AUGUST 1998 -

CONTENTS

1. Anti-sanctions forces in Congress prevail over states who would defy WTO

2. Castro plays for more help abroad

3. Cuba’s economy sparks aid requests

4. Helms-Burton debates go on and on

5. Is the U.S. tightening immigration and travel regulations involving Cuba?

6. Organizations and meetings

7. Indictments allege plot to kill Castro

CANADIAN NAC SPOKESMAN AT AMCHAM CUBA LUNCH IN DC, FRI. SEPT. 25. Canada’s Director of the North American Committee, Dr. Charles A. Barrett, will discuss the NAC’s work on promoting its “Principles for Private Sector Involvement in Cuba” released July 1997. He will speak from the viewpoint of the NAC, a coalition of business, labor and academicians from the U.S, Mexico, and Canada and will take questions after his talk at the National Press Club.

Besides serving as Vice President, Business Research, of the Conference Board of Canada, Dr. Barrett heads its leadership development arm, the Niagra Institute of International Studies. We are pleased that the NAC and the National Policy Association, which serves as the NAC’s U.S. Secretariat, will co-sponsor this event.

MIAMI LUNCH OCTOBER 28: Privatization and claims will be discussed at lunch at the Coral Gables Biltmore Wednesday, October 28:

Privatization of state enterprises in Central and Eastern Europe will be explored by Dr. Jorge Sanguinetty, together with lessons learned as applicable to Cuba’s transition to democracy.

Claims against Cuba, both certified by the U.S. government and not, will be discussed by Nicholas J. Guttierez, Jr., Esq. He will consider claims brought by individuals and firms, and the implications of Cuban laws after Castro.

1. IS US POLITICAL DEBATE ON SANCTIONS SHIFTING? Narrow victory by anti-sanctions forces in Congress was seen as a shift away from using sanctions as a foreign policy tool, at least by Michael Levyveld (Journal of Commerce August 7). The National Foreign Trade Council (Dan O’Flaherty) was cautiously hopeful this shift will last.

Lobbied by UnderSecretary of State Stuart Eizenstat and others, the House by 228-200 rejected an amendment of a Justice-Commerce-State Department funding bill which would have denied funds for challenges to state or local laws decreed by the WTO (World Trade Organization) to violate international trade or investment pacts. William Roberts (Journal of Commerce) said the defeated amendment appealed to opponents of foreign trade. For example, Rep. Ros-Lehtinen hoped the amendment would have meant that diplomacy would not require surrender, such as to the EU challenge of Helms-Burton at the WTO.

The amendment would have protected laws in Massachusetts to punish firms dealing with Myanmar (Burma), New York to exclude Swiss banks involved in Nazi gold from its business, and, said the busi-ness coalition USA*ENGAGE, other “sub-federal sanctions against authoritarian regimes from Indonesia to Nigeria.” The majority prevailed by asserting that the Administration had full authority to approve the treaty creating the WTO. USTR (Trade Representative Barshefsky) said federal courts are barred anyway from deferring to the WTO, hopes Massachusetts will amend its law, but if not will support it at the WTO.

2. CASTRO APPEALS FOR HELP FROM ABROAD - NEW INITIATIVES. Is Castro expanding efforts to find support overseas? Some see his initiatives as a cautious follow-up to opportunities offered by the Pope’s visit.

Economic difficulties have led Castro to seek more emergency aid and credits to meet eastern Cuba drought losses which he estimates at $160 million, according to a report from Havana August 7. The WFP (World Food Program) plans to help meet its own estimate of needs ($60 million for food crops “with no end in sight”), plus export losses, costs for trucking water, and financial obligations.

More political was President Castro’s call for U.S. cooperation in fighting terrorism. In a 5-hour speech in Santiago de Cuba July 27, reported Nikko Price (Associated Press,), Castro claimed that Clinton’s responsiveness had been derailed by CANF (Cuban American National Foundation) whose leaders had “miserably deceived” him. He cited the New York Times report that Luis Posada Carriles’ long CIA-aided destabilization efforts had financing from the CANF - a report promptly denied by Posada and the CANF.

