THE HELMS-BURTON ACT: A LOOSE CANON?

 

By Wayne S. Smith

On February 10-11, 1997 the Center for International Policy, the Canadian Foundation for the Americas (FOCAL), and the Institute for European - Latin American Relations (IRELA) co-hosted a conference in Washington on the pros and cons of the Helms-Burton Act.

 

Summary

By and large the conference concluded that the Helms-Burton Act was not working as its authors intended. It has had insignificant impact on the Cuban economy, certainly not sufficient to force a change of government or even a process of reform. On the contrary, the effect in Cuba was seen to be an internal crackdown and a slowing of reforms. Rather than improving the human rights situation, Helms-Burton worsened it.

However, spokesmen for the Clinton administration, including Ambassador Stuart Eizenstat, maintained that the law was working inasmuch as other countries were paying more attention now to the questions of democratization and human rights in Cuba. They cited especially the common position adopted by the European Union in December, 1996, as evidence of this, since it conditioned an economic cooperation agreement with Europe on reforms in Cuba. Europeans and Canadians, however, said they were already giving attention to those issues well before Helms-Burton was enacted and that the common position was simply a matter of formalizing what had all along been their approach.

Meanwhile, the conference found, international reaction to the law was one of outrage. The law was seen as a blatant violation of international law and treaties the United States was bound to uphold, and as extraterritorial in nature. Concern in the international community went well beyond Helms-Burton, conference participants found. It was seen as but one symptom of a trend in the United States toward unilateralism -- toward ignoring rule of law and relying increasingly on unilateral sanctions. American business especially was concerned that this trend would have costly consequences for the United States.

Opposition to the bill was found to be bipartisan and growing. Virtually all conference participants were agreed that repeal was unlikely for several years to come. Opponents believed that with continued international pressure, pressure from the U.S. business community, and an educational campaign to acquaint the American public with the law’s full ramifications, Congress might be persuaded to make some ameliorative adjustments over the next couple of years and eventually consider removal of what former president Jimmy Carter has called "the worst piece of legislation" he has ever seen.

BOTH SUPPORT AND OPPOSITION CUT ACROSS POLITICAL LINES

A phenomenon discussed during the course of the conference, and indeed reflected by the participants themselves, was that opposition to the bill is deeply and broadly bipartisan. This was not a liberal-conservative issue, much less one between Democrats and Republicans. On the contrary, strongest opposition -- and concern -- at the conference was expressed by conservative businessmen, including representatives of the U.S. Chamber of Commerce and the National Association of Manufacturers. Few of these had any interest in doing business with Cuba, or even any particular interest in U.S. policy toward Cuba itself. Rather, they saw Helms-Burton as being bad for international business in general and as putting at risk U.S. trade ties with its principal friends and trading partners and undermining such organizations as the World Trade Organization, over the essentially extraneous issue of Cuba.

It was noted that while Democrats as well as Republicans in Congress and the Clinton administration, defended the legislation, a minority of both parties in the Congress strongly opposed it. Opposing also were Democrats such as Jimmy Carter, Jesse Jackson, and George McGovern, and Republicans such as James Baker, Malcolm Wallop and Lawrence Eagleburger, the latter calling it not only mistaken, but reflecting "an imperial policy."

There was a sense also among most American participants that while the measure was approved by a lopsided majority over a year ago, there was now little enthusiasm for it except in the Congress, the Administration, and perhaps in Miami. Even so, the consensus was that there was little prospect for repeal -- at least in the near term.

 

 

STRONG AND UNANIMOUS INTERNATIONAL REACTION

European, Canadian and Mexican participants pointed to the fact that international reaction was strongly opposed to Helms-Burton. Not a single other government supported it. Canada, Mexico and the European Union had all enacted retaliatory legislation to enable their citizens and businesses to countersue any U.S. entities who took them into U.S. courts over properties lost in Cuba more than thirty years ago. The Organization of American States had unanimously condemned Helms-Burton and the Inter-American Juridical Committee had ruled that this kind of legislation would violate international law on at least eight counts.

