Investors Race to Re-Privatize Cuba

Where relations between the United States and Cuba are concerned, just about all the "objective reporting" is heavily slanted. After the Cuban air force shot down two small planes on February 24th of this year, you could read a very wide variety of opinions about what actually took place and what it meant. Either the attack was 1) an egregiously vicious confirmation of both the desperation of the Castro regime and its utter disregard for human rights, or it was 2) a legal, justified and measured response to a serious, repeated threat to Cuban security and sovereignty. Or both. Or somewhere in between. You won't find much in the media, left or right, to help you sort it out.

In any case, the downing of the two small planes, which belonged to "Brothers to the Rescue," a Miami-based anti-Castro group, fanned the flames of anti-communist resentment, especially in the electorially-vital state of Florida, and prompted President Clinton to sign the punitive Helms-Burton Act, against the advice of his top advisors. The most interesting provision of this law - which the ever-hedging Clinton administration has recently pledged to wait another six months to enforce - allows U.S. nationals to sue foreign companies who "traffic" in U.S. property that was confiscated back in the Cuban Revolution in 1959. Cuba, desperate to raise some foreign exchange in the post-Soviet global economy, has been offering deals to investors in Mexico, Europe, and, especially, in Canada.

The Helms-Burton Act specifically allows claimants to sue for 1) the current market value of the seized proprety or 2) the value of the property when it was seized, plus interest - whichever is greater. (Incidentally, it also allows the U.S. to refuse to allow entry to any foreign national who has "trafficked" in such confiscated property.) The Act is explicitly intended to intensify U.S. pressure on the Castro government.

It is interesting that the governments of both Canada and Mexico criticize this U.S. gambit on the grounds of the North American Free Trade Agreement! The United States might have its own beef with its communist neighbor - but if its NAFTA partners see fit to do business there, buying property that the Cuban government says it has to sell, why, whose business is it, they say, of Washington's?

One aspect of this whole flap has not been mentioned in any press coverage, whether left, right or middle-of-the-road: the issue of land speculation. What sort of property is at issue here? The Helms-Burton act applies to an admirably wide (and vaguely defined) variety of property, real and movable. But of course, we all know that anything movable on that property that was seized in 1959 has long since been moved. In general, the only kind of property that investors can possibly be interested in, now, is the land itself. U.S. - or Cuban expatriate - real estate investors see themselves in at the ground floor when the Castro government finally falls. The Helms-Burton Act is simply an attempt to protect these investments from opportunists in other nations who have the cheek to deal with the Cuban government directly.

No doubt, many see this as a perfectly permissible part of the free market: a dispute over legal title to property. Nevertheless, this case sharply illustrates the true absurdity of private land ownership. After 39 years, no one believes that there exist any valuable buildings, tools, machines, equipment or any product of labor in the disputed "properties." This dispute is about controlling the rent of land, a value which no U.S. - or Canadian - or Cuban, for that matter - real estate investor ever lifted a finger to create.

Who did create it? Why, the people of Cuba, of course. Under the Communist government, the land has little market value. But were the people of Cuba to establish a new government that was more friendly to foreign investment, their land values would shoot up - and that is what the Helms-Burton Act is all about.

Lindy Davies - July 23, 1996


The above comments present a good example of a "Georgist" interpretation of the Helms-Burton Act. It should also be noted that both Helms-Burton and the U.S. embargo against Cuba actually have the effect of allowing Castro to remain in power. As long as these sanctions remain in place they allow Castro to continuously point to the actions of the U.S. government as the reason for Cuba's economic crises. However, foreign investment from other Western countries have not been sufficient to bring about any improvement in this situation. Therefore, it is not unreasonable to conclude that investment from the United States cannot improve the Cuban economy. If this were the case how long do you think Castro would last?
Andrew Eckel <105163,[email protected]>
Blossvale, NY USA - Saturday, July 27, 1996 at 22:45:59 (EDT)
Why do so many governments resort to _economic_ sanctions or boycotts when they are angry with other governments? Time and time again, governments insist on hurting their own citizens economically in order to prevent them from trading with bad guys. We need to learn a broader set of responses when governments act badly. Currently, we seem to be restricted to just two -- either bomb the bad folks or place economic sanctions on them. We need to be able to confront wrongdoing in a large number of ways. Meanwhile, citizens in other countries are gleefully gaining competitive advantages in Cuba.
Hanno Beck <[email protected]>
Columbia, MD USA - Tuesday, July 30, 1996 at 11:28:28 (EDT)
But Hanno, one thing we used to hear all the time from South Africa was that everyone there supported the sanctions even tho' it was so hurtful to them.
Lisa Cooley <[email protected]>
NY, NY usa - Tuesday, July 30, 1996 at 14:51:45 (EDT)