The Real Deal Miami

Cuban economy may hinge on property claims issue

Unresolved U.S. claims against Cuba may total as much as $8 billion, including interest
July 26, 2015 09:15AM

Havana, Cuba

For Amy Rosoff, the warming of U.S.-Cuba relations is deeply personal. Her parents fled Cuba in 1961 after Fidel Castro’s revolutionary government seized family assets. Left behind were a 14,000-acre farm, an apparel factory, and a 17-room Spanish colonial residence in Havana that belonged to Rosoff’s grandmother.

Rosoff is among thousands of individuals and companies with property claims against the government of Cuba for property seized in the Castro-led revolution.

The U.S. and Cuban governments “are just in the early stages of thinking about what their opening positions might be and how they want to bargain this,” said Richard Feinberg, a fellow at the Brookings Institute and a University of California, San Diego, professor. He is writing a paper about the unresolved financial claims against Cuba.

Feinberg said resolution of the property claims, which have a total value between $6 billion and $8 billion, is critical to establishing a business-friendly environment that could boost Cuba’s under-performing economy.

“In order for Cuba to become a truly market-friendly, to have a favorable business climate for international investment, the outstanding claims issue has to be resolved,” Feinberg said.

A big majority of property claims against Cuba are held by such companies as ITT Corporation, Coca-Cola and Colgate-Palmolive. About 9,000 claims against Cuba have been filed with an arm of the Justice Department called the Foreign Claims Settlement Commission.

In 1971, the commission certified as valid nearly 6,000 property claims, and at the time, they had a total value of $1.9 billion. Today, with interest, their value could be as high as $8 billion.

The unresolved-claims negotiations likely will be complex and contentious. Cuba has claims against the United States and may demand compensation for deaths and injuries from alleged U.S. terrorist acts against Cuba. The Cuban government also is likely to demand information about Cuban assets in U.S. bank accounts frozen since the Castro revolution. The Treasury Department reported in 2014 that $270 million of Cuban assets were stuck in frozen U.S. bank accounts. [New York Times] — Mike Seemuth