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Tuesday, November 24, 2020, 15:06
In blow to Cubans, Western Union offices close as sanctions bite
By Reuters
Tuesday, November 24, 2020, 15:06 By Reuters

A Western Union office worker puts up the closed sign on its last day of business in Havana, Cuba, Nov 23, 2020. Restrictions from the Trump administration on the military-controlled operator that handles cash deposits will go into effect on Nov 23 at 6 pm local, keeping Cubans from being able to retrieve money sent from abroad through Western Union – the main source of cash remittances for many families. (ISMAEL FRANCISCO / AP)

HAVANA - Western Union Co suspended its operations across Cuba on Monday evening as new US sanctions kicked in, cutting a key lifeline for many struggling Cuban families as the coronavirus pandemic deepens the island’s economic crisis.

The closures of Western Union’s 407 offices in Cuba came into effect after US President Donald Trump’s administration banned US firms sending remittances via military-controlled companies that include Western Union’s main Cuban partner

US Democrat Joe Biden has promised to roll back some sanctions on remittances. But any lifting of the suspension could take time and until then, Cuban Americans are expected to resort to alternatives that are more costly, less secure and less rapid.

Remittances to Cuba are believed to be around US$2 billion to US$3 billion annually, representing its third biggest source of dollars after the services industry and tourism.

Money transfers from the United States via Western Union were estimated at more than US$1 billion last year, the majority of which was sent from Florida, according to John Kavulich, president of the US-Cuba Trade and Economic Council.

ALSO READ: Cuba slams US extension of ban on flights to the island

Current options for remittances include agencies that hire “mules” to fly out to Cuba with cash and which predate Western Union’s start in Cuba 20 years ago, as well as companies that transfer dollars to Cuban accounts - though that money can only be used at state stores.

Cryptocurrency exchanges are also promoting themselves as an alternative. Cuban Americans can transfer digital currencies to middle men on the island who then give money to the Cuban Americans’ relatives.

But such platforms lack oversight, cryptocurrencies can fluctuate rapidly and unexpectedly in value and internet access is still not a given in Cuba, Kavulich said.

“We’ve looked but there are no safe services,” said local resident Arturo Labaut.

The closures of Western Union’s 407 offices in Cuba came into effect after US President Donald Trump’s administration banned US firms sending remittances via military-controlled companies that include Western Union’s main Cuban partner.

His administration has also previously capped the amount Cuban Americans can send family members at US$1,000 per quarter, and transfers of money to non-family members are no longer allowed.

READ MORE: Cuba leads race for Latin American coronavirus vaccine

The new ban comes just as Cuba has started enacting structural reforms to revive its state-run economy which have been long called for but which will spell pain for its residents in the meantime.

“It’s a bad time to be doing this because of the suffering it will cause,” said Florida International University professor Guillermo Grenier.

“It’s not governments that suffer, it’s people.”

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