Have you ever been to Key West, Florida?
A landmark in Key West is a marker at the corner of Whitehead and South Streets that says in big letters: “Southernmost Point Continental United States.” Above it reads in smaller letters: “90 miles to Cuba.” Visiting this concrete marker recently made me pause and reflect upon a major decision that I made a few years earlier: the choice to give up my U.S. citizenship.
This process started when I found that there were many restrictions on my ability to travel or do business outside the United States because of my U.S. citizenship. For instance, I had long desired to visit the Republic of Cuba, but because of my U.S. citizenship, I could not do so. Canadians, Mexicans, Europeans and every other nationality may travel and do business there, but with limited exceptions, U.S. citizens have not been excluded from Cuba for nearly 50 years.
As I thought about this prohibition and the many others established by statute or executive order, I became outraged. Finally, in 1994, I read a story that galvanized me to take action. The story was about a group called the “Freedom to Travel Campaign” that sought to end these travel restrictions. This group had challenged Treasury Department regulations prohibiting such travel. However, the Clinton Justice Department, perhaps fearing that juries would side with these “tourist lawbreakers,” declined to prosecute the cases.
In reaction to the failure of the Justice Department to prosecute these tourists, the Treasury Department amended the regulations to make it possible to fine persons violating travel restrictions administratively, without going to court. The U.S. Treasury Department administers these and other sanctions programs through the Office of Foreign Assets Control—http://www.ustreas.gov/ofac.
Despite the risks, I decided to secretly visited Cuba. I flew to Nassau, the Bahamas, and embarked upon the daily direct flight to Havana on Cubana de Aviacion, Cuba’s national air carrier.
While in Cuba, I discovered a wealth of business opportunities. This was the height of the “Special Period in Peace” when, due to the collapse of the Soviet Union and the end of Soviet aid, the Cuban economy was in a tailspin.
There was a serious need for outside investment on favorable terms. I decided that I wanted to participate in those investments. Returning a few days later to Nassau, I passed through U.S. Customs pre-flight inspection without revealing that I had visited Cuba. (The customs inspector did not ask me if I had done so, and the customs forms in those days did not ask, “countries visited on this trip prior to U.S. arrival,” as they do now.)
Upon my return to the United States, I began to read the U.S. Treasury regulations regarding Cuba. I learned that they prohibited virtually all contact with Cuba by any person “subject to U.S. jurisdiction.” This included: “all U.S. citizens and permanent residents wherever they are located, all people and organizations physically in the United States or its territories, and all branches and subsidiaries of U.S. organizations throughout the world, corporations, wherever they are located throughout the world.”
Criminal penalties for violating the regulations range up to 10 years in prison, $1,000,000 in corporate fines, and $250,000 in individual fines. Civil penalties up to $65,000 per violation may also be imposed.
The only way to legally travel to or do business with Cuba, or any other sanctioned country, was (and still is) to obtain a license issued by OFAC. Only journalists and a few other classifications of individuals may obtain a license to travel to sanctioned countries. For businesses, it is almost impossible to obtain a license.
The only other option was not to be a U.S. citizen. At that moment, I was not prepared to take that step. Instead, I decided to explore the possibility of living outside the United States. However, I quickly discovered that doing so did not exempt me from OFAC regulations. I also learned that there was no escape from the obligation of U.S. citizens to pay tax on their worldwide income, even if they physically resided outside the United States. I began to seriously wonder if my “little blue book” (my U.S. passport) was really worth keeping.
(In Part II of this article, P.T. describes the “nuts and bolts” of expatriation: obtaining a second passport, and the all-important psychological impact of giving up U.S. citizenship)