The Trump administration on Wednesday opened the door for lawsuits against foreign firms operating on properties Cuba seized from Americans after the 1959 revolution.
Secretary of State Mike Pompeo said he won’t renew a bar on litigation that has been in place for two decades, meaning that lawsuits can be filed starting on May 2 when the current suspension expires. The decision could affect dozens of Canadian and European companies to the tune of tens of billions of dollars in compensation and interests.
“Any person or company doing business in Cuba should heed this announcement,” Pompeo said.
Pompeo said the administration was acting because it recognized the “reality” that the bar on lawsuits, which has been in place since 1996, had not achieved the goal of pressing Cuba to enact democratic reforms or reining in what he called its export of oppression throughout the Western Hemisphere, particularly in Venezuela.
“We see clearly that regime’s repression of its own people and unrepentant exportation of tyranny in the region has only gotten worse because dictators perceive appeasement as weakness, not strength,” he told reporters at the State Department.
Pompeo’s decision gives Americans the right to sue companies that operate out of hotels, tobacco factories, distilleries and other properties Cuba nationalized after Fidel Castro took power. It allows lawsuits by Cubans who became U.S. citizens years after their properties were taken.
“Those citizens’ opportunities for justice have been put out of reach for two decades,” Pompeo said.
There are roughly 6,000 claims that the Justice Department has certified as having merit, according to Kimberly Breier, the top U.S. diplomat for the Americas. Those claims have an estimated value of $8 billion: $2 billion in property and $6 billion in interest, she said. In addition, there are about 200,000 uncertified claims that could run into the tens of billions of dollars, she said.
Breier said there would be no exceptions to the decision, which has already prompted stern responses from Canada and Europe as they have vowed to protect their businesses from lawsuits. She said the only way companies will be safe from litigation would be to ensure that they are not doing business on expropriated properties.
“European companies that are operating in Cuba will have nothing to worry about if they are not operating on properties taken from Americans,” she said.
The decision deals a severe blow to Havana’s efforts to draw foreign investment to the island and comes as President Donald Trump steps up pressure to isolate embattled Venezuelan President Nicolas Maduro , who is holding power with help from other countries, including Cuba, China and Russia.
Spain, which has large investments in hotels and other tourism-related industries on the island, was the first to react. A senior government official told The Associated Press that Madrid would ask the European Union to challenge the U.S. move in the World Trade Organization.
Businesses from Canada, France and Great Britain among other countries also conduct business in properties nationalized after Castro took power.
National security adviser John Bolton is expected to discuss the new policy during a speech in Miami, home to thousands of exiles and immigrants from Cuba, Venezuela and Nicaragua. The speech at the Bay of Pigs Veterans Association is to be delivered on the 58th anniversary of the United States’ failed 1961 invasion of the island, an attempt to overthrow the Cuban government.
Johana Tablada, Cuba’s deputy director of U.S. affairs, said on Twitter: “Before they try to euphorically ride a wave of wickedness and lies, they should take a dose of reality. The world has told John Bolton and the U.S. government to eliminate the criminal blockade against Cuba and the Helms-Burton Act.”
The 1996 act gave Americans the right to sue the mostly European companies.
Countries with large investments in Cuba have ferociously protested the law.
“The extraterritorial application of the U.S. embargo is illegal and violates international law,” said Alberto Navarro, the European Union ambassador to Cuba. “I personally consider it immoral. For 60 years the only thing that’s resulted from the embargo is the suffering of the Cuban people.”
U.S. airlines and cruise lines that carry hundreds of thousands of travelers to Cuba each year appear to be exempt from the key provision of the Helms-Burton Act.
Every U.S. president since Bill Clinton has suspended the key clause to avoid those trade clashes and a potential mass of lawsuits that would prevent any future settlement with Cuba over nationalized properties. Cuba has said it is willing to reimburse the owners of confiscated properties, but only if the communist government is also reimbursed for billions of dollars in damages generated by the six-decade U.S. trade embargo.
The announcement comes at a moment of severe economic weakness for Cuba, which is struggling to find enough cash to import basic food and other supplies following a drop in aid from Venezuela and a string of bad years in other key economic sectors.