Alan Gross: Castro's prisoner
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    Claimed

    Claimed
    When Castro took power, Americans fled Cuba and left a lot of property
    behind. Now the claims on these contested holdings—land, buildings, cars
    and more—are exciting speculators and could stand in the way of
    reconciliation.
    By Seth Stevenson

    Back in April, at the Nasdaq marketplace in Times Square, a few hundred
    interested parties gathered for a daylong conference. It was labeled the
    “Cuba Opportunity Summit: High-Velocity Growth.” Wharton faculty
    organized the event. CNBC financial reporter Michelle Caruso-Cabrera
    hosted it. The scent of predatory capitalism wafted through the air.

    SETH STEVENSON
    Seth Stevenson is a frequent contributor to Slate. He is the author of
    Grounded: A Down to Earth Journey Around the World.

    There were cruise-line executives eager to anchor in Havana Harbor.
    Pharma folks thirsty to hire Cuban scientists at fractions of the
    salaries of American lab workers. Hoteliers, telecoms guys, retail
    bankers, and agriculture experts. A handful of international lawyers to
    grease the wheels. A sprinkling of Cuban diplomats in the back of the
    room, taking notes.

    The spectacle of American companies scrambling to storm Cuba’s shores
    would have seemed far-fetched—even laughable—just a few months prior.
    But a startling December 2014 announcement from President Obama set the
    greed machine whirring. Obama’s intent was clear: We will seek some sort
    of détente with Cuba. We will move to normalize. And down the line,
    maybe sooner than later, there will be commerce.

    Thomas Herzfeld was among the panelists at the Cuba Opportunity Summit.
    Back in 1970, 25 years old and not long out of the military, Herzfeld
    had been the youngest managing partner at a New York Stock Exchange
    firm. He got an ulcer, so he moved to Miami to relax. Surrounded down
    there by Cuban exiles, managing their money, he began to develop an
    understanding of the opaque Cuban economy. He eventually formed the
    Herzfeld Caribbean Basin Fund, which is listed on Nasdaq (ticker symbol:
    CUBA). Under American law, he wasn’t allowed to invest directly in Cuban
    entities, but he found ways to stick his nose into nearby operations
    that offered exposure to the island.

    Now 70, tall, handsome, and elegantly dressed, Herzfeld was every bit
    the wise old Cuba hand at the Wharton event. From up onstage, he warned
    attendees that a “carpetbagger” approach would not sit well in Havana.
    He enthused about entering “one of the last true emerging markets” and
    building a new Cuban middle class. He delightedly noted that Cuba’s
    railroads are built with the same gauge as ours.

    And then, shifting tone, he brought up something that sounded like a
    stumbling block. “There is the issue around prior claims,” he said
    gravely. He talked about how to vet and value these claims. He spoke of
    “vulture investors trafficking in claims” and the difference between
    “real claimants versus claims speculators.” He mentioned, in an offhand
    manner, perhaps designed to pique the crowd’s interest, that he’d
    devised an airtight plan to solve this claims problem.

    My ears perked up. This was near the end of the day, and no one
    else—amid all the gushing about a brand new Cuba—had mentioned anything
    about “prior claims.” Were they a potential monkey wrench in the greed
    machine?

    When I set out to understand these difficult-to-value assets and the
    speculators they’d attracted, I discovered that the Cuba claims are much
    more than a roadblock. They offer a stark snapshot of the past: old
    grievances, ramshackle farms, decaying factories, Cold War geopolitics.
    Yet they have the power to shape the future. Handled badly, they might
    derail the Obama administration’s efforts to reconcile with Havana;
    handled shrewdly, they might help pave the way to a 21st-century Cuba.

    Meanwhile, all around the claims, sharks circle and nip, smelling
    opportunity.

    * * *

    After Fidel Castro took power in 1959 he nationalized the Cuban economy.
    He seized the sugar mills. The power plants. Oil refineries, department
    stores, hotels. Some of these belonged to Cubans. But others belonged to
    American citizens doing business on the island. Within a couple of
    years, all the Americans in Cuba fled, leaving this property in Castro’s
    hands.

