Obama has power to further weaken Cuba sanctions

By Anna Yukhananov and Alistair Bell

By Anna Yukhananov and Alistair Bell

WASHINGTON (Reuters) - President Barack Obama has the power to further weaken U.S. sanctions against the Communist-run island beyond the normalization of relations with Havana that he announced on Wednesday, sanctions experts said.

While the restoration of diplomatic ties to Havana after decades of animosity was a big breakthrough, the real obstacle to normal ties between the two countries is the decades-old embargo.

With Republicans due to take control of both the U.S. House of Representatives and the Senate in January, the chance of lawmakers scrapping all sanctions on Cuba soon is almost zero.

But Obama has wide executive powers to further open up to Cuba, after his announcement that he will ease some restrictions on commerce, transportation and banking.

While the sanctions are enshrined in law, most notably the Helms-Burton Act of 1996, a U.S. president has leeway to chip away at the embargo even if Congress objects, the experts said.

"There is a lot of breadth to authorize things more broadly than they’ve been authorized, provided that the broad (legislative) contours are adhered to," said Peter Kucik, a former Treasury Department official who worked on Cuban sanctions.

The sanctions on Cuba are tighter than those against other U.S. adversaries such as Iran and Russia although America sends food and medicine to Cuba.

A president can loosen trade bans with Cuba as long as at least one restriction remains on the books to justify an embargo, said Clif Burns, a sanctions lawyer at Bryan Cave LLP in Washington.

"He can do anything other than end the economic embargo. So, say, the way it’s written, we can have an economic embargo. But the only thing that can’t be shipped to Cuba are jigsaw puzzles," Burns said.

Undermining the sanctions might enflame Congress but if he wanted to, Obama could instruct the Treasury Department's sanctions bureau, known as OFAC, to soften its rules on Cuba.

OFAC could issue "general licenses" to allow the export of U.S. goods such as cars or glassware to Cuba, or permit the import of sugar.

There are some gray areas.

“The president has some flexibility to loosen restrictions on exports to Cuba but it’s not clear how far he can go in light of the Helms-Burton Act,” said John Bellinger, the State Department’s top legal adviser under former President George W. Bush.

There are half a dozen provisions in sanctions law that specifically limit what Obama can do, for example in telecoms investments or trade with specific ports.

The Obama administration is unlikely to weaken sanctions to allow dealings with the Cuba's leadership any time soon, said former Treasury official Kucik.

"The government is going to be off limits, dealings with the Communist Party are not suddenly going to be authorized," said Kucik, now at Inle Advisory Group.

TERRORISM LIST

Obama called for an end to the economic embargo against its old Cold War enemy on Wednesday as the United States and Cuba agreed to restore diplomatic ties that Washington severed more than 50 years ago,

The Obama administration acknowledged that Congress, already upset at the Democratic president for acting alone to change immigration policy, is in no mood to help him lift the embargo on Cuba.

"We support efforts to remove those restrictions. However, we understand that Congress is unlikely to take those steps in the immediate future,” a senior administration official said.

As part of the thaw, the State Department is expected to declare that Cuba is no longer a "state sponsor of terrorism" and remove it from a list that includes Iran, Sudan and Syria. This step does not need congressional approval and would make it easier to open trade with Cuba.

While Cuba supported leftist rebels in the Cold War, few in the U.S. government believe Havana plays a major role in sponsoring terrorism now. In fact, Cuba has hosted peace talks between the Colombian government and FARC guerrillas this year

As tension between the United States and Cuba eases, the two countries will try to reopen embassies in each other's capitals after decades of broken diplomatic relations.

That step might hit a snag if Republicans in Congress attempt to halt funding to the State Department for a mission in Havana. The Senate could also refuse to confirm any ambassador to Cuba named by Obama.

Sanctions may take years to lift fully, even if Cuba cleans up its human rights act. The White House said on Wednesday it wants to see the embargo lifted by the time Obama leaves office in 2017.

The Helms-Burton Act states that the sanctions cannot be ended until Cuba transitions to a democratic government that does not include current Cuban President Raul Castro and his brother, former President Fidel Castro.

Barring unexpected events, Raul Castro is likely to stay in office for several years more. He has announced he will not seek re-election in 2018.

(story refiles to change attribution to 'Burns' from his law firm 'Cave' in 9th paragraph)

(Additional reporting by Lawrence Hurley, Warren Strobel and Roberta Rampton; Editing by Lisa Shumaker)