Other governments regarded Helms-Burton as not only in violation of international law but also extraterritorial in nature. "Canadian businesses will adhere to Canadian law and trading practices, not be dictated to by a foreign power," was the way one Canadian participant summed it up.

 

CONCERN OVER TREND TOWARD UNILATERALISM

It became clear during the course of the conference that the central concern of opponents, both American and foreign, went well beyond Cuba or U.S.-Cuban relations. Rather, European, Canadian and Mexican participants, as well as American businessmen, legal experts and academics, all expressed deep concern that Helms-Burton represented an acceleration in the developing trend in the United States, and especially in Congress, toward unilateral sanctions as a primary foreign policy response. This was already making the U.S. less competitive and was cutting into exports. Helms-Burton could only worsen the situation.

In addition to the economic consequences, Helms-Burton was found to lead away from the kind of international system based on rule of law and clear rules of the game that many Americans had hoped would come to characterize the post-Cold War period. It was pointed out that Helms-Burton was being interpreted by other governments as a signal that the United States, being the only superpower left in the world, did not intend to abide by international law or even treaties and agreements to which it recently became a party. It would do as it wished.

This, it was noted, was a dangerous attitude to take in this highly interdependent world in which U.S. economic sway was on the decline.

 

 

HELMS-BURTON SEEN AS NOT ACHIEVING ITS STATED OBJECTIVES

One of the major substantive conclusions reached by the conference was that, except in a very narrow and limited sense, Helms-Burton was not working. According to the language of the act itself, its purpose was to increase economic pressures on the island so as to replace Fidel Castro with a transitional government that would lead the island to full democracy. Defenders of the act maintained that it had indeed led to a drop-off in investments and bank loans. Opponents agreed that the act had had some early and limited impact on the economy, but pointed out that this was already receding. A few companies had pulled out, but others had already taken their place and the Cuban economy continued to recover, its growth rate for 1996 being over 7 percent. Canadian investments and trade had actually increased in the wake of Helms-Burton. Further, more and more companies would ignore Helms-Burton as it became apparent that Title III would not stand up in U.S. courts even if implemented, and that in fact it was not likely ever to be implemented. In one of the most interesting revelations of the conference, it was pointed out that one reason it would not be implemented is that there were already other ethnic groups, including hundreds of Palestinian-Americans, ready to file class action suits the moment it might be enforced -- the latter claiming an equal right to sue the Israeli government for lands taken from them in Gaza and on the West Bank.

Opponents also pointed out that Helms-Burton suffered from an almost total disconnect between means and ends. The relatively minor degree by which it might increase Cuba's economic distress would certainly not induce Fidel Castro to resign and go live in exile, nor would it bring about so severe a crisis as to lead to an uprising or even a civil war. How then was Helms-Burton to produce a transitional government without Fidel Castro? The conference’s answer to that was that it could not. It could not possibly achieve its central stated objective.

Defenders of the act, and especially spokesmen for the Clinton administration, including Ambassador Stuart Eizenstat, insisted that it had already led to a more coordinated defense of human rights on the part of the Europeans, and to some extent of the Canadians and Latin Americans. The common political position adopted by the European Union last December was presented as prima facie evidence of this.

The Europeans and Canadians, however, insisted that in their discussions with the Cubans, they had always raised the question of human rights and urged improvements. Thus, they said, there was nothing really new in their positions as the result of Helms-Burton. As Mr. Sweder van Voorst of the Netherlands foreign ministry put it: "Ambassador Eizenstat would have us believe the European common position was in response to Helms-Burton, but this is absolutely not the case."

Opponents also noted that if Helms-Burton were intended to improve the situation of human rights in Cuba, it had had the opposite effect. Since its passage, there had been an internal crackdown, not a loosening up. This was to be expected, for the Cuban government always responded to increased pressures from the United States by calling for greater internal discipline and exercising heightened control.