    Governments expropriate stuff all the time. Even capitalist governments.
    In America, we call this eminent domain, and the state compensates the
    people it takes the stuff from. Castro, too, acknowledged the principle
    that he owed these people something in return. But he never paid up.
    Eisenhower tried to force him. So did Kennedy. No dice. And so, in
    retaliation, we slammed Cuba with a trade embargo—one that’s now lasted
    more than 50 years.

    The “prior claims” seemed like a potential monkey wrench in the greed
    machine.
    Starting in 1964, the U.S. Foreign Claims Settlement Commission created
    a registry to record the assets yoinked from Americans who’d been in
    Cuba. (The FCSC calls itself “a quasi-judicial, independent agency
    within the Department of Justice which adjudicates claims of U.S.
    nationals against foreign governments.” Since its establishment in 1954,
    it has completed claims resolutions against countries including Libya,
    Panama, the Soviet Union, and Vietnam.) After Castro took power, 5,913
    individual Cuba claims were certified. They were assessed at a total
    value of $1.9 billion at the time they were seized.

    The largest of these so-called “U.S.-certified” claims were corporate.
    The Cuban Electric Company, an American-run entity that Castro
    nationalized, had its claim valued at about $268 million. Exxon had a
    claim for $72 million. Coca-Cola for $28 million. Woolworth for $9
    million. If you look through the Walt Disney Productions claim, you’ll
    see line items like $12,300 worth of color 35 mm feature film prints.

    There were family claims, too. Estates had been taken. Modest sugar
    plantations. Even items along the lines of, as claims experts will put
    it, “great-grandma’s 1953 Chevrolet.” The dollar value of the tiniest
    claims wouldn’t buy you a decent lunch in Miami these days. You can
    explore the claims in our interactive chart.

    All these claims, great and small, have lain around for
    decades—gathering dust and (as stipulated by the FCSC) 6-percent annual,
    noncompounding interest. They’ve grown to a collective worth of just
    about $8 billion. In theory, the U.S. State Department is authorized to
    broker a deal with Cuba that will settle all the claims at once. The
    claimants can also, experts seem to agree, attempt on their own to reach
    individual agreements with the Cuban government. But to date, as far as
    anyone can tell, not a single claim has been settled.

    The claims have faded out of view over the years. I, for instance, have
    long been aware that I can’t legally buy Cuban cigars in New York, yet
    I’d never quite realized that the trade embargo’s origins were
    specifically tied to these claims. Or that, under the Helms-Burton Act,
    the trade embargo can’t be lifted until the claims are resolved. I’d
    never heard of the claims. Nor, when I asked, had any of my generally
    well-informed friends.

    Even some of the claimants have stopped paying attention. Some companies
    long ago wrote the claims off as losses, to take the tax benefit. The
    Cuban Electric claim, through various corporate shufflings, has fallen
    onto the balance sheet of Office Depot—which has zero emotional link to
    the decades-old injustice. The Woolworth claim now belongs to Foot Locker.

    Family claims have been handed down through four generations, diluted by
    the branching of heirs, coming to rest in the hands of descendants
    who’ve never been to Cuba and can’t be bothered to hate communism. Their
    old family mansion might have been divided into 16 apartments by now,
    sheltering Cuban families who’ve lived there for 40 years in multiple
    generations of their own. It’s messy. Some claimants have given up hope
    of seeing any return.

    It’s tough to feel deep sympathy for the long-ago losses of a giant
    corporation—especially since American companies have a less-than-stellar
    record of operations in Latin America. Likewise, it’s tough to muster
    tears for heirs to Anglo families that were rich and powerful enough to
    own holdings in Cuba 50 years ago. (The claims of native Cubans who fled
    the revolution dwarf, in dollar terms, the claims of people who were
    U.S. nationals. These exile claims comprise a separate, in some ways
    broader, fight. But they’re not covered by the FCSC, and they don’t
    stand between Obama and restored relations.)

    There’s an almost funny disconnect embedded in the fact that these
    claims were carefully recorded by the FCSC down to the last nickel,
    engraving into the ledger the sacred notion of individual property
    rights. The entire project on the Cuban side—the very basis of the move
    to nationalize farms and businesses—was to sweep away the principle of
    property. For Cuba to admit that the claims are important and just is
    tantamount to acknowledging the foundations of capitalism.

