Illustration: greaterbelize.com

By Joven Cuba

HAVANA TIMES — The Trump administration claims to stand with the Cuban people, and Secretary of State Marco Rubio has repeatedly invoked their right to freedom and dignity in his statements about the island. However, with each new executive order signed in Washington, another layer is added to the daily crisis faced by those living in Cuba.

On June 3, a notice from Cuba’s Central Bank reported that a foreign bank that had been processing Visa and Mastercard transactions on the island informed FINCIMEX S.A. that it was terminating its business relationship. Only cash, the domestic prepaid Clásica and Tropical cards, and the international Mir and UnionPay cards would remain available.

According to the official statement, the decision was received on June 2 and was directly linked to Executive Order 14404, signed by Donald Trump on May 1. The announcement added that, as of June 6, when the measure would take effect, it would become “illegal and impossible” to continue implementing the agreements with the Cuban entity. As a result, the country would no longer be able to receive income from the sale of goods and services through those two international payment networks.

To understand the impact of this measure, Joven Cuba consulted three economists who analyzed its effects on the national economy.

Carlos Enrique González said the development is “terrible news.” In his view, payments through these cards represented one of the few remaining channels for non-cash inflows of money into Cuba. He explained that replacing those flows with cash complicates matters for families, the state, and private businesses alike, since handling physical foreign currency entails higher costs, logistical difficulties, and additional obstacles to integrating those funds into commercial and financial circuits.

“Cash, if it goes to the state, then the state has to report it, find a bank willing to accept it, and that’s a tremendous problem,” he said. In his opinion, private businesses will also be affected because dollar payments to foreign suppliers could become more difficult: “It simply makes the entire import process and the supply of products more expensive.” Regarding the impact on families, he noted that there are “families in Cuba with relatives abroad whose way of sending remittances is precisely by loading money onto one of those cards,” which people inside the country use “mainly for shopping in stores.”

At the same time, while not justifying Washington’s policy, the economist argued that concentrating these financial processes within FINCIMEX, an entity belonging to the military conglomerate GAESA, gives the United States a rationale for imposing sanctions:

“If there were several companies through which these transactions could be processed, or if Fincimex were not part of GAESA [the Business Administration Group of the Revolutionary Armed Forces], it would take away the argument from those on the other side for doing this.”

He therefore concluded that, rather than helping Cuba circumvent the embargo, the process of concentrating operations within GAESA “has actually made the embargo’s job easier.”

Omar Everleny Perez Villanueva agreed that “it is obviously a major blow to the Cuban economy,” although, in his view, not all Cubans use these cards, so it would be inaccurate to speak of an immediate collapse in the daily lives of ordinary citizens.

Regarding the private sector, he explained that a business owner who uses a card abroad does not face problems making international purchases because those transactions are conducted remotely. The obstacle arises when the operation depends on a Cuban payment gateway.

“What you can no longer do is pay a business operating in Cuba, a small company in Cuba that tells you: ‘I’ll bring you so many kilograms of butter; pay me through this payment gateway.’ That will no longer exist.”

As a result, this limitation cuts off an infrastructure that had been facilitating part of the country’s private commerce.

Where he does foresee a more far-reaching structural impact is in tourism. Although he noted that the sector “is already on the floor,” meaning the immediate effect may not be devastating, he warned that the measure closes a door that will not be easy to reopen:

“As tourism recovers, if you don’t restore the use of international cards, it’s a country that effectively doesn’t exist.”

[Editor’s Note: Visa and Mastercard issued in the United States have been unusable for many years, however the same cards issued from other countries have been widely used. That will no longer be possible.]

Meanwhile, Ricardo Gonzalez Aguila broadened the analysis to encompass macroeconomic consequences. In his view, the measure “affects the payments system and will further increase the cost of Cuba’s international transactions with the rest of the world, with consequences for finances and foreign trade.”

Although he acknowledged that it is difficult to estimate the precise magnitude of the impact at this point, he warned that “the decision represents an additional problem for an economy already burdened with too many accumulated vulnerabilities,” and that under current conditions “any additional pressure—even if it seems minimal—has the potential to eventually trigger a humanitarian crisis of unknown dimensions.”

His analysis also highlights the risk of greater geo-economic isolation: the measure will make Cuba “more dependent on bilateral exchanges with allies such as Russia and China.”

Domestically, he expects the effects on international trade and finance to spill over into the real economy, meaning the supply of goods and services, and into monetary balances, including inflation and the informal exchange rate, accelerating the deterioration that has become increasingly evident in recent months. It is a warning closely connected to trends already visible in Cuba’s everyday economy.

The Executive Order signed by Trump on May 1, authorizes the blocking of property and interests belonging to individuals or entities linked—directly or indirectly—to sectors considered strategic to the Cuban economy, including financial services.

In addition, it allows sanctions against those who operate in these sectors, act on behalf of the Cuban government, or provide it with material or financial assistance.

One of its most significant provisions for understanding what happened with Visa and Mastercard concerns foreign financial institutions. The Treasury Secretary may impose sanctions on any foreign bank or entity that has facilitated significant transactions for, or on behalf of, a person blocked under the order, including prohibiting the institution from maintaining correspondent accounts in the United States.

As a result, the mechanism’s broad language encourages banks and international operators to withdraw from any relationship that Washington might interpret as involving sanctionable Cuban actors—even before any sanctions are actually imposed.

This phenomenon is known as overcompliance, the tendency of financial institutions to go beyond what regulations strictly require and sever ties with sanctioned countries or entities simply as a precaution, in order to avoid any risk of future fines or retaliation.

The cancellation of Visa and Mastercard processing in Cuba adds to a series of restrictions that in recent months have affected shipping companies, fuel suppliers, and international logistics operators.

In every case, the measures are presented as tools aimed at state structures, yet their concrete effects ultimately fall on the population.

In an economy where inflation is eroding purchasing power, the supply of basic goods remains inadequate, and families depend on resources arriving from abroad, any additional restriction on remittance channels or electronic payment systems places direct pressure on the material living conditions of people who are already living on the edge.

It is both legitimate and necessary to rigorously analyze the Cuban government’s internal responsibilities for the country’s accumulated economic deterioration, as well as the decisions that, as Carlos Enrique González pointed out, have made the embargo’s work easier.

But an honest assessment of the situation also requires acknowledging that a sanctions policy that has been applied for decades without producing the political changes it claims to seek—and that instead contributes to worsening indicators of health, nutrition, and civilian well-being—deserves to be questioned on its own merits.

When economic pressure reaches a level capable of “eventually triggering a humanitarian crisis of unknown dimensions,” as Ricardo Gonzalez Aguila warns, it is worth remembering that, regardless of the mistakes committed by a country’s government, no foreign government has the right to impose such a cost on a civilian population.

First published in Spanish by Joven Cuba and translated and posted in English by Havana Times.

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