Dean Browne of FOCAL pointed out that conference participants who were proponents of Helms-Burton seemed to have adopted a whole new set of objectives for it -- objectives considerably more modest than those first indicated. While at the time the act was signed the public was told that the objective was to choke off investments and increase economic pressures to the point of producing a change of government, it was now told that the purpose was simply to get other governments to focus more attention on human rights in Cuba. Dan Fisk of Senator Jesse Helms's staff said that the act was succeeding because it had advanced four major policy objectives: (a) halting the drift toward normalization in U.S. policy, (b) stimulating the global isolation of the Castro regime, (c) complicating Castro's investment schemes, and (d) having the United States prepare for Cuba's democratic transition.

But halting any moves toward normalization was not described as one of the act's objectives a year ago, the conference noted. As for isolating Castro, Helms-Burton had isolated the United States considerably more. And as for preparing the United States for Cuba's democratic transition, there was no explanation at all as to how Helms-Burton was to bring about that transition. Mr. Fisk’s saying that the act was designed to "complicate" Castro's investment schemes rather than choke them off, also seemed to be a matter of downsizing the act's objectives to unimportant dimensions and then declaring victory.

Michael Ranneberger of the State Department said Helms-Burton had two major objectives. The first was to promote democratic transition by discouraging foreign investment. The second was to protect the property rights of U.S. citizens.

But Wayne Smith of CIP retorted that, as had been stated before, there was no indication as to how some small decline in investments was supposed to bring about democratic transition. And the rights of American property owners could have been advanced more effectively by negotiating a compensation agreement with the Cuban government. The latter recognized its obligation to compensate those owners and had on several occasions indicated its willingness to negotiate an agreement -- as it had done with every other country that had claims against Cuba. The United States did not wish to negotiate such an agreement because that would be perceived as a long step toward normalization, Smith noted. It was this political calculation, and not protection of American property rights, that underlay the U.S. position.

Finally, several participants expressed thanks that Helms-Burton was not working as its proponents had hoped. If it were having the kind of devastating impact on the Cuban economy that might lead to some sort of explosion, it was clear that Castro would fight rather than quit and that many would fight with him. To speak seriously of Castro's ouster, then, was to speak of armed conflict and massive bloodshed, perhaps even a full-scale civil war, with all that implied in terms of tens of thousands of refugees on Florida's beaches and disruptions of commerce and communications throughout the region. That should be the last outcome the United States would want, participants believed. Fortunately, Helms-Burton was not working and was therefore unlikely to produce such an outcome.

Also, were Cuba moving toward some kind of systemic crisis as the result of economic pressures exerted by Helms-Burton, participants were concerned that Castro would again open the refugee floodgates before the situation reached critical mass. Again, fortunately, Helms-Burton gave no evidence of an ability to produce such an outcome. That its purpose was to increase economic distress, however, would seem to work directly against U.S. interests and objectives. The 1995 refugee agreement with Cuba was clear proof that the United States did not want floods of Cuban boat people on its shores. Yet, with Helms-Burton, it was trying to create the very economic conditions which might cause them to take to the boats again. This can only be seen as counterproductive, if not irrational.

 

 

 

HELMS-BURTON CLEARLY VIOLATES INTERNATIONAL LAW

Another fundamental conclusion of most participants was that Helms-Burton violated international law. Defenders of the act pointed to Article 17 of the Universal Declaration of Human Rights as the basis for their claim that there was an internationally recognized right to own property, a right whose violation by the Cuban government justified the actions taken under Helms-Burton. Opponents, however, noted that the Universal Declaration was not a binding document and that the right to own property was not written into any of the binding covenants. No such right existed under international law, nor did a government's nationalization of its citizens' properties, with or without compensation, fall within the purview of international law. Further, the United States itself had always recognized that a state cannot advance the claims of those who were not its citizens at the time they lost their properties. The U.S. Claims Commission noted that this was so enshrined a concept of international law that it required no further discussion. But now, with Helms-Burton, that enshrined principle was being ignored.

