U.S.-Cuba thaw ignores embargo

Living in Cuba and doing business there are still both risky prospects, subject to the whims and heavy-handed control of the Castro brothers’ iron-grip on all political speech and commercial enterprise.

Over the past year, Obama’s efforts to normalize diplomatic relations with Havana have chipped away at the trade embargo, in violation of U.S. law, critics say.

Commercial flights and ferry service from the U.S. will begin soon, bringing more American travelers to Cuba. U.S. cellular companies are now providing service on the island, and the first American factory, a tractor-making company, will open on Cuban soil in more than 50 years with the apparent green light from both the U.S. and Cuban governments.

But this super speedway to normalization contains potholes that are already causing some businesses to step on the brakes.

In the rush to rapprochement, the Obama administration has yet to address the roughly 6,000 property claims in Cuba certified by the U.S. government now worth $7 to $8 billion, including interest.

At the time of the Cuban revolution in 1959, Americans and American companies were the largest foreign investors on the island. The new Cuban communist government seized that property, regardless of who owned it.

Some American companies lost millions of dollars in property, and many more individuals lost plantations and homes, some passed down through generations.

Fidel Castro acknowledged at least in principle that he owed people money in return for the seized property, but never paid up. Presidents Eisenhower and Kennedy pressured him to come clean, but when he wouldn’t budge, the U.S. slapped the trade embargo on the tiny island nation, and it’s lasted for 50 years.

Under the 1996 Helms-Burton Act, the embargo can’t be repealed until the Cuban government has paid the bill for the confiscated property. But critics argue you wouldn’t know it from Obama administration calls for Congress to repeal the embargo.

“Nothing has been done on the one issue that we put defenses in place to deal with, which is the property issue,” said Jason Poblete, whose law firm Poblete and Tamargo represents several claimants. “You can’t really avoid it because it’s the reason that the embargo was put in place in the first place.”

The Castro regime has responded with demands of its own, arguing that the U.S. must pay billions of dollars in economic reparations for damages caused by the five-decade-old embargo.

The claims issue is not just a matter of enforcing U.S. law. American and European businesses looking to open offices on the island have to worry about running into legal quicksand if they locate a Cuban office on a piece of property subject to a claim.

“The settling of claims is pretty much the linchpin in all of this because you can’t drive foreign policy on human rights improvements alone. There are always economic interests,” Poblete said.

At least as the law is written, the legal consequences are serious. If a European company starts doing business with a piece of stolen property, under U.S. law, the CEO of that company and even family members could lose their U.S. visas.

“The law is very clear: the properties that were confiscated, you cannot do any business involving them,” said Andy Gomez, a former assistant provost and dean of international studies at the University of Miami who now serves as a senior fellow at the school’s Institute for Cuban and Cuban-American Studies.

Gomez said he has spoken to lawyers representing several companies eyeing Cuba who have decided at least for now that the “risks are still greater than the opportunities because nothing really has changed except Obama issuing an executive order” re-establishing diplomatic ties with Havana.

The Cuban government controls the entire business process. It wants to own 51 percent of the investment, decide which employees to hire and take a vast majority of their salaries, Gomez said. In fact, all payments go through the Cuban government before salaries reach workers.

If the company encounters any kind of legal dispute, there’s no place or agency to take the complaints or grievances.

“The executive branch is very naive when it comes to Cuba,” Gomez said. “They are thinking like Washington, they’re not thinking like Havana.”

Poblete and Gomez argue that the administration is ignoring the claims issue in its negotiations with the Castro regime.

Last week, Ben Rhodes, Obama’s deputy national security adviser, addressed the claims issue but offered no indication that any progress had been made during the past year of negotiations and ahead of Obama’s trip.

In fact, he appeared to give the issue, and the Cuban government’s demands for reparations for the embargo, equal weight.

“We have initiated under the State Department’s leadership a dialogue with the Cubans on the issue of claims,” Rhodes told a reporter who asked him about it. “There are many claimants in the United States. We’ve been engaging many of them to try to determine the best way forward to see that, again that their concerns are satisfied.

“So the Cubans also, frankly, have a substantial number of claims against us as well. So, there’s a formal dialogue on claims and I think it will be part of the agenda as well,” he concluded.

The comment gave Cuban claimants little solace.

Just like with human rights abuses, which have only increased since the U.S. and Cuba began renewing ties last year, there’s little hope for claimants that the Obama administration will extract any concession from the Castro regime.

“President Obama is going to go talk there and maybe he will meet with opposition and dissident leaders,” Gomez said. “So what? What he is going to do afterward? Absolutely nothing.”