HOW SANCTIONS CAN AFFECT U.S. POLICY INTERESTS
Prepared Statement of Daniel Fisk(1)
Before the Committee on International Relations
U.S. House of Representatives
June 3, 1998
Mr. Chairman, Members of the Committee:
Thank you for the opportunity to appear before you today to discuss "how
sanctions can affect U.S. policy interests." I have had an opportunity to give this
topic a great deal of thought and study, from both a legislative and executive
policy-making perspective and, now, from an academic framework. The views I express,
however, are my own.
Mr. Chairman, five premises underlie my analysis of the question before this committee
on U.S. sanctions policy:
First, that there is no perfect foreign policy tool or instrument. If sanctions are an
imperfect tool, so are United Nations resolutions, the use of the military, and doing
nothing. Recent experience in Haiti, in my opinion, stands as a perfect example of the
limitations of the gamut of foreign policy options.
Second, that U.S. foreign policy and U.S. foreign economic policy should be
complementary, not distinct, and that both should enhance U.S. national interests. The
distinction between the two that some would like to have codified is an artificial one.
Why? It allows them to promote their interests (e.g., economic and commercial) while
criticizing other aspects of U.S. national interests. I do not think we should fall into
the trap that there are sanctions for "foreign policy" purposes and sanctions
for "economic purposes": there are sanctions - and other policies - which seek
to enhance or promote our interests. Promoting free markets is equally important to U.S.
interests as promoting free elections, modes of democratic and transparent governance, and
respect for human rights.
Third, that it is impossible to hurt a national government without negatively
impacting its citizens, and there is no way to help its citizens and not help the
government. This was as true of Ukraine famine relief in the 1930s as it is for
humanitarian aid to Iraq or Cuba. In each case, helping the people helps the government
that is primarily responsible for the human destruction at work in each of those
What cannot be forgotten is that internal regime behavior bears primary responsibility
for the conditions of that nation's citizens. There were intentional efforts by the Soviet
government to starve a significant portion of its population in the 1930s, just as there
was the intentional use of starvation by the Ethiopian government in the late 1970s and
early 1980s. Weather contributed, but human governments intentionally exacerbated the
situations and increased the toll in human lives.
Cuba and Iraq are recent examples. It is the regimes' own policies that bear primary
responsibility for the human condition in those two States. External economic and
humanitarian factors do not determine the treatment of a regime's own citizens; the regime
determines that. Critics of embargoes are right: the elites continue living well. What the
critics do not go on to say, however, is that this condition is not the fault of the
embargo or sanctions; it is a result of direct and deliberate governmental policies. One
cannot ignore the human cost of the system imposed by the regime.
Fourth, that States do not have to have a one-size-fits-all foreign policy. In other
words, the United States does not have to treat every nation the same. What we should be
consistent in is primarily the values that we seek to promote, but also our national
interest as we define it at the time must be a major consideration.
In this regard, the question of consistency is raised about U.S. policy on so-called
"secondary boycotts": that the treatment we accord Israel with our opposition to
the Arab boycott against that nation differs from our treatment of Cuba. The United
States, to its credit, took a leadership role against the extension of coercive measures
against Israel by the Arab states. What's the difference?
In the cases of Israel and Castro's Cuba, we obviously share values with the former,
not the latter. And it has been, and remains, in our national interest to oppose any
boycott of Israel. In other instances, we have applied "secondary boycotts," at
least to the extent of prohibiting foreign firms controlled by U.S. firms from transacting
with North Vietnam, South Vietnam, Cambodia, North Korea, Rhodesia, and the Soviet Union.(2)
Fifth, that there are, and will be, irritants in our bilateral and multilateral
relationships. These exist in our individual, everyday relationships, why, then, do we
presume that they will not exist among States? The United States shares many interests
with other nations, but we also have different approaches to, views on, and objectives for
The debate about the use of embargoes, economic coercion, or sanctions is as old as
the American Republic, and it revolves around the issue of whether U.S. trade policy is an
instrument of or distinct from boarder United States foreign policy objectives. The first
significant debate on the utility and costs of economic coercion occurred in 1794, as the
young Republic sought to balance its response to tensions between British and French and
their attacks on American shipping as a result of those tensions. What is of note is that
the debate in the U.S. Congress over the proper American response to the 1793 British
Orders in Council, which allowed for the detention and seizure of "neutral"
vessels bound for France with foodstuffs, involved the question of whether the subject
should be confined to purely commercial matters or should be it be broadened to all
matters to which the U.S. and Great Britain were at odds. Before this question could be
settled, events overtook the positions of both sides, as the U.S. and Great Britain
entered a period in which war seemed imminent.(3)
Sanctions: What are they?