Castro took his appeal for international support to the Caribbean in July. His two-day Jamaica tour was seen by Michelle Faul (Associated Press) as “burying the hatchet” on the eve of Emancipation Day. August 1 he dedicated a memorial to 73 Barbadians killed 22 years ago in a Cuban plane bombing, blamed at the time on U.S.-based anti-Castro activists. In Grenada, nearly 15 years after U.S. invasion to prevent communist “contamination”, he relished the irony of Prime Minister Keith Mitchell’s thanks for Grenada’s interna-tional airport. Mitchell said his posture was “not anti-anyone at all” but merely designed to strengthen ties across the Caribbean, a view shared by cheering crowds.

In the Dominican Republic the third week of August, Castro discussed trade negotiations with Europe with regional leaders, and a new trade pact with long-time adversary President Balaguer.

Although aid offered by Castro to his Caribbean hosts was described by Larry Rohter in the New York Times August 2 as “a major effort to provide economic and other assistance to its neighbors,” in fact it seemed modest, including, as in the past, of Cuban scholar-ships, technical aid, and doctors and specialists, no doubt simultaneously easing unemployment in Cuba.

Castro will be at the Ibero-American Summit in Portu-gal, the Non-Aligned Movement Summit in S. Africa, and as observer at September talks with African, Caribbean, and Pacitic partners on a trade-and-aid accord to replace the Lome Convention in 2000.

Castro’s trip successfully played to the Caribbean region’s wearying of the U.S. embargo. Warm reception by his Caribbean hosts was ascribed to desire on their part to cement a regional countervailing weight to U.S. indifference, such as to a WTO ruling against preferential terms for banana sales from the islands. Castro was also trying to distract domestic attention from Cuba’s economic difficulties. However, Jorge Ponce, writing to The Washington Times August 9, said Castro is more concerned with his international image than with welfare at home or giving foreign aid. In the August 8 New York Times, Larry Rohter felt that the visits were festive, not threatening, since, without Soviet Union back-up, “the Communist anthem could.no longer frighten the capitalist world.” The New York Times took the occasion to urge the U.S. to reinforce efforts to open up Cuban society with more official and unofficial contacts with Cuba’s people.

OPINION CORNER. Our newsletter forum is open to contributors reflecting the entire range of views of business people interested in Cuba. We will welcome your views for consideration. This month, AmCham Cuba’s Secretary, Matias F. Travieso Diaz, Esq., discusses “Putting the Helms-Burton Law on Ice”.

On May 18, 1998, the U.S. and the European Union (EU) reached a compromise on application of the Helms-Burton Law (the Law) to EU nationals. While for reasons of space we cannot provide a detailed discussion of the law here, suffice it say that its Title III authorizes a private right of action by U.S. nationals whose properties in Cuba were confiscated by the Castro regime against third-country persons (individuals or companies) who “traffic” in those properties. Title IV requires the exclusion from entry into the U.S. of trafickers and their agents and the members of their immediate family. If the person is a corporate entity, its officers, principals, and controlling shareholders are exludable. The U.S. Department of State is the agency charged with the implementation of Title IV of the Law.

The Executive was firmly opposed to the Law while it was under consideration by Congress. Only in the aftermath of Cuba’s downing of two civilian planes flown by Cuban exiles did the Clinton Admiistration relent and lend its support to the legislation. One concession the President extracted was his ability to suspend the application of the right-to-sue provisions in Title III for discrete periods of six months based on the Presiden’t sdetermination that to do so is in the national interest and will facilitate a transition to democracy in Cuba. The President has continued to esercise his power to keep Title III litigation from taking place, and has announced his intention to continue to do so for the balance of his term. As justification for his actions, the President has repeatedly cited efforts by the EU and other countries to press Cuba’s government to institute democratic reforms.

While Title IV has been in effect for over two years, its implementaition has been sporadic and selective. Only three companies have been subjected to its sanctions: the Canadian mining company Sherritt Intl.; the Mexican tele- communications firm Grupo Domos; and the BM Group, an Israeli enterprise involved in operating a citrus farm and, more recently, real estate transactions. No European firm has been the subject (or proposed subject) of sanctions. This is remarkable given that a number of European companies have been identified as engaged in significant business operations in Cuba; in particular, Stet, an Italian telecommunications company, was a partner of Grupo Domos in a joint investment in the Cuban telephone company; yet sanctions were applied to Domos but not to Stet.