    * * *

    If, as everyone assumes it will, Cuba does eventually wish to transition
    to some form of capitalism—craving an economic recovery that features
    U.S. investment—it actually bolsters the claimants’ leverage. Because if
    the claims aren’t settled there will always be encumbrances on the
    disputed properties. They will be, in a practical sense, haunted. A
    risk-averse hotelier might be scared to develop a new resort with an
    inchoate claim on it when, somewhere down the line, an heir could show
    up, point to a certification, and demand her great-great-grandparents’
    land. You’d have a quagmire of lawsuits and attorney fees and treble
    damages and delays.

    Knowing this, from time to time, a few enterprising hustlers have eyed
    the claims while licking their chops. They sniff around the claim
    holders. They make enquiries to open-minded Cuban officials over
    backroom mojitos. They conjure up schemes to sidestep the U.S.
    government and cut their own deals.

    For a long while, the prospect of settling the claims through official
    state channels seemed a remote fantasy. Cuba and the U.S. had hunkered
    into a stalemate. There was no hint of perestroika on the horizon. Which
    made each individual claim, considered as a financial asset, a strange
    sort of duck.

    Imagine your grandparents, who were U.S. citizens, owned a farm in Cuba
    that got seized by Castro. They fled with nothing and, understandably,
    they were pretty raw about it. So they got their claim certified by the
    FCSC for $1 million. That was back in the 1960s. A few years ago, you
    inherited the claim.

    What good did it do you? What you had was a piece of paper from Uncle
    Sam certifying that you were owed a certain amount by Cuba. Maybe,
    sometime in the future, if our pals in Havana decide to play nice, you
    might see some fraction of that amount as compensation for your
    grandparents’ troubles. But the piece of paper was worth nil to you in
    the here and now. You might have reasonably concluded, after research
    and reflection, that the claim would never get paid, given that it had
    lain dormant since 1967. And here is where the hustlers step in.

    One day, out of the blue, I knock on your door. “Hello there,” I say,
    “I’m an international lawyer well-connected to the Cuban government. I’d
    like to represent you in your efforts to resolve your claim. I guarantee
    you I’ll get 100 cents on the dollar. Don’t settle for anyone who
    promises less! You’ll just need to pay me a small contingency fee—say,
    30 percent of whatever we do end up recovering.” If I talk a good game,
    especially with a Cuban accent, you might believe I’m your white knight
    who’s going to close a favorable, backdoor deal.

    Or maybe: “Hello there,” I say, “I represent a group of wealthy
    investors. We’d like to outright buy your $1 million claim. We’ll give
    you $250,000 for it.” If you’ve abandoned all hope of getting back your
    million (never mind the years of interest on top), my offer might sound
    like a decent exit strategy. Suddenly, your worthless piece of paper is
    a liquid asset. And, after all, it wasn’t your sweat that went into that
    farm. Cold hard cash would feel like a windfall. Benjamins from heaven.

    Timothy Ashby was one of the people knocking on doors. In a previous
    life, Ashby had been a political appointee under President Reagan, as a
    deputy assistant secretary of commerce in the International Trade
    Administration. Around 2006, having re-entered private life, he devised
    an ingenious scheme that centered on the Cuba claims. He planned to buy
    them up, one by one, until he amassed a big chunk of them. Maybe he’d
    corner the market. Then, having puffed himself into a major player, he’d
    go straight to the Castros. Let’s forget about the U.S. State
    Department, was his idea. Let’s hash this out between us, negotiate a
    swap. You give me something good, and we can put these nagging claims in
    your rearview mirror.

    Ashby is based in London these days, but when I met him it was in Lower
    Manhattan. He’d come to speak on a panel about future opportunities in
    Cuban tech. (“There’s huge potential,” he said, giving me a snippet of
    his elevator pitch. “I’ve been formally advising the Cuban government
    about the development of its IT sector. There are Cuban software
    engineers there with Ph.D.s who get paid $300 a month.”) After he slid
    two different business cards across the table to me—one for a London law
    firm at which he is not officially on staff, another for a company
    called Pembury Capital that lists him as CEO but doesn’t have a
    website—I asked him to recount his claims saga.

