More on Title III

It appears likely from the State Department’s announcement that Title III of the Helms-Burton law will be allowed to go into effect around March 1. No U.S. President has permitted this: Since enactment in 1996, Clinton, Bush, Obama, and Trump have blocked it every six months.

As a result, those whose properties in Cuba were expropriated and who can identify a foreign business connected to that property, can sue the foreign business in U.S. courts – even if the plaintiff was not a U.S. citizen or resident at the time of the taking.

My opinion on all this is here. Some more info on Title III:

The law is presented as protection for claimants who were never compensated. But the right to sue is limited. Cuban Americans can’t sue for their homes. No one can sue for a property worth $50,000 or less when it was taken. And the right to sue expires if Cuba’s socialist government goes away, or if the President decides to suspend it again.

The law also shields two classes of business from Title III lawsuits.

First are those engaged in “the delivery of international telecommunication signals to Cuba.” In other words, companies delivering voice or data traffic to the Cuban network are protected, while those whose businesses extend into the Cuban domestic network are not.

Then there are those engaged in “transactions and uses of property incident to lawful travel to Cuba, to the extent that such transactions and uses of property are necessary to the conduct of such travel.” The House-Senate report accompanying the bill put it more simply: “any activities related to lawful travel to Cuba” are protected. Those who want to sue, for example, based on ownership of a port facility, are surely searching for ways to argue that this language should not apply.

In theory, the damages could be substantial; the law fixes them at three times the property’s current value, plus court costs and attorneys’ fees.

Finally, some U.S. businesses who lost property in Cuba were partially compensated through a tax deduction. In November 1962, the IRS allowed them to deduct Cuba confiscation losses from their business income.

Odds and ends

·      I wrote recently that state employment in Cuba had dropped by more than half million. Actually, it’s double that. See this article by Prof. Ricardo Torres, showing that the state shed 998,000 jobs between 2009 and 2016.

·      Physician Carlos Lage became a vice president of Cuba’s Council of State and served as a quasi-prime minister until 2009 when he and a few others of his generation lost their political footing and were expelled from office. 14yMedio looks at his life now, practicing medicine again at the Policlínico 19 de Abril.

·      Financial Times on Cuba’s drive for foreign investment.

·      It may be that no te importe tres pepinos, but here’s a Twitter thesaurus of Cuban slang.

·      Billboard on the weekly paquete as a music promotion platform.

·      Granma’s “Today in History” feature on the sinking of a German U-boat in Cuban waters during WWII.

·      The new U.S. threats to sanction foreign companies that do business with Iran recall the extraterritorial U.S. sanctions in the Helms-Burton law, former Swedish foreign minister Carl Bildt explains, while calling on Europe to resist.

·      Prof. Larry Press rounds up the information on the public record about the views of Cuba’s new President on Internet development.

Odds and ends

• Granma published the text of the foreign investment law today.

• In the Mariel economic zone, as in foreign investment projects in general, workers are hired and paid through an employment agency.  Payment is made in hard currency, the agency keeps most of the money and pays the workers a normal Cuban wage.  Foreign businesses then make side payments to the workers to raise their wages and productivity, which is why jobs with foreign businesses are sought-after.  Trabajadores reports that in the Mariel economic zone, the agency will no longer have a “revenue-collecting” function and will pay workers 80 percent of the wage negotiated between the foreign business and the agency.

• Reuters on Cuba’s new private non-farm cooperatives; more than 450 are now operating in the program’s “experimental” phase.

• Granma: the new labor code makes Good Friday a holiday in Cuba, this week and permanently.

• A granddaughter recounts an interview that her grandfather Clark Hewitt Galloway conducted with Fidel Castro in 1959.

• Dodger phenom Yasiel Puig’s flight from Cuba was harrowing, and still is so, recounted in detail by Los Angeles Magazine in English and Spanish.

Malmierca on the new investment law

The text of Cuba’s newly approved foreign investment law will come out in due course, and according to this presentation by trade and investment minister Rodrigo Malmierca, the new policy will also be defined by regulations and norms to be issued by at least four parts of the Cuban government.

The first principle he stated regarding the new policy is that foreign investment is viewed now “as a source of development for the country in the short, medium, and long term.”  That may seem obvious, but it’s a change from the old, more narrow formulation of foreign investment as a “complement” to Cuban production.  Everything else flows from that, beginning with the broader list of specific goals that foreign capital is to serve – instead of “capital, markets, and technology,” it now includes job generation, acquisition of new management methods, and more.  In two years, if a substantial number of new investment projects are operating in Cuba, that change of thinking will be responsible.

Other points of note:

If you’re curious as to whether the priority on renewable energy means that the taboo on cane-based ethanol has been cast aside, there’s not a clear answer.  He refers to the use of “biomass, which includes that of sugar cane” but it’s not clear whether he means cane itself or bagasse, the waste product of sugar milling.

He notes that cooperatives will be able to participate in foreign investment projects but with the participation of a state enterprise; details here.

Contracting of employees will continue to occur through state employment agencies, with salaries negotiated between the foreign partner and the agency.

He, like others, refers to “errors” of past policies on investment but doesn’t say what they were. 

Sugar and agriculture, two high-potential sectors where Cuba has shown low interest in foreign participation in the past, are on the list of priorities where sector-specific policies have been defined.