Biggest Duty for New OFAC Chief is Enforcing Embargo Against Cuba
by Larry Luxner
Politicians, academics and Cuban exiles can debate the U.S. embargo until theyíre blue in the face, but when it comes to actually enforcing the blockade, the buck stops at the desk of Robert W. Werner.
A former federal prosecutor whoís also regulated casino gambling, Werner took over as director of the Treasury Departmentís Office of Foreign Assets Control (OFAC) on Oct. 1. He replaced Richard Newcomb, who had headed the agency for 17 years.
"Rick Newcomb did a fabulous job at OFAC. He really was the father of this institution," Werner said during an exclusive interview at his second-floor office in the Treasury Department annex, only two blocks from the White House. "But my advantage is that I have a fresh perspective and am able to look at things in a new way."
Werner, 45, grew up in Hartford, Conn., and earned a law degree from New York University School of Law. As director of Connecticutís gaming office, he was responsible for regulating two casinos run by Native American tribes.
Werner also worked as a federal prosecutor in the U.S. Attorney Generalís Office in Connect
icut and served in the Justice Departmentís Office of Legal Counsel. At the Treasury Department, he was assistant general counsel for enforcement and intelligence, counselor to general counsel and chief of staff at the Financial Crimes Enforcement Network.
Wernerís private sector experience includes work as a partner at Bingham Dana LLP (now Bingham McCutchen) and as an officer at Phoenix Home Life Mutual Insurance Co. (now The Phoenix Cos.). Werner is also a former law clerk to Associate Justices Lewis F. Powell Jr. and Anthony M. Kennedy.
"I think that having been a regulator in several kinds of industries and having been in the private sector, Iím very conscious of a desire to marry effective enforcement of our programs with minimizing the burden this places on people and businesses," Werner said. "With regard to Cuba, this means that when we get license applications, we consider them quickly. Our response time is prompt, and we take the time to understand the needs behind the application."
As director of OFAC, Werner oversees 140 staffers and a budget exceeding $20 million. "Thatís a lot smaller than people think," he said. "We leverage the resources of the entire department. For example, Customs is a critical part of the OFAC mission. Weíre constantly coordinating with the Department of Homeland Security and other agencies. Without our government partners, we would not be able to do what we do."
Although OFACís enforcement of the anti-Cuba embargo certainly generates the most headlines, itís only one of 29 sanctions programs under the agencyís jurisdiction. The U.S. government also maintains sanctions against Iran, Sudan and North Korea. Other programs deal with drug trafficking, terrorism and weapons of mass destruction.
"Not all the sanctions programs are the same," the OFAC chief told The Washington Diplomat. "We still have residual work associated with sanctions against Iraq and Libya, as well as persons indicted for war crimes."
Clearly, however, a big chunk of Wernerís workday is taken up by Cuban issuesóeven more so after last June, when the Bush administration unveiled tough new rules limiting travel by Cuban-Americans hoping to visit their families on the island.
"After we implemented the new regulatory procedures on Cuba travel, we obviously had a balloon of applications which required more resources. We were snowed under, but weíre getting through them."
Werner said OFAC has received between 14,000 and 17,000 applications since the laws were tightened in June, of which "in excess of 11,000" have already been processed.
"Most of these applications were not necessarily people who are eligible under the current regulations," he explained. "Thereís a lot of confusion. Some forms we got more than once. Most of the ones that came in had problems. Either they werenít filled out completely or there was evidence that people were lying about having been to Cuba within the last three years."
Another problem was that "the concept of only immediate family being allowed to travel hasnít quite sunk in," said Werner. "A good example of that would be a parent who is clearly eligible under the definition [of immediate family], who wanted to visit a relative in Cuba, but wanted to bring a child who fell outside that definition."
Under the new rules, Cuban-Americans may visit only parents, grandparents, spouses, siblings and childrenónot aunts, uncles or cousins. Before July 2004, no such limitations existed.
Werner claims these harsh restrictions have resulted in "positive developments" from the U.S. point of view. "What weíre seeing is that the policies in place are having the desired effect on the regime," he said. "My understanding is that Cuba has had to close a terminal at Havana airport [as a result of fewer exile flights from Miami]. There are signs the country is becoming very stressed for U.S. currency. These are all a direct result of the new sanctions."
Critics on both sides of the aisle complain that the Bush administrationówhich talks a lot about family valuesóhas no business defining what a family is. Sensitive to such criticism, Werner hinted there might be some wiggle room here.
"OFAC should be willing to continually re-examine the family definition to make sure weíve got it right," he said. "Thatís an issue weíre willing to look at, though any re-examination of the family definition would be done in conjunction with the State Department."
On the other hand, Werner said he would not re-examine other controversial aspects of the tougher Bush administration policy. These include limiting family visits to once every three years and doing away with the exemption that allowed legal travelers to bring back up to $100 worth of rum, cigars and other Cuban souvenirs.
"When you add up the $100 exemptions, it amounts to a lot of money, but it also exposes people to products that they generally donít have access to," he said. "Itís like ivory trading. You donít want to stimulate a desire for such commodities."
What about people who intentionally violate the travel ban? Is there any sense, we asked Werner, in threatening a retired Catholic couple from Michigan with $110,000 in penalties for flying to Cuba via Canada to distribute Bibles? Or in throwing the book at an elderly grandmother who broke the law by participating in a bicycle tour of the island?
"The way it works is, weíll get a referral from Customs that someone has traveled to Cuba illegally. We review the facts and assess a penalty based on those facts.
"But we definitely take into account mitigating circumstances," he explained. "If someone goes to Cuba and engages in a substantial export business, theyíll get hit with a much larger fine than if a couple travels to Cuba to pass out religious materials.