    He explained that, along with investment partners, he established a
    claims holding company called Siboney that was registered in the Isle of
    Man. He began to locate claimants and make offers. A few of the claims
    Siboney bought were hotels. A few were prime agricultural acreage. In
    all, he managed to purchase nine claims for a total of $4.5 million. “We
    paid an average of 28 cents on the dollar,” he tells me—a huge discount
    to the original value FCSC had assigned to the claims. Ashby reckoned
    their actual worth, if he could somehow negotiate a deal with Cuba that
    put the properties back in play, was more like $55–60 million. When
    Siboney asked BNP Paribas to value the claims, says Ashby, they agreed
    the value was in the tens of millions.

    “For example, one of the claims we bought was the Hotel Kawama claim,”
    Ashby tells me, “on a huge beach right near the marina. It had belonged
    to a family in California. The father died, and we bought the claim from
    the son for $1 million. It’s a run-down hotel now, operated by Cuban
    state tourism. We were talking to the Cubans about razing it, replacing
    it, bringing in new foreign investment.”

    But then the Bush administration shut him down. Anti-communist,
    Castro-hating conservatives didn’t like the idea of an American wheeling
    and dealing in Havana. Ashby was told he’d need a license from the
    Office of Foreign Assets Control if he wanted to buy more claims, or
    swap the ones he owned, since a foreign country—namely, Cuba—had an
    interest in the underlying properties. Ashby asserts that Cuban American
    former Rep. Lincoln Díaz-Balart (whose aunt, weirdly, was the first wife
    of Fidel Castro) “personally intervened and persuaded the Bush White
    House to deny me the OFAC license. He didn’t want the claims settled. He
    wanted to keep the gun at the head of the Cubans.” Díaz-Balart did not
    respond to multiple inquiries left with his law office.

    * * *

    Under the Helms-Burton Act of 1996, the trade embargo can’t be lifted
    until the claims are resolved. (Lots of other things need to happen as
    well, but the claims are a clear sticking point.) Many Cuba experts I
    spoke to theorized that Obama desperately wants to make normalization
    part of his legacy. Which suggests that the claims issue, long on the
    back burner, might soon come to a boil.

    The administration’s loosening of Cuba strictures is already moving at,
    as one expert put it, “breathtaking speed.” First, there was the
    December 2014 statement that got the ball rolling. Then the opening of
    embassies and the removal of Cuba from the list of state sponsors of
    terrorism. Traveling to Cuba has gotten far easier for U.S. citizens.
    Companies like Airbnb are already earning revenue from Cuban operations.
    New commerce regulations were announced in September and were expansive.
    For the first time ever, there is explicit authorization for U.S.
    companies to establish physical office space in Cuba and to hire local
    Cuban agents.

    The fact that this has happened with no movement on the claims must be,
    for some claimants, galling. It seems clear the administration will do
    all it can to ease commerce with Cuba short of openly violating
    Helms-Burton. It’s fair for claimants to wonder if their claims will be
    brushed aside—an afterthought in the rush to open up the island.

    Under U.S. law, the State Department has the power to “espouse” the
    certified claims, which means it can broker a blanket deal with Cuba to
    resolve all the claims simultaneously. There’s clear motivation for
    State to sweep the claims away, given the administration’s broader
    goals. Yet none of the experts I spoke to knew for sure how espousal
    would work.

    Would there be a tribunal to hear each claim individually? Would
    corporate claims be split from family claims? Big claims separated from
    small claims? Would there be one lump settlement for everyone? One
    hundred cents on the dollar, or more like 2 cents? Could payment be in
    cash, or in Cuban sovereign bonds, or something more complex? Could a
    claimant opt out of the deal if she didn’t like it?

    The State Department has said very little on the matter. I asked for
    answers to the above questions and others. A State Department
    representative, after a week’s deliberation, emailed the following
    comment: “The resolution of outstanding U.S. claims remains a priority
    for the U.S. government. We raised claims during re-establishment talks
    and discussed property claims in the bilateral commission meeting on
    September 11 in Havana. We are not in a position to address specific
    time frames at this point.”

    I’ve talked to several lawyers who represent certified claimants, and
    almost none of those claimants were willing to speak with me. I was told
    that claimants are wary of tipping their hands before a final
    negotiation—be that negotiation with the State Department or with Cuba
    or with a speculator. After so many years of inactivity, the last thing
    claimants want now is to say something impolitic that might scotch the deal.