How "sanctions" are defined depends on who you talk to or what academic one
reads. This is as true in the policy debate as it is in academic discussions. As one
researcher noted, "Definitions tend to be idiosyncratic, often sloppy, and frequently
in violation of the minimum requirement that a word be defined in a way that generally
conforms to common usage."(4) While "economic
sanctions" or "economic coercion" are often used, there is no general
agreement among academics as to what the terms mean beyond an overarching notion of one
state's (the "sender"/"initiator") use of economic instruments for
coercive reasons against another state (the "target").
In a majority of the academic literature, the author constructs a specific definition.
In a small number of cases, authors either leave the term undefined (leaving it to the
reader's imagination) or accept another's definition for testing purposes. For example,
one author defined sanctions as "economic measures directed to political
objectives."(5) Another says they are "measures
in which one country (the initiator) publicly suspends a major portion of its
trade with another country (the target) to attain political objectives."(6) Perhaps the definition that is becoming the
"accepted" one can be found in the work of Hufbauer, Schott, and Elliott, in Economic
Sanctions Reconsidered: History and Current Policy. They define sanctions as the
"deliberate, government-inspired withdrawal, or threat of withdrawal, of 'customary'
trade or financial relations
[with] 'customary' mean[ing] levels that would
probably have occurred in the absence of sanctions
" But this must be done
"in order to achieve foreign policy goals" (i.e., in order to achieve changes
"in the political behavior of the target state").(7)
It reminds me of the quip about pornography - we may not be able to define it, but we
know it when we see it. What is and is not a "sanction" is dealt with in the
same manner. However, this lack of any accepted definition has been used by opponents of
sanctions to define them as excluding those actions taken for economic or commercial
purposes.(8) Hence, we are led to believe that
"foreign policy" sanctions fail, without any mention of sanctions put in place
to protect economic, commercial or trade objectives. The exception to this dichotomy are
actions taken in response to expropriation/nationalization disputes, especially those
resulting from massive expropriations in Cuba and Nicaragua, and policies designed to
promote worker rights and deter the use of "slave labor."
This convenient economic/non-economic categorization allows sanctions opponents to
sidestep the "success" of trade actions, such as those taken in response to
violations of intellectual property agreements, thus protecting and perpetuating the
fiction that trade policy is distinct from broader U.S. foreign policy. This approach also
protects from scrutiny a record of trade sanctions that is no more effective in achieving
its objectives than non-economic sanctions are deemed to have been.
Types of Sanctions
In discussing "sanctions" there are several levels that should be kept in
First, there are private trade and investment activities. These involve activities
which do not rely on U.S. subsidies, but which may be subject to negotiated agreements
(e.g., GATT, NAFTA). These, then, are further divided into activities which may entail a
legal entitlement and activities in which a government does not interfere with the ability
of its own citizens to engage in economic pursuits.
In these cases, the United States can dictate whether its nationals can or cannot
engage in all or certain economic activities with another nation. And there will be
obligations that other nations will deem it appropriate, if not essential, that the United
States respect: for instance, benefits extended by the United States as part of the GATT
Second, there are bilateral assistance programs, including programs that subsidize or
guarantee trade and investment activities (e.g., OPIC, EXIM). In this area, at least as
regards the United States, no one or no State is entitled to bilateral assistance. There
is no right to a form of international welfare. The United States can condition these
types of relationships in any way deemed to serve U.S. interests.
Third, there are multilateral assistance programs, including assistance and loans made
by international financial institutions (IFI's). Again, the United States, by joining
these institutions did not surrender its rights as to whether it will support or oppose a
particular provision of assistance to a state. Nor do our obligations preclude us from
conditioning bilateral assistance upon how member states vote (or do not vote) in the
Costs of sanctions
In the "great sanctions debate," a major discussion centers on the costs of
sanctions. One recent estimate placed the cost of current sanctions between $15 and $20
billion in lost exports.
There is no doubt that sanctions cost American business and impact the American
economy. In fact, a cost analysis of U.S. foreign policy would be a very helpful tool for
evaluation. But in order for it to be useful, such an analysis must consider all aspects,
including the cost of engagement as well as the cost of doing nothing.
We can make projections of what it will cost us if we do not respond to a situation.
For example, what is the cost to the United States for the recent policies of engagement
with India and Pakistan? This question is especially relevant given the heightened
tensions in the region. What is the cost of engagement in Indonesia, where U.S.
businesses, operating within Indonesian law, supported crony capitalism? What is the cost
of U.S. engagement with China, especially in technologies that enhance its military
potential? Without getting into the debate on the allegations involving the transfer of
satellite launch capabilities, it is fair to ask about the costs of commercial engagement.
