vice minister of the Environment Ministry and Zuleth Muñoz, from the country’s Human Rights Ombudsman office.

They sat in a rectangular room across a long wooden table and discussed the mining project for several hours.

The most important moment of the meeting was the very clear message from Álvaro Morales, the mining director of the country’s Ministry of Energy and Mines.

“The ministry has not authorized a mining plan for Cerro Blanco and it’s not going to authorize one right now,” he said. “There are many steps to go before then.”

For the anti-mining activists at the table, it was a bittersweet response. The mine is not going to happen now. But it’s not off the table. Their struggle continues.

In the hallway outside the congressional office, after the meeting, Yony Barrera huddled with his companions and discussed the future. He wore a white T-shirt, a dark blue jacket and the same black cap he wore the day he drove me up to the mine.

I asked him what he thought about the meeting.

“Well, we’re halfway there. We were able to achieve some things, but we didn’t achieve everything we wanted, which was the revoking of the environmental license,” he said. “We removed the tree, but we wanted to cut it off at the roots, so it would never come back. But we will continue to fight.”

Porto Alegre Floods and the Failure of the

Minimal State

BY BRIAN MIER

 MAY 29, 2024
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Bruna Rodrigues, 36, from the Communist Party of Brazil, the first black woman ever elected to Rio Grande do Sul’s state legislature.

On April 31, 300 mm of rain fell in the mountains of Northern Rio Grande do Sul, causing dam breaks, landslides and submerging entire towns, leaving over 160 people dead as it headed south towards the Guaíba drainage basin, where all of the streams and rivers of the northern third of the state converge to enter into a river that runs directly past downtown Porto Alegre. Devastated by a huge flood in 1941, the City of Porto Alegre used Dutch technology to construct a huge dike, floodgate and pumping station system in the 1960s to prevent a similar tragedy from every happening again. As the water level in the Guaíba River surpassed the 3-meter mark during the first days of May, the public found out that some of the flood gates were missing rubber seals and bolts, and many had rusted into their tracks. Furthermore, pumping station 17, located next to Porto Alegre’s historic district, which hadn’t worked during a recent flood in November, 2023, was still broken. By the time the water hit it’s high point of 5.33 meters on May 5th, half of the city’s pumping stations were inoperable, 85% of the city of 1.4 million no longer had running water, and over half the city had lost its electrical service. Two weeks later, I traveled by bus from Florianopolis to Osario, Rio Grande do Sul. There, I caught a local bus to the Agronomia municipal bus terminal, which had been temporarily set up for inter-city transport as both the city’s main bus terminal and airport were still underwater, along with large swathes of the city and the surrounding suburbs like Canoas and Sao Leopoldo, part of the metropolitan area of 3.3 million. On the day I arrived, 580,000 people had been displaced, with 71,000 living in shelters and the remainder in the houses of friends and families.

On May 22, I interviewed State Congresswoman Bruna Rodrigues. Daughter of a public street sweeper and the first member of her family to study at university, she was elected City Councilor in 2020 and State Congresswoman in 2023 . Before that, she served as President of Porto Alegre’s Residents Association Union and the Union of Socialist Youth. A member of the Communist Party of Brazil, Rodrigues is a former cabinet member of 2018 Vice Presidential Candidate Manuela D’Avila, and co-founder of the state assembly’s first congressional black caucus.

I caught up with her in Porto Alegre’s Santa Teresa neighborhood at Preta Velha, a formerly abandoned public school building which she helped convert into an Afro-Brazilian movement community center. Preta Velha is now running a solidarity kitchen and serving as a voluntary distribution center for donated clothes and sanitary goods. Due to the noise of dozens of volunteers packing hot food into Styrofoam containers and folding and packing donated clothing, her press secretary suggested we go upstairs, where I filmed this interview in an empty classroom. The following is a translated transcript that has been edited for readability.

Brian Mier: Could you explain some of the failures of the Porto Alegre city government over the last few years that have exacerbated this catastrophe?

