(Bloomberg) -- The Trump administration will let U.S. citizens file lawsuits over property confiscated in Cuba during the 1959 revolution, a move reversing two decades of policy and creating new tensions with allies whose companies do business there.
“Cuba’s behavior in the Western Hemisphere undermines the security and stability throughout the region”Secretary of State Michael Pompeo said in announcing the turnaround on Wednesday. “Detente with the regime has failed.”
The U.S. will begin enforcing a provision of a 1996 law known as the Helms-Burton Act that allows Cubans who fled Fidel Castro’s regime to sue companies that have used their former property on the island. Like his predecessors, President Donald Trump had previously waived the provision, Title III, because enforcing it could result in a flood of litigation against foreign companies.
It’s part of Trump’s broader push to reverse moves by his predecessor Barack Obama that eased the U.S. trade embargo with Cuba. He also wants to punish Cuba over its support for Venezuelan President Nicolas Maduro, who has managed to stay in power despite massive U.S. sanctions and a move by the Trump administration to recognize Juan Guaido as the country’s legitimate leader.
The European Union, the biggest foreign investor in Cuba, threatened action before the World Trade Organization or other possible retaliation over Trump’s Cuba move.
“The European Union reiterates its strong opposition to the extraterritorial application of unilateral restrictive measures which it considers contrary to international law,” Alexander Winterstein, spokesman for the bloc’s executive arm, told reporters in Brussels on Wednesday. “Let me stress that the EU is ready to protect European interests, including European investments and the economic activities of EU individuals and entities in their relations with Cuba if these were to be affected.”
A group that advocates ending the trade embargo on Cuba said in a statement Tuesday that U.S. companies also will be affected. “This decision punishes the Cuban people and American companies -- companies who were given permission by the U.S. government to do business and are now having the rug pulled from underneath them,” said James Williams, President of Engage Cuba.
White House National Security Adviser John Bolton planned to boast of Trump’s move in a speech in Miami on Wednesday criticizing governments in Cuba, Venezuela and Nicaragua that he has branded a “troika of tyranny.”
Earlier this month, Trump blocked an agreement under which Cuban baseball players returned some of their signing bonus to the country’s baseball federation. The deal, signed with the Major League Baseball Association, had been meant to allow Cubans to travel to the U.S. freely rather than having to defect and find their way to American soil on their own.
The State Department says there may be as many as 200,000 claims under the 1996 Helms-Burton law, with some of the biggest held by companies including Office Depot Inc., Exxon Mobil Corp. and Coca Cola Co. Many may not bring suits because they would effectively be targeting clients overseas.
While lawsuits would take years to wind its way through the legal system, the impact is likely to be felt almost immediately, said Peter Harrell, a fellow at the Center for New American Security, a Washington-based research group
“It’s going to be pretty long road ahead to actually winning any judgments but the Trump administration will get what it wants out of this because you’re going to see a number of European companies decide the risk isn’t worth it,” Harrell said.
Canadian Foreign Minister Chrystia Freeland discussed Helms-Burton with Pompeo on the sidelines of the NATO meeting in Washington at the beginning of April. She told her American counterpart that the government, led by Prime Minister Justin Trudeau, “will defend the interests of Canadians conducting legitimate trade and investment with Cuba, if the United States enforces Title III,” according to a readout from her office.
Canadian miner Sherritt International Corp., which has been mining nickel in eastern Cuba since 1994 and also has oil-and-gas operations near Havana, declined to comment until the announcement is officially made.
--With assistance from Stephen Wicary and Margaret Talev.
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