There is a battle brewing in the U.S.-Cuba public policy arena and no one in this town who can do something about it is paying any serious attention to it. If someone fails to take up this issue, U.S. taxpayers owed billions of dollars by the Cuban Communist government will, as usual, be left holding the bag. No one wants to talk about it because it is, well, unseemly in polite society to ask things of the dying. And when it comes to property, real property, it does not get anymore indiscreet.
According to the U.S. government, if you factor in interest, the Communist government owes U.S. taxpayers anywhere from $5 billion to $20 billion for illegal confiscations. These claims include real property expropriations, businesses, contracts, and much more. The final figure will be much higher. There is a whole class of claimants, Cuban expats and their family, that have yet to be factored in to this equation.
The Communist party apparatchiks takes a somewhat curious approach on this issue, they just ignore it and hope it will go away; however, deep down they understand that this will not be so. Rather than deal with this issue head on, it is doing what every good communist does when losing a battle, it muddles the issue and makes it worse.
For example a few years ago through interlocutors — some who should be prosecuted under U.S. laws for doing so — the regime tried to buy claims from U.S. claim holders. They told folks that their claims were worthless and would never be repaid in full. No one will ever get their old property back. This quixotic effort prompted a Treasury Department warning that claim holders needed U.S. government authorization before engaging in any transaction in which Cuba has an interest (more background here). It was a novel approach that may work, with some tweaking, but only when claimants are allowed to truly value their claims in a free market with a free Cuba in a democratic society that respects the rule of law and private property rights.
With regards to private property rights and rule of law in Cuba, let me save you the trouble. There are none and never will be with this government. Last week’s announcement by Communist party planners that island residents would be allowed to own two homes: a residence and a vacation home, is a revenue-generating scheme not a property reform law. In the days and weeks ahead a lot will be written about this development, including this Potemkin yarn, that this yet another sign that Cuba is headed for a China model transition. There are no private property rights in Cuba. There is no banking system to speak of to handle mortgages. Rule of law? None.
In addition to raising revenue from new taxes and remittances sent by Cuba-Americans, this announcement is the first volley in the Cuba claims battle that lies ahead. It is telegraphing to the U.S. government and bona fide claim holders, “we’re going to cloud title on all lands and there is not much you can do about it.” The truly pernicious impact of this new decree is that it seeds false hope throughout the Cuban populace. The party planners have set in motion an expectations game that they hope will pit Cuban exiles against loved ones on the island. It is an old Cuban Communist party trick. Pit family against family. They are going back to their roots, dividing people and families. If you want to understand this dynamic, look at Andy Garcia’s outstanding film on the subject, The Lost City.
With the support of the Communist party, outside groups are popping up on the internet promising a Cuban property gold rush. At an odd website called the Cuban Property Real Estate Group, viewers are encouraged to invest in Cuba and buy land. U.S. sanctions? No worries, “[w]e never said that getting to Cuba was going to be easy. But the difficulty in getting there is part of its appeal.” There are more websites out there on this issue, but this one seems to be the most brazen in trying to get Americans to break the law. On the other side of the ledger, there are several claims groups who have been advocating a solution to this issue including: Certified Cuba Claims and the Cuba Property Rights Initiative, among others.
U.S. lawmakers and the Obama Administration should begin to take a closer look at this issue. Crafting a solution to this will not be easy, but under U.S. law one of the aims of U.S. policy is “to protect United States nationals against confiscatory takings and the wrongful trafficking in property confiscated by the Castro regime.” While it is not a pre-condition to normalizing relations with Cuba, it is one factor the President will have to consider one day when conditions on the island warrant. Right now Cuba is demonstrating it is not committed to resolving the claims issue, rather made a public commitment to make it more difficult and is playing with political fire.
The Cuban-American community is not going to fall for this trap, nor will folks who hold valid claims, or most of the people in Cuba. That’s the difference between us and them. We live in a democracy where rule of law and hard work mean something; and the majority of the people of Cuba do not believe these political troglodytes anymore. The problem will come from the very people the regime claims it does not want in Cuba, opportunity seekers looking to cash in on a fire sale.