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A $6 billion sticking point could create headaches for
the U.S.-Cuba talks.
Though concerns over human rights, press freedoms and U.S.
fugitives living free on the island have dominated debate
over the Obama administration's negotiations on restoring
diplomatic ties, the Castro regime also still owes Americans
that eye-popping sum.
The $6 billion figure represents the value of all the assets
seized from thousands of U.S. citizens and businesses after
the Cuban revolution in 1959. With the United States
pressing forward on normalizing relations with the communist
country, some say the talks must resolve these claims.
"The administration has not provided details about how it
will hold the Castro regime to account for the more than $6
billion in outstanding claims by American citizens and
businesses for properties confiscated by the Castros," Sen.
Robert Menendez, D-Fla., top Democrat on the Senate Foreign
Relations Committee,
wrote in a letter to Secretary of State John Kerry ahead
of historic talks in Havana last week.
Menendez urged the U.S. to "prioritize the interests of
American citizens and businesses that have suffered at the
hands of the Castro regime" before moving ahead with
"additional economic and political concessions."
Beginning with Fidel Castro's takeover of the Cuban
government in 1959, the communist regime nationalized all of
Cuba's utilities and industry, and systematically
confiscated private lands to redistribute -- under state
control -- to the Cuban population.
The mass seizure without proper compensation led in part to
the U.S. trade embargo.
Over nearly 6,000 claims by American citizens and
corporations have been certified by the U.S. Foreign Claims
Settlement Commission, totaling $1.9 billion.
Today, with interest and in today's dollars, that amount is
close to $6 billion.
U.S. sugar, mineral, telephone and electric company losses
were heavy. Oil refineries were taken from energy giants
like Texaco and Exxon. Coca-Cola was forced to leave
bottling plants behind. Goodyear and Firestone lost tire
factories, and major chains like Hilton handed over
once-profitable real estate for nothing in return.
Assistant Secretary of State Roberta Jacobson, after leading
the talks in Havana last week, did not mention the U.S.
property claims at a press briefing. But a State Department
spokesperson later told FoxNews.com the claims "were
addressed" in the talks and "will be subject to future
discussions."
In Dec. 18 remarks, Jacobson said, "registered claims
against the Cuban government" would be part of the
"conversation."
She also noted Cuban claims of monetary losses due to the
50-year-old U.S. embargo.
"We do not believe those things would be resolved before
diplomatic relations would be restored, but we do believe
that they would be part of the conversation," she said. "So
this is a process, and it will get started right away, but
there's no real timeline of knowing when each part of it
will be completed."
The billions are owed, in part, to an array of major
companies.
U.S. banks ranging from First National City Bank (which
became Citibank) to Chase Manhattan lost millions in assets.
According
to the list of claimants, the Brothers of the Order of
Hermits of St. Augustine even lost $7.8 million in real
estate when they were expelled from the island.
According to a
government study commissioned in 2007, however, some 88
percent of the claimants are individual American property
and asset owners, many of whom would probably like to see
some sort of compensation out of the diplomatic
deal-making.
"I think this is a significant issue and it has more
resonance today than it would have had 20 years ago," as
nationalization has seen a resurgence throughout Latin
America in recent years, said Robert Muse, a Washington,
D.C., attorney who has represented corporate clients whose
assets were seized. "You have to take seriously the notion
that a government must support their companies when their
[property] is expropriated. You have to have some
consistency on that."
Experts who spoke to FoxNews.com agree that fully
compensating everyone on the list would be a complicated, if
not impossible, endeavor.
First, the Cuban government, even if it did agree in spirit
to pay, probably would not be able to afford it.
Some individual claimants may be long dead. Further, some of
the original corporations no longer exist, thanks to
mergers, buyouts, and bankruptcies over the years.
Such is the case with the Cuban Electric Company, which has
the largest claim -- $267.6 million in corporate assets
(1960 dollars). The company was part of the paper and pulp
manufacturer, Boise Cascade Company (which also has a claim
for $11.7 million), at the time of the seizures.
But Boise Cascade has since spun off and the part of it that
held a subsidiary with a majority stake in Cuban Electric
became Office Max -- which later merged with Office Depot in
2013. Company officials reached by FoxNews.com had no
comment on the original Cuban Electric claims.
Muse and others, like Cuba analyst Elizabeth Newhouse at the
Center for International Policy, say that companies that
still have an active interest in getting compensated might
agree to more creative terms -- whether it be for less
money, or tax breaks or other incentives on future
investments if and when the U.S. embargo is lifted.
"My sense is that some corporations are more interested in
having a leg-up in any trade arrangements than they are in
getting their money back," Newhouse said.
Thomas J. Herzfeld, who heads the 20-year-old Herzfeld
Caribbean Basin Fund which trades shares of firms that would
have an interest in Cuba if the embargo is lifted, said his
life-long goal has been "to rebuild Cuba." He has approached
claimants about taking their claims in exchange for
investment shares. He said his fund is "well-prepared" for
when normalization resumes.
But others warn about popping the corks too soon,
particularly if the Castro regime is unwilling to take the
compensation seriously.
According to the Helms-Burton Act, which enforces the
sanctions, the embargo cannot be lifted until there is
"demonstrable progress underway" in compensating Americans
for their lost property. (Congress also would have to vote
to lift the embargo.)
"This is an issue where they are going to have to put their
heads together and figure out how to resolve it," Newhouse
said. "I think everyone wants to see it resolved."
Jacobson, at the close of last week's opening talks, said
there was some progress on opening up embassies, but there
continue to be "areas of deep disagreement," particularly on
Cuban human rights and fugitives from U.S. justice in Cuba.
"Let me conclude," said Jacobson, the highest-ranking U.S.
diplomat to visit Cuba in more than three decades, "it was
just a first step."
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http://www.foxnews.com/politics/2015/01/26/cuba-6b-debt-to-americans-for-seized-properties-hangs-over-us-talks/