Hey, D-17. I’ve Got Mail!

 

Fifty-two years ago, as our country recovered from its near death experience in the Cuban Missile Crisis, the U.S. government cut off direct mail service to the island.  Although letters could still pass from Miami to Havana, so long as they flowed through third countries, the ban on direct postal service was just a small part of the hefty regime of sanctions that became only more harsh and severe over time.

Next week in Washington – and we imagine other places as well – there will be a nice party to celebrate the diplomatic breakthrough we call D-17, and the year in which the governments of Cuba and the United States acted like adults and talked to each other respectfully.

Yes, this was long overdue and yes, civil behavior was about the least that a citizen of either country could have asked of his government.  But, when you think about what came before December 17, 2014, and what happened after, this year stands out like a Chanukah candle, a shining beacon of light.

For five decades, everything about our policy toward Cuba was about getting the Castro family to cry uncle. We tried to kill them and, when that failed, we sought to incite an insurrection among Cubans who we tried to make hungry and more desperate hurting them with our sanctions.

We didn’t just cut off their mail.  We cut off direct phone service.  We divided Cuban families by imposing stringent travel sanctions; just a decade ago, bereaved families couldn’t even make the trip to say goodbye to a lost loved one.

No petty slights were held back.  We denied visas to Ibrahim Ferrer of the Buena Vista Social Club, guitarist Manuel Galvan and other musicians to keep them from coming to our country to pick up their Grammy Awards, calling them “detrimental to the interests of the United States.”

We heaped disdain on the Cuban doctors who the Castros offered us to treat the ill and injured after Hurricane Katrina.  Such disdain, our old policy never considered the notion that Cubans might want to be left alone to write a new future for themselves.

We did all of this and more, year after year, and the system we wanted to replace so badly never budged.

Now, we have a new policy.  It isn’t perfect.  It’s pentimento – most of the new paint boldly covers over what we used to do though, from time to time, we can still see trace evidence of the old policy (#Radio/TVMartí, #CMPP, etc.).  This new policy is a lot better than what it was, and certainly doesn’t come with the sense of shame we feel about a political discourse that even considers putting the religious backgrounds on the visa papers of desperate migrants.

This policy is about opening real communication – not just direct mail service, but also direct calls, cellphone roaming in Cuba, more trade and travel and more access to the Internet for Cubans because our agreement with President Castro included support for Wi-Fi hotspots.

It’s also about open embassies, and real diplomacy. This week, U.S. and Cuban negotiators started addressing the billions of outstanding compensation claims for expropriated property and damage from the embargo.

One expert told the Washington Post, “it was a positive sign that the sides were even talking about the issue. It’s the first time the two countries are going back to look at this history and try to sort out a system for fixing it.’ ‘You don’t have this conversation if you haven’t built some mutual trust and respect,’ he said.”

We’re told there are more agreements on the way on bigger ticket items, like the restoration of normal airline service between our countries, and more talks to take place on law enforcement, fugitives from justice in both countries, and human rights.

It’s also about sticking to our beliefs. To their credit, our diplomats never let their knees buckle when pro-sanctions hardliners in Miami manufactured the lie that Cuban troops were driving Russian tanks in Syria, and they certainly haven’t called to close the border despite the upsurge in Cuban migration through Central America.  To its credit, our State Department stood up straight on International Human Rights Day to highlight our disagreements with Cuba on free expression and to criticize the arrests of Cubans who sought to express themselves on that day.

Can anyone think of an alternative?  Not even the geniuses at the Washington Post, who stubbornly insist that President Obama is being played by Raúl Castro, have offered one suggestion that could have brought us this far.   All of this can be taken away, of course, by next year’s election.  That’s a risk that should focus both governments on obtaining more results. There’s a lot more work, hard work, left to do.

It’s a stretch to think the U.S. and Cuba will emerge from this normalization process as allies.  We were adversaries and now, after a year of living under a policy of engagement, the U.S. and Cuba have built enough respect and trust to become governments the other can work with.  What a great change and sign of hope for the future.