I will call the Committee's attention to the situation last summer when the government in
Beijing made threatening gestures towards Taiwan and the U.S. responded by deploying naval
forces to the straits separating those two. To what extent was the cost of that deployment
- the cost of potential warfare - attributable to engagement?
Let me turn to a real case - one which the opponents of current U.S. sanctions
policies categorize as a "failure": the question of the Soviet pipeline designed
to carry Siberian natural gas to Western Europe. As a result of President Reagan's
decision to prohibit U.S. involvement in this endeavor, some 60 U.S. companies were
affected, including such corporate giants as Caterpillar (which lost a $90 million order)
and General Electric (which lost a $175 million order). In each instance, other non-U.S.
companies were quick to attempt to fill the void. In addition, American companies lost
credibility with suppliers, admittedly a cost that is difficult to calculate but is no
less real. I do not minimize the sacrifice made by these companies when the decision was
made not to "engage" the Soviet Union.
However, there was a cost for cooperating with the pipeline project. First, there was
the question of Europe's dependence on a hostile foreign ideology/power. We know - and the
Reagan Administration and European governments knew then - that the European nations had
misrepresented to their own populations the extent of dependence on Soviet supplies. They
were trading reliance on Middle East supplies for dependence on the Soviet Union, a
situation with significant geostrategic ramifications.
The pipeline case is deemed a "failure" because it was completed without
American involvement. That would be a valid conclusion if that were the entire story, but
it is not. U.S. sanctions did not stop the pipeline, true, but they did raise the cost at
a time when the Soviets could least afford it. The pipeline, it has been estimated, would
provide for the flow of natural gas westward and hard currency, to the tune of $10 to $12
billion, eastward. The Soviet Union needed this cash and needed the pipeline. What they
did not need was a project that cost them two years delay and some $15 to $20 billion in
unexpected expenses to complete. And, the United States, despite protests from the
Europeans, got something else out of the deal: tightened export restrictions on
technologies to the Soviet Union. The Reagan Administration used the prohibition to
negotiate a tighter export regime.(9)
Mr. Chairman, the pipeline sanctions did not cause the fall of the Soviet Union, but
they contributed to, rather than ameliorating that regime's difficulties. They raised the
costs to the regime in a way that forced it to allocate already scarce resources. In this
case, sanctions were part of a strategy to engage the question of the Soviet Union's
future. They were not a case of enunciating a policy and leaving it to the rhetoric in
hopes of a positive outcome. Rather than a "failure," the pipeline example is
one of sanctions working, or contributing to a policy to affect the life-span of a hostile
regime. My question is, what would have been the costs if the Soviets had completed the
pipeline as scheduled and without having had to pay the additional costs inflicted by the
Let me go back to the cost of not acting; in effect, of acquiescing in unacceptable
behavior, and let me relate this to property takings in this hemisphere. I will remind the
committee, that as 1994 ended, American citizens had had over 1,400 properties, valued at
$600 million, taken in Nicaragua, there were about 25 claims in Costa Rica, and some 20
cases in Honduras.(10) These, even without the 5,911
certified claims involving properties taken in Cuba, made the Western Hemisphere the worst
offender in terms of uncompensated property takings. American citizens, as well as the
American and local economies, were the losers in these takings.
As I discuss further below, one of the objectives of the LIBETAD Act was to move the
agenda on the protection of property rights. That process had gained momentum in 1994 with
the enactment of Section 527 of the Foreign Relations Authorization Act for fiscal years
1994 and 1995 (P.L. 103-236), which sought to sanction nations that had engaged in
uncompensated takings by conditioning U.S. bilateral assistance and support in the IFIs on
the willingness of those nations to remedy the situation. This type of sanction directly
benefited private citizens and corporate America. During consideration of the LIBERTAD
Act, several foreign and U.S. ambassadors and private U.S. citizens conveyed to the
Foreign Relations Committee the new seriousness with which both the U.S. and foreign
governments were taking the question of property rights.
Mr. Chairman, I acknowledge that property issues, including those in Nicaragua, remain
an open issue in our bilateral relationships. However, from my experience on the Senate
Foreign Relations Committee handling both the Cuba and general property issues, there is
no doubt that the combination of section 527 and titles III and IV of the LIBERTAD Act
focused attention on property rights in a positive way for Americans overseas - and I
would argue for property rights generally.
Do sanctions or economic coercion work?
