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The U.S.-Cuba Policy $2.0 billion Elephant in the Room

One of the things I enjoy most my business is working on matters for clients that most people do not like to get close to – the proverbial elephant in the room problem. I would rather tackle the matter head on before it becomes an issue and not wait to be that guy in the circus walking behind the elephant cleaning up the mess. The U.S.-Cuba policy elephant in the room is the close to $2.0 billion that the Cuban government owes U.S. taxpayers for the illegal confiscation (without compensation) of all sort of property claims.

Elephants are interesting animals. Physically powerful and highly intelligent, through the centuries the pachyderm has been used in warfare and industry. I am told that training an elephant requires a lot of attention and patience because without either of these skills, the animal can destroy property and persons. In the case of certified Cuba claims, this elephant in the room needs to be dealt with, fast.

In the pantheon of third-rail policy issues, this issue ranks up there with proposals to privatize social security. And, as in the case of social security, it needs to be done or we will never get anywhere with advancing U.S.-Cuba policy anytime soon. It should not be this way and the mindset needs to shift.

The Cuban regime is obsessed with these U.S. certified claims. Why? Because it knows that it must deal with it or they will be facing years of costly litigation and negative public relations. In a future Cuba that refuses to recognize and compensate (notice I do not say return properties), investors will be weary as well that a certified claimant, or their heirs, will sue them or make trouble for them on Capitol Hill, among other things.

A few years ago, there were folks in town reportedly trying to buy old claims on behalf of the Cuban government. The Cubans wanted to mollify foreign investor concerns that title to the land was held free and clear. If not, these foreign companies faced potential lawsuits in the U.S. or, more likely in the near term, a messy public policy fight fought out in the newspapers. This project seems to have died down, in part, because it is illegal for U.S. claim holders to engage in the unauthorized selling of their claim to the Cuban government (more on this aspect of this issue for another day).

With regards to the U.S. Government, it has done absolutely nothing to deal with certified claims, yet it keeps granting concession after concession to the Cuban regime in the form of increased trade, travel, and remittances. In fact, U.S. taxpayers gets nothing in return from Cuba except more troubles and a litany of human rights abuses of its people. The regime keeps collaborating against U.S. interests with other bad seeds such as the Iranian mullahs or regional despots such as Hugo Chavez, among others.

A swift and clean resolution of these claims is critical not only for U.S. taxpayers, but for the future free people of Cuba. Private property rights are a cornerstone of a free country. Your hard work means nothing if you cannot own anything. When your people’s rights in land and ideas are protected, it stimulates economic growth and stability. Investors are more likely to loan you money. A system of laws takes hold that lay a foundation for other sectors of society.

The U.S. government needs to start preparing for the day, that may not be far off, when this issue takes center stage in dealing with Cuba. For those that argue that this issue should be put to the back of the line of issue, they are wrong. If anything, U.S. taxpayers belong at the head of the line, as does this issue with regards to  U.S.-Cuba policy. U.S. law require that we deal with certified claims in working with a “transition” government, along with a series of other variables that must be met by the Cuban regime before the U.S. eases fully the embargo.

There is a lot out on the web about certified Cuba claims. A good place to start is the Foreign Claims Settlement Commission website.

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