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    Cuba Seizures Now Present Opportunities

    Cuba Seizures Now Present Opportunities
    By FRANCES ROBLESDEC. 21, 2014

    MIAMI — It was a routine Saturday morning, almost two years after Fidel
    Castro took power in Cuba, when Lois and Roy Schechter went to check on
    their tobacco farm 100 miles west of their home in Havana.

    The American couple encountered soldiers posted outside their property.

    “My husband got out of the car, exchanged a few words with the soldiers,
    got back in the car, and we drove away,” Mrs. Schechter, of Saratoga
    Springs, N.Y., recalled of that day in October 1960. “Things were
    getting scary, and there was nothing else we could do.”

    After nearly 60 years in the country, the Schechter family fled and
    never returned.

    The Schechter family farm in Pinar del Río became one of almost 6,000
    properties owned by American citizens and companies that were
    confiscated by the Cuban government. With the stroke of a pen or the
    pointing of a rifle, countless farms, oil refineries, homes, factories
    and other businesses were nationalized — losses that ultimately led the
    United States government to prohibit trade with Cuba.

    On Wednesday, President Obama announced that the United States will
    begin normalizing relations with Cuba, bringing the Schechter family a
    step closer to resolving its decades-old property claims. Although the
    president did not mention the contentious issue in his announcement,
    lawyers are scrambling to determine whether normalized relations with
    Cuba will create an opportunity to get compensation for lost properties
    now estimated to be worth nearly $7 billion.

    Cuba’s gross domestic product is about $68 billion, making cash payouts
    highly unlikely. But companies interested in foreign investment in Cuba
    are probably imagining how their settlements could be exchanged for
    other investment deals, said Robert L. Muse, a Washington lawyer who
    represents several claimants and watches the issue closely.

    “I think a large flare has gone up over the corporate claimants. They
    are not going to miss it,” Mr. Muse said. “I think it’s unlikely that
    Coca-Cola’s highest aspiration is to recover a state-of-the-art 1950s
    bottling plant. If people approach it with the right flexibility,
    innovation is going to be key.”

    Continue reading the main story

    Highlights from the Times’s coverage of the historic developments in
    relations between the United States and Cuba.

    Cuba: A Reading List
    Recommended books for learning more about Cuba’s history and its
    relationship to the United States.

    When J.F.K. Secretly Reached Out to Castro
    A meeting just a few days before the president’s assassination.

    For Cuban Artists, Bigger World Awaits After Restoration of Ties
    The new relationship between Cuba and the United States could accelerate
    cultural exchanges as well.

    Focusing on Future, Cuba Leaves Fidel Castro to History
    A venerable figure to generations of Cubans is fading from daily
    conversation as his more pragmatic brother, Raúl, reshapes the nation.

    The list of claimants includes national hotel chains and an electric
    company, sugar mill owners and tobacco farmers like the Schechters.

    The Schechters lost their farm, a shirt factory and a 17-room home in
    Marianao, which is now being used as a residence by the Chinese Embassy.

    Confiscation of American properties in Cuba began in 1960 after United
    States oil companies refused to refine Russian crude. Cuba in turn
    nationalized the oil companies, so the United States refused to buy
    Cuban sugar. The Schechters lost the farm in October 1960, when Cuba
    announced it would nationalize all remaining American property on the

    The retaliatory tit-for-tat that helped begin one of the most enduring
    Cold War standoffs also resulted in staggering losses for many companies
    and individuals. At the same time, a policy of redistributing idle land
    to the masses also meant that Cubans and Americans alike had their
    holdings seized by the state.

    In 1967, the United States government created the Foreign Claims
    Settlement Commission, a quasi-judicial agency within the Department of
    Justice, to calculate American losses in Cuba. In six years, the
    commission logged 5,913 claims totaling $1.8 billion.

    The American-owned Cuban Electric Company submitted the largest claim,
    for $267 million. Large corporations with claims included United Fruit,
    Standard Oil, American Sugar Company and Texaco.

