The Trump administration is set to upend US policy and allow lawsuits against foreign firms in Cuba. The move opens the way for new tensions with European Union allies.
The Trump administration will ramp up pressure against Cuba by allowing US nationals to file lawsuits against foreign companies doing business on the island.
The major policy shift sets the stage for fresh economic disputes between the US and Europe. It also marks a new escalation in Washington’s policy to hammer Havana over its support for Venezuela’s socialist acting President Nicolas Maduro.
National Security Adviser John Bolton will announce the policy change during a speech Wednesday in Miami, which is home to exiles and immigrants from Cuba, a senior administration official said Tuesday. The speech will also be used to announce new sanctions on Venezuela and Nicaragua, two leftist allies of Communist Cuba.
The US decision to end a two-decade waiver to part of the 1996 Helms-Burton Act could expose US, European and Canadian companies to billions of dollars in legal claims and undermine Cuba’s attempts to attract more foreign investment at a time of economic crisis triggered in part by steep cuts in subsidized Venezuelan oil.
Title III of the Act gave Americans who fled Cuba the right to take legal action in US courts against mostly European companies operating out of properties Cuba nationalized following the island’s 1959 revolution.
In addition, the administration will begin to enforce Title IV of the Act, which requires the denial of US visas to those who “confiscate or ‘traffic’ in confiscated property in Cuba claimed by US nationals.”
Every US president since Bill Clinton has issued waivers to the Act out of concern it would spark trade disputes with allies and a mountain of lawsuits in US courts that would prevent any future settlement with Cuba over nationalized properties.
Cuba has said it would reimburse the owners of nationalized properties, but only if it were reimbursed for billions of dollars in damages cause by a six-decade US trade embargo.
EU threatens trade dispute
The European Union, which is Cuba’s largest trading partner, has warned it could challenge the US at the World Trade Organization if it tries to interfere in business ties between sovereign states.
EU envoy to Havana Alberto Navarro told reporters that the bloc “strongly condemns” the move.
“This will create even more confusion for foreign investments that are helping create jobs and prosperity in Cuba,” he said.
The announcement comes as the Trump administration has angered European allies over the withdrawal from the Paris climate accords, the 2015 Iran nuclear deal, and amid brewing trade disputes between Washington and Brussels.
Europe has backed the United States in applying pressure on Venezuela’s Maduro, but opening a trade dispute and hitting Cuba’s fragile economy could lead to losing support from key allies such as Spain.
US hardliners push regime change, ignore allies
William LeoGrande, a professor at American University in Washington DC, who specializes on Latin America, said hardline interventionists in the Trump administration have adopted a policy of regime change towards Venezuela and Cuba.
“They hope that by toppling the Venezuelan government and cutting off oil exports to Cuba, they can bring about an economic crisis in Cuba that causes political collapse there as well,” he told DW.
The Trump administration’s policy is designed “to scare away foreign contractors and investors, leaving Cuba short of the capital it needs to grow its economy, and aggravating the economic crisis,” LeoGrande said.
Europe has lobbied Washington not to end waivers to the Act exposing foreign firms to lawsuits after the Trump administration signaled earlier it would upend previous policy.
“Now it appears that the concerns of the EU are going to be ignored, despite the EU’s efforts to be helpful solving the crisis in Venezuela,” LeoGrande said. “It is yet another example of the Trump administration’s unilateralism and contempt for traditional allies.”
US-Cuba relations have plummeted under Trump following a historic rapprochement under the Obama administration, when the two countries re-established diplomatic relations.