The Militant(logo) 
    Vol.60/No.15           April 15, 1996 
 
 
New Law Escalates U.S. Economic Assault On Cuban People
`Libertad' act also registers Washington's intensifying trade offensive against competitors in Europe, Canada  

BY ARGIRIS MALAPANIS

The misnamed Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, which U.S. president William Clinton signed into law March 12, is a substantial new escalation of Washington's 37-year-old economic war against the Cuban people.

At the same time, the new legislation registers the intensifying trade offensive by the U.S. rulers against their imperialist allies, who are also competitors, especially in Europe and Canada.

The bill was introduced by Sen. Jesse Helms and Rep. Daniel Burton in February 1995. In its final form it was approved by substantial bipartisan majorities in both houses of Congress on March 5 and 6 of this year. Its enactment was part of a new round of hostile measures Washington unleashed against the Cuban people following the February 24 shooting down by the Cuban air force of two U.S.-based planes that violated the country's airspace, piloted by Cuban counterrevolutionaries operating out of Florida.

The new legislation tightens the embargo that was already intensified by the Cuban Democracy Act of 1992 (sometimes referred to as the Torricelli law, after Democratic congressman Robert Torricelli, who introduced it). That act - signed by President George Bush after candidate Clinton took the lead during his presidential bid in pushing the bill - made it illegal for foreign subsidiaries of U.S. companies to trade with Cuba.

It also closed U.S. ports to ships that have called in Cuba within six months. And it authorized the president to apply sanctions against any country that provides aid to Cuba, by declaring such countries ineligible for U.S. foreign aid funds, arms sales, or debt relief.

The Cuban Democracy Act contained several provisions designed to encourage the "free flow of ideas." These included measures to improve telephone communication, leeway for non- governmental organizations to finance U.S. activities in Cuba, and greater latitude for travel to Cuba by certain U.S. academics as well as allowing greater access to U.S. universities for Cuban professionals on a case-by-case basis. These provisions have been referred to as "track two" of the Torricelli law and denounced in Cuba as one more strategy to overthrow the revolution.

In addition to the blockade, Cuban president Fidel Castro told a rally last July 26, there are those who "want to exert their influence through wide-ranging interchanges with diverse sectors they believe they can influence, by granting generous scholarships, by dazzling us with their million-dollar institutions, their technology, their social research centers. They do not allow U.S. citizens to travel to Cuba, to get to know the island and to have a holiday here, but they are prepared to send sociologists, philosophers, historians, Cuba specialists, English professors, and other academics to our universities to `enlighten' us.... That is to say, the so- called `track two' of the Torricelli Act."

The "Libertad" act codifies into law all executive orders pertinent to the embargo in effect on March 1 and requires that U.S. sanctions remain in place until a "transitional government" approved by Washington is established in Cuba (see summary of key provisions below).

Since July 1960, when Washington initiated the embargo against Cuba, many U.S. economic and other sanctions have been imposed by presidential decree, not congressional legislation. This executive leeway has been curtailed.

Designed to stifle foreign investment in Cuba, the law permits for the first time Cuban-American and other U.S. businessmen whose property on the island was confiscated by Cuban workers and peasants after the 1959 revolution to sue companies abroad that invest in those properties. This comes on top of the long established procedures for filing claims against and demanding compensation from the Cuban government for the expropriations.

Keep your cake and eat it too
Under one provision of the law the richest Cubans who fled to Florida after the revolution - those who owned at least $50,000 worth of property in 1960s prices - will be able to cash in on investments in Cuba despite the embargo by extorting payoffs from foreign companies. Under the measure, these former property owners can sue an investor in a Cuban joint venture and then reach an out-of-court settlement giving them a cut of the investment revenue.

In effect they can both support the embargo and profit from business in Cuba.