The conventional pundit and academic wisdom is that sanctions do not work. Study after
study, op-ed after op-ed, concludes that they are ineffective, basically because they do
not topple governments.
In fact, the answer to the question of sanctions working is, "it depends."
It depends on the regime. They appear more effective when applied against crony capitalist
states, such as Somoza's Nicaragua, Marcos's Philippines, or Suharto's Indonesia, than
against totalitarian states as characterized by the former Soviet Union or Castro's Cuba.
But, as noted above in the case of the Soviet Union (and as I will discuss below as
regards Cuba), sanctions can have a significant impact on totalitarian states.
Multilateralism also is a chimera: In the case of "multinational" sanctions
against South Africa, U.S. businesses were concerned about divesting because Japanese
firms were prepared to - and in some cases did - move in and replace the U.S. firms. The
same happened in Haiti: when U.S. businesses withdrew, there were reports of French firms
moving in to fill the void. There will always be someone willing to profit from repression
and the willingness of others to protest that repression or other unacceptable behavior.
I argue that in answering the question of "do sanctions work?" the first
issue is whether they have been implemented. Too often, sanctions are announced, a notice
is published in the Federal Register, and then, nothing. When sanctions are
implemented, sanctions by themselves, generally are ineffective to change a government's
behavior, unless the economic relationship is so disparate that the withdrawal of economic
relations provokes a backlash. One instance in which they worked was in Guatemala, in
1993, in the U.S. response to the so-called Serrano "autocoup." The threatened
withdrawal of U.S. economic relations, and U.S. opposition in the IFIs prompted the
business sector in that country to intervene, with the military, in stopping the
Guatemalan president from exercising supreme control.
I argue that sanctions must be part of a policy to engage the issue of the target
country, which is not the same as engaging the target itself. Let me explain: sanctions
policy is no different than any other policy, be it foreign or domestic. In any number of
instances, Congress does not simply enact a piece of legislation or the President invoke
an executive order, do nothing, and a problem is solved or removed. There must be
enforcement; there must be engagement on the issue. Again, I argue that Soviet pipeline
sanctions met this criteria. Not "engagement" as articulated by anti-sanctions
Second, sanction policy has two dynamics: first, there is the effort to have a clear
U.S. position on a particular question or country/regime; second, there is getting
executive branch action. Congress can and does play an important role in the former, but
has to find the right mechanisms to move the latter. As I understand the legislative
history of both the LIBERTAD and Iran-Libya Sanctions Acts (ILSA), as well as the Cuban
Democracy Act before them, they sought to achieve both objectives. They enunciated a clear
U.S. position and attempted to create incentives so that the executive branch could not
avoid the issues. In this regard, legislatively-mandated sanctions are working, albeit not
necessarily as the authors of the legislation envisioned it.
Engagement: the Solution?
Before turning to the specific question of U.S. sanctions against Cuba, I want to
address a side of the debate that has been ignored, especially by those who oppose U.S.
sanctions policies. This is the question of whether the United States achieves its foreign
policy/national security/foreign economic policy objectives any better through a policy of
"engagement." I must add that the opponents of current sanctions ignore this
question with good reason, and I will explain why.
Opponents of sanctions, in general, have outlined three criteria that should be
assessed before taking any unilateral action:
(1) the sanctions are likely to achieve their intended objective;
(2) the impact or harm the sanctions will cause to other national interests; and
(3) the impact or costs the sanctions will have on American citizens.(11)
These are reasonable judgements, and one would hope that they would be asked of any
foreign policy initiative, not just the decision to implement sanctions. However, what
happens when you apply the same criteria to "engagement"? "Engagement"
does not pass the test established for sanctions. There is no evidence that
"engagement" (whether it is called "constructive" or
"economic") achieves any policy results (unless the objective is simply that a
trade relationship exist).
The United States pursued engagement with Imperial Japan, and it failed to deter
Japanese aggression. The United States pursued a form of engagement - détente - with the
Soviet Union. The result: the military balance threatened U.S. national security and we
saw a period of Soviet expansion. In the case of Romania, the United States extended
most-favored-nation status - the only East Bloc country to be accorded that status - to
that nation. It failed to moderate the repressive behavior of Ceausescu's regime or the
transition when it came; in fact, the transition in Romania was the most violent of all
Soviet Bloc states.
