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The Cuban Connection

As the United States trade embargo against Cuba has dragged on over the past 30 years, a simple phone call to the island has become a frustrating ordeal. New or upgraded phone service from the U.S. to Cuba was forbidden when the Kennedy administration imposed the embargo, essentially freezing telecommunications in time. AT&T's modest transmission system, the only telephone link between the two nations, was further hampered when Hurricane Andrew blew down a transmission tower in the Keys. Now AT&T is forced to route all calls to Cuba through Italy, and company spokesmen concede that almost none get through.

But the 1.5 million Cubans and Cuban Americans living in the U.S. aren't cut off from their homeland. The communications void has been amply (and usually expensively) filled by several Canadian entrepreneurs, whose government has no restrictions on trade with Cuba. These services, which range from a single operator to subsidiaries of large telecommunications corporations, simply hook up the U.S. caller with the desired number in Cuba through a variety of conferencing methods. While some of the enterprises have been around for years, several have begun operations only recently, born advantageously as U.S. phone service to the island has hit its nadir, and as disastrous economic conditions in Cuba have increased the urgency of communication between separated families and loved ones. (The Treasury Department, charged with enforcing the embargo, has declared the Canadian-routing practice illegal, but so far has taken no action against the thriving companies or their U.S. clients.)

Still, some Cuban exile groups have criticized the Canadian long-distance services, principally because all calls made through Canada mean money for the Cuban government. A portion of the revenue from any international telephone call goes to the carrier in the destination country. In the case of Cuba, the Castro regime gets that portion. When AT&T completes a call to Cuba, however, the money doesn't go to the Cuban government but instead into an account held in escrow by the U.S. government.

The middleman days of our neighbors to the north, though, may be numbered. U.S. telecommunications companies soon will be free for the first time to offer A or at least compete to offer A phone service to Cuba. In the next few weeks, the U.S. State Department will issue regulations for implementing the Cuban Democracy Act, which was signed into law by George Bush this past October at a ceremony in Miami. The regulations, according to informed Washington sources, will allow U.S. carriers to negotiate phone-service contracts that will permit the Cuban government to collect revenue payments from the U.S. companies instead of having the funds blocked, as they have been since 1963.

Washington sources familiar with the new regulations refuse to discuss them in detail until they're made public. But the sources confirm they were written by a State Department team in collaboration with the Treasury and Commerce departments and the Federal Communications Commission. They have been approved by top Latin American affairs officials at the National Security Council and at the State Department. Key political figures will soon be briefed, according to one source familiar with the process, though their approval is not necessary.

The legislation A also known as the Torricelli Law after its chief sponsor, Rep. Robert Torricelli of New Jersey A was ushered through Congress with the help of the conservative Cuban American National Foundation. Its intent is to tighten the economic embargo. At the same time, though, it contains provisions to improve communication between citizens of both countries. "Telecommunications facilities are authorized in such quantity and quality as may be necessary to provide efficient and adequate telecommunications services between the United States and Cuba," the legislation states.

For the first time in three decades, AT&T and other American long-distance companies that receive proper licensing will be able to install modern telecommunication systems, allowing U.S. residents to easily, and relatively inexpensively, dial direct to the island. But the issue of communications to Cuba has become so politically charged that knowledgeable observers say almost anything could happen. Or not happen. Perhaps the most significant potential obstacle to change: the blocked funds accumulated by AT&T over the past 30 years, which are now estimated to total more than $80 million.

In the past, AT&T has made efforts to upgrade its aging telephone connections to Cuba, most recently in 1987 by installing an undersea cable from West Palm Beach to the Cuban coastal town of Cojima. But Cuba demanded the release of the $80 million in escrow before it would agree to any improvements. The Bush administration wouldn't release the blocked funds and thus the cable lies useless. Under the new regulations, Castro still won't be able to touch the $80 million, according to sources familiar with the development of the legislation and regulations. "There are a number of companies negotiating about telephone service in Cuba, including U.S. affiliates, and Cubans are telling them they want to sign contracts when the regulations are out," explains one source. "But if they think that's going to produce the unblocking of the account, they're wrong."

The U.S. president always has had the power to authorize the release of the funds, though, and some observers see signs the Clinton administration will be more conciliatory toward Cuba than were Reagan and Bush. Even so, significant policy changes would be unlikely, experts agree. The exile hardliners represented by the Cuban American National Foundation have used their considerable clout in Washington to lobby against language in the Torricelli Law that would permit any transfer of currency to Cuba, especially the $80 million. But allowing phone call revenues to be turned over to Cuba in the future was considered a necessary compromise to maintain other embargo-enhancing elements, according to experts on both sides of the issue.

"Telecommunications is a humanitarian issue that's become politicized by both governments. It's being used as a pawn in the foreign-policy game by both governments," says Alicia Torres, director of the Cuban American Committee Research and Education Fund, which opposes the policies favored by the Cuban American National Foundation. Torres participated in early formulation of the legislation, which she says included specific authorization of payments to Cuba, both from the blocked account and from future phone-service revenue. "The first drafts of the bill had a much more complete revamping of the telecommunications issue. The Foundation took the meat out of our initial recommendations and put the issue right back in the hands of the executive [branch], which is where it was in the first place. What has changed is we have a new executive."

Cuba's executive remains a crucial unknown. Fidel Castro's reaction to the U.S. liberalization remains a matter of speculation, and so it is impossible to predict exactly how phone service will be affected. "We do not know how Castro will accept this increase in contact, because of political implications," says Antonio Jorge, professor of political economy at Florida International University and one of several Cuba experts who doubt Castro really wants his people exposed any more than they already have been to the capitalist lifestyle and freer expression in the U.S.

But Michael Krinsky, a New York attorney who represents the Cuban government, asserts that the matter is more practical than political. "For there to be normal telephone service," he says, "the United States would have to change its policy in two regards: payment, and allowing as many circuits as necessary."

At least until the guidelines are issued, AT&T, which loses money on the few calls it connects nowadays, is reluctant to make big plans. "We're waiting for the State Department to figure out what it is going to allow," says Fernando Figueredo, a local spokesman for the company. "If the Cuban government approves, and if the U.S. government says go ahead, we'd have to sit down and study what equipment we'd need to improve communications." AT&T is ready right now, however, to switch on the undersea cable installed in 1987. The cable, Fifties vintage, would be a big improvement over the almost nonexistent service today, but would still be capable of handling only about 750,000 calls annually, a fraction of the demand.

MCI Telecommunications, which didn't exist back when AT&T held the U.S. monopoly on long distance service, says it will be ready to swing into action when the government gives it the green light. "We're very interested in providing service to Cuba," says MCI spokesman Alan Garratt. "We think there's a significant need. At the moment, we're still prevented by State Department restrictions, but should those restrictions be lifted, we're certainly interested.


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