    “Those corporations bounced back from their losses,” said Carolyn E.
    Chester, whose father, a speechwriter for Fulgencio Batista, the leader
    who was ousted by Mr. Castro, lost land in the Isle of Pines and
    $250,000 worth of telephone company stock. “These families that lost all
    their land and all their property, they did not bounce back. I went to
    junior college and didn’t have riches. When I was a little girl, all my
    life I heard, ‘When the embargo ends, we will get paid for our losses.’ ”

    The United States trade embargo against Cuba prohibits full economic
    trade with the island until those claims are settled. Experts say
    restoring diplomatic relations is likely to open the door for claims to
    be resolved sooner, although the Cuban government has expressed no
    interest in doing so and the embargo remains in place.

    Roberta S. Jacobson, the assistant secretary of state for Western
    Hemisphere affairs, said registered claims against the Cuban government
    have always been included in discussions about restoration of diplomatic

    “We do not believe those things would be resolved before diplomatic
    relations would be restored, but we do believe that they would be part
    of the conversation,” she said last week. “So this is a process, and it
    will get started right away, but there’s no real timeline of knowing
    when each part of it will be completed, because it has to be completed
    by agreement of both governments as you go along.”

    The Department of Justice said in a statement on Friday that it was “not
    yet clear” what effect the policy changes would have on the claims, but
    that it would “continue to monitor the issue.”

    Even Cuban-Americans opposed to Mr. Obama’s rapprochement see opportunity.

    “As a pro-democracy activist, this is morally repugnant,
    disproportionate, possibly illegal and bad for America,” said Nicolás J.
    Gutiérrez Jr., a Miami consultant who has studied the confiscation issue
    for decades, referring to the normalization of relations. “Putting that
    aside, as a member of a family that lost significant property and
    someone who has worked with claimants for years, it may ironically
    create opportunities.”

    Mr. Gutiérrez noted the Foreign Claims Commission was available only to
    property owners who were American citizens at the time of the
    confiscation. Cubans who later became American citizens were excluded,
    which could allow them to negotiate on more favorable terms, while the
    State Department negotiates on behalf of American claimants, he said.

    About 15 percent of the confiscated land is in the hands of
    cooperatives. Small farmers use about 2 percent, and large Cuban state
    corporations control much of the rest, he said.

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    “It’s not like we’re going to take this property back from potentially
    good guys or little guys,” Mr. Gutiérrez said. “When the government
    crumbles, the legitimate owners should have a chance to get their
    properties back, put them in production or give them to someone who can.”

    Teo Babún, whose consulting firm tried unsuccessfully to register
    Cuban-American losses, said experts had spent years studying reparation
    models used in other countries, including Vietnam and Nicaragua. In
    post-unification Germany, a temporary commission of judges and lawyers
    put all the claims into a pool and then negotiated them one by one,
    often making deals with investors.

    “I think a lot of larger corporate entities in Cuba are thinking that at
    the appropriate time, they will go to Cuba and negotiate one on one,”
    Mr. Babún said.

    Frank O. Mora, a former Obama administration official who now heads the
    Latin American and Caribbean Center at Florida International University,
    warned against too much optimism. Aside from a prisoner swap last week,
    he said, all the other major policy changes were unilateral decisions by

    “You need two sides to play, and the Cubans have not agreed to
    anything,” Mr. Mora said. “There is no indication that the Cubans in the
    near future are going to sit down and negotiate.”

    Last week’s announcement was also closely watched by companies with
    Cuba-related trademark disputes.

    Although companies were allowed to register trademarks despite the
    embargo, they could not renew them without a special license, which
    meant some trademarks lapsed, setting the stage for future litigation,
    said Jorge Espinosa, a Miami lawyer who represents firms that register
    trademarks in Cuba.

    A 1998 law made it illegal to register a trademark that belonged to an
    expropriated company. With that law on Bacardi’s side, in 2012 the
    United States Supreme Court let stand a lower-court ruling in favor of
    the company in a decades-long dispute with the French firm Pernod Ricard
    over the use of the Havana Club brand.

    Pernod Ricard has a joint venture with the Cuban government and took the
    Havana Club name when Bacaradi’s registration lapsed. After the court
    loss, Pernot Ricard came up with a new name, “Havanista,” for the
    identical product, ready for the American market should the embargo be

    “What I can tell you is that the day the embargo is lifted, we will
    become the first company to send boxes of genuine Cuban rum to the
    United States,” Pernod Ricard’s spokesman, Olivier Cavil, said by
    telephone from France on Sunday. “The question is whether it will be
    named Havana Club or Havanista is the point. Havanista for sure — it’s
    registered. Havana Club is a question mark for the moment.”

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