The last year has been better, magically better than the previous, and quite painful, 55.  That alone is something worth celebrating.   So, on Thursday night, raise a glass, have a mojito, hug a friend.

Oh, and when that letter from Havana gets delivered, don’t forget to thank December 17.

U.S-Cuba:

Bi-Lateral Talks:U.S. and Cuba Hold Talks on Settling Claims For Seized Assets and Embargo Damages

On Tuesday, U.S. and Cuban negotiators met in Havana to discuss, as Reuters reported, “the claims of Americans whose property was nationalized after the 1959 revolution and Cuban counterclaims for damages caused by the U.S. trade embargo.”

After a day of negotiations, the Miami Herald noted, the talks concluded with an agreement to talk again next year. The Herald quotes a State Department official who said the meeting produced, “A very respectful and professional exchange,” and a communique from Cuba’s Foreign Ministry which said the discussions took place in “A respectful and professional climate.”

After Cuba’s revolution in 1959, the Cuban government nationalized properties belonging both to Cubans and foreign investors, including those from the United States.  Under U.S. law, 5,913 individual claims have been certified accounting for losses with an assessed value of $1.9 billion when they were seized, but are now worth roughly $8 billion, according to the Washington Post. Ongoing claims negotiations are likely to include legal judgements against Cuba in U.S. courts, including the 1996 Brothers to the Rescue incident, and unspecified direct claims by the U.S. government against Cuba’s government, according to the Miami Herald.

Cuba asserts that it is owed roughly $122 billion in damages for the economic embargo and an additional $181 billion in compensation for the Bay of Pigs and other attacks on Cuba launched by or with the support of U.S. administrations and Cuban exiles.

Mauricio J. Tamargo, the former chairman of the Foreign Claims Settlement Commission at the Justice Department calls these negotiations “an enormously big deal” highlighting the fact that, “The Cubans have up till now never recognized these claims as legitimate or something they are even prepared to discuss. It has never happened in 56 years since the revolution began and they started confiscating American property.”

Among the claimants from the U.S., the Cuban Electric Company, whose current shares belong to Office Depot, has the largest claim. The 50 largest American claimants account for three quarters of total claims, with the majority of large claims coming from corporations not individuals. For a list of the top twenty U.S. claims, please click here.

Although a payment plan will have to be part of a final agreement, Cuba’s ability to pay, according to one expert, should not be an obstacle. In a report published by the Brookings Institution, Professor Richard Feinberg offers a formula nested in a grander diplomatic bargain.  This would allow Cuba to spread payments over ten years, with Cuba able to offer U.S companies investment vouchers or tax incentives, and the U.S. allowing Cuba to join the World Bank and other financial institutions.

Under the Helms-Burton law, resolving this complicated issue is a precondition for normalizing relations.  As Peter Kornbluh and William LeoGrande write in “Back Channel to Cuba: The hidden History of Negotiations between Washington and Havana,” their history of U.S.-Cuba diplomacy, since the property nationalizations after the revolution caused the U.S. to impose the embargo, the compensation issue must be solved before it is lifted.  In addition, just as avoiding default on a nation’s sovereign debt can protect its ongoing financial stability, the protection of property rights in Cuba would be affirmed by settling the claims, and contribute to Cuba’s ability to address its economic problems going forward by attracting new foreign investment and the like.

Individual claims are only being negotiated for individuals who were U.S. citizens at the time their property was confiscated.  Relatedly, the family of the deceased mobster, Meyer Lansky, whose hotel casino, The Havana Riviera, was seized by the Cuban government, wants the hotel back or cash compensation for the loss.   However, since the claim has not been certified by The U.S. Foreign Claims Settlement Commission, Lansky’s heirs may have missed the boat.

Cuba hands over first U.S. fugitive since U.S. and Cuba reestablished diplomatic relations

Cuba returned a fugitive wanted by the United States this week, AFP reports. Cuban authorities detained Shawn Wegmann, who was wanted on firearms charges in the U.S., on Oct. 31 after he took off a GPS ankle monitor and fled to Cuba by a stolen boat, according to The Miami Herald. The Cuban authorities notified the U.S. Marshals Service in early November and a team of federal marshals flew to Havana to pick him up on Tuesday.