Bruna Rodrigues: There have been a lot of them. First of all, Porto Alegre has seen its public services severely degraded over the past 20 years – destroyed by a governing coalition that believes that the State should be minimal and subordinate to the market. One example is the Civil Defense department, which is responsible for rescue operations during disasters. Today Porto Alegre has its lowest number of Civil Defense workers in its history. In counterpart, there has been a huge level of privatization and outsourcing of city services. When you look at investment, the disgrace is even deeper. There is no work being done on prevention and environmental education – we can start there. Porto Alegre recycles less than 6% of its solid waste. Furthermore, the Water and Sanitation Department, DMAE, is being prepared for privatization and has laid off half its workers over the last decade.

The Porto Alegre Mayor’s Department changes actors but the policies remain the same. Mayor Sebastião Melo was José Fortunati’s Vice Mayor and has been part of the government for 20 years. So a very small part of the actors change but the management remains the same. We can see what they have done to DMAE, and how they closed the Department of Rainwater Drainage (DEP) – a service that was essential for a kind of urban development in which basic sanitation was treated as an important policy. So when we talk about structural axes, environmental policy practically doesn’t exist in Porto Alegre aside from tree trimming and removal, which isn’t done very well. There are no prevention policies, no policy of analysis of the advance of climate disasters meaning that there is no investement in a phenomonon that is here to stay. In Porto Alegre we have neighborhoods built on river islands that historically suffer from floods. No solution has ever been made for them. To the contrary, this coalition has pushed the ideology of the minimal State for years and this has led to a strategy of blaming of the victims. This is what the mayor’s office has been doing. It’s been shirking its responsibilities and putting all of the blame for this catastrophe on its citizens. We are fighting hard against this.

Mier: How does Mayor Melo work to put the blame on his citizens?

Rodrigues: For example he says, “people live in risk areas- this is the problem.” When he says that this is the problem and we look at the people who are living there, they are people who have no access to social housing policies. When we look at this city we see that it doesn’t have a clearly defined housing policy. It doesn’t have a strategy – it hasn’t had a municipal housing plan for many years. Porto Alegre hasn’t produced any social housing for a long time. It doesn’t have a municipal development plan. The city government’s own vacant buildings and lots, which could be converted to social housing, are given to real estate speculators for market initiatives instead of the population that needs it the most.

Mier: What do you think is the most important thing that the Mayor’s Office should do now for the flood victims?

Rodrigues:For starters, they should listen to them, right? So far the people are being thrown into different predetermined places. Their lives are now being defined by public services that barely exist. Here in the Preta Velha collective, which has opened its doors for solidarity, people who were rescued are arriving who have been given bad information, who have been dumped in shelters but don’t have any information, and who are receiving reduced quantities of food. They are leaving these places and going to the houses of relatives but they don’t have any perspective of returning to any form of dignified housing. So when we talk about these public services which aren’t being delivered we’re talking about these people who are suffering the consequences. They were taken from the water and thrown somewhere out of the water. So when we talk about public policies, of a government that has the capacity to rescue people, put them somewhere dignified and offer them some kind of perspective for the future, unfortunately, this is something that Mayor Melo hasn’t been able to do.

Mier: Have you witnessed any attempts by people on the far right to sabotage or deligitimize the relief efforts made by the federal government?

Rodrigues: Disinformation is on the loose everywhere in every form imaginable. The Federal Government brought in 3500 rescue workers during the first week of the flood, but they spread lies that the Federal Government hadn’t arrived yet. President Lula took a series of measures so that Rio Grande do Sul could organize rescue efforts that including deploying the army and the national security force. He also allocated funding and, unfortunately this is all being distorted on social media to generate a smokescreen to take the blame away from the responsible parties and re-frame all the anger and hatred. Unfortunately, Brazil has a tradition of political agents fomenting and organizing hatred in a way that people have a hard time understanding what is real and what isn’t. The fake news is doing this, unfortunately. So when we talk about sabotage, we are talking about everything that wasn’t done so that the people could have been rescued with dignity. The governor has been working as an interlocutor of the weather and not a manager who is living in a disaster zone, a total tragedy, without the capacity to manage or organize civil society to show more solidarity. So we have a lot of challenges but we are fighting so that we can return to having a strong State that has the capacity to care for its citizens.

Brian Mier is a native Chicagoan who has lived in Brazil for 25 years. He is co-editor of Brasil Wire and Brazil correspondent for TeleSur English’s TV news program, From the South.

