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The Opening to Cuba: The impact on foreign U.S. subsidiaries

The Opening to Cuba: The impact on foreign U.S. subsidiaries

The American-Danish Business Council invited Dr. Wayne Smith, former chief of the U.S. Interests Section in Havana and Senior Fellow at the Center for International Policy, and Robert Muse, an attorney with more than 25 years of experience on U.S.-Cuban commercial issues, to discuss the impact of President Obama’s normalization of relations with Cuba.

Dr. Smith opened the meeting that was held at the Embassy of Denmark on the 24th of June. Having just returned from Cuba, Dr. Smith said he was somewhat disappointed at the slow pace. While the Cuban people are enthusiastic, the Cuban government is more cautious and dubious. Dr. Smith admitted that there are legitimate causes for this attitude. The Cubans point to the fact that they have been open to an easing of tensions and re-establishment of relations for some time and the US has not been interested. Having spent 56 years working for a return to normal relations with Cuba, Dr. Smith said he was encouraged and hopeful but expected the pace to remain slow.

Robert Muse made the point that the President is able to do much more than he has with executive orders rather than looking to a Congress that is heavily influenced by the old guard of Cuban exiles. Mr. Muse indicated that the pace could be sped up from the U.S. side and that the more measures in place when the President leaves office the less likely that this legacy accomplishment will be overturned by the new President.

Mr. Muse cited the example of President Nixon’s opening of dialogue with China. Although many objected, by the time he left office, too much had been accomplished to reverse course. In other words, President Nixon changed the rules of the game.

As examples of executive actions that could be taken, Mr. Muse cited:

  1. Executive power to dismantle most of the Helms-Burton Act
  2. Decriminalize the use of U.S. dollars regarding trade with Cuba
  3. Allow agricultural commodities from Cuba to enter the U.S.
  4. Allow sales to government supported entities, Caterpillar for example would like to sell to Cuba and food companies might want to source products from Cuba.

An encouraging sign has been the licensing of ferry service to Cuba. Mr. Muse suggested getting U.S. ports (Gulf and Atlantic) invested in Cuba so that port security issues, etc., could be better addressed.

The Miami Cuban community and others are now fractured between the old guard that still wants no rapprochement with Cuba and younger Cuba-Americans who are less obdurate.



Three areas of claims against Cuba is another barrier that must be resolved. Nationalization claims dating from the 1960s amounting to about $1.8 B. The State Department is responsible for resolving these claims. The old model has been a lump sum payment at a negotiated amount. However, that may not be possible now.

Cuban-American claims are not being promoted by the U.S. Dr. Smith said that a rancher had previously owned a large ranch in Cuba. Instead of asking for the property back that he lost in the 1960s, he was asking for the right to run cattle on the ranch and live in the house – adding to the Cuban economy. This might be an innovative solution others could follow as well.

A third area of claims is more troublesome. These are law suits that have been filed and adjudicated in Florida giving enormous damages to plaintiffs. Mr. Muse suggested that these judgments needed to be voided. However, at this time, the State Department, who needs to certify claims, does not have a working group on the issue.

Asked what sectors might enter Cuba first, Mr. Muse named the hospitality industry – Golf courses, five star hotels, etc. – and real estate developers potentially focusing on the coastal areas. There is a strong biotech industry in Cuba and agriculture provides a potential platform for Cuban exports of winter vegetables and fruit.

All-in-all, the U.S. should unilaterally speed up the process using executive powers. Presidential advisors, however, seem locked in old school quid pro quo negotiations which is timely and potentially obstructive.