Cuba Practice Update -- August 15, 2013

by Akerman LLP

Cuban Baseball and the Embargo

Twice in recent weeks news has surfaced highlighting the effects of U.S. sanctions on Cuba's participation in regional tournaments and on Cuban ballplayers who have recently defected or are currently playing for Major League Baseball (MLB) teams.

In a clear example of how far-reaching U.S. sanctions on the island are, it appears the embargo will prevent Cuba’s national baseball team from playing in the Caribbean Series (La serie del Caribe), which is scheduled to take place in February 2014 in Venezuela and will not involve any American teams. Launched in 1949, Cuba was one of the series' founding members and played every year until Fidel Castro banned professional sports on the island in 1961.

Initial reports earlier this year that Cuba intended to participate in next year's tournament were well received by countries throughout the region. Then came news last week that the Dominican Republic-based organizers of the series had received a letter from MLB headquarters in New York indicating that ballplayers with MLB contracts would not be allowed to play in the tournament if the Cuban team also participated. This is particularly bad news because most of the players who would play in the series on behalf of their home-country teams already have MLB  contracts—some for associated minor league teams—and excluding them would almost certainly be a death blow to the tournament.

It is difficult to discern exactly what prompted MLB's decision, but in light of the significant penalties the Office of Foreign Assets Control (OFAC) can levy and the agency's perceived sporadic enforcement practices, allowing the league's players to participate may simply not be worth the risk for MLB.

In other news, Cuba's top right-hand batter Jose Dariel Abreu was reported earlier this month to have left Cuba for Haiti with intentions to become a free agent and secure a Major League contract in the United States. His is the highest profile defection by a Cuban player in recent years and some sports analysts believe Abreu has the potential to become one of the top-five hitters in baseball. The catch is that Abreu needs to clear numerous regulatory obstacles before he can be "unblocked" by OFAC and become eligible for contractual obligations with U.S. teams. This process can be complicated and is likely to take at least six months or longer. Still, it's not too long to wait for a big pay day:  In 2012 the Chicago Cubs signed 20-year-old Cuban outfielder Jorge Soler to a nine-year, $30 million contract—one of several Cuban players to join the big leagues in recent years.

Cuban Online Access Grows, in Fits and Starts

Ever since President Raúl Castro's announcement in 2009 that Cuba intended to install its first-ever undersea fiber-optic cable—courtesy of late Venezuelan President Hugo Chávez—hopes have grown that the island might finally replace its abysmally slow satellite-based Internet connections with twenty-first century broadband access. However, although the new cable (which was finally completed in 2011 after years of lengthy delays) is now operational, Cuba still comes in dead last in the Western Hemisphere in terms of connectivity. It was only in June 2013 that many Cuban citizens were for the first time allowed legal access to the Internet at one of roughly 150 designated “cyber points” on the island. Still, according to the latest official statistics (which may themselves be inflated) only 25 percent of the Cuban population is online and the cost of access (approximately $5 per hour) is prohibitively expensive for many Cubans whose average monthly salaries still hover around $25 per month.

According to the report on August 14, 2013 in Time World, "Cuba’s Journey on the Internet: There’s a Long March Ahead," to use the internet at a public access point, Cubans must show their national ID cards before logging on and their activity is somewhat restricted. Sites, such as CraigsList-style website and the website of Radio Martí, an anti-Castro station, are blocked. Other sites, such as the New York Times, Facebook, Google, and Wikipedia appear accessible. Many users have reported difficulty accessing data heavy sites such as YouTube, as well as certain applications, such as Skype and Google Chat—despite 2010 regulations exempting free internet communications technologies  from U.S. sanctions.

Many Cubans have also found ways to bypass restrictions inherent to slow or nonexistent Internet access and changes to U.S. regulations in 2009 to allow donations from the United States of consumer communications devices, such as cell phones, laptops, and USB drives may be having an impact. Frequent visitors to Cuba report that USB drives are ubiquitous in Havana and beyond and are readily available on the black market for around $2, often preloaded with bootleg films, music, television shows, and other media.

As Internet access grows, so might demand for even greater access among everyday Cubans. One crucial question is whether the United States is prepared to further loosen its own rules to help ensure the freer flow of information between the two countries by allowing the sale and export to Cuba of U.S. communications technologies and equipment.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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