 

What is Dual Power?

by subMedia / May 28th, 2024

Dual Power, sometimes referred to as counter-power, is a stage in a revolutionary movement where two competing political frameworks occupy the same space. For anti-state revolutionaries this implies a significant mobilization of people organizing autonomously and outside of and against existing power structures and institutions.

In this episode of A is for Anarchy, we examine the historical origins of dual power and analyze current examples and those throughout history.

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SubMedia is directed and produced by Frank Lopez. Read other articles by subMedia, or visit subMedia's website.

Deadly Heat in a Political Jungle

by Robert Hunziker / May 27th, 2024

World heat is worse than ever. The entire planet is sweating.

Every summer is hot but never like this. In America, it’s a national election year in the face of global record heat. What are candidates’ positions on CO2-infused heat?

Graph by Brian Brettschneider, PhD, Climatologist

It’s extremely significant that global heat is just as bad in the world’s oceans, which have absorbed 85-90% of planetary heat, serving as a heat reservoir for decades. But now, the oceans are starting to strut their hot stuff. According to Copernicus, April was the 13th month in a row that global sea surface temperatures between 60 degrees latitude south and 60 degrees latitude north have been the warmest on record for the month. Astoundingly, nearly 30% of the world’s oceans were above 28C (82.4°F) too hot for a bath, in April 2024, setting a record. Both the Mediterranean and Black Seas also had sharp upward trends for the month. Has civilization lost its ocean heat cushion?

Consequently, heat deaths are on the rise and look to escalate, by a lot, and soon. This is a worldwide crisis like none other. It requires world leadership to do something, soon, like the day before yesterday. But, how soon and will it be enough and who’s willing?

According to World Weather Attribution d/d May 14^, 2024: Consistent sweltering temperatures well above 40C (104F) are creating havoc from Israel, Palestine, Lebanon, and Syria in the West to Myanmar, Thailand, Vietnam, and the Philippines in the East, and even though  heat-related death tolls are typically underreported, hundreds of heat-related deaths have been reported, schools have been closed, and citizens warned to stay indoors.

Moreover, two studies by World Weather Attribution (WWA) “found that human-induced climate change influenced the events, making them around 30 times more likely and much hotter.”

Heat knows no borders. According to WLRN South Florida d/d May 23, 2024: “Heat Dome Leads to Sweltering Temperatures in Mexico, Central America, and US South”: “This extreme heat is occurring in a world that is quickly warming due to greenhouse gases, which come from the burning of fossil fuels like oil, gas, and coal.” For example, Miami International Airport is running 10°F hotter than normal at 96°F.

Mexico City is nearly a war zone scenario with record high temperatures which, combined with pollution, leads to multiple city-wide protests, including by police: “A group of police agents blocked six lanes of traffic Wednesday on a main Mexico City avenue, saying their barracks lacked water for a week and the bathrooms were unusable. ” (Ibid.) Water has been trucked for hospitals and to firefighting teams. Numerous birds and animals in the wild of Mexico have dropped dead on the spot.

All Central America is exposed to the same horrendous moist heat. And people wonder why they migrate North.

Yale Climate Connections d/d April 29, 2024 listed some global warming samplers (1) corals are bleaching in every corner of the ocean, threatening its web of life (2) extreme drought in southern Africa leaves millions hungry (3) West African heat wave: high humidity made 40°C feel like 50°C, which is a killer (4) discomfort may increase: Asia’s heat wave scorches hundreds of millions (5) record heat in Europe, Asia closes another extremely warm month for the planet (6) Europe unprepared for rapidly growing climate risks, report finds (7) China breaks heat records as sweltering weather baked cities from north to south.

“The era of global boiling has arrived,” UN Secretary-General António Guterres has warned. “Climate change is here. It is terrifying. And it is just the beginning.” (Source: Climate Action, World Economic Forum, August 4, 2023.)

António Guterres “nailed it” nine months ago. Meanwhile, at some point in time soon, the major nations of the world will hit panic buttons and go all-in supplanting fossil fuels with renewables as quickly as possible. They’ll be forced to do this. After all, when police protest in the streets, as in Mexico City, who’s left to patrol?

It’s a national election year in America, and climate change should be a major political issue as the heat is on for the whole world to see like never before, and it will get worse, as stated by the UN secretary-general. What’s the political landscape in America? According to the mainstream publication Yahoo! Finance d/d Feb. 15, 2024: “MAGA Republicans Have a 920-Page Plan to Make Climate Change Worse.” Isn’t that just great!

