Don't forget what we lost in Cuba

January 10, 1999|By Pete Petersen

IN THE mid-1940s, Pat Castillo was a beautiful, young Baltimorean who met and married her husband, Eugenio, while he was a graduate student at Johns Hopkins University. In 1952, they moved to his native Cuba, where they built a sprawling, four-bedroom house with a beautiful garden, befitting his position as a Cuban diplomat.

But their serene life was shattered 40 years ago this month, when Fidel Castro seized control of the government and took the Castillos' home, personal property and cash.

The Castillos left Cuba penniless in the summer of 1959 and returned to Baltimore. Castillo died a decade ago, but Mrs. Castillo still lives in Baltimore and has vivid memories of her Cuban nightmare.

Now, with talk of the baseball Orioles playing in Cuba and other movements toward a thaw in relations that might lead to the lifting of the U.S. embargo against Cuba -- as it likely will, someday -- lawmakers and policy makers ought to remember the Castillos and others like them.

It took a decade for Mrs. Castillo to document her claim against Cuban authorities in the Castro government. After all, those same authorities seized the Castillos' deed and other papers that proved ownership. But in 1969, the U.S. Foreign Claims Settlement Commission accepted Mrs. Castillo's claim, one of nearly 6,000 totaling $5.6 billion accepted by the commission in the past 25 years.

What will become of these unpaid claims?

While international law supports the return of expropriated businesses, the law is not as clear about individually owned houses and apartments. Complicating the situation further is the fact that compensation might be paid in Cuban pesos, now worth less than they were in 1959.

In any event, it is doubtful many U.S. dollars could be gained from such a transaction. Perhaps a more equitable solution for Mrs. Castillo would be to barter for a comparable property or commodity that could be converted into dollars. One problem is that foreign investment in Cuba has replaced the subsidies the Cuban economy lost after the fall of the Soviet Union.

And foreign investors have been rewarded with stakes in properties formerly owned by Americans. For instance, the Sherritt International Corp., a Canadian firm, invested more than $1 billion in Cuba's nickel industry and in oil and gas exploration there. But the mines Sherritt now uses once belonged to a predecessor of Freeport-McMoRan Inc., a U.S. firm that lost its holdings when the Castro regime seized its property.

If the embargo is lifted, how will the New Orleans-based Freeport-McMoRan be compensated? Should it get the mine back? Will the Cuban regime or the Canadian company compensate the company?

A further complicating factor is the Helms-Burton Act, which allows any U.S. citizens to sue foreign companies that bought formerly U.S.-owned property confiscated by the Cuban government.

Indeed, this law has become a source of contention between the United States and Canada as well as many European nations, which have responded with their own laws, permitting their firms to counter sue for damages attributed to Helms-Burton.

Since the U.S. embargo on trade and tourism against Cuba was caused by Cuban confiscatory policies, its removal should be accompanied by compensation to those who lost assets. It should be noted that the Cuban government has compensated other foreign nationals whose property was expropriated. For example, Castro has compensated many Spanish citizens for the property they lost after the revolution in 1959.

In the early stages of expropriation, the Cuban government offered as compensation 20-year bonds paying 4-percent interest. The United States refused these terms. Now, four decades after the Cuban revolution, there have been considerable changes. The Cold War is over and Cuba now depends on foreign exchange.

If and when the United States considers lifting its embargo of Cuba, it would be wise to convene a bipartisan task force to explore the issues and offer recommendations. The focus should not be on corporations, but rather those with the least political influence.

Remember the U.S. citizens who were homeowners in Cuba and in many cases lost their life savings when the Cuban government seized their homes. Indeed, don't forget Mrs. Castillo when the embargo is lifted.

Pete Petersen is a professor of management at Johns Hopkins University who traveled to Cuba in May to do research on emerging small businesses.

Pub Date: 1/10/99

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