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Title III was almost immediately recognized as a grotesque chapter within the legislation, guaranteed to unleash unnecessary and damaging trade wars between allies. Photo: Artwork from exhibit at Fabrica de Arte. Artist unknown.


Helms Burton Title III: Punishment or Fireworks?

By David Urra and Sue Ashdown

The Helms-Burton law passed by the U.S. Congress in 1996 is best summarized as legislation that wrested control over the U.S. embargo against Cuba away from the Executive Branch, placing it in the hands of the Legislative Branch, so that no U.S. president could eliminate it unilaterally. The time frame is important.

By the mid-nineties, with an economy thoroughly devastated by the loss of trade with a toppled socialist bloc, Cuba’s only remaining option was to pursue foreign capital elsewhere. This lifeline was infuriating to Miami’s representatives in Congress, bewildered over the fact that even with an economy shattered by the loss of all trading partners, Cubans still had not toppled their government. Helms Burton was the response, designed to deliver the coup de grace by making Cuba inhospitable for foreign investment through the creation of unacceptable risk.

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It proposed doing this through Title III, opening the door to lawsuits to be filed in US federal courts where plaintiffs could demand payment for property nationalized or expropriated by post-revolutionary Cuba. As longtime Cuba observers suggest, Title III was promoted at the time as a “moral principle.” Payment was to be extracted from businesses operated by foreign companies on the sites of said property, punishing Cuba by transforming it into a pariah for foreign investment. As a bonus for Miami, Title III expanded the field of possible claimants beyond the limits set by the Federal Claims Service Commission (FCSC) which defined legal claimants as those who were U.S. citizens at the time the properties were taken. Title III includes Cubans who were not yet U.S. citizens at the time, but were granted citizenship some time later. Naturally these would prefer to pursue their claims in the United States, rather than in Cuba with a government they refused to recognize. It is important to note that in the long history of international claims resolution this method has been pursued with no other country besides Cuba.

Title III was almost immediately recognized as a grotesque chapter within the legislation. It was so obviously guaranteed to unleash unnecessary and damaging trade wars between allies that every president starting with Clinton, followed by Bush, followed by Obama, exercised their executive prerogative to continually suspend the Title’s enactment, six months at a time, for twenty-three years running. These suspensions were the solution to calming the retaliatory actions threatened at the World Trade Organization, while as an insurance policy many countries passed anti-doping (anti-Helms Burton) legislation, blocking their nationals from complying with any judgment resulting from a Title III legal claim. It was one thing to block U.S. companies and their foreign subsidiaries from doing business with Cuba, or leverage control of the world’s financial system to impose sanctions globally, but quite another to meddle in the sovereign trade decisions of U.S. allies.

The history of property seizures in Cuba is a complex one, as unlikely to be understood by a 1996 Congress as one in 2019. The expansion of the FCSC limits on claims is an excellent example of a detail easy for the casual observer, buried in a mountain of higher priorities or perhaps simply overcome with disinterest, to overlook. A very rough summary of the claims dispute between the U.S. and Cuba goes something like this: Cuba has always defined the property seizures as expropriations or nationalizations – carefully implemented within a legal framework – and in certain cases, confiscations as punishment for illicit activity. The U.S. on the other hand, consistently refers to all the seizures as confiscations, despite simultaneously recognizing that they were part of a nationalization process.

The difference is key. Nationalization is recognized under international law as the prerogative of any state. Cuba offered not one but two different options for U.S. property holders to recover their capital, either under 20 year bonds paying a higher rate of interest than the average corporate bond of the time, or as cash payments extracted from a restored sugar quota. Both offers were rejected by the U.S. as inadequate, and slow, and the sugar quota was never restored in any case. Cuba approached the U.S. at least five different times under various administrations, seeking to resolve the issue, but was continually rebuffed and the statute of limitations for resolving the issue was ignored. Interestingly, U.S. allies took the opposite approach. Coming to the bargaining table in a timely way allowed them a head start in the Cuban market once the country did open to non-socialist capital. Notwithstanding this, Cuba extended the statute of limitations for the United States, holding a public referendum where U.S. claims were guaranteed consideration as long as Cuba’s claims are also considered.

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Fast forward to the present day, with a U.S. president whose interest in the finer points of international trade is as demonstrably negligible as his need to distract attention from perpetual domestic siege is pressing. Not unlike many American executives who are convinced that when it comes to Cuba, a Cuban American guide is essential, Senator Marco Rubio has been happy to oblige as President Trump’s Latin American expert, while promising to deliver the 2020 Florida electoral vote – an irresistible if somewhat illusory combination. The chaos that would ensue from a torrent of lawsuits unleashed on an overburdened judicial system, along with the wasteland left behind by devastated trade alliances, are likely of no greater interest to Rubio than they are to Trump; rather, Title III is simply the last remaining tool in the Cuba sanctions box, so why not?

Title III excludes from prosecution any American company doing business with Cuba that was defined as “necessary to authorized travel.” In 1996, the only U.S. companies falling in this category were the telecommunications companies delivering international voice traffic to the Cuban network, and travel providers operating under the restricted framework of travel to Cuba for U.S. citizens. Now that this field has expanded to U.S. cruise lines and airlines, it seems likely that any behind the scenes negotiations to mitigate the damage of the Title III “nuclear option” would define those as equally essential to authorized travel and therefore also excluded.

But anything is possible. An initiative to wrest the embargo away altogether from legislative or executive manipulation could come from the opposite direction, through a revival of the 2003 legislative project, H.R. 5616, written to sunset Helms Burton entirely. Either the lobbying to revive HR 5616 is so secretive that no-one is willing to talk about it, or it is not happening at all. This leaves three possible scenarios:

  1. 1) The campaign to enact Title III has been orchestrated but in the end will not be acted upon, for fear of the ensuing chaos = Fireworks.
  2. 2) Title III is enacted and Congress, unwilling to be pressured this way, eliminates the law = Fireworks and grandstanding.
  3. 3) Title III is enacted by the Executive Branch and Congress fails to respond = Cuba is punished due to extreme dementia, fireworks and grandstanding combined.

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