The United States has pursued "engagement" with India in hopes of deterring
its nuclear ambitions; we recently witnessed the success of that policy. In another recent
case - Indonesia - engagement did not give us the leverage and access that one would have
expected. For example, the Washington Post noted that military-to-military
relations failed to give the United States insights into how the Indonesian military would
respond to turmoil in that country.(12)
It is argued that engagement, especially economic engagement, results in the economic
empowerment of individuals. China, it is argued, is the successful example. This ignores
the fact that U.S. policy has sought to promote political rights and freedoms, as well as
economic and social rights. And there is no evidence that economic rights lead to or
result in political rights. Economic empowerment does not necessarily lead to political
access or opportunities to participate politically.
China remains an example of a repressive political state for a significant portion of
its population. The same was seen in apartheid South Africa and the de facto military rule
of Haiti. In those cases, as with China, the ruling elite was prepared to grant some
degree of economic rights to its citizens. But these economic opportunities were limited
and could be revoked at any time - and they were not a prelude to political empowerment.
The Soviet Union also experimented with such "openings" throughout its history,
and we have seen the same phenomena in Castro's Cuba.
"Engagement" works when the regime in power makes a fundamental decision to
open the system both in economic and political terms. Examples include South Korea and
Taiwan. In the case of Vietnam, "engagement" came after the regime made the
decision to allow some economic opening to its citizens. The question remains as to
whether and how this will translate into political rights, which I see as the ultimate
objective of U.S. policy. Simply to "engage" with a regime that has made a
tactical decision to trade does not facilitate political or policy changes.
Finally, we now have three cases of "engagement" which should raise
questions of that approach's effectiveness: Indonesia, India, and Pakistan. In each
instance, the United States sought to "engage" the nations, offering them
economic/commercial relations in the hopes that that would either deter or compel them to
act in a certain manner. As luck would have it, each acted in ways that we did not expect.
In Indonesia, capitalism, in particular its manifestation as the IMF, is being given
some credit for the end of the Suharto government.(13)
But, "even before Indonesia was gripped in turmoil, it was evident that U.S. policy
there, based on trade and tacit backing for Suharto, had reached a dead end."(14) In this case, then, "engagement" did not
envision a regime change, nor turmoil. In fact, according to the "engagement
orthodoxy" this sort of tumultuous change is not supposed to happen. Admittedly,
there has not been the bloodshed that could have occurred, but still some 500 dead is no
small matter. Not to mention that "engagement" failed to give us any more
insight into what was happening and how the various factions would line up. According to
press reports, the U.S. military was "shut out from the inner workings of the
[Indonesian] armed forces" as it was making decisions on how to respond to the
anti-Suharto unrest.(15) Military-to-military contacts
were to help make sure that we were not ignorant of the Indonesian military's thinking. It
does not appear to have worked that way, however.
In India, the United States sought to convince (entice?) that nation away from a view
that nuclear weapons were needed for its security. We now have five nuclear explosions to
show the "success" of engagement. Again, politics trumped economics.
The same could be said for Pakistan and engagement. Pakistan now appears to the target
of the world's failure to sanction India sufficiently.
Cuba and U.S. Sanctions Policy
Finally, Mr. Chairman, I want to review U.S. sanctions policy as it relates to
Castro's Cuba. This issue, in particular, is one I have spent a great deal of time on and
I think there are several misconceptions that need to be addressed, as well as areas where
U.S. policy has achieved some results which are often dismissed or overlooked by the
I should start out by giving some background on the most recent legislative
manifestation of U.S. policy towards Cuba. In 1994, as Chairman Gilman knows, I moved from
the staff of the then-Foreign Affairs Committee to join the staff of the Senate Foreign
Relations Committee. Senator Helms and Admiral "Bud" Nance, his committee chief
of staff, raised the question of Cuba with me and asked that I give it attention. Both
expressed concerns that the policy needed to be looked at again.
I began the process, at the staff level, of reviewing the situation on the island and
the range of available policy options. My only criterion from Senator Helms and Admiral
Nance was to think about the policy in terms of what served U.S. national interests best.
One question that those favoring lifting the embargo could not answer was: why is
Castro's number one priority the lifting of the embargo? I received many answers, some
more credible than others, but the one thing that kept emerging was that Castro does seek
the embargo's end. The conclusion that I came to - and which others have expressed - is
that Castro wants it lifted because he thinks he can survive such a U.S. policy change.(16) Further, it was, and remains, my conclusion that Castro
wants the legitimacy that the embargo's lifting would bestow upon him and his cult of
personality. Remember, for Castro, "the revolution" is embodied in him as much,
if not more so, than in the institutions that have been constructed since 1959.