“Weggman is the first fugitive who has been returned to the United States by the Cuban government after fleeing to Cuba since diplomatic relations began,” said U.S. Marshal Amos Rojas Jr.

Back in November, U.S. and Cuban diplomats held a law enforcement dialogue, where theyreportedly discussed counter-terrorism, counter-narcotics, transnational crime, cyber-crime, secure travel and trade, and fugitives. As we reported, both parties agreed to continue technical discussions in 2016. The U.S. seeks the extradition of around 70 fugitives, including Assata Shakur and William Morales. Cuba’s government also seeks the return of several figures accused of engaging in acts of terrorism against Cubans.

Up at Bat: MLB Heads to Cuba for good will tour

Major League Baseball and its players union are set for a good-will tour to Cuba next week, reports the New York Times. The league is set to host children clinics and a charity event led by top MLB officials and players including Joe Torre, the former manager of the New York Yankees and the chief baseball officer of the MLB, LA Dodger’s ace Clayton Kershaw, Miguel Cabrera of the Detroit Tigers, Nelson Cruz of the Seattle Mariners, and Jon Jay, centerfielder for the San Diego Padres.

The trip carries a particular significance for the three Cuban players who will also participate on the trip; White Sox star Jose Abreu, veteran shortstop Alexei Ramirez, and Brayan Pena of the St. Louis Cardinals All three players left the island in order to play in the major leagues here in the U.S.

Normally, the government of Cuba prohibits defectors from reentering the island. For the trip, the Cuban players have received assurances from the government of Cuba that they will be able to enter and exit the island safely as well as have the opportunity to visit family.

The trip is the latest step by the MLB to improve its relationship with Cuba. Baseball’s top lawyer, Dan Halem met with Antonio Castro, senior Cuban baseball official and the son of Fidel Castro, last October in order to discuss strengthening the league’s relationship with the island.

Foremost, the league has expressed interest in creating a system in which the Cuban players can legally and safely be scouted by MLB teams and enter the league. Moving forward, there have been talks of spring training games in Havana and even a Cuban minor league team.

Breaking news: U.S. to begin direct mail service with Cuba

It was announced today that U.S. and Cuban officials have reached a deal to resume direct mail services for the first time since 1966.

A pilot program is set to be launched as technical and operational specifics continue to be discussed. A start date has not been announced for the permanent reestablishment of direct mail services.

The announcement comes just days before the anniversary of the Obama Administration’s normalization began.

In Cuba

Moody’s shifts outlook on Cuba from “stable” to positive

On Thursday, Moody’s Investors Service affirmed Cuba’s Caa2 foreign currency issuer rating while improving its outlook on Cuba’s economy from stable to positive. Moody’s is a leading provider of credit ratings, research, and risk analysis.

As the Financial Times rported, Cuba has been attracting greater interest among international investors in the year since the U.S. and Cuba had the breakthrough in diplomatic relations.   Moody’s credits the rapprochement with improvements in Cuba’s economic outlook – increases in tourism, for example.

Moody’s also observed that, despite the decline in oil prices, Cuba is surviving reductions in financial flows from its relationship with Venezuela.  The agency said a pick-up in economic activity on the island, aided by measures Cuba has taken to diversify its portfolio of economic relationships, has offset the drag on growth created by Venezuela’s problems.

Cuba is near closing a deal with the Paris Group that would restructure $16 billion in debt.

Cuba is likely to strike a debt forgiveness deal with the Paris Group this week, reports Reuters. Parties are expected to meet in Paris later this week to finalize a multilateral deal.

The Paris Club is an informal organization of creditor nations that includes “Australia, Austria, Belgium, Britain, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland and the United States.”

According to a diplomate from a major creditor nation, “Cuba has agreed to pay the principal of around $5 billion owed since its 1986 default in exchange for forgiving $11 billion in service charges, interest and penalties… Negotiations are now more about how much time they need to pay it and how much of the money will be reinvested in Cuba.”