    I did manage to speak to one certified claim holder. Tim Claflin is a
    72-year-old investment manager in Boston. His great-great-grandparents
    were in the shipping business, ferrying cargo between Boston and Cuba.
    During a financial downturn they foreclosed on a mortgage, which was how
    they came to own a 30,000-acre sugar plantation, replete with a
    refinery, on the Cuban coast. Claflin visited it once, on his spring
    school vacation, when he was 8 years old. Castro confiscated the
    property 10 years later.

    “We filed a 30-page claim,” says Claflin. “The acreage, the cattle,
    everything.” (You can read the adjudicated claim here. It includes an
    itemized list of lost items, including $54,000 worth of molasses.) The
    Claflin family claim was one of the largest noncorporate claims
    certified by the FCSC. It was valued at $11.7 million at the time it was
    seized. With simple 6-percent interest, it’s now worth more than $40
    million.

    “We used to check in every five years or so with the government,” says
    Claflin, “when somebody died or something, to make sure they had all the
    right names and addresses for us. But last time they said we shouldn’t
    bother. They said they’d find us when a settlement happens.”

    Over the years, Claflin has gotten many knocks at his door. “Some people
    want to represent me on a contingency basis and take 20 percent of the
    settlement,” he says. “I was also approached seven years ago by a group
    represented by Tim Ashby. They made me an offer of about $1.2 million,
    but I didn’t think it was enough, so I turned it down.”

    The Claflin claim illustrates some of the complexities that can gum up
    the issue. For instance, Tim Claflin is only one of 25 heirs to this
    claim, so any agreement will need to be coordinated with other
    stakeholders. What’s more, the Swiss cement company Holcim made a deal
    with Castro years ago to build a factory on the Claflin land—it’s
    unclear what legal entailments might come into play if the property were
    ever returned to the Claflins. There are also, almost certainly, Cuban
    families who’ve been living on other parts of the plantation for
    multiple generations. Claflin has no urge to kick them off their plots.

    “I think Obama wants to finish this before he’s out of office,” Claflin
    says, “so he’s not going to spend time to fight for the best deal. I’ve
    been told I can expect 4 percent of the original claim.” That would be
    $468,000. Claflin doesn’t sound thrilled, but he doesn’t seem to think
    there’s much he can do at this point. If a settlement comes down, he’ll
    assess his options then.

    * * *

    No one seems to think Cuba has enough hard currency to pay off $8
    billion in claims. That’s more than 10 percent of the current Cuban
    gross domestic product. But for every pessimistic claimant glum at the
    thought of settling for pennies on the dollar, there’s an optimist who
    sees the claims as a golden opportunity—not just a means of satisfying
    claimants but as a way to jumpstart the Cuban economy. Tom Herzfeld is
    one of these dreamers. After I watched him speak at the Wharton Nasdaq
    conference, where he coyly mentioned his plan to resolve the claims and
    boost Cuba in one fell swoop, I got in touch with him to ask him how
    he’d do it.

    The headquarters of Thomas J. Herzfeld Advisors are in a stylish
    building in South Beach, Miami, just down the hall from Elite Model
    Management. Herzfeld’s conference room is plastered with framed press
    clippings about himself. (He claims to have been quoted in more than
    2,000 articles.) To scan the photos that accompany these stories, dating
    back to the 1970s, is to watch an evolution in the tie and lapel widths
    native to Florida executive fashion.

    Herzfeld is so old-school that he still keeps paper charts. When I
    visited his office, he jovially displayed the ledger in which he tracks,
    in pen ink, the Herzfeld Caribbean Basin Fund, which he started in 1993
    as a way to bet on the opening of Cuba. There’s a page in the ledger
    where he needed to Scotch-tape an extra sheet of graph paper at the top,
    flopping beyond the margin, to contain a skyward-shooting line. That’s
    where the fund spiked on news of restored U.S.-Cuba diplomatic relations.

    Herzfeld can’t invest directly in Cuba for now. He tries to find things
    like cruise lines, regional airlines, shipping companies, and other
    businesses that will surge when the walls come down. He sallies out on
    his yacht sometimes to count containers on Miami cargo ships in the
    harbor, keeping tabs on the comings and goings of freight. One of his
    more esoteric holdings—almost a curiosity at this point—is stock in the
    long-dead Cuban Electric Company. This means he has a piece of the
    Office Depot claim.