Here’s the opening paragraph of Yahoo! Finance’s write-up: “When former President Donald Trump exited the Oval Office in January 2021, he left behind a record of environmental rollbacks unrivaled in US history. Over his 1,461 days as commander-in-chief, Trump replaced, eliminated, or otherwise dismantled more than 100 environmental rules – at least — from repealing the Clean Air Act to allowing coal plants to dump toxic wastewater into lakes and rivers to declaring open season on endangered gray wolves.” Several of the hatcheted rules were from Richard Nixon’s administration.

Subsequently, the Biden administration rolled back a lot of Trump’s hatchet job.

“Had all Trump’s policies gone into effect, the nonpartisan Rhodium Group estimated at the end of 2020, they would have added an additional 1.8 gigatons of CO2-equivalent to the atmosphere by 2035 – more than the annual energy emissions of Germany, Britain, and Canada combined. But even though we never felt the full brunt of them, the medical journal The Lancet estimated that the policies undertaken during his presidency were responsible for 22,000 deaths in 2019 alone due to sharp increases in things like asthma, heart disease, and lung cancer.” (Ibid.)

Project 2025 is the Heritage Foundation’s roadmap for MAGA Republicans going forward: “The plan’s proposals include eviscerating existing climate programs and increasing reliance on fossil fuels. It emphatically repudiates efforts to decarbonize the economy and is a wholesale reversal of the progress made on climate policy over recent years.” (Source: “Project 2025 Tells us What a Second Trump Term Could Mean for Climate Policy. It Isn’t Pretty“, WBUR nonprofit news org, March 27, 2024.)

Well, that’s great to know, but here’s the real issue: “Much of the voting public is disturbingly unaware of both Biden’s climate record and the assault that Project 2025 would marshal against it.” (Ibid.)

Make America Great Again. Really?

Robert Hunziker (MA, economic history, DePaul University) is a freelance writer and environmental journalist whose articles have been translated into foreign languages and appeared in over 50 journals, magazines, and sites worldwide. He can be contacted at: rlhunziker@gmail.com. Read other articles by Robert.

END THE EMBARGO

US allows Cuban entrepreneurs conditional banking access


AFP
May 28, 2024


A delivery van from a US-based food remittance company drives on a street in Havana on May 22, 2024 - Copyright AFP/File Raul ARBOLEDA

Private sector entrepreneurs in Cuba will be able to establish US bank accounts which they can remotely access, US officials said Tuesday, in announcing an update to the country’s Cuba policy.

The new rules modify a longstanding embargo on Cuba, allowing conditional access to the US banking system among moves to support the private sector.

“These amendments will facilitate greater access to internet-based services for the Cuban people,” a senior US official told reporters.

They will also “provide the independent Cuban private sector greater access to international transactions and US banking services, including through online payment platforms,” the official added on condition of anonymity.

Cuban Foreign Minister Bruno Rodriguez criticized the measures as “limited,” saying “they do not reverse the cruel impact and economic suffocation” caused by the six-decade-old embargo imposed by Washington.

“These measures seek to create divisions within Cuban society,” Rodriguez wrote on X.

Under the changes, independent private sector entrepreneurs will be able to set up remotely accessed US bank accounts for authorized transactions.

According to US officials, this should help to facilitate the import of food, equipment and other goods that support Cuban people.

US authorities have also reinstated authorization allowing for transactions that start and end outside the country but pass through the US financial system.

In May 2022, US President Joe Biden’s administration vowed to encourage the growth of Cuba’s private sector, including by supporting greater access to US internet services and e-commerce platforms.

As of 2021, Cuban entrepreneurs could establish private small- and medium-sized enterprises — after these were banned for almost six decades in favor of state-owned enterprises.

Some 11,000 private companies have since been registered, said US officials.

Cuba’s centrally planned economy is in its deepest crisis since the end of Soviet subsidies in the 1990s.

“The Cuban economy is a shambles and there is rising public frustration with the arthritic dictatorship,” said Benjamin Gedan, director of the Latin America program at the Wilson Center.

“Greater internet access would offer business opportunities and new tools for Cubans to work together to communicate their legitimate grievances,” he said.

Authorities said that the latest announcement excludes prohibited Cuban government officials such as military officers.

