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Facts and Knowledge are the Antidote to Threat

Mark Entwistle takes time out to speak with Cuba Business Report's editor.

Mark Entwistle was the former Canadian ambassador to Cuba from 1993 to 1997. He is also co-founder and co-managing director of Acasta Cuba Capital Inc. in Toronto, Canada. Acasta Cuba Capital is an advisory and specialist business development firm which enables clients to understand the market in Cuba and pursue commercial opportunities. Mr. Entwistle has been in the Cuba business for over 25 years and travels to Cuba frequently.

Cuba Business Report: Tell us about your years as the Canadian ambassador to Cuba from 1993 to 1997? How was your experience in Havana during those years? Was it considered a “charmed” posting?

Mark Entwistle: The unbroken relationship between Canada and Cuba as two fellow countries of the Americas has been special for a long time, dating from well before the Cuban Revolution. It has been deep and multi-faceted, both at the personal individual level and between governments. Given the longstanding bilateral relations as well as the absence of the United States in Cuba until the historic opening engineered by former presidents Raúl Castro and Obama in 2014, the role played by Canada in Cuba was often unique. So, in that sense, it was a fascinating assignment for me as professional career Canadian diplomat.

When I first arrived in Havana in July 1993, the so-called “Special Period” was in full effect, triggered by the collapse of the Soviet Union and the former socialist world’s global trading system. Economic conditions were harsh, and it was an extremely tough time for all Cubans. Almost permanent power outages, food shortages, few cars, no gas, bicycles everywhere. So, at the same time, it was a challenging experience. On behalf of the Canadian people, I was very involved in many aspects of Cuban life and society. But, by the time I departed Havana officially as Ambassador four years later, the Cubans had clawed their way back from the precipice, a telling demonstration of the broad social resilience and determination characteristic of the Cubans. A lesson that I never forgot. Cubans should never be underestimated, in any circumstances.

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Cuba Business Report: Do you think the U.S. embargo against Cuba is actually effective? I mean, we have countries such as Russia, China, Vietnam, Spain, Italy, the U.K. investing in Cuba? If the embargo was working, it would not be worth anyone’s effort to trade with Cuba.

Mr Entwistle: What we call generally the U.S. embargo against Cuba is a mash-up of laws, regulations and executive orders. Taken in its totality, it is one of the most comprehensive and aggressive instruments of coercion in world economic history, launched against a developing Caribbean nation and hemispheric neighbour. This is not a political position on my part, but a statement of fact that is hard to perceive any other way.

Over the span of decades, the core aim was to prevent U.S. businesses, entities and persons from having contact with Cuba. Given that effectively no other country in the world supports the unilateral American embargo, foreign companies were encouraged by their own governments to conduct legal business in Cuba. And, generally, foreign business people have tried to be reasonably informed and respectful of the interests of holders of claims for compensation for properties expropriated in the early 1960s from U.S. nationals.

However, the driving ethos of the embargo changed fundamentally in April of this year with the decision of the Trump Administration to implement fully Title III of the so-called Helms-Burton Law, after 23 years of being suspended by successive U.S. Presidents and Secretaries of State. In confirming extraterritorial design directly and explicitly, there is now a clear intent to try to do harm to third parties and render them unintentional agents of subsequent damage to the Cuban economy. This is now a qualitatively different phase.

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The extraterritoriality of the U.S. embargo, a legal concept that is widely rejected by friends and allies of the United States, is really an attempt to offload to third parties the responsibility to seek solutions to issues that are bilateral matters between Cuba and the United States. The prospect of compensation for expropriated property is something that needs to be negotiated directly between the U.S. and Cuban governments, in the same way that the governments of Canada, Spain and many other countries settled years ago on behalf of their companies and citizens that had claims for compensation. The process of dialogue with Cuba begun in the Obama Administration included a bilateral working group on claims, which is where this matter belongs. Rather than trying to weaponize companies from third countries that have every right to conduct legal business in Cuba.

The U.S. embargo has an additional purpose – to cast enough of a shroud of doubt and concern about exposure to distracting and potentially expensive lawsuits in American courts to dissuade potential foreign and American business people from participating in the Cuban economy. To muddy the waters. In that sense, it has an undeniable effect.

But understanding what the embargo does and can do, and what it cannot, is key. There is business that can certainly be done in Cuba regardless of the U.S. embargo.

Cuba Business Report: What would you say about the implications of the recent enactment of the Helms Burton regulations by the United States on Canadian business investments on the Island? Are Canadians still able to do business with Cuba?

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Mr Entwistle: Yes, without doubt, Canadians can do business in Cuba. The Government of the United States or the American courts of course have no jurisdiction over Canadians, and, in any case, nothing in the U.S. embargo says that a Canadian company or national cannot do business in Cuba.

Business people make decisions based on a range of considerations. Capital inexorably follows returns, even a type like socially responsible impact investing, and constantly weighs the relative costs and benefits of each competing global opportunity. Provided the structure of a deal in Cuba makes business sense, if there is the chance to participate fully with the possibility of seeing sustainable longer-term value, there is no shortage of opportunity in the Cuban economy for Canadian business in different sectors.

Cuba Business Report: Is there an antidote to the Helms Burton regulations? How can investors protect their investments in Cuba?

Mr Entwistle: The U.S embargo adds an extra category of risk to be considered by businesses and investors. Serious global business people are not afraid of risk per se because it is everywhere. But they need to understand it and be able to factor that risk into the mix of decision-making. The recent implementation of Title III of Helms-Burton suggests another level of risk, but it is all about knowledge.

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The lever at the heart of everything is property, pure and simple.

Part of the reasonable response to potential embargo risk is, therefore, to know and understand the antecedents of property title. This is not always easy to do, and it does create an additional layer of diligence. But, armed with knowledge, it may be that possible risk from Title III lawsuits is manageable and can be mitigated. I am certainly not a lawyer and would never give legal advice. But it is clear that potential action under Title III in U.S. courts is a right of private action, that could in theory be privately settled without needing to be licensed by the Office of Foreign Asset Control (OFAC) of the U.S. Department of Justice and that a putative claimant must meet a documentary burden of proof that the claim is bona fide. There is also precedent for U.S. courts to have determined that they lack jurisdiction over a foreign entity. There is a not insignificant fee to file such a lawsuit.

I only mention these several aspects to underscore that there are many considerations, and that facts and knowledge are the antidote to threat.

This interview with Mr Entwistle will be continued in tomorrow’s edition of Cuba Business Report.

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