Just over a year ago, President Obama began thawing the half-century Cold War chill between the U.S. and Cuba when he and President Raul Castro agreed to reestablish diplomatic relations. More recently, Florida-based Stonegate Bank announced it would start issuing debit cards that American travelers can use in the island nation, a first for an American firm. Last week the administration permitted U.S. airlines to resume flights to Cuba, which will make it easier for approved travelers who have been relying on a complicated charter system to get to the island. While rapprochement with Cuba is long overdue, it will take a significant amount of time and delicate negotiations before full reconciliation can be achieved.
One of the thorniest elements [facing U.S. and Cuban negotiators] is ensuring that Cuba makes good on the assets it seized from Americans and U.S.-based companies 55 years ago.
FOR THE RECORD:
Cuba: A Dec. 21 editorial about the United States and Cuba said that initial discussions between the two countries over reparations for nationalized assets ended when John F. Kennedy imposed a trade embargo in 1960. That occurred in 1962. —
One of the thorniest elements is ensuring that Cuba makes good on the assets it seized from Americans and U.S.-based companies 55 years ago. When Fidel Castro’s guerrillas swept dictator Fulgencio Batista from power in 1959, the new regime quickly converted the island’s governance to a communist system and nationalized billions of dollars in private property, from small homes and farms to foreign-owned utilities, hotels, sugar cane estates and other corporate assets. Castro settled property claims with England, Spain, Mexico and others, but negotiations with the U.S. ended in 1960 when President John F. Kennedy barred Americans from buying from or selling to Cuba. The embargo came in response to Castro’s seizure of refineries owned by U.S. companies that refused, under Kennedy’s order, to process Soviet oil. More than 5,900 claims with an initial value of $1.9 billion have been certified by the Justice Department’s Foreign Settlement Claims Commission, and estimates put their current value, with interest, at more than $7 billion. Notably, those claims do not include losses by Cubans who later fled to the U.S.
Cuba, meanwhile, argues that the U.S. is on the hook for some, if not all, of the $117 billion in damages it claims were caused by the embargo. While the Cuban responsibility to compensate for nationalized property is clear, it’s specious for Cuba to argue that the U.S. owes damages because it refused to engage in trade. Murkier is the validity of a Cuban court ruling 15 years ago that found the U.S. was also responsible for damages caused by the Bay of Pigs fiasco and other CIA-backed incursions. How enforceable that might be is a question that ought to be wrapped into the negotiations.
It’s a thorny situation, especially since the U.S.-based claims would consume a significant chunk of Cuba’s $77-billion gross domestic product. One compromise worth exploring would be to compensate smaller claimants for at least some of their losses with cash, while paying off larger creditors by giving them access to Cuban markets and resources — a deal that also would help Cuba by pumping some energy into a generally low-performing economy.
Unfortunately, the president and influential lawmakers are at odds over the sagacity of normalizing relations with Cuba. But Obama is on the right track here. The embargo has not only exacerbated the hardships faced by people living under the Castros’ totalitarian regime, it has harmed Americans and American companies without weakening the Castros’ grip on power. With Fidel retired and Raul promising to step down in 2018, now is an optimal time for the U.S. to begin exerting positive influence on one of its nearest neighbors.
The administration should ensure through these crucial negotiations that Americans who lost property to the Cuban revolution receive some measure of justice. Yet the United States’ most pressing interest here lies not in making amends for the past, but in forging a better future. Congress should join the Obama administration in this effort, and lift the embargo.