One of the key authors of this provision is Cuban-American attorney Nicolás Gutiérrez, who, according to an article in the March 3 Washington Post, "represents the National Association of Sugar Mill Owners of Cuba and the Cuban Association for the Tobacco Industry." Before the revolution, his family owned two sugar mills, a rice plantation, 15 cattle ranches, and a bank, among other properties, which Cuban working people expropriated in the 1960s. Ignacio Sánchez, another lawyer representing the Bacardi rum company, was also involved in writing this clause.

Gutiérrez is eyeing a Kentucky subsidiary of British- American Tobacco (B.A.T.), which produces Lucky Strike cigarettes. B.A.T. is part of a Cuban joint venture to produce tobacco on land supposedly confiscated from Gutiérrez's clients. And the Bacardi family will now be able to sue Pernod Ricard, the French spirits distributor, currently marketing Havana Club rum worldwide. Bacardi claims that the rum Pernod Ricard trades is being produced in the former Bacardi distillery in Santiago de Cuba, which was nationalized after the revolution.

The same approach can be applied against Canadian or other companies with investments in nickel mining or oil exploration.

Out-of-court settlements for such lawsuits do not need U.S. government approval. "Given the choice of forfeiting millions of dollars invested in Cuba or their financial business interests in the United States," said the Post article, "the practical business solution might be to give the exiles a cut of the action."

Banning officers of rival firms
The new legislation also denies visas and excludes from the United States principle shareholders and corporate officers, and their family members, of companies that do business involving expropriated properties in Cuba. Even citizens of Canada, who are not required to obtain U.S. visas, would be barred.

Executives of firms such as the Canadian oil and mining company Sherritt International or the Italian apparel corporation Benetton Group, which have investments in Cuba, may be affected. According to the March 14 New York Times, U.S. trade representative Mickey Kantor defended the new legislation saying that "the United States reserved the right to protect its security interests and to bar from entry people who have committed crimes of moral turpitude."

The new law also contains a sweeping prohibition of importing into the United States anything that may contain even a grain of Cuban sugar.

These provisions potentially affect companies and their subsidiaries in dozens of countries. Cuba has substantial trade relations with more than 100 countries today.

According to Cuban government statistics, there are more than 200 joint ventures in the Caribbean nation now, totaling investments of $2.1 billion - the overwhelming majority in tourism and a few in industry. Other estimates are more modest. According to the March 25 Financial Times of London, "one independent estimate puts total funds actually committed or delivered since 1990 at only around $730 million."

Topping the list of investors are companies from Mexico, Spain, and Canada.

Last year, Cuba's National Assembly adopted a new investment law to facilitate more joint ventures with foreign capital, in an effort to boost access to technology and markets, and increase production levels that plummeted with the post-1989 cutoff of aid and favorable trade links with the former Soviet bloc countries.

Government officials in Cuba acknowledge that the new U.S. law will probably have an adverse impact on the nation's economy.

It "may influence... some enterprises," said Carlos Lage, vice president of Cuba's Council of Ministers, "and that will have a negative impact on our economy." Lage was speaking to a meeting of the Central Committee of the Communist Party of Cuba on March 23. His remarks were published in the Cuban daily Granma March 25.

"Fear of that law, of the implications of that law, puts a brake on investments," Lage stated. It "can paralyze financing, it can paralyze the supply of products, because of the concerns it raises for enterprises or suppliers."

Lage cited "isolated cases" of corporations and banks that have indicated they may back out of investment plans.

Interimperialist conflicts
Some of Washington's competitors have "released a steady stream of invective against the U.S.," according to an article in the March 14 Wall Street Journal.

"The real chill for Canada in the wake of the new U.S. law to tighten the blockade around Cuba is how the precedent could hurt Canadian companies doing business anywhere in the world," said an article in the March 26 Toronto Globe and Mail.

There was a similar response from officials of the European Union, which passed a resolution condemning the legislation. "It is particularly unacceptable that a third country could tell us how to conduct our trade," stated Jean-Pierre Leng of the European Union (EU).

