New US policy on seized property in Cuba threatens EU ties | News | DW | 17.04.2019
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New US policy on seized property in Cuba threatens EU ties

The Trump administration plans to upend US policy and allow lawsuits against foreign firms in Cuba. The move opens the way for new tensions with European Union allies.

The Trump administration will ramp up pressure against Cuba by allowing US nationals to file lawsuits against foreign companies doing business on the island.

The major policy shift 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 acting President Nicolas Maduro.

National Security Adviser John Bolton announced the policy change during a speech Wednesday in Miami, which is home to exiles and immigrants from Cuba. Speaking to veterans of the CIA's failed 1961 Bay of Pigs invasion, Bolton also used the speech as an opportunity to announce new sanctions on Venezuela and Nicaragua, two leftist allies of Communist Cuba.

Bolton also announced a tightening of travel restrictions and remittances, saying, "These new measures will help steer American dollars away from the Cuban regime."

Ahead of Bolton's speech, Secretary of State Mike Pompeo confirmed that the US will allow lawsuits against foreign companies operating on properties that were seized from Americans during the 1959 Cuban Revolution. Pompeo said anyone doing business in Cuba "should heed this announcement."

The change will go into effect May 2.

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?

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 cause by a six-decade US trade embargo.

EU threatens trade dispute 

The European Union, which is Cuba's largest trading partner, has warned it could challenge the US at the World Trade Organization if it tries to interfere in business ties between sovereign states.

The EU told DW it was ready to defend European interests in the matter.

"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 said. 

"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 announcement comes as the Trump administration has angered European allies 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 Venezuela's 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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Trump quashes Cuba baseball agreement

Read more: How much influence does Cuba have over Venezuela?

US hardliners 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 has lobbied Washington not to end waivers to the Act exposing foreign firms to lawsuits after the Trump administration signaled earlier it would upend previous policy. 

"Now it appears that 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 re-established diplomatic relations.

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