U.S. Treasuryís Juan Zarate Enforces Sanctions, Especially Against ëRogue Regimesí by Larry Luxner Early last month, the Treasury Department announced that its Office of Foreign Assets Control (OFAC) would freeze the assets of Cuban-run travel companies and pursue civil and criminal action against U.S. citizens who do business with those companies. Then on Feb. 26óthe same day OFAC lifted the U.S. travel ban against LibyaóPresident Bush signed an executive order that expands Washingtonís ability to inspect U.S. pleasure craft sailing to Cuba, place guards on vessels and in some cases confiscate the boats. Bush justified the tough new policy, warning U.S. boaters that they could be injured or even killed by the Cuban militaryís ìpotential use of excessive forceî if they entered Cuban waters. Thereís also talk that OFAC may substantially reduce the $1,200 in annual remittances that Cuban-Americans are allowed to send their relatives each year, while possibly eliminating the $100 allowance for rum, cigars and other souvenirs that licensed travelers may bring back from Cuba. Top Treasury official Juan Carlos Zar ate declined to comment on specific measures his office might take with regard to Cuba or any other country on the State Department's list of ìrogue regimesî that support international terrorism. ìWeíre reviewing our current regulations to see if there are improvements that can be made,î he told The Washington Diplomat. ìWeíre talking about taking a fresh look at existing laws and regulations, with no promise to change anything.î Zarateís official title is deputy assistant secretary for the Treasury Departmentís Executive Office for Terrorist Financing and Financial Crime. As such, he oversees not only OFAC but also U.S. efforts to fight money laundering by al Qaeda and other terrorist groups. In an exclusive, hour-long interview at his office one block from the White House, Zarate called the gradual lifting of sanctions against Libya ìa great successî for the Bush administration. ìAs the president has said, this is part and parcel of his engagement with the international community to rein in rogue regimes and those who would seek weapons of mass destruction,î Zarate said. ìWe are working very closely with the Libyans to ensure theyíre taking verifiable steps to dismantle their program and make all relevant information available to us.î In 1986, the U.S. government suspended travel to Libya for U.S. citizens, following the Gaddafi regimeís participation in terrorist attacks at airports in Rome and Vienna the month before. Among other things, the sanctions have prohibited U.S. citizens from engaging in travel and transportation-related activities with the North African country. Exceptions were confined to journalists on assignment, ìclose family membersî of Libyan nationals, and travel for the sole purpose of selling licensed agricultural commodities, medicine and medical devices. Even though the travel ban is no more, OFAC plans to leave the prohibition against ìtransportation-related activities,î such as flights to Libya by U.S. air carriers, in place for the time being. Things even seem to be improving with Iran, which along with Iraq and North Korea form Bushís famous ìaxis of evil.î ìThe Europeans and the United Nations are clearly engaged with Iran,î Zarate said. ìThe important point here is to gain accountability. Iranís greater openness on this issue is a signal that this administrationís policies are working in terms of holding their feet to the fire.î On the contrary, U.S. relations with Cuba are getting worse, and as a result, legal travel to Cuba by American citizens seems to be getting more and more difficult every day. Zarate said ìthe most significant actionî taken yet by OFAC with regard to the Castro government was the Feb. 9 designation of the 10 companies involved in Cubaís lucrative tourism industry. ìItís the first time weíve actually identified entities that are owned by the Cuban government,î he said. ìIn so doing, weíre trying to raise awareness with the American people and internationally as well.î The 10 entities singled out by Treasury Secretary John Snow during a speech to cheering Cuban-American exiles in Miami are all owned by the Cuban government. They include Havana-based CorporaciÛn Cimex S.A. and Grupo Cubanac·n, along with subsidiaries operated by those state-owned giants in the Caribbean, Canada, Europe and South America. ìThose are notifications to U.S. financial institutions that any assets or transfers related to those entities have to be blocked,î said Zarate. ìSo if you have a dollar transfer in place between Cubanac·n and Havanatur and the funds are clearing through New York, that would now be blocked. Absent a license to do business with these designated parties, itís now illegal for U.S. citizens to provide services to any of those companies.î On the other hand, Zarate said itís not OFACís goal to punish non-Cuban companies from providing services to the Castro government. ìOur powers are limited, but the power of any sanctions the U.S. wields stems from the use of the dollar and access to the U.S. financial system,î he said. ìWe donít want to affect commerce under way between Cuba and legitimate third-party countries like Canada. Thereís a qualitative difference between those entities owned by the Cuban government and foreign companies merely doing business in Cuba.î Rep. Lincoln DÌaz-Balart (R-Fla.), a staunch supporter of the embargo, praised the recent White House crackdown on Cuba, telling the Miami Herald that ìthe Castro regime harbors terrorists and has repeatedly hampered U.S. anti-terrorist efforts since Sept. 11, 2001. President Bushís commendable action will reduce the resources available to the Cuban terrorist regime.