    Herzfeld hopes to convince claim holders to swap their claims for shares
    in a new fund he’ll launch—a fund that doesn’t exist yet. In return for
    owning half the equity in the fund, and for making those pesky claims go
    away, the Cuban government would offer an array of developable
    properties for the fund to invest in. Herzfeld says he’s identified all
    the properties he needs. None have prior claims attached to them. The
    fund would partner with investors to build hotels on these properties or
    to mine nickel from them or to grow vegetables in their soil. This way
    the claims will evaporate, the claimants will receive liquid shares in
    the fund that they can either hold or sell, and the Cuban economy will
    crawl out of the past and into the future.

    He says he’s circulated the plan to officials at the State Department
    and within the Cuban government, and he’s brought it up with claimants.
    “Everyone loves the idea,” he assures me. When asked why he in
    particular should be the one to run the fund, he cites his experience,
    his knowledge of the Cuban economy, and the simple fact that it’s his
    idea. He also notes his noble intentions. “It would be the least
    profitable thing we do here,” he says. He promises he’ll forego any
    monetary benefit beyond a 1-percent management fee.

    “That would still be nice for Tom,” a skeptical Cuba expert chuckled
    when I described the plan. Even if all the other steps miraculously fell
    into place—claimants exchanging their claims, the Securities and
    Exchange Commission approving the fund, OFAC licensing it, the State
    Department stepping aside, and Cuba offering up land on a silver
    platter—it seems possible that running such a fund could be farmed out
    to a bigger player like Goldman Sachs or Morgan Stanley.

    Herzfeld’s plan is not the only one of its kind. The 1898 Company, a
    Spanish outfit, has similar thoughts about bringing investors together
    with claimants to develop desirable properties. Raúl Valdés-Fauli, a
    Miami lawyer whose family owned a bank in Cuba, once tried to organize
    claimants into a cohesive bargaining group that would have pushed for a
    similar claims-for-equity swap. Tim Ashby foresees an approach in which
    Guantánamo gets tossed into the mix—in exchange for settling the claims
    and closing the prison, maybe the bay gets transformed into a free
    enterprise zone for U.S. businesses, with high-speed Internet cables
    snaking undersea from Florida.

    “There’s room for creativity here,” says Richard Feinberg, an
    international political economist who’s working on a Brookings
    Institution research paper about the claims. “Let’s see the claims not
    as a problem but as a solution. That’s the beauty of economics—it’s not
    a zero-sum game like geopolitics or military security affairs. We can
    put together solutions in which everyone is better off.”

    In all these proposals, even the ones that might serve to enrich their
    proponents, the driving impulse to lift up Cuba seems heartfelt. Tom
    Herzfeld envisions his plan as a way for Cuba to save face, to escape
    the claims without hemorrhaging money, to give the claim holders more
    value than they could expect from a straight cash settlement, and to
    create jobs for a new Cuban middle class that he’s certain will thrive.
    “There’s a lot more at this stage of my life than another dollar,” says
    Herzfeld. “I’d like to be remembered for something more than just making
    a lot of money.”

    Still, there’s irony in the fact that all these guys are pitching market
    economics as the solution to the claims issue. It’s like Cuba merely
    took a timeout from capitalism—a hiccup in history. And now that timeout
    is ticking to an end, and everybody knows it. Fidel Castro is 89 years
    old. Younger Cubans want the Internet and premium cable and, like, a
    living wage. Meanwhile, many assume that Cuba’s savior will be …
    complex, rapacious capitalism. Those young Cubans—well-educated and
    healthy, thanks to the communist system—comprise a highly attractive
    workforce that will perform skilled labor for absolute peanuts. Every
    part of the U.S. financial apparatus is poised to pounce.

    The beautiful dream of the revolution has ended poorly, and the claims
    have come to seem like strange bookends on either side of it: At first
    they were a tally of the merchantry and profiteering Castro squashed;
    now they’re an opportunity to let a thousand Starbuckses bloom.

