New US policy on seized property in Cuba threatens EU ties

Trump administration changes to the Helms-Burton Act have come into force, allowing for lawsuits against foreign firms in Cuba. The move has set the White House on a collision course with European allies.

The Trump administration will allow US nationals to file lawsuits against foreign companies operating on properties that were seized from Americans during the 1959 Cuban Revolution.

The major policy shift, first announced in April but implemented on Thursday, sets the stage for fresh economic disputes between the US and Europe. It also marks a new escalation in Washington's policy to hammer Havana over its support for Venezuela's socialist President Nicolas Maduro.

US sanctions and who they target

Iran

US sanctions on Iran target Tehran's trade in gold and precious metals, block the sales of passenger jets and restrict Iran's purchase of US dollars, among other punitive measures. The US has also blocked Iran's key oil sales in a further tranche of sanctions, which came into force in November 2018.

US sanctions and who they target

North Korea

Impoverished North Korea is under a UN-backed embargo, but Washington also maintains an extensive regime of sanctions of its own. For example, the US strictly bans exporting weapons to the pariah state. Washington also uses its global clout to penalize non-US banks and companies that do business with Pyongyang.

US sanctions and who they target

Syria

Washington trade restrictions prevent the regime of President Bashar Assad from exporting Syrian oil to the US. All property and assets of the Syrian government in the US have been frozen. Americans, wherever in the world they might be, are banned from "new investment" in the war-torn country, according to the US Treasury.

US sanctions and who they target

Russia

The US blacklisted scores of high-ranking Russian officials and businessmen after the 2014 Crimea crisis, stopping them from traveling to the US and freezing their assets. The comprehensive sanctions list includes goods from the Russian-annexed region, such as wine. New sanctions imposed in the aftermath of the Skripal poisoning in March 2018 target sensitive national security and defense goods.

US sanctions and who they target

Cuba

American tourists began flocking to Cuba immediately after the Obama administration initiated a thaw in relations in 2016. Under Donald Trump, however, the White House reimposed travel restrictions for US citizens, making it much harder for Americans to travel to the island. At least one Obama-era concession is still in place, however: it is still legal to bring Cuban cigars and rum to the US.

Helms-Burton Act

The US decision to end a two-decade waiver to part of the 1996 Helms-Burton Act could expose US, European and Canadian companies to billions of dollars in legal claims and undermine Cuba's attempts to attract more foreign investment at a time of economic crisis triggered in part by steep cuts in subsidized Venezuelan oil. 

Read more: Venezuela crisis: Is Cuba's oil supply under threat?

Politics | 02.11.2018

Title III of the Act gave Americans who fled Cuba the right to take legal action in US courts against mostly European companies operating out of properties Cuba nationalized following the island's 1959 revolution.

In addition, the administration will begin to enforce Title IV of the Act, which requires the denial of US visas to those who "confiscate or 'traffic' in confiscated property in Cuba claimed by US nationals."

Every US president since Bill Clinton has issued waivers to the Act out of concern it would spark trade disputes with allies and a mountain of lawsuits in US courts that would prevent any future settlement with Cuba over nationalized properties.

Cuba has said it would reimburse the owners of nationalized properties, but only if it were reimbursed for billions of dollars in damages caused by a six-decade US trade embargo.

Cubans carve out their own real estate in Havana

For sale

80 percent of the houses for sale are in Havana. Other cities do not have a meeting-point for sellers and buyers, like Havana’s Prado. They display for sale signs on their houses, like here in Cienfuegos.

Cubans carve out their own real estate in Havana

Wheeling and dealing

On a Saturday morning potential buyers, sellers and intermediaries gather at the corner of the Prado and Colon in Havana to hash out deals.

Cubans carve out their own real estate in Havana

Sign of the times

People display their offers with self-designed handwritten cardboard signs. Buying property with state salaries is an almost impossible task. People need to have a lot of money to buy a house. Foreigners officially cannot buy houses, but many have done so by putting in the name of a Cuban.

Cubans carve out their own real estate in Havana

Cashing in

Milagro Socaraz Arazora, who lives with her two children and mother in Havana Vieja, wants to sell her house for 40,000 CUC (€34,000) and buy a cheaper house for around 15,000 CUC on the outskirts of Havana. With the money that is left, she wants to travel abroad to try and start an import-export business.

Cubans carve out their own real estate in Havana

Affordable housing

Alamar, about 15 kilometers from central Havana, is a district where housing is cheaper. Often people sell their more expensive house in the center as a means to make money. Before 2012, Cubans could only swap their houses. The value that was set in the early years of the Revolution applied, so the contracts were worth less than $100. If sold, the referential value set by the government applies.

Cubans carve out their own real estate in Havana

Deal or no deal?

Jorge (name changed) works as a permutero, a broker. He actively roams the streets for houses on sale. He cannot afford to work with a licence, as government taxes are too high. If he manages to broker a house swap, he gets a fee from both parties. If he brokers a sale, he gets 5 percent of the asking price.

Cubans carve out their own real estate in Havana

Free living space

Usufructos are rooms/spaces donated by the government where people can live for free. As there are no ownership rights, they cannot be sold officially. However, the owner wants to charge 7,000 CUC from potential buyers. An entry will be made in the addresses register, but no sales contract will be signed at the notary.

Cubans carve out their own real estate in Havana

Trying to make ends meet

Mario Díaz is 79 and one of the oldest brokers at the Prado. He needs the money, as he cannot live off the state pension. The last house he sold was last September. The one before in November 2017.

Cubans carve out their own real estate in Havana

A quick getaway?

Although houses were sold clandestinely before 2012, the legalization of the housing market has the effect that more people sell their houses and move. The actual prices do not correspond with the referential value and most of the market and its players rely on verbal agreements.

EU threatens trade dispute 

The European Union, which is Cuba's largest trading partner, has warned it would take "appropriate measures" if the US tries to interfere in business ties between sovereign states.

"The European Union reiterates its strong opposition to the extraterritorial application of unilateral restrictive measures which it considers contrary to international law," a spokesperson for the EU told DW. 

"The EU is ready to protect European interests — including European investments and the economic activities of EU individuals and entities in their relations with Cuba, if these were to be affected."

The Trump administration has angered European allies in the past over its withdrawal from the Paris climate accords and the 2015 Iran nuclear deal. There are also trade disputes brewing between Washington and Brussels.

Europe has backed the United States in applying pressure on Venezuelan President Nicolas Maduro, but opening a trade dispute and hitting Cuba's fragile economy could lead to losing support from key allies such as Spain.

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US hard-liners push regime change, ignore allies 

William LeoGrande, a professor at American University in Washington, DC, who specializes in Latin America, said hard-line interventionists in the Trump administration have adopted a policy of regime change towards Venezuela and Cuba.

"They hope that by toppling the Venezuelan government and cutting off oil exports to Cuba, they can bring about an economic crisis in Cuba that causes political collapse there as well," he told DW.

The Trump administration's policy is designed "to scare away foreign contractors and investors, leaving Cuba short of the capital it needs to grow its economy, and aggravating the economic crisis," LeoGrande said.

Europe had lobbied Washington not to end waivers to the Act exposing foreign firms to lawsuits. 

"Now the concerns of the EU are going to be ignored, despite the EU's efforts to be helpful solving the crisis in Venezuela," LeoGrande said. "It is yet another example of the Trump administration's unilateralism and contempt for traditional allies."

US-Cuba relations have plummeted under Trump following a historic rapprochement under the Obama administration, when the two countries reestablished diplomatic relations.

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