"We also consider other things: Do people respond to our requests? Do they engage us in a conversation about the violation, or do they simply ignore us? The longer you wait to deal with us, the bigger a problem youíll face."
Werner added: "The way we justify it is that consistent enforcement of the policy is essential to making it work. Every person who travels illegally to Cuba undermines the integrity of the program. If itís OK for them to travel without a license just because they feel like traveling and because the purpose of their trip is righteous, where does that stop? The fact is that as a government, weíre not leaving that up to peopleís discretion."
One of the biggest controversies swirling around OFAC these days, however, has nothing to do with traveling to Cuba. Rather, it concerns the possibility that U.S. law will be changed to prevent U.S. companies from shipping food products to Cuba unless the Castro government pays cash for the products in advance.
Since passage of the Trade Sanction Reform and Export Enhancement Act (TSRA) in 2000, payment from Cuba has only been required before goods being released to the buyer, not before shipment.
Werner was reluctant to discuss this issue because OFAC hasnít issued any new guidelines on TSRA. But he did offer the following:
"We donít know precisely what triggered it, but something caused a number of financial institutions to become concerned that the transactions they were being asked to process fell outside the parameters of what was permissive. It would be very speculative for me to say. It may have been publicity related."
Regardless of what triggered it, warned the American Farm Bureau Federation (AFBF), going through with the proposal would
be detrimental to U.S. farmers and ranchers.
"There is no reason to change rules of payment that might reduce the market for the wide number of products produced by our members and exported to Cuba, including wheat, rice, corn, soybeans, chicken, pork, eggs, dairy products, apples and even live animals," AFBF President Bob Stallman said in a recent letter to President Bush.
The petition, endorsed by a coalition of agricultural groups, claims all farm exports since TSRAís passage have met both the letter and spirit of the law. Exported farm products have not been unloaded in Cuba until payment is received. Additionally, requiring payment before shipment would be contrary to standard methods of international business.
"We urge you not to make unnecessary and harmful changes to the implementation of TSRA," said Stallman. "Cuba has become our 22nd-largest agricultural market, valued at almost $400 million per year. It is a market we cannot afford to lose."
The letter also questions the "extraordinary legal risks" of Cuba paying for goods in advance of shipment and having them remain on U.S. soil. These Cuban goods would be subject to court-ordered seizures that could result from legal claims against Cuba.
Meanwhile, three U.S. senators have complained to the Treasury Secretary John Snow. "OFACís mission is to enforce sanctions in place against Cuba, not to regulate or interfere in lawful commerce between the United States and Cuba," wrote Max Baucus (D-Mont.), Larry Craig (R-Idaho) and Byron Dorgan (D-N.D.). "Since the TSRA law expressly codified the right of U.S producers to sell food and medicine to Cuba, any attempts by OFAC to inhibit such sales must necessarily be interpreted as a conscious and intentional decision by OFAC to flout the will of Congress."
Baucus has threatened to block any new Treasury nominees that come before the Senate if OFAC goes ahead with such plans.
"Moving to obstruct lawful trade after three years of it functioning without incident takes this administrationís dangerous obsession with Cuba to a whole new level," he warned. "I will not sit idly by if the Treasury Department attempts to rewrite legislation Congress intended to facilitate trade with Cuba. I am prepared to hold up the next significant Treasury nominee until this gets resolved."
Larry Luxner is a contributing writer for The Washington Diplomat.
OFAC Eases Sanctions on Publishing
U.S. publishers can breathe a little easier now that the Treasury Department has ruled they may publish books and articles by citizens of Cuba, Iran or Sudan.
The new rule was announced in mid-December by Treasuryís Office of Foreign Assets Control (OFAC). It comes after Iranian Nobel Peace Prize winner Shirin Ebadi sued the United States because OFAC rules blocked her from signing a contract with the Boston-based Strothman Agency, which wanted to represent her.
OFACís previous policy effectively discouraged the publication of dissident speech from those three countries.
"That is the opposite of what we want," Stuart Levey, Treasuryís undersecretary for the Office of Terrorism and Financial Intelligence, said in a statement. "This new policy will ensure those dissident voices and others will be heard without undermining our sanctions policy."
OFAC Director Robert W. Werner said people wanting to publish Cuban, Iranian or Sudanese works in the United States will be able to do so "without seeking permission" from his office firstóas long as the authors arenít government representatives.
"This rule provides clarity and promotes important policies aimed at the free exchange of ideas without undermining the national security objectives of these country sanctions," said Werner.
The action follows two lawsuits against Treasury Secretary John Snow and other officials, claiming the restrictions were tantamount to blocking free exchange of ideas and therefore unconstitutional.
One of the two suits was filed by representatives of the Association of American Publishers and PEN American Center in September. Iranian Nobel winner Ebadi filed a related complaint nearly two months ago.
The plaintiffs said OFACís crackdowns against scientists and cultural figures who have business with Cubans, Iranians and Sudanese have cost them about $30 million in fines over the past 10 years.
They cited the case of musician Ry Cooder, who was fined $25,000 in 1999 for working with Cubans to record the Grammy Award-winning album "Buena Vista Social Club." According to lawyers, when Cooder tried to record a second album in Cuba, OFAC first denied permission, then reversed itself but made the trip contingent on Cooder agreeing to forgo all profits.
Despite the new rule, reports the New York Times, some activities remain restricted, including the development, production and marketing of software, general marketing activities unrelated to a written publication, and the operation of a publishing house or sales outlet in Cuba, Iran or Sudan.
Treasury spokeswoman Molly Millerwise told the Times that OFACís new regulations were not issued in response to the lawsuits. Rather, she said, the rules are "more of a clarification" that the department had been considering "since we were first asked how the regulations apply to publishing activities."
óLarry Luxner |