    * * *

    In September, Akerman LLP—a law firm with perhaps the premier Cuba
    practice in the U.S.—held a conference call to advise American companies
    on the latest rules of engagement. Everybody is panting to launch
    enterprises in Cuba, but no one is clear on what exactly is legal. A
    leisure-group executive asked a question about risk adjustment. An exec
    from Western Union asked if regulations had changed with regard to cash
    remittances. Representatives from Visa and Carnival Cruise Lines hopped
    on the call to pose queries.

    One of the Akerman lawyers hosting the call and fielding questions was
    Pedro Freyre. Freyre’s family owned properties in Cuba. (“My
    grandfather’s house is beautiful—every time I’m in Cuba I drive by it.
    The house I was born in is occupied by a Cuban official agency.”) Freyre
    now works in Akerman’s Cuba practice in Miami. He mostly counsels
    businesses and investors on how to legally get involved with Cuban
    development. But he also advises a handful of claimants.

    “I certainly don’t convey to my clients that they’re going to get 100
    cents on the dollar,” he says. “I manage their expectations. But in
    order to build a solid foundation for a new relationship with Cuba, you
    have to clear out the bad stuff. You need to address it. You can’t let
    it fester.”

    Freyre favors a simple, win-win solution. Claimants would drop their
    claims in exchange for tax credits from Cuba. If the claim holder wants
    to go back and invest in the island, he or she could do so with a major
    tax break. But the credits would also function as liquid assets, with a
    busy secondary market—if a hotelier decides to build a resort, he could
    buy up a bunch of tax credits from claimants at a discount. The
    claimants get an easy exit and cold hard cash; the developer reduces his
    costs. “I think Cuba will want something simple,” says Freyre, “and I
    think they’ll want to settle this all at once.”

    Cuba’s taken a tough stance on the claims. It cheekily argues that the
    trade embargo has cost it more than $100 billion over the decades so,
    really, the U.S. should be making restitutions to Havana. “They’re
    really good negotiators,” says Freyre. “They’ve acknowledged that they
    owe some compensation. They’re willing to discuss it. But they don’t
    give up a lot. They don’t see themselves as over a barrel. They think
    this is a respectful conversation between equals.”

    I asked Freyre why Americans harbor such excitement about Cuba. Even if
    things were running smoothly, this is a country of less than 12 million
    people with a GDP equivalent to a midsize U.S. city. Its infrastructure
    is in disrepair. It’s small potatoes, in the grand scheme.

    Freyre lit up. “It’s the forbidden fruit!” he said with a big smile.
    “You’re right, this isn’t China or Mexico or Brazil, in terms of scale.
    But it’s a stunningly beautiful place, with hundreds of miles of
    untouched, pristine beaches. It’s fertile—it could be the provider of
    winter vegetables to the U.S. East Coast tomorrow. The people are funny
    and good-looking and smart, and I’m not just saying that because I’m
    Cuban. It has 99-percent literacy—Florida is 80 percent. The life
    expectancy is one year less than in the United States—in Haiti,
    expectancy is 63. These are things that don’t happen in other parts of
    Latin America. If you’re Hyatt, or Google, or Apple, or Chiquita, you
    look at Cuba, and you say, ‘Oh my god, this is a fantastic place.’ ”

    Freyre’s office is papered with photos and drawings of Havana. He jumped
    to suggest Cuban restaurants for me to try while I was in Miami. He
    twinkled as he described his travels back to the island where he was
    born. He implored me to make a visit.

    “I’m a lawyer, I’m a rational guy,” he says, “but I’m a believer in
    mythology. There’s a mythical Cuba. There’s a Cuban magic. You’ve got to
    go. When you go, it will grab you. The moment you land at the airport
    and drive into the city, you’re gonna see row upon row of abandoned
    factories that were privately owned. You’ll see the faded old signs of
    restaurants that used to be there. You drive the bumpy road that takes
    you around the port, and you’ll see the abandoned oil refinery, the old
    dockyards. In the city, you’ll see the icon, the Habana Libre hotel—that
    used to be the Hilton, OK? And it’s frozen in time since 1959, with
    burst pipes and water splashing in the lobby. These are the claims. And
    you’ll see the potential.”

    Source: U.S. claims in Cuba: The strange battle that is exciting
    speculators and could stand in the way of normalization. –
    www.slate.com/articles/news_and_politics/foreigners/2015/11/u_s_claims_in_cuba_the_strange_battle_that_is_exciting_speculators_and_could.single.html