Politics

Canada pushes back after U.S. clears the way for lawsuits over seized Cuban property

Canada is "deeply disappointed" with the Trump administration's decision to allow lawsuits against foreign firms operating on properties Cuba seized from Americans after the 1959 revolution, Foreign Affairs Minister Chrystia Freeland says.

Canada 'deeply disappointed,' EU considering all options

The United States will lift a ban on U.S. lawsuits against foreign firms doing business in Cuba on May 2. (Alexandre Meneghini, File/Reuters)

Canada is "deeply disappointed" with the Trump administration's decision to allow lawsuits against foreign firms operating on properties Cuba seized from Americans after the 1959 revolution, Foreign Affairs Minister Chrystia Freeland said Wednesday.

U.S. 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.

Freeland said in a statement that she has discussed this issue with Canadian businesses "to reaffirm we will fully defend the interests of Canadians conducting legitimate trade and investment with Cuba."

"We will be reviewing all options in response to this U.S. decision," Freeland said. 

"Since the U.S. announced in January it would review Title III, the government of Canada has been regularly engaged with the U.S. government to raise our concerns about the possible negative consequences for Canadians — concerns that are long-standing and well known to our U.S. partners."

Canadian Foreign Affairs Minister Chrystia Freeland said Canada will defend the interests of Canadian businesses in Cuba following the decision by the U.S. to allow lawsuits against foreign firms doing business on the island. (Alexandra Beier/Getty Images)

The decision is a blow to Havana's efforts to draw foreign investment to the island and 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.

U.S. President Donald Trump is stepping up pressure to isolate embattled Venezuelan President Nicolas Maduro, who is holding power with help from other countries, including Cuba, China and Russia.

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.

Claims valued at $8B

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 US: $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 the only way companies will be safe from litigation would be to ensure that they are not doing business on expropriated properties. She said there would be no exceptions to the decision, which prompted a stern response from European Union as it has vowed to protect its businesses from lawsuits.

"The EU will consider all options at its disposal to protect its legitimate interests, including in relation to its WTO rights and through the use of the EU Blocking Statute," EU foreign policy chief Federica Mogherini and EU trade commissioner Cecilia Malmstrom said in a joint statement.

The 28-nation bloc has warned that it could relaunch a World Trade Organization case on the issue, while its "blocking statute" allows EU companies sued in the United States to recover any damages from U.S. claimants in EU courts.

Mogherini and Freeland also issued a joint statement that said they're "determined to work together to protect the interests" of their companies.

They warn that EU and Canadian laws allow counter-claims against any U.S. lawsuits "so the U.S. decision to allow suits against foreign companies can only lead to an unnecessary spiral of legal actions."

Speech on Bay of Pigs anniversary

National security adviser John Bolton is expected to discuss the new policy during a midday speech in Miami, which is 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's failed 1961 invasion of the island, an attempt to overthrow the Cuban government.

"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," Johana Tablada, Cuba's deputy director of U.S. affairs, said on Twitter.

The 1996 act gave Americans the right to sue the mostly European companies that operate out of hotels, tobacco factories, distilleries and other properties that Cuba nationalized after Fidel Castro took power. The act even allows lawsuits by Cubans who became U.S. citizens years after their properties were taken.

U.S. airlines and cruise lines that bring hundreds of thousands of travellers 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.

Struggling economy

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.

Foreign investment in Cuba increased slightly in recent years, but it remains far below the levels needed to recapitalize the island's dilapidated, often collapsing infrastructure. The Trump administration's decision is not expected to drive out major foreign players like Pernod-Ricard of France, which makes Havana Club rum, or Spanish hotel chains Melia or Iberostar, but it could prove a major obstacle to new investment from foreign companies.

"It will harm prospective investment in Cuba. It will not cause people who are invested in Cuba already to pull out now," said Phil Peters, director of the Arlington, Virginia-based Cuba Research Center, who advocated for closer relations with Cuba and has consulted for U.S. companies looking to invest.

Cubans line up to buy food in Havana on April 4. Raul Castro, the first secretary of the Communist Party of Cuba, recently warned the shortages of food and other goods could become even worse. (Yamil Lage/AFP/Getty Images)

Peters said he also believed the new measure could hurt the Trump administration's effort to force Maduro from power with help from allies like Spain.

"There are plenty of countries that are interested in helping Venezuela find a soft landing after Maduro, but they are not interested in waging an economic war on Cuba," Peters said.

The U.S. official said the administration also plans to start enforcing the section of the act that allows the U.S. to deny entry visas to Cubans and citizens of other countries involved in trafficking in the confiscated property.

With files from Benjamin Blum/CBC

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