U.S., Cuba Hold First Talks on Rival Claims

U.S., Cuba Hold First Talks on Rival Claims
Negotiations part of broader agenda aimed at normalizing relations
between two nations
By FELICIA SCHWARTZ
Dec. 8, 2015 12:43 p.m. ET

U.S. and Cuban officials met Tuesday in Havana for their first round of
talks on billions of dollars in competing financial claims, one of the
most contentious challenges in the process of normalizing relations.

The negotiations are part of a broader agenda of discussions aimed at
normalizing relations between the two countries after more than 50 years
of enmity.

There are 5,913 U.S. individuals and companies with claims that have
been certified by U.S. officials against the Cuban government for
property confiscated after the 1959 revolution. The claims, originally
valued at $1.9 billion, now are estimated to be valued at $7 billion to
$8 billion, with interest.

Cuba says it has about $121 billion in counterclaims for damages
stemming from the U.S. economic embargo.

Tuesday's talks lasted most of the day and were "very preliminary," a
State Department official said, describing the meeting as professional.
The sides exchanged numbers, but didn't talk about the mechanisms for
proceeding with the talks.

The talks are likely to last beyond President Barack Obama's presidency,
but U.S. officials and independent experts consider the starting of
negotiations to be a significant step.

"There really weren't any kind of considerations of processes going
forward other than both governments agreed to meet to have further
discussions," the State Department official said.

Corporate claims, which make up most of that money, have been lodged by
several Fortune 500 companies, including Coca-Cola Co., Exxon Mobil
Corp., Starwood Hotels & Resorts Worldwide Inc. and Colgate-Palmolive Co.
Office Depot Inc. holds the largest claim, which is now valued at more
than $1 billion. That claim, originally made by Cuban Electric Co., has
changed hands several times over the years through mergers and
acquisitions. Many of the companies nationalized by the Castro regime no
longer exist and claims have been passed down. Individuals also have
pressed claims.

The U.S. delegation to the talks was led by the State Department's
acting legal adviser, Mary McLeod. The two sides discussed claims
certified by the U.S. Foreign Claims Settlement Commission, government
claims, and claims related to unsatisfied U.S. court judgments against
Cuba, officials said. There are several judgments by state and federal
courts valued at about $2 billion, a State Department official said.

The next discussions are set to take place within the next three or four
months, the State Department official said.

The U.S. believes that the nearly 6,000 certified claims should easily
be addressed, either through compensation or other ways of providing
value, the official said.

In a study recently released by the Brookings Institution, Richard
Feinberg, a former National Security Council and Treasury official,
suggested a two-tier approach to resolving the U.S. claims.

In one tier, about 5,000 individual claims out of the nearly 6,000 could
be cleared for about $230 million, excluding interest, he said in an
interview. The remaining corporate claims, he said, could be resolved
through "a menu of options," such as allowing companies to re-enter the
Cuban market.

For many of the individual claimants, the start of talks was filled with
emotions and memories.

"We've been waiting for this for 50-something years," said Amy Schechter
Rosoff of Ballston Spa, N.Y., whose family has three certified claims.
"We just hope that whatever happens that the settlement is fair and we
get compensated for the property that was stolen. We don't want it to be
done in such a rush that it is sort of given away or glossed over."

Ms. Rosoff said her grandmother's house in Havana is now being used as a
residence by the Chinese Embassy. Cuban officials didn't comment on the
day's talks or the claimants' allegations.

The U.S. and Cuba also have begun talks this year on a number of other
issues, including civil aviation, direct mail service, counternarcotics
efforts, environmental cooperation, law enforcement and
telecommunications. The two sides also have continued pre-existing talks
that have been under way on migration issues.

The U.S. and Cuba signed an agreement last month to cooperate on
environmental issues. The pact covers coastal and marine protection,
climate change, disaster risk reduction and marine pollution.

U.S. and Cuban negotiators are close to reaching agreements on civil
aviation and direct mail service, with both agreements expected to come
late this year or early next year, Cuban and U.S. officials said.
Negotiators are expected to meet next week for a final round of talks on
civil aviation, with a goal of announcing an agreement to resume direct
commercial flights between the U.S. and Cuba early next year.

Mr. Obama and Cuban President Raúl Castro announced last December that
the U.S. and Cuba would begin to normalize relations after decades of
frozen ties.

Only Congress can fully lift the trade and travel embargoes, but Mr.
Obama took several steps on his own to loosen regulations.

"A good settlement that had the overwhelming support of the 6,000
claimants would just knock the wind out of any remaining opposition to
normalizing relations," Mr. Feinberg said.

Mr. Obama's policy shift continues to face staunch opposition from some
Republicans in Congress. Republican candidate Sen. Marco Rubio (R.,
Fla.) has vowed to reverse Mr. Obama's moves to normalize relations if
elected.

Write to Felicia Schwartz at Felicia.Schwartz@wsj.com

Source: U.S., Cuba Hold First Talks on Rival Claims - WSJ -
http://www.wsj.com/articles/u-s-cuba-hold-first-talks-on-rival-claims-1449596628