The explanation behind this anomalous situation is that in October 1996 the EU countries demanded the start of an arbitration proceeding before the World Trade Organization (WTO), claiming that the Law violates the terms of the international treaties governing international trade in goods and services. Neither party, however, wished to press the WTO arbitration to conclu-sion, which could seriously impact international trade regardless of the outcome. For that reason, the U.S. and the EU have from the start tried to avoid worsening the dispute by taking inflammatory actions, and have sought a diplomatic solution. The parties reached on April 11, 1997 agreement in principle under which the U.S. and the EU committed to establishing a joint regime of “disiplines and principles” to strengthen protection afforded to investors worldwide against uncompensated expropriation, and in exchange the U.S. government would seek consultations with Congress towards suspending application of Title IV. In particular, the U.S. government indicated it would continue keeping the right to sue provisions in Title III from becoming applicable and would follow a “thorough, deliberate process in order to ensure careful implementation of Title IV,” which in non-diplomatic terms meant that the U.S. would go very slow in applying further Title IV sanctions, particularly against a citizen of an EU country.

After a year of wrangling over the details, a permanent agreement between the U.S. and the EU on Helms-Burton was reached May 18, 1998, just in time to make the closing of the summit meeting between the U.S. and EU on trade issues. In the permanent agreement, the Clinton Administration committed to seek Congressional approval for an amendment to the Law to suspend Title III right-of-action indefinitely and give the President the authority to waive application of Title IV to EU nationals. For its part, the US committed to establishing, jointly with the U.S., a claims registry in which nationals of the contracting parties can enter expropriation claims against third countries. If it was determined that properties in question were explopriated without payment of compensation, and if a national of one of the contracting states were to do business involving such properties, the country of which the investor was a national would be required to deny its support (such as government investment guarantees) to the investment.

It is noteworthy that this agreement is the first instance in which an international forum accepts the concept that the uncompensated expropriation of the property of an alien by the state creates potential rights of action against property in other countries. In that regard, this agreement represents a measure of vindication to the legal position of the Law’s supporters. This point was made in a June 17, 1998 letter from Sen. Jesse Helms and Rep. Benjamin Gilman to Sec-retary of State Madeleing Albright. The letter, however, goes on to provide reasons why the agreement is inadequate and to express opposition to making changes to the Law. To date, no moves to modify it have been initiated in Congress and none are exprected in the immediate future. Under the terms of the agreement between the U.S. and the EU, the latter has no obligation to keep its side of the bargain unless the U.S. changes the Law.

While the agreement itself is unlikely to be carried out, it has already had four significant consequences. First, it provides a face-saving mechanism for all parties to abandon the WTO dispute and avoid potential distruption of world trade. Second, it formally stabilizes the situation on implementation of the Law, or at least with respect to European countries, such that it can be assumed the Law will be in suspense until at least January 20, 2001 when a new President takes office. Third, as noted above, the agreement creates a new right under International Law to persons who are the victims of uncompensated expropriations; definition of the contours of that right will likely take decades. Fourth, the agreement has avoided further complications on the status of title to property in Cuba; such complications would have been inevitable if litigation over confiscated properties were allowed to be brought before the courts of the U.S.

In short, the U.S.-EU agreement has been a positive development, if nothing else by keeping the Helms-Burton Law on ice for a couple of years and thus preventing it from complicating further the difficult picture of Cuba’s transition. The way things stand, what is needed is fewer punitive laws and more constructive efforts at creative engagement on all sides.

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3. CUBA’S ECONOMIC PROBLEMS LEAD TO MORE AID REQUESTS. Juventud Rebelde reports that Cuba may soon close half its 156 sugar refineries not needed for production, but will first explore the impact on thousands living off refinery incomes. The August LA Monitor, British journal, deplored Cuba’s drought and export losses, aid requests, and steep increases in dollar taxes on the 154,000 self-employed businesses, and said tourism expansion offers little relief. Besides WFP drought aid cited above, UNDP awarded a two-year grant of $300,000 to help Cuba market biotech products. This, with an 866,000 peso matching contribution, would support marketing infrastructure for scientific institutions and build a high-velocity computer network linking research institutions.