The amendment also comes shortly after the Biden administration removed Cuba from a list of countries that it says do not cooperate fully on counterterrorism.

Cuba was on the list alongside Iran, North Korea, Syria and Venezuela.

U.S. announces changes to give private sector, small businesses in Cuba more financial support

It would also bolster access to U.S. internet-based services, part of limited but timely measures that officials said would help give the island’s budding small businesses a leg up.

A person waves a Cuban flag during a gathering in Havana, Cuba on May 1.Ariel Ley / AP file

May 28, 2024, 
By Reuters

WASHINGTON/HAVANA — The U.S. Treasury Department on Tuesday announced regulatory changes to allow more American financial support for Cuba’s nascent private sector and bolster access to U.S. internet-based services, limited but timely measures that officials said would help give the island’s budding small businesses a leg up.

The United States said it would permit small entrepreneurs on the Communist-run island to open and access U.S. bank accounts from Cuba for the first time in decades, following prohibitions put in place shortly after Fidel Castro’s 1959 revolution.

The measures would also allow Cuban entrepreneurs to use U.S.-based social media platforms, online payment sites, video conferencing and authentication services, previously unavailable to the sector and a major hurdle currently facing small businesses on the island.

The moves aim to fulfill the Biden administration’s long-delayed pledge to help Cuba’s budding entrepreneurs, giving its small but fast-growing private sector deference despite the Cold War-era U.S. embargo that has for decades complicated financial transactions by the Cuban government.

“Today we’re taking an important step to support the expansion of free enterprise and the expansion of the entrepreneurial business sector in Cuba,” a senior U.S. official told reporters on Tuesday.

The Cuban government did not immediately respond to a request for comment on the policy changes.

In crafting the measures, U.S. officials, who briefed reporters on condition of anonymity, signaled they had sought to balance the goal of bolstering the private sector with a desire to avoid benefit to Cuban authorities.

President Joe Biden took office in January 2021 with hopes high in Cuba for a reversal of a harsh Trump-era approach, but Cuba’s crackdown on protests during the summer of that year prompted the administration to keep pressure on Havana.

The new measures would exclude Cuban officials, military officers and other government “insiders,” with the aim of minimizing resources available from the benefits to the Cuban government, the officials said.

Republican U.S. Representative Maria Elvira Salazar, a Cuban American lawmaker from South Florida, quickly criticized the Democratic administration’s announcement.

“The Biden Admin is now giving the ‘Cuban private sector’ access to the U.S. financial system,” she said in a post on X. “This would make a mockery of American law, considering no progress has been made toward freedom on the Island and repression has intensified.”

Cuba has long blamed the embargo — a tangled web of U.S. laws and regulations that complicates financial transactions by the Cuban government — for decades of economic crisis that have left it with little choice recently but to open its economy to small private business.

Such businesses — for decades taboo in Communist-run Cuba — are now booming on the island.

New Cuban laws put in place in 2021 have seen the establishment of upwards of 11,000 small businesses as of May, the government has said, ranging from corner grocers to plumbing, transportation and construction businesses.

Those businesses employ upwards of 15% of Cuban workers and accounted for around 14% of gross domestic product, according to economy ministry statistics from late 2023.

The regulations announced on Tuesday also authorize U.S. banks to once again process so-called “U-Turn” fund transfers, allowing them to move money for Cuban nationals — including payments and remittances — so long as senders and recipients are not subject to U.S. law.

Such measures are a step in the right direction, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, but he noted a “glaring omission” in the policy: Cuban businesses are still handicapped by a requirement that they use banks in third countries to move their money.

“As long as financing, investment, and payments need to be routed through third countries, the Biden-Harris Administration will be constraining precisely the activity it professes to support,” Kavulich said in an email.

There was no sign that Tuesday’s announcement could foreshadow a more significant easing of U.S. sanctions and other restrictions on Cuba, beyond the modest steps that Biden has already taken since he became president.

Some analysts have attributed Biden’s cautious handling of Cuba issues to his concern that a softened approach to Havana could hurt him politically among strongly anti-communist Cuban American voters in Florida, a key swing state that he lost to Trump in the 2020 election.

The U.S. officials declined to say whether the administration was conducting a formal review of Cuba’s continuing presence on the State Department’s list of state sponsors of terrorism.