Risk for foreign firms in Cuba

Political Propaganda, Cuba. Photo: Gorupdebesanez

The Trump administration declared that from March 19 lawsuits against Cuban firms will be permitted in U.S. courts.

What’s the legal base? This decision is based on the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996. This law, better known as Helms-Burton, has held a section (Title III) that allows citizens and firms whose properties were confiscated during the Cuban revolution of 1959 to sue for compensation in U.S. courts. However subsequent U.S. Presidents have suspended this clause every six months since then.

Secretary of State, Mike Pompeo declared:

“We encourage any person doing business in Cuba to reconsider whether they are trafficking in confiscated property and abetting this dictatorship,” 

Further toughening on Cuba. The Trump administration has reversed the policy of rapprochement that the Obama administration launched. Obama eased restrictions on remittances and travel of U.S. citizens to Cuba. The administration also removed Cuba’s designation as a terrorism sponsor and even visited Cuba in 2016 as the first American President since Calvin Coolidge in 1928.

The election of Trump reversed this trend. National Security Advisor John Bolton declared Cuba to be part of the “troika of tyranny” together with Nicaragua and Venezuela.

What’s the risk? At this moment Title III has only been partially rolled out. A complete rollout would also allow those firms to be sued that use confiscated properties. This would create risks for European firms doing business in Cuba. The European Union’s ambassador to Havana, Alberto Navarro sees this as a way for the

Trump administration [ ] trying to create confusion… to scare off investment in Cuba. [ ] We cannot accept that a country tries to impose its laws outside its own borders… that would be a return to the jungle.

The extraterritorial effects of the Helms-Burton legislation, targetting not only U.S. firms but also foreign firms, has been a contentious issue between the EU and the U.S. since its origin and upending the suspension of Title III would only increase the already contentious nature of U.S-EU relations.

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