4. CUBA-WATCHERS DEBATE EMBARGO. “Should the U.S. lift the Cuba embargo?” was debated for two hours August 7 on Washington’s Channel 22. Positions taken contained no surprises, but the prestige of panelists at Coker College in Hartsville, SC, chaired by Michael Kinsley, was impressive. Speeches, rebuttals and cross-questioning agreed on a democratic Cuba as the ultimate objective, but disagreements on how to achieve this were strident.

Supporting continuation of the embargo to show U.S. outrage at Cuba’s human rights and U.S. citizens’ property violations, and to make economic recovery difficult for Castro, were Rep. Bob Menendez, D-NJ; journalist Ninoska Perez; Cuban American Business Council President Ambassador Otto Reich; and Sen. Robert Toricelli (D-NJ). Asserting that in 37 years the unilateral embargo has failed to achieve democratic improvements or bring down Castro even after the end of Soviet aid, and that dialogue with the Cuban people should have a chance were: columnist Bill Buckley; Cuban Committee for Democracy past president Alfredo Duran, Esq; Kirby Jones of Alamar Associates, and ex-Rep. James Symington, Esq.

Meanwhile, an op ed column by former Sen. Malcolm Wallop (R-WY, Chmn., the Frontiers of Freedom Inst. and reportedly representative of the Canadian Sherritt Intl Corp.) speculated in the Washington Times (August 12) whether Helms-Burton goals, “through no credit to itself,” may be achieved by a confluence of forces, low sugar and nickel prices, poor sugar production, the Asian economy, and nebulous new property rights in the new U.S.- EU agreement. If this happens and Castro falls, Wallop challenged the U.S. for specific answers to Cuba’s likely response, such as a massive exodus, or revolution (how to know whose?). What types of authorized aid to democracy would the U.S. give? Since U.S. policy now is merely a symbol of fidelity to embargo proponents, not a policy to help the Cuban people, won’t freedom come very slowly and great cost to U.S. taxpayers? On the other hand, Wallop says there is still time to use trade (not aid) to seek Cuban liberties with minimal strife and loss of life, minimal U.S. cost, and maximum benefit to Cuban civilians. He invites Cuba to begin to feed and service its population’s needs at its own cost

Finally, enclosed is an August 19 analysis by Richard Lawrence (Journal of Commerce) of the wide-ranging inaction on the U.S. embargo, the EU complaint to the WTO that it violates international trade rules, and the MAI (Multilateral Agreement on Investment) being negotiated by 29 members of the Organization for Economic Cooperaton & Development (OECD).

5. IS THE U.S. QUIETLY TIGHTENING IMMIGRATION, TRAVEL, & CUSTOMS REGS? Recent immigration events include arrest, in Florida’s Keys, of Canadian David Butler for smuggling a dozen Cuban refugees into the U.S. In August, the Bahamas sent back 65 boat people. As for immigrants’ behavior in the U.S., the Miami Herald July 29 said Miami’s Chief FBI officer warned that Cuban exiles now face tightened crackdowns on plots that violate our neutrality law (see Sec. 7 below).

Some refugees get out, however: August 13 CANF reported that, ironically on Castro’s birthday, five baseball players fled to Nicaragua; four of them had been forcibly returned from the Bahamas in May. And at least four athletes defected to Venezuela where while competing in regional competitions.

Is travel to Cuba more restricted? Reps. Diaz-Balart (R-FL) and Ros Lehtinen (R-FL) said new enforcement by the Coast Guard and FAA (Federal Aviation Adm.) “to prevent threatened disturbances” is really designed to “muzzle hardline exiles to pave the way for normalized relations with Cuba”, CUBAInfo reported July 30. Dr. Jaime Suchlicki said, quoting his recent study, the reasons are economic, as relaxing or lifting the travel ban would give Castro and state enterprises needed dollars without benefitting the whole economy, and damage economies of nearby island nations.

Requests for “fully funded” trips by U.S. citizens are reported to be newly questioned by Treasury which places on U.S. visitors the burden of proving that they spend no dollars in Cuba. It is reportedly studying the Alamar Associates’ September trip to help U.S. businessmen “gain a foothold in Cuba in anticipation of the embargo’s being lifted” (Kevin Hall, Journal of Commerce, August 12). CANF alleges that either some of the escalated cost of Summit II ($3,250, up $1,200 from Summit I in March) is being slipped to Cuba’s government or the Cancun Melia Hotel costs will subsidize overnights at the Havana Melia - charges denied by Alamar President Kirby Jones, who calls the difference his necessary profit.