Since Raúl Castro became president in 2008, he has made the country’s finances a top priority resulting in a trade and current account surplus that has been sustained since 2011. Now, as normalization with the United States continues, creditors are increasingly flexible with Cuba.

One European diplomat was quoted in Reuters saying, “Our companies want this out of the way so they can obtain financing for investments… They want to get here before the Americans lift the embargo.”

Cuba’s foreign debt is estimated at debt $26 billion. The country is not part of the World Bank or another international lending organization which makes its foreign investment and financing difficult. The deal with the Paris Group could help to improve the situation, as Richard Feinberg of the Brookings Institute notes,

A comprehensive deal would go a long way toward normalizing Cuba’s international financial relations and gaining access to official trade credits… However, a deal with the Paris Club will not get Cuba a good international credit rating. That can only come from more robust export earnings and a healthier sustainable balance of payments.

Cuba Foreign Relations

Update on Cuban Migrant Crisis, President of Costa Rica to visit Cuba

Immigration from Cuba to the United States has sky rocketed over since the announcement to normalize relations last year. The Washington Post reports the number “rising to 43,159 from 24,278 the previous year.”

The influx is different from past immigration, not just in size but also in the methods used. The vast majority are coming through land, using Central American nations and U.S. ports of entry along the Mexican border.

The surge in migration is reportedly being driven, in part, by fears among Cubans that preferential treatment that Cuban migrants receive under current U.S. policy could be taken away.

As Cubans try to take advantage of existing laws, a migrant crisis has developed in the Central American nations being used for passage. According to the Washington Post, “As many as 4,000 U.S.-bound Cubans have become stranded in Costa Rica since last month, when Nicaragua stopped letting them pass through.”

Ecuador has also taken measures to enforce its borders and slow the stream of Cuban immigrants attempting to pass through. For the first time since 2008, the country reinstated strict visa requirements sparking protests in Havana.

The past Wednesday, the President of Costa Rica issued a statement regarding the migrant crisis. He called on citizens and immigrants alike to be patient and to work with the government peacefully. He also called on the governments of Panama and other nations to also ease this process. The President of Costa Rica is scheduled to make a trip to Cuba next week to further bilateral talks on this issue.

Recommended Viewing:

¡OUT! Las Transformistas of Havana, Eric Politzer

This week, CDA was fortunate to receive a copy of Eric Politzer’s beautiful new photography book.,¡OUT!. Inside its bright pink cover, ¡OUT! features beautiful, captivating, photos of performers in Havana’s gay cabarets. The book celebrates the “individual, creativity, [and] sense of confidence” possessed by the individuals highlighted.

Hemingway’s Life in Cuba Profiled in Biopic- Debuts at Havana Film Festival, Cuba Journal.

The film “Papa” is set to premiere this week at Cuba’s 37th International Festival of New Latin Cinema. The film tells the story of journalist Ed Meyers who travels to Cuba to meet his idol, Ernest Hemingway. Their story unfolds amidst the backdrop of the Cuban Revolution.

Recommended Reading:

Reconciling U.S. Property Claims in Cuba: Transforming Trauma into Opportunity, Latin America Initiative at Brooking, Richard Feinberg

In depth article detailing how property claims between the U.S. and Cuba will be addressed. Richard Feinberg provides a detailed account the history behind these property disputes and cites past examples in order to represent what the final outcome could be.

Uncovering a Long-Lost Aston Martin While Riding Around Cuba in Castro’s Limos, Road & Track, Jonathan Ward

Avid collector and restorer of vintage vehicles, Jonathan Ward, describes his summer exploring Cuba’s car culture.

Why Cuba is ripe for investment, CNN Money, Ramphis Castro

Kauffman Fellow and technology startup founder, Ramphis Castro, describes the potential in Cuba as a huge opportunity for venture capitalists after attending Cuba’s first-ever Startup Weekend. “Early-stage venture capitalists want to see two things: the pool of talent and the need for a given solution. Cuba has both in spades,” Ramphis describes.

 

Until next time,

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