European, Canadian and Mexican participants stressed that it was this quality, i.e., Helms-Burton's dismissal of international law and treaties the United States had considered binding, that was intolerable to them. As one participant put it, "Helms-Burton seems to assume the United States is above the law. If we accept that, then the whole international system begins to break down."

It was for that reason that the European Union had felt compelled to file a complaint against the United States in the World Trade Organization. The United States had passed legislation which broke the rules. Like it or not, it had to be held accountable. As Ambassador Hugo Paemen of the European Union put it, there was a principle involved that could not be overlooked. The rules of conduct must be adhered to by all. The United States had agreed to those rules. If it were allowed so flagrantly to break them, then what would prevent others from doing so? "No," said Ambassador Paemen, "the law must be upheld." And, he suggested, the WTO was the proper venue in which to uphold it.

Jeanette Tramhel of the Inter-American Juridical Committee agreed fully that Helms-Burton violated international law. She explained that after analyzing a hypothetical law which was the mirror image of Helms- Burton (in order to avoid reaching a judgment on the internal legislation of a member state) the committee had concluded unanimously that such legislation was not in conformity with international law. In fact, the committee’s report had indicated it to be in violation on at least eight counts.

 

IRRATIONAL NATURE OF HELMS-BURTON

Opponents of the act, both American and foreign, expressed concern at the apparent willingness of the Clinton administration and the U.S. Congress to ignore international law, the opprobrium of the entire international community, and condemnation in both the United Nations General Assembly and the Organization of American States. This suggested not only a turn toward unilateralism, but an arrogance which was entirely misplaced in this increasingly interdependent world. Perhaps even more disturbing was the fact that the United States was defying world public opinion in order to push forward legislation which was not working and could not achieve its stated objectives. Indeed, even if it had the capability of achieving those objectives, the consequences would be disastrous for the United States itself: tens of thousands of Cuban refugees on U.S. shores.

The final evidence of its irrationality, however, was that it placed at risk critically important U.S. commercial relationships with Canada, Europe, Mexico and several other states and the future of the World Trade Organization over Cuba, a tiny island which posed no security threat whatever to the United States and which indeed in the post-Cold War world should not even be on the radar screen of U.S. foreign policy concerns.

 

DEVELOPMENTS SUBSEQUENT TO THE CONFERENCE

U.S.-EU Preliminary Agreement

In mid -April, the United States and the European Union reached a preliminary agreement which had the effect of at least postponing until October their confrontation in the WTO. For its part, the EU agreed to hold off its complaint before the resolution panel of the WTO for six months, and during that time to use the Cuban case as a precedent in establishing global standards for resolving disputes over confiscated property and foreign investments in them. This will be done within the context of the Multilateral Agreement on Investment (MAI), now being negotiated.

For its part, the United States agreed to continue to postpone implementation of Title III, under which foreign entities can be sued in U.S. courts for "trafficking" in lost U.S. properties, and to seek new legislation to give President Clinton waiver authority for Title IV, under which executives of "trafficking" foreign companies, and their wives and children, could be denied visas to enter the U.S.

 

Whether an agreement on how to handle nationalized properties can be reached in the MAI remains very much to be seen. One spokesperson for the EU described U.S.-EU discussions on the matter as "purely exploratory."

And whether the Congress will give President Clinton waiver authority for Title IV also remains very much to be seen. The preliminary agreement, in other words, may not hold up. Meanwhile, the effect has been to render Helms-Burton impotent. As one observer noted, without Titles III and IV, the Helms-Burton Act has no teeth.

