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Cuba: a year of the Helms-Burton

| News | Cuban Desk

Ignacio Aparicio takes stock of the impact of Title III since its entry into force and analyzes the prospects for Cuba and companies doing business on the island

To deny that the coming into force of Title III of the Helms-Burton Act (1996) has strengthened the US blockade of Cuba would be to deny the evidence.

As you will remember that title allows lawsuits to be filed in U.S. federal courts against those who "traffic" in property confiscated from Americans in Cuba after Fidel Castro's revolution.  Its application was suspended by the Clinton, Bush, Obama and Trump administrations, although the latter lifted the suspension on May 2nd 2019.

One year later, we can affirm that Trump's "star" measure in relation to Cuba has had an effect, not in terms of the number of lawsuits filed, but in terms of companies rethinking their business decisions on the island, taking more than ever the risk of being sued in the U.S. for possible "trafficking" with confiscated/nationalized goods into account. Financial institutions have also reduced their exposure in their transactions and those of their clients with the Island.

Accompanying the Helms-Burton, the Trump Administration has adopted other measures against Cuba: restrictions on travel to the United States; reductions in remittances to US$ 1,000 per person per quarter; interdiction of certain financial transactions; inclusion of new entities on the Cuba Restricted List ("black list" on which there is a ban on trade with the United States); sanctions against Venezuela that affect Cuba financially, etc. 

With six months to go until the presidential elections (3rd November 2020), sources point to further measures against Cuba. Florida, with many Cuban exiles, is a Republican stronghold that Trump needs to revalidate.

On May 13th, the State Department registered Cuba under the Arms Export Control Act for not having "fully cooperated" in 2019 with the U.S. anti-terrorism efforts. Although this qualification has little practical effect, since it prohibits Cuba from purchasing defence goods and services (which it had not been doing), it could be the prelude to its inclusion in the list of countries sponsoring terrorism, a list from which Obama removed it in 2015. This would mean, among other things, the persecution of financial transactions between Cuba and banks in third countries, with the imposition of multimillion-dollar fines, as was the case of BNP Paribas in 2014, and further cooling down foreign investments and business.

It has undoubtedly been a complicated year for Cuba, and the unforeseen consequences of the COVID-19 on the world and Cuban economy, with its heavy dependence on tourism, are still to be added up.

Quantifying the direct impact of Helms-Burton on Cuba is a complicated thing to do. What can be concluded, in view of the statistics, is that this year there has not been the barrage of lawsuits that the State Department predicted.

According to the numbers provided by the US-Cuba Economic and Trade Council, only 0.15% of the 5,913 claimants who once obtained a certified claim from the US Foreign Claim Settlement Commission (FCSC) have sued on Helms-Burton grounds.

Although it is not only possible to sue based on a certified lawsuit, it would be these "certified" claimants who would a priori best be able to justify their entitlement. Let us remember that the FCSC has been aware of lawsuits by U.S. citizens against foreign governments over the years. The programs against Cuba heard a total of 8,821 claims, of which 5,913 were considered compensable ("certified").

Well, as of the year of the Helms-Burton, only 25 lawsuits have been filed: of these, 5 in the last six months and 9 by certified claimants. It should be remembered that in March 2019 the US State Department had estimated that between 75,000 and 200,000 potential defendants were expected to be involved in claims that had already been certified and those that had not. 

Another fact to keep in mind is that almost half of the defendants are American companies and only two Cuban companies are still being sued. Among the US-based defendants were Amazon, American Airlines, Carnival Corporation, Expedia, Mastercard, Norwegian Cruise Lines, Orbitz, Royal Caribbean Cruises, Tripadvisor and Visa.

However, Amazon has ended up being excused (pending appeal) in the proceedings by Daniel A. Gonzalez for trading in coal from the farm confiscated from his predecessor, because of two issues that are being alleged in a very recurrent way: the difficulty of proving the legitimacy to sue (property title or inheritance right over the property), and that the trafficking has been carried out, as required by Helms-Burton, in a conscious and intentional way (knowingly and intentionally).

Spain is the European Union country with the most  companies being sued (NH, BBVA, Meliá and Iberostar) and, in total, outside the US, nine other countries have been affected: Germany, Canada, Chile, France, the Netherlands, the United Kingdom, the Republic of Cuba, Switzerland and Thailand.

In view of this uncertainty, the EU's reaction cannot be said to be effective. Regulation 2271/96 protects its nationals from the effects of Helms-Burton on European territory, but this protection does not extend to the assets or interests that the affected parties may have on US territory.

In conclusion, the assessments of the lawsuits under Helms-Burton this year will not have been what Trump expected and the political price paid will have to be analysed. However, we will have to wait for events, the outcome of the lawsuits, the next steps taken by the US, as well as the outcome of the US elections which may mark another milestone in US-Cuba relations.

You can see the article in Expansion.

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