A second factor was the record of engagement. The argument is that U.S. policy has
failed; that after nearly 40 years and eight U.S. Presidents, that we have not succeeded
in removing Castro or moderating his behavior. Castro is still in power, true, and his
internal behavior remains as repressive today as it did in its infancy. However, there is
another record of relations with Cuba that equally bears upon this debate: the record of
40 years of engagement by other nations with Castro's Cuba. Frankly, that record is no
more successful in removing Castro or moderating his repression. Rather, this engagement,
arguably, has supported his regime.
The most recent example of this engagement policy occurred in April with the visit of
the Canadian Prime Minister to Cuba. The "success" of Canada's policy was
clearly articulated by Castro after seeing off Prime Minister Chretien: "We are not
going to change; we are going to continue defending our cause and our socialism."(17) The record of European engagement and of Latin American
engagement is not much better.
Sitting on a beach, mining nickel or other extractable resources, or exploiting Cubans
forced into either government-controlled labor markets or illicit economic endeavors, such
as prostitution, does not support change; it does not give that foreign investor or a
foreign government "leverage"; it does not do anything more than endorse the
Third, given this lack of any discernable positive results of others' engagement, the
question is, why, then, are others in Cuba? I asked this of foreign embassy personnel and
foreign and U.S. businesspersons. In 1994, the consistent answer I received was that they
were in Cuba awaiting the lifting of the U.S. embargo, for the advent of a U.S. market in
Cuba, not because of any Cuban market. There was almost total agreement that it was not
for profit. The exception, of course, were those in the hotel and mineral extraction
areas. But, at the time, even those in hotels and tourism had a mixed record.
Fourth, how does Castro have engagement structured and where is Castro getting his
hard currency? Castro was hit hard with the loss of between $5-6 billion in Soviet
subsidies. He, logically, began searching for an alternate means of gaining hard currency
and relieving the internal economic pressure. This effort entailed an opening for Cubans
to engage in "self-employment" (known as cuentapropistas or trabajadores
por cuenta propia)(18) and a new campaign to promote
The structure of foreign economic engagement is well-known to this committee and I
will only briefly review it here: In Cuba, foreign investors work through the central
government, who determines the investor's labor force. The foreign investor pays the
government, in dollars somewhere between $400 and $900 per month, for each Cuban employee
and the government then pays that employee roughly the equivalent of $10-20 a month. One
analyst concluded that this "wage confiscation scheme" is the Cuban state's
"most important source of earnings from foreign joint ventures" and that the
informal supplements given workers by foreign investors "means little more than
putting food in hungry stomachs, allowing the favored workers to get by somewhat better
than the impoverished rest
[and that] its overall impact on empowerment is
Not only is the government the investor's "business partner," but this is
actually advertised as something positive. In April 1996, The Economist, which is
not usually known for its starry-eyed assessments, noted that one of the benefits of
having Castro as your business partner is that it makes it "easy to hire, fire, and
Fifth, there has been a lot of noise about the LIBERTAD Act "violating"
international law. This is proof that if you repeat something enough that it will begin to
be believed. What struck me - and, I must confess, continues to be beyond my comprehension
- is that Castro's behavior, be it in the realm of human rights or in his government's
takings of properties (and subsequent efforts to provide the benefits of those takings to
foreign entities who are not even pretending to be operating for the good of Cuba or the
Cuban people) is not the source of any international outrage. In fact, it has been a
struggle just to get others to acknowledge that his actions were in violation of
My argument remains that foreign investment in Cuba, as currently structured and
implemented, supports the regime and ratifies the taking of property. In fact, it creates
a "Cuba precedent" that destroys current international law on property takings.
If Castro's Cuba can nationalize and/or expropriate properties, deny the rightful owners
any compensation or redress, and then turn those same entities over to other private
concerns which then can operate against the rightful owner, then why cannot other nations
do the same? Since international property settlements are based on customary international
law, which itself is based on State behavior, then European, Asian, Canadian, and Latin
American acceptance of that situation raises the question as to whether Cuba's takings are
acceptable behavior. The answer seems to be that, if the takings are at the expense of a
U.S. citizen, then it is proper to trample on their rights. This situation was
unacceptable to Senator Helms and the other authors of the LIBERTAD Act - and, with
LIBERTAD's enactment, put the United States clearly in a position to object to an arguable
evolution in international law legitimating similar property takings.
Why the LIBERTAD Act?
This situation on the island, combined with signals from the Clinton Administration
that democracy in the Western Hemisphere did not include Cuba, gave impetus to the
LIBERTAD Act. In fact, every signal from the Administration indicated rapprochement with
Castro. Except for the question of containing the large outflow of Cubans attempting to
flee Castro's repression, administration appointees primarily saw U.S. policy towards Cuba
as little more than a vestige of the Cold War.
