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An exclusive interview with OFAC Director Bob Werner
CubaNews / January 2005

By Larry Luxner

Politicians, academics and Cuban exiles can debate the U.S. embargo until they’re blue in the face. But when it comes to actually enforcing the bloqueo, the buck stops at the desk of Robert W. Werner.

A former federal prosecutor who’s also regulated casino gambling, Werner took over Oct. 1 as director of the Treasury Department’s Office of Foreign Assets Control (OFAC). 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 told CubaNews 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, Ct., and earned a law degree from New York University. As director of Connecticut’s 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 General’s Office in Connecticut, and served in the Justice Department’s 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.

Werner’s private-sector experience in-cludes work as a partner at Bingham Dana LLP (now Bingham McCutchen) and as an officer at Phoenix Home Life Mutual Insurance Company (now The Phoenix Companies). 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, I’m very conscious of a desire to marry effective enforcement of our programs with minimizing the burden this places on people and businesses,” he 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.

“That’s 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. We’re 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.”

While OFAC’s enforcement of the anti-Cuba embargo certainly generates the most headlines, it’s only one of 29 sanctions programs under the agency’s 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 us. “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 Werner’s workday is taken up by Cuba issues — even 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 we’re 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. “There’s a lot of confusion. Some forms we got more than once. Most of the ones that came in had problems. Either they weren’t 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 hasn’t 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 children — not 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 we’re seeing is that the policies in place are having the desired effect on the regime,” he told us. “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 administration — which talks a lot about family values — has no business defining what a family is.

Sensitive to such criticism, Werner hints there might be some wiggle room here.

“OFAC should be willing to continually re-examine the family definition to make sure we’ve got it right,” he said. “That’s an issue we’re 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 don't have access to,” he said. “It’s like ivory trading. You don’t 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, we’ll 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 mitiga-ting circumstances,” he explained. “If someone goes to Cuba and engages in a substantial export business, they’ll 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 you’ll face.”

Werner adds: “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 it’s 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, we’re not leaving that up to people’s 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 American companies from shipping food products to Cuba unless the Castro government pays cash in advance.

Since passage of the Trade Sanction Reform and Export Enhancement Act (TSRA) in 2000, payment from Cuba has only been required prior to goods being released to the buyer, not prior to shipment.

Werner was reluctant to discuss this issue since OFAC hasn’t issued any new guidelines on TSRA. But he did offer the following:

“We don’t 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, warns the American Farm Bureau Federation, going through with the proposal would be detrimen-tal 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 TSRA’s 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 prior to 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 Treasury Secretary John Snow. “OFAC’s 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-MT), Larry Craig (R-ID) and Byron Dorgan (D-ND). “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 administration’s 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.”

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