HAVANA, 29 December (David Phillips) The United States and Cuba appear to be moving to normalized relations and the end of more than 50 years of trade embargo, Bloomberg noted last week that the issue of compensation for those individuals and corporation’s whose property was seized in the 1959 revolution is still in play.
Under the 1996 Helms-Burton Act, the U.S. can’t lift its embargo until the Cuban and American governments agree to settle the outstanding claims. Under another law, it will fall to the U.S. State Department to negotiate the value of the claims with the Cuban government. The two nations may settle for a fraction of the $7 billion (by today’s accounting) owed.
The impoverished island nation cannot afford to pay the full amount of losses that have been claimed since the nationalized after Fidel Castro’s revolution, and Bloomberg says some estimates put the country’s ability to pay those claims at about 2%. Cuban and U.S. negotiators are likely to search for other ways to compensate companies and individuals.
The U.S. recognizes more than 5,900 claims against Cuba stemming from the expropriation of property owned by Americans in the aftermath of the revolution, according to the Foreign Claims Settlement Commission, an arm of the Justice Department. The claims were worth about $1.8 billion at the time; today, they total about $7 billion with interest.
The largest claims include one from Coca-Cola Company, which lost $27 million in machinery and real estate. They also include a claim from Carolyn Chester, whose family lost an 80-acre farm on what was then known as the Isle of Pines. “I’d rather be paid a fair settlement over a period of time than pennies on the dollar in one lump sum,” Chester said.
“I know the Cuban people are poor, so maybe we can work something out intelligently.” President Barack Obama’s surprise announcement earlier this that the U.S. will seek to establish diplomatic ties with Cuba and ease economic barriers unearthed an issue that had faded in the decades since Castro took power and nationalized foreign-owned assets. More than 80% of the claims are held by individuals, according to a 2007 study by Creighton University School of Law in Omaha, NE, Bloomberg said.
The Creighton team suggests the U.S. and Cuba could create a tribunal to referee compensation demands. This kind of tribunal resolved claims of Americans who lost property in Iran’s revolution. For Cuba, such a tribunal might reward claimants with development rights or distribution licenses instead of cash, said Patrick Borchers, a Creighton law professor and the report’s principal investigator “Iran had money because of oil, and Cuba doesn’t really, although it does have some significant natural resources”.
For instance, Starwood Hotels & Resorts Worldwide Inc., which controls a $50 million claim once belonging to International Telephone & Telegraph Corp., might be satisfied with “attractive undeveloped property and a tax-free zone,” while Coca-Cola might seek distribution rights for its soft drinks.