What highlighted the Administration's inactivity on Cuba was its
"proactivity" on Haiti. In the case of Haiti, the Administration was willing to
exert the diplomatic, political, and military capital and credibility of the United
States, as well as risk American lives, to restore to power an anti-American demagogue,
albeit a democratically-elected one. The Administration worked to form an international
coalition, applying the necessary leverage to achieve this objective. As Ambassador Jeane
Kirkpatrick asked, "What has happened to the Clinton administration's enthusiasm for
promoting democracy in the Caribbean? When Haiti was the issue, 'restoring democracy' had
top priority. The Clinton team was indefatigable in pressing demands before the U.N.
Security Council--to tighten an already punitive economic embargo, to further isolate the
country, to secure a mandate for the use of force to remove Haitian 'dictators' who
constituted a threat to international peace and security."(22)
The Administration's willingness to pursue democratic objectives in Haiti at any price was
not lost on Congress.(23)
While the Administration remained inactive on Cuba, Castro was engaged in an
aggressive international campaign to sell the idea that Cuba was opening economically and
the United States was on the verge of lifting its embargo. As I noted above, the reality
was that Castro was seeking a means of replacing billions in lost Soviet subsidies by
convincing the international business community that Cuba was "open for
business." What Castro had to offer for exploitation was a labor force watched over
by state security and an infrastructure which primarily consisted of properties taken from
American citizens in violation of international law and, arguably, Cuban law.
The only significant initiative on Cuba during the first two years of the Clinton
Administration came from Congress, which was then-controlled by the Democrats. The
"Free and Independent Cuba Assistance Act of 1993," written and introduced by
Congressman Bob Menendez (D-NJ), attempted to establish some parameters for U.S. policy
for an inevitable end to the Castro regime. With the approval and support of the Clinton
Administration, however, the congressional leadership kept that legislation bottled up
until its provisions were incorporated as title II of the LIBERTAD Act.
In late 1994, there was a listless U.S. Cuba policy, an Administration that could and
would apply U.S. leverage when the cause suited it (e.g., Haiti), and a Cuban regime
desperately seeking new sources of hard currency.
How has the LIBERTAD Act affected U.S. interests?
The LIBERTAD Act is in its third year since enactment; I cannot say
"enforcement" because that remains an open question. However, the
"conventional wisdom" has been that it, specifically, and the embargo,
generally, has harmed U.S. interests; that we are worse off today than we were 10, let
alone, two years ago. Like many pieces of "conventional wisdom," the story is
better with the telling than in reality.
The intensity of the Castro regime's reaction to the law is the first litmus test of
determining the impact of the policy. Castro yells when he is squeezed; otherwise, Havana
is quiet. The LIBERTAD Act has been effective, a view supported by the intensity of the
Castro regime's efforts against it. Castro is not gone yet, but he is being squeezed. And
the "squeeze" includes both sanctions and initiatives like the Cuban Solidarity
Act (Solidaridad) and other initiatives to get aid to the Cuban people.
But progress should be judged not only in terms of where we are today, but also where
we might have been without the LIBERTAD Act. Further, the results should be judged in
terms of whether the Act has begun to meet some of the goals that the authors set, not
solely in terms of outsiders' reactions.
The original bipartisan coalition of co-sponsors of the LIBERTAD Act recognized that
any U.S. policy shift that might extend the Castro dictatorship was immoral. But they also
recognized that the status quo -- that is, the policy of doing nothing -- was equally
intolerable. The objective of the LIBERTAD Act was clear from the beginning: break the
status quo through a proactive American policy to encourage the demise of Castro's
repressive regime and to lay the foundation for American support for Cuba's democratic
The Act sought four broad policy objectives: (1) halt the drift in U.S. policy; (2)
stimulate global isolation of the Castro regime; (3) shut-off Castro's escape route by
complicating his foreign investment schemes (and, in so doing, protect the property rights
of American citizens who had been victimized by Castro's exploitation of wrongfully taken
property and elevate international attention on property rights); and (4) have the United
States prepare for the inevitable transition.
In some form, each of these objectives is being achieved.
First, the LIBERTAD Act has done more than stop the drift in U.S. policy. The law has
invigorated U.S. policy and produced a level of effort on Cuba that is almost
unprecedented -- and which many would never have expected from the Clinton Administration.
Since the bill's enactment, we have seen the most sustained U.S. policy focus on Cuba in
nearly three decades.
The drift in U.S. policy was halted, in part, by the codification of the embargo.
