President Miguel Diaz-Canel (L) and Communist Party First Secretary Raul Castro (R) watch Labor Day parade in Havana, Cuba May 1, 2019. Photo courtesy of Telesur
HAVANA, May 3 (NNN-TELESUR) – A new chapter of the U.S. economic bullying begins today with the application of Titles III and IV, both of which arbitrarily enhances legal insecurity for foreign investors in Cuba.
The United States administration under President Donald Trump will begin to enforce the Helms-Burton Act’s Titles III and IV Thursday, suspended since 1996 that will expand U.S. commercial and financial blockade against Cuba.
What does Title III say?
In 1996, former U.S. president Bill Clinton approved the Helms Burton Act under the idea that the blockade against Cuba had an extra-territorial scope and was not limited just to the island.
The Title III allows U.S. citizens, including Cubans who acquired their nationality, to file lawsuits against foreign companies linked to properties nationalized after the Cuban Revolution in 1959, but it has never been activated. President Trump announced in March the U.S. would begin to enforce the measure, May 2.
What is Title IV states?
The Helms-Burton Act’s Title IV prohibits entry into U.S territory people being sued under Title III.
Who are affected?
Companies from the European Union, Spain, Canada, Japan, Russia, China and other countries that invested in properties nationalized during the first years of late President Fidel Castro’s government may be affected.
According to the US-Cuba Economic and Trade Council, the U.S. government has a “certified” record of nearly 6,000 cases of U.S. citizens eligible for Title III, which could total US$1.9 billion in lawsuits.
Effects among Cubans
The most likely short-term effect is the large-scale withdrawal of foreign investors from Cuba, a country whose economy has around US$2 billion in foreign investments.
In addition, the Trump administration has announced more travel restrictions to the island, rolling back measures made by the Barack Obama administration, and is limiting remittances to US$1,000 per person per fiscal quarter.
Cuban authorities have responded by developing six economic sectors: tourism, biotech and pharmaceutical industry, renewable energy, food production, professional services exports, and construction.
“Cuba is revolution. No to the Helms-Burton Act. Along with our president Miguel Diaz-Canel, the Infrastructure Planning Institute reaffirms the continuity of the revolution.”
The European Union could take the U.S. to the WTO
The European Union High Representative for Foreign Affairs, Federica Mogherini, said that “the EU considers the extra-territorial application of unilateral restrictive measures to be contrary to international law and will draw on all appropriate measures.”
She specified that the EU could take the U.S. to the World Trade Organization (WTO) or use retaliatory sanctions to protect its companies in Cuba.
According to Mogherini, the application of Title III violates EU-US agreements in place since 1997.
The U.S. decision “will create unnecessary friction and weaken the confidence and predictability of the transatlantic partnership,” she added and explained that the EU “will continue working with its international partners, who have also expressed their concern in this regard”.
Regarding eventual measures to halt the fulfillment of any Helms-Burton related obligation, Europe has “two antidote rules” that allow European companies to sue the U.S. plantiffs and potentially take away their European-based assets.
Because of this many U.S. companies will likely not dare to carry out legal actions against EU companies because the consequences “could be terrible for them”, international lawyer Jose Maria Viñals told a Spanish newspaper.
The legal uncertainty would affect Spanish companies
Cuba’s main European foreign partner is Spain, a country which has important amounts invested in tourism with companies such as Melia, Iberostar, Barcelo, Globalia, Sercotel, NH, Blau or Roc.
“If any claim is made against a hotel, our role would be that of mere hotel managers,” Melia said in a statement.
The Barcelo Hotel Group said it’s not “at all” concerned given that the company is working in Cuba through management contracts, which means that “there is no investment and, therefore, no risk.”
Nevertheless, financial analysts argue that the Helms-Burton Act could generate “exceptional” situations that companies cannot anticipate. One of the main uncertainties is regarding Title III, which defines “trafficking” as the purchase, receipt, use or investment in assets “confiscated” by the Cuban Revolution. A broad interpretation of “trafficking” could go so far as to be used against companies that have “very indirect” deals with a nationalized Cuban property.
“The Act is made by thick lines and the legal concept of [trafficking] is very broad. Besides not all those who can claim are registered,” explained Viñals.
The Cuban response
For its part, Cuba’s government considers that the full application of the Helms-Burton Act is a form of “political blackmail” to toughen the economic and financial blockade against its people.
“There is no force, threat or blockade that can separate us from our principles of solidarity, internationalism, Latin Americanism, Bolivarianism and Martians. Latin America is a Zone of Peace. Viva Cuba libre,” President Miguel Diaz-Canel tweeted Thursday.