Cigar smuggling continues. A few Cohibas get by U.S. customs, especially if ring labels are removed. The best come via London, Geneva, and Spain where they are humidified and cared for (Tom Baldwin, Journal of Commerce August 3). Fake Cubans fool ten million baby boomers seeking fine cigars, claims The Ultimate Cigar Book by Richard Carleton Hacker. Good fakes are Dominican tobacco rolled in Dominican or Honduran wrappers, and “Connecticut shade” exterior wrappers. U.S. Customs watches for whole boxes of Cuban cigars (symmetrically packed). Price is an index of authenticity: those selling for less than $18-$30 per box are not Cubans. Hacker says the aura of Cuban cigars will evaporate with the embargo.

In contrast, loopholes in U.S. embargo laws have been cited (Eric Schmitt, New York Times, August 9) for letting U.S. farmers ship food to Cuba and Iraq, and food and agricultural products are donated with the Administration’s blessing as U.S. suppliers try to position themselves to compete when the embargo lifts. The U.S. Grains Council donated 4,000 lbs. of mixed feed grain last spring to a Cuban aid agency, and Kansas farmers and the wheat industry’s export arm donated 22,000 lbs. of flour to Cuba in February.

6. NEW CUBAN CIVIL SOCIETY ORGANIZATION, AND CUBA STUDIES ASSN. MEETING. AmCham Cuba’s Miami representative, Carlos Porro, reports that a group of prominent Cuban-Americans, including Dr. Jose Ignacio Rivero and Dr. Andres Vargas Gomez, journalist, have brought Cuban exile organizations together so as to have one voice in exile and “to reach...understanding on true and legitimate democratic efforts in Cuba.” Crossing political lines, La Sociedad Cubana has attracted 26 professional, fraternal, and patriotic organizations formed either in Cuba or more recently, including those representing agronomists, bankers, cattlemen, communications, engineers, environmentalists, journalists, landholders, lawyers, municipalities, sugar and tobacco producers, university women, unions in exile, veterans, and chambers of commerce. El Nuevo Herald of August 1 said American also firms support the new exile group.

A Cuban Studies Symposium will explore Church and State in Cuba September 12-13 at the James L. Knight Center, Univ. of Florida, report the Cuban Studies Assn. and U. Miami’s School of International Studies. Invited participants are some 25 experts from U.S. NGOs, academia, the media, Congressional staffs, and churches. There will be panels on church and state, the future of faith in Cuba, Afro-Cuban religion, the Pope’s impact, the Jewish presence, protestantism and evangelical movements. To register (pre-registration $25, on-site $40), call 305-284-3251, e-mail JCEspinosa@sis.miami.edu.

7. ALLEGED PLOTTERS AGAINST CASTRO INDICTED. Castro would have been assassinated by explosives, grenades, or shots, Reuters reported August 9, citing a Guatemala meeting of Luis Posada Carriles with Cuban exiles. They explored weapons smuggling to the Dominican Republic with a view to killing Fidel, but the plot “was betrayed to U.S. authorities and fell apart”. A few days later El Nuevo Herald said a Cuban was deported by the Dominican Republic for suspicion of an assassination attempt.

On August 26, CANF Board member Antonio Llama and six others, apparently including “Pepe” Hernandez, President, were indicted by a Puerto Rico grand jury for violating the U.S. Neutrality Act barring military action against countries with which the U.S. is not at war. The charge of “conspiracy to assassinate Fidel Castro” at Isla Margarita during an LA summit November 1997 followed detention by the U.S. government off Puerto Rico for carrying a rifle owned by Hernandez on a boat owned by Llama.

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We look forward to seeing you in Washington September 25 or Coral Gables on October 28, or both! Send a check for $35 for AmCham Cuba members (non-members and guests $40 ) to the appropriate AmCham Cuba office to assure reservations.

Keep sending in your views for us to share with other members of AmCham Cuba and the business community concerned about Cuba. We rely on you.

Sincerely,

Phoebe Lansdale

Executive Director

August 28, 1998