 

USA Engage

Also in mid-April, corporate America, including representatives who participated in the February conference, launched a campaign against unilateral trade sanctions such as Helms-Burton. With the participation of some of the country's largest corporations, and with the support of former president Carter and Republican senator Richard Lugar, a new coalition, USA Engage, was formed to persuade policy makers that unilateral sanctions are counterproductive. The coalition, led by the National Foreign Trade Council, said trade sanctions should only be used as a foreign policy alternative of last resort. The new coalition plans to mount a major lobbying effort against unilateral sanctions, including Helms-Burton.

 

CONFERENCE PROGRAM OF EVENTS

 

Monday, February 10

Brookings Institution Auditorium

1775 Massachusetts Ave., NW

 

9:00am Opening remarks:

Ambassador Robert White

 

Panel I9:30am

Helms-Burton a year later: Is it working?

Dan Fisk, professional staff member, Senate Foreign Relations Committee

Gareth Jenkins, president, Cuba Business (London)

Michael Ranneberger, director, office of Cuban affairs, US Department of State

John Kirk, professor of Latin American Studies, Dalhousie University (Canada)

Wayne Smith, senior fellow, Center for International Policy

 

Panel II11:00am

Helms-Burton, international law and a closer look at trade embargoes.

Robert Muse, attorney, Muse & Associates

Alberto Mora, attorney, Holland & Knight

Jeanette Tramhel, legal division, Organization of American States

Gary Hufbauer, fellow, Institute for International Economics

 

12:30pm Buffet lunch.

Panel III

2:30pm The American business community, Helms-Burton and other sanctions

legislation.

William Lane, Washington Director Governmental Affairs, Caterpillar, Inc.

Toby Roth, partner, Flippo, Roth and Associates

Willard A. Workman, vice president, international, U.S. Chamber of Commerce

T. Peter Blyth, president, Radisson Development Worldwide

Marino Marcich, director for international investment, National Association of Manufacturers

 

Panel IV

4:45pm Coping with Helms-Burton

Matthew M. Horn, Institute for Entrepreneurship in Emerging Economies, Washington, D.C.

Jean Anderson, partner, Weil, Gothsel & Manges, LLP.

Joy Olson, Latin America Working Group, Washington, D.C.

 

Tuesday, February 11

House Ways & Means Subcommittee

Rayburn House Office Building B-318

Independence Ave. & S. Capitol St., SW

 

Panel V

 

9:00am Reaction of US trading partners to Helms-Burton.

Ana Covarrubias, El Colegio de Mexico

Hon. Doug Lewis, chairman, Cuba-Canada Business Committee of the Canadian Council for the Americas

Wilfried Richter, director, Latin American affairs, German foreign ministry

Peter Kittelman, member of parliament, European Union

 

Panel VI

10:00am Retaliation or Retreat? The international community responds to Helms-Burton.

John Godfrey, Member of Parliament, Canada

Peter Milliken, Member of Parliament, Canada

Eric Hayes, chief for U.S. relations, European Commission

Sweder Van Voorst, deputy director, Western Hemisphere department, Dutch foreign ministry

Scott Armstrong, The Information Trust, Washington, D.C.

 

Commentators:

Fernando de Galainena, Spanish subdirector general for international economics, Mnistry of Foreign Affairs

Hernan de Jesus Ruiz Bravo, director of U.S. law, legal advisor’s office, Mexican Foreign Ministry

Bert Hoffman, Institute for Iberoamerican Studies

 

12:30 Lunch break.

 

Panel VII

1:30 Is an open society in Cuba advanced by a policy of isolation?

Gillian Gunn Clissold, director, Caribbean Project, Georgetown University

Gaddis Smith, professor of history, Yale University

Susan Kaufman Purcell, vice president, Americas Society

David Thomas, former British undersecretary for the Americas and ambassador to Cuba

 

3:00pm Conference summary and comments.

 

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© Copyright 1997 by the Center for Inter national Policy. All rights reserved. Any material herein may be quoted without permission, with credit to the Center for International Policy. The Center is a nonprofit educational and research organization focusing on U.S. policy toward the developing world and its impact on human rights and needs.

ISSN 0738-6508

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