In major breakthrough, Cuba and U.S. discuss $1.9 billion in property claims

In major breakthrough, Cuba and U.S. discuss $1.9 billion in property claims
By Nick Miroff December 8

HAVANA — U.S. and Cuban officials met in Havana on Tuesday to begin
negotiating a possible settlement for $1.9 billion worth of American
assets seized by Fidel Castro's government in the early 1960s, as well
as other claims built up over years of strained relations.

The talks were a breakthrough and would have been hard to imagine before
President Obama and Cuban President Raúl Castro announced plans last
December to normalize relations.

[Here are the 20 largest U.S. property claims in Cuba]

A settlement would be especially significant because it would address
the chain of events that led to the U.S. trade embargo, which by law
cannot be lifted until the claims are resolved.

A U.S. State Department official told reporters that reaching a
settlement was "a top priority" for the United States. The official said
Tuesday's talks were "fruitful" and would continue in 2016.

Cuba experts said the most important thing was that the negotiations
occurred at all.

"Merely for the two nations to sit down and talk in an orderly,
professional manner about claims, after so many decades, is a major
achievement," said Richard Feinberg, a Cuba expert at the Brookings
Institution who published a report this month proposing possible
solutions for the two sides.

"Settlement of U.S. claims would be a huge step forward toward fully
normalizing U.S.-
Cuban economic relations and would give live ammunition to those who
favor lifting the economic embargo," Feinberg said.

The State Department official said the U.S. side also provided
information on the additional $2 billion or so in judgments awarded to
plaintiffs who have sued the Cuban government in U.S. courts,
proceedings that ­Havana does not recognize. The official spoke on the
condition of anonymity under State Department ground rules.

[U.S. officials are frustrated with lack of progress in trade with Cuba]

U.S. and Cuban diplomats have held numerous meetings this year on their
normalization agenda. But Tuesday's session was the first time the two
governments made a formal attempt to talk about the past and one of its
most complicated chapters, in which Castro's nationalization policy
devoured U.S. factories, farms and sugar mills in the early years of his
Marxist revolution.

At 6 percent annual interest, the claims would be worth about $8 billion
today.

Preliminary discussions for compensation to U.S. companies broke off in
1960 after President Dwight D. Eisenhower suspended Cuba's sugar export
quota to the United States. The Cuban government's property grab
accelerated after that, and Cuba would eventually seize virtually all
private businesses, down to shoeshine stands and the ice cream carts of
street vendors.

Tuesday's talks did not address the issue of property taken from Cuban
citizens. Cuba settled claims with Canada, Spain and other governments
decades ago, but those amounts were dwarfed by the American claims.

While recognizing that U.S. plaintiffs were never compensated, Cuba has
presented counter-claims totaling more than $1 trillion, citing damages
from a ­half-century of U.S. trade sanctions and the loss of life and
property stemming from attacks by U.S.-backed militants, such as in the
failed Bay of Pigs invasion in April 1961.

Trade experts and lawyers say the Cuban government will have a difficult
time recovering damages from sanctions. It may have a better argument
citing the attacks, they say — part of what may be the government's
broader strategy of having the competing claims cancel each other.

"There is no international court to take a look at this, so it's a
bilateral negotiation, and the Cubans are very tough, very clever," said
Pedro Freyre, a Cuba expert at the Akerman LLP law firm in Miami.

Freyre said it was a positive sign that the sides were even talking
about the issue. "It's the first time the two countries are going back
to look at this history and try to sort out a system for fixing it."

"You don't have this conversation if you haven't built some mutual trust
and respect," he said.

The 50 largest U.S. claims against Cuba account for more than
three-quarters of the $1.9 billion, and most are corporate — not
individual — grievances. The largest, at $267 million, belongs to the
Cuban Electric Company, Havana's major power utility at the time it was
taken. After changing hands through corporate mergers and sales, the
majority of its shares today are owned by Office Depot. Other U.S.
companies that have claims include Texaco, Coca-Cola and
­Colgate-Palmolive. Half of the top 10 largest claimants are sugar
companies that lost their mills and railways. Several of the companies
no longer exist, and the claims have been passed down to heirs.

Feinberg and others say the fact that most of the money is owed to U.S.
companies could make the negotiations easier, if some of the firms are
willing to accept tax breaks or other concessions from the Cuban
government to ease their potential return to the island.The other nearly
5,000 individual claims against Cuba amount only to about $200 million,
a relatively modest amount, Feinberg said, even for the cash-strapped
communist government

Source: In major breakthrough, Cuba and U.S. discuss $1.9 billion in
property claims - The Washington Post -
https://www.washingtonpost.com/world/the_americas/in-major-breakthrough-cuba-and-us-discuss-19billion-in-property-claims/2015/12/08/9bc2ced0-9d23-11e5-9ad2-568d814bbf3b_story.html