î OFACís threats are meeting, however, with a great deal of skepticism from observers on all sides of the Cuba debate. ìThis is not new,î said Enzo Ruberto, a Canadian businessman who runs PreciosFijos.com and Cash2Cuba.com. ìThe foreign travel companies identified [by Snow] are all 100 percent owned by Cuban government corporations. For the past 40 years, Cuban companies have been banned from doing business inside the United States. Thereís no change here, other than that the Bush administration has now decided to enforce this during an election year.î Even Joe GarcÌa, executive director of the Cuban American National Foundation, said OFACís new policiesóparticularly the one restricting U.S. boaters from sailing to Cubaódoesnít amount to much. ìThis is the United States government applying existing law,î he told the South Florida Sun-Sentinel. Zarate, 32, has had direct oversight of OFAC ever since his office was established one year ago in the reshuffling that followed the establishment of the Department of Homeland Security. Before that, OFAC reported to the Treasury Departmentís undersecretary for enforcement (See March 2003 issue of The Washington Diplomat). The product of a Cuban mother and a Mexican father, Zarate was born in California, graduated from Harvard Law School in 1997, and worked as a prosecutor in the Justice Departmentís Terrorism and Violent Crime Section before taking on his current job. ìFor those of us who have close personal ties to Cuba, the destruction of civil society is a sheer travesty,î Zarate said. ìIíve never been to Cuba, but itís long been a topic of discussion in our family. And itís always been clear to me that Cuba is in a very different category from the other countries under U.S. sanctions.î One reason for that is the islandís proximity to the United States. Itís certainly a lot closer than Libya, North Korea, Iran, Iraq or Sudan. It also attracts many more tourists than the five other countries combined. Thatís why Zarate is particularly proud of the White House for eliminating the so-called ìpeople-to-peopleî licenses, which expired on Dec. 31. ìWhat we saw was an abuse by the companies marketing those programs,î he said. ìPeople were traveling on tourist packages instead of engaging in academic pursuits. The flip side of that was that the regime itself co-opted the process and in many instances began taking control of those programs. So we eliminated that licensing provision.î At present, roughly 13 percent of OFACís budget goes to enforce Cuba-related sanctions. Although critics have accused the Bush administration of squandering OFACís resources when it should be fighting al Qaeda and other Middle East terrorist groups, Zarate argues that the administrationís current policy is justified. ìPresident Bush well over a year ago provided the Castro regime with an opportunity to re-engage in a relationship with us. As a precondition, the president indicated that Castro would have to allow for free elections and open up Cubaís economy as an important first step. It was a historic crossroads for relations between the U.S. and Cuba, and the Castro regime rejected it outright. That has resulted in increased enforcement of the law that currently exists.î Zarate added, ìThe reason weíre focusing so intently on the travel industry is that itís such a seminal part of the regimeís ability to survive and perpetuate itself. Over 70 percent of Cuban tourism is segregated, and it doesnít allow the interactions that we all want.î On Oct. 10, the Department of Homeland Securityóacting on orders from the White House and in conjunction with OFAC and other agenciesóbegan inspecting 100 percent of all Cuba-bound charter flights originating in Miami, New York and Los Angeles, the three designated ìgatewayî cities for such flights. As of Feb. 10, according to OFAC, 569 flights had been targeted for outbound inspection. More than 44,000 passengers were screened as they departed the United States, and some 50,915 passengers were screened upon their return for Cuba. According to OFAC, 275 passengers were prevented from boarding after examinations revealed that they didnít qualify for travel to Cuba under any OFAC category. In addition, more than 1,000 flights returning from Cuba were targeted for inspection, resulting in 376 seizuresómost of them related to the unlicensed importation of Cuban cigars and rum. ìIf people are engaging in activities that run afoul of U.S. law, theyíre subject to OFAC fines,î said Zarate. ìWhat weíre trying to do is enforce the law more effectively.î One way of punishing those who traveled illegally to Cuba is by stepping up enforcement at airports throughout Canada and the Caribbean. Customs inspectors are now stationed at preclearance facilities at six facilities in Canada, looking for telltale signs that tourists have been to the forbidden island. Similar inspectors are on the job in Bermuda, Nassau and Aruba, said Zarate. ìItís not about harassing people, but effectively enforcing U.S. law,î he said in response to a question about whether it makes sense to punish little old ladies for bringing Bibles to Cuba in violation of the travel ban. ìWe look at each situation on a case-by-case basis. The fines range from very low amounts up to $55,000, depending on how forthright the person is.î Asked about a possible link between OFACís get-tough attitude against Castro and the presidentís need to win over Floridaís 25 electoral votes in November, Zarate sighed. ìThis is not about politicsóitís about good policy,î he said. ìThe enforcement of U.S. law is something this administration is proud of, and if God willing the president is re-elected, we will move forward on this policy.î Larry Luxner is a contributing writer for The Washington Diplomat.