"We remain strongly opposed to this legislation," stated Peter Guilford, EU trade spokesman. "One of the principles of the World Trade Organization is that you don't export your laws and your principles to other countries."

"The bill runs counter to international practice in bringing extraterritorial claims against foreign investors in Cuba," said Mark Entwistle, Canadian ambassador to Cuba.

Ottawa announced it was considering a formal complaint, along with the government of Mexico, that the legislation violates the terms of the North American Free Trade Agreement. On March 19, the Geneva-based World Trade Organization (WTO) criticized the embargo-tightening law in a non-binding resolution.

Washington on the offensive
"So why aren't America's allies rushing to file a challenge at the WTO?" asked the March 14 Journal. "Because they aren't likely to win." Kantor, the article says, indicated the White House will use an escape clause in WTO rules that allows governments to declare unilateral trade sanctions for reasons of "national security."

Since the WTO was established in January 1995, Washington has challenged the rules of the organization at least three times. It ignored, for example, WTO dispute settlement procedures in a conflict with Japanese companies over auto parts, choosing to threaten Tokyo with sanctions.

Another bill moving through U.S. Congress now, sponsored by Republican Sen. Alfonse D'Amato, would also impose sanctions on non-U.S. companies selling oil and gas equipment to Iran and Libya. On March 21, a House of Representatives committee passed this proposal. The Senate has already approved a version of the bill.

Cuba campaigns against law
The Cuban government has launched a political campaign to counter the effects of the law, by taking advantage of differences between Washington and its capitalist competitors over provisions of the act.

"The goal of breaking the Cuban people through hunger will fail, as all hostile efforts against the Cuban revolution over the last 37 years have failed," said the statement from Cuba's foreign ministry condemning the new U.S. law. "Cuba reiterates its firm determination to defend its sovereignty, independence, and self-determination. We know justice and truth are on our side.

"The road charted by the revolution since Jan. 1, 1959, is irreversible."

The Latin American parliament, the Caribbean Community and Common Market (CARICOM), and the Rio Group, which includes the majority of Latin American states, have adopted resolutions against the "Libertad" act.

The law has been condemned by most governments in Latin America and the Caribbean on the grounds that it infringes on their sovereignty. Several conservative parties vehemently opposed to the Cuban revolution, such as the right-wing opposition Democratic Independent Union of Chile, have also issued statements objecting to its extraterritorial reach.

A tour to Latin America and the Caribbean by U.S. secretary of state Warren Christopher in early March, the first such visit in eight years, met with an unusually cool reception in Chile and Brazil.

The Chilean foreign ministry refused to support the new U.S. moves against Cuba and there was dissatisfaction among Chilean capitalists with the recent U.S. ban on import of Chilean grapes citing contamination with "poisons." Christopher's reception in Brazil was similar because of Washington's recent decision to bar gasoline imports from that country and Venezuela, allegedly for environmental concerns.

Small street demonstrations in Santiago, Chile, and Sao Paulo, Brazil, also protested Christopher's presence and showed solidarity with Cuba.

Christopher's Latin America tour coincided with Clinton's announcement that the government of Colombia failed to stanch narcotic trafficking. A U.S. law requires the president to report each year which countries supposedly linked to illegal drug trade are combating trafficking and which are not.

The U.S. "decertification" of Colombia - which according to the White House could affect $750 million to $1 billion in Export-Import Bank commitments and at least $50 million in loans - caused widespread outrage in Latin America, including among many bourgeois politicians and commentators.

"Who certifies the United States?" asked a columnist in El Diario, a Spanish-language New York daily.

At the same time, most governments in Latin America joined Washington in castigating Havana for the February 24 incident. And their condemnations of the "Libertad" law are not likely to be translated into actions defying U.S. policy toward Cuba. Most of these capitalist regimes have few investments in Cuba and, when faced with the choice, are unlikely to sacrifice their relations with Washington over trade deals with Cuba.

 
 
 
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