Trump’s Cuba Changes Could Target Marriott Deal With Castro Military

Hotel chain spent $260K in lobbying this year in advance of Trump's Cuba changes

The Four Points by Sheraton in Havana / Getty Images

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Marriott International is the company with the most to lose if President Trump cracks down on the ability of U.S. businesses to work with the Cuban military.

A spike in the hotel chain's lobbying expenses on Cuba travel issues may reflect its concern about the expected policy changes.

Marriott spent $260,000 on in-house lobbying during the first quarter of 2017, and listed Cuba travel as the first of four issues the lobbying focused on in its disclosure reports.

That amount is up from a total of $670,000 for all of 2017 and the highest amount in one quarter over the last two years, according to the lobbying disclosure records.

President Trump is expected to announce changes to the Obama administration's efforts to normalize diplomatic and commercial ties to the communist island nation during a speech in Miami Friday or Saturday.

The Trump administration earlier this year announced it was reviewing U.S. Cuba policy. White House and State Department officials have been tight-lipped about whether the review is completed in advance of Trump's Miami speech.

The president's new policies, among other changes, are expected to discourage business transactions with the Cuban military, which controls much of the tourism industry on the island.

The Obama administration directed the U.S. Treasury's Office of Foreign Assets Control, which is charged with sanctioning foreign governments, to grant a Marriott subsidiary a multi-year license with the Cuban military in 2016 to operate a hotel in Havana.

The Treasury Department has not disclosed the full terms of the license, according to critics, but it allowed Starwood Hotels and Resorts Worldwide, a Marriott subsidiary, to turn the Cuban military-operated Hotel Quinta Avenida in Havana into the Four Points by Sheraton.

Other Starwood deals involve Cuban hotels operated by the Castro government, not the military, but work on those hotels has been delayed. Any new policy changes Trump could impose will likely pressure Starwood to "modify or relinquish" the management agreement it has with the Cuban military, according to John Kavulich, president of the U.S.-Cuba Trade and Economic Council, a nonprofit based in New York.

"If the company did not modify the management contract, members of Congress and the Trump administration could target the company as undermining United States policy and acting in a manner inconsistent with the United States policy, which could be used to rescind the license from OFAC," he wrote in an email.

"All OFAC licenses are issued on the basis that they may be revised or rescinded at any time if they no longer are consistent with United States policy," he added.

A White House spokeswoman on Tuesday said only: "We do not have any declarations regarding Cuba policy at this time, nor do we have a confirmed time or date for an announcement."

The Miami Herald earlier this week quoted a White House spokeswoman saying that a proposal to prohibit business with the Cuban military "is one of the many possibilities discussed. It is being considered as one of the many options."

Several Republicans, such as Sen. Jeff Flake (R., Ariz.), have backed Obama's diplomatic and commercial détente with Cuba, especially the changes allowing more Americans and Cuban exiles to travel to the island.

However, other prominent Republicans have said the rapprochement was an uneven deal that gave too much to the Cuban government and have specifically criticized business ties between U.S. companies and the Cuban military.

Speaker Paul Ryan (R., Wis.) last June in a speech to the Council of Foreign Relations argued that the United States should work to restore leverage with the Cuban government and ensure that any further accommodations are met first with "real concessions from the Cuban government."

"A first step should be to ban financial transactions with the Cuban military," he said.

Obama's decision to grant Marriott the license has opened up a legal can of worms for the Trump administration.

Since the Obama administration never disclosed the exact terms of Starwood's OFAC deal, Cuban experts can only speculate about the amount of money that is ending up in the pocket of the Cuban military.

"I don't know if this is a deal whereby they are leasing the property from whoever owns the property—probably the military because most businesses the military is involved in," said Jaime Schulicki, the director of the University of Miami's Institute for Cuban and Cuban-American Studies. "You buy something in Cuba—even cigars and rum—and the military gets a cut so you're supporting a military dictatorship."

The travel industry viewed Starwood's entry into Cuba's hotel business as the first of several U.S. hotel chains who want to take advantage of the new Cuban tourism market, Schulicki said.

If Trump rescinds Starwood's OFAC license, the hotel chain could sue the federal government to have it reinstated. If Trump leaves it intact but fails to grant other hotel chains the same type of licenses, they too could sue over what may be viewed as a special business carve-out for Starwood alone.

Richard Feinberg, a senior fellow at the Brookings Institution's Latin American Initiative, said the business deals that both Marriott and American Airlines have in Cuba are "small potatoes" compared to their global revenue, so he doubts they would launch a lawsuit against the federal government over one hotel in Havana.

"Now, do they see the possibility down the road for more business? The answer is yes, but so far they have just gotten their toes wet," he said.

Feinberg is a former Clinton administration National Security Council aide and the author of Open for Business: Building the New Cuban Economy.

He predicts Trump will try to appeal to the Cuban-American community, which supported his campaign, by playing up minor changes to the Obama administration's Cuba policy.

"Maximum rhetoric, minimum action, which will meet his goal and appeal to the Cuban-American community […] for them, to have the President of the United States talk tough will suffice," he added.

Trump has yet to indicate exactly what changes, if any, he will make to Obama's Cuba rapprochement. In addition to rolling back business ties between the two countries, especially those involving the Cuban military, he could also re-impose some limits on U.S. travel to the island.

While campaigning last year, Trump said he would create a "better deal" with Cuba than Obama had. He also earned the endorsement of the Bay of Pigs Veterans Association in Miami, and some political analysts have credited his support from the Cuban exile community in South Florida with Trump's critical win in Florida in November.

Sen. Marco Rubio (R., Fla.) has been working "diligently" behind the scenes with the administration on the potential changes to U.S. Cuba policy, according to a Rubio aide.

"I am confident the President will keep his commitment on Cuba policy by making changes that are targeted and strategic and advance the Cuban people's aspirations for economic and political liberty," Rubio said in a statement emailed to the Washington Free Beacon.

Flake and like-minded GOP colleagues have been pressing the administration not to punish the Cuban people by rolling back the Obama-era changes.

"Several years ago, around the same time as the last administration was allowing increased American travel and remittances to the island, the Cuban government came to the realization that it could no longer afford to employ every Cuban, even at $20 a month," he wrote in a recent piece posted on medium.com

In response, he said the Cuban government allowed hundreds of thousands of Cubans to find their own work in the private sector as taxi drivers, barbers, auto mechanics, restaurant owners, bed-and-breakfast hosts and myriad other jobs.

"Do we really want to turn back the clock?" he asked.

Update 6:50 p.m.: This post has been updated to clarify the amount of money Marriott spent lobbying on Cuba issues.

Susan Crabtree

Susan Crabtree   Email Susan | Full Bio | RSS
Susan Crabtree is a senior writer for the Washington Free Beacon. She is a veteran Washington reporter who has covered the White House and Congress over the past two decades. She has written for the Washington Examiner, the Washington Times, the Hill newspaper, Roll Call, and Congressional Quarterly.

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