Cuba Libre
U.S. to Cuba: No Expropriation Without Compensation

Washington made a show of restoring diplomatic relations with Cuba this past Monday with a flag-raising at the new embassy, but now the real work begins, starting with billions of dollars worth of unresolved property disputes. According to the NYT:

Resolving [property claims] is a complicated and politically tangled process, made more difficult by the more than 50 years that have passed since Fidel Castro came to power and began confiscating land and businesses in the name of the revolution, including from many Americans.

In the years that followed, many filed claims with the United States government through the Foreign Claims Settlement Commission, an independent agency at the Department of Justice. The commission received nearly 9,000 such applications — the vast majority from large corporations like Coca-Cola, Colgate-Palmolive, and the ITT Corporation — and in 1971 certified almost 6,000 of them as valid, which at the time totaled $1.9 billion. The value today, with interest, is estimated as high as $8 billion.

Negotiating the property question will both test the strength of new diplomatic ties and foreshadow the future of relations between the two nations. Both countries have reasons for wanting the claims resolved. The 1996 Helms-Burton Act lists “satisfactory resolution” of property claims as an essential prerequisite to the normalization of trade relations, so these disputes could act as a stumbling block to lifting the embargo. And if the Cuban government wishes to promote a favorable business climate and attract foreign investors to salvage its economy, demonstrating to the international community that it is not liable to spontaneously seize property (especially without compensation) is a prudent, if not imperative, move.

However, the barriers to resolving these property disputes are also formidable. On one hand, the Castro regime has absolutely no desire to return lands and other assets on the island to their original owners. To do so would be to break from its own socialist experiment and reduce its control over the country. And even if Castro did wish to issue full compensation for the expropriated property, Cuba would simply not be able to afford it. The country has been flailing economically under the weight of sanctions and, at $8 billion, the value of the claims amounts over 10 percent of the nation’s GDP, which is barely a third of Miami’s.

While Cuba has reportedly offered to negotiate the settlement of property claims with the U.S., Cuban-Americans clamoring for either a return of their lands or full compensation are likely to face headwinds. The showy establishment of diplomatic relations with Cuba has brought plenty of contentious issues to the forefront, leaving diplomats with their work cut out for them.

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