While the President retains flexibility in implementing provisions of the Cuban embargo,
it cannot be suspended or lifted in its entirety until real political and economic reform
is underway in Cuba. Congressional frustration and dissatisfaction with the implementation
of the economic embargo was specifically noted in the Conference Report which accompanied
the LIBERTAD Act.(24)
Perhaps most importantly, approval of the multifaceted LIBERTAD Act, like the Cuban
Democracy Act before it, shattered any illusions that U.S. policy resolve might be
The Act's second overall objective was to stimulate global sanctions and increase the
international pressure on the Castro regime. It is remarkable, but fair, to say that until
the European Union's adoption of a "Common Position" in December 1996, the
European country that had done the most to help the cause of freedom in Cuba, albeit
unintentionally, was none other than the Soviet Union. Its collapse deprived Castro of
billions in subsidies, increasing the pressure on the regime to allow some economic space.
While Castro and his cronies have referred to these economic steps as "tactical"
and "emergency measures," these so-called "reforms" were forced by the
failure of socialism.
The authors of the LIBERTAD Act favor an international embargo against Cuba similar to
that implemented against the Haitian military regime, but they also understood that
pressure could be exerted on the Castro regime in various ways beyond such an embargo. For
a regime that is overly sensitive to public criticism of any kind, any number of avenues
that increase international attention on its behavior can be seen as a sanction and a move
Coinciding with LIBERTAD's enactment was the election of Jose Maria Aznar as Prime
Minister of Spain. The fortification of U.S. resolve on Castro's Cuba through the LIBERTAD
Act combined with the Aznar government's honesty in addressing the brutality and
repression of Castro has changed the international focus. (Unlike the Felipe Gonzalez
government which, in my opinion, seemed determined to rationalize away Castro's misdeeds,
Aznar has not shied away from publicly criticizing Castro's repression.)
Although the European objections to the LIBERTAD Act continue, the subject of Cuba as
something other than a place to sit on the beach has begun to enter into their policy
calculations. Since the enactment of the LIBERTAD Act, there have been unprecedented
political and diplomatic initiatives taken by the international community on Cuba.
The most notable initiative remains the adoption of a "Common Position" by
the European Union (EU). On December 2, 1996, EU member states and the European Commission
committed themselves to pursue with the Cuban Government -- both publicly and privately --
respect for human rights, reform of the criminal code, release of all political prisoners,
an end of harassment of dissidents, and compliance with international human rights
conventions. This position clearly conditioned future European relations with Cuba on
specific and concrete progress towards democracy. The position also requires that EU
member states channel humanitarian aid to Cuba through NGOs instead of the Cuban
While respect for and implementation of the EU "Common Position" has been
uneven among EU member states, it is no less significant that such a document was
promulgated. The fact is that the EU policy was codified, in effect, in a legally-binding
document after the enactment and partly as a result of the LIBERTAD Act.
Other actions coming in the wake of LIBERTAD include:
· The Brazilian Foreign Minister, at the end of May, held what was described as an
"unprecedented meeting" with Cuban human rights activist Elizardo Sanchez. The
Brazilian minister said human rights was a "heartfelt and priority policy" for
· The British Government, late last year, announced it would step up its human rights
activities in Cuba; and collectively, EU member states with embassies in Havana created a
Working Group on Human Rights.
· The November 1997 Ibero-American summit saw unprecedented public criticism of
Castro for not fulfilling promises he made at the 1996 summit in Santiago, Chile. While I
did not expect Castro to change his stripes, I was surprised at the number of Latin
officials who were prepared to criticize publicly Castro for his failure to live up to his
political commitments. (During the November 1996 Ibero-American summit, Castro signed the
communiqué calling for democracy throughout Latin America.)
· Symbolically, Nicaragua's President-elect Aleman did not invite Fidel Castro to his
inaugural in January, 1997.
· The International Confederation of Free Trade Unions, Europe's largest labor
confederation, issued a stinging report condemning labor conditions in Cuba's
"worker's paradise." The report calls for truly independent unions and enhanced
worker rights, and strongly supports adherence to "best business" practices by
foreign investors in Cuba.
· The international business community, for the first time, is serious about the
development and implementation of "best business practices" for investors in
Cuba. While the ultimate impact of such guidelines are open to question, they are a
positive step forward. Nonetheless, any "best business practices" must mandate
that Castro not control an investor's workforce. Cubans should be free to work for whom they
want, not for whom Castro wants them to work. The serious discussion of "best
business practices" did not emerge until after LIBERTAD was on the books.
Other notable actions highlighting international attention on Cuba and the fallacies
of Castro's "communism-with-a-human-face" and expressing support for freedom in
Cuba recently were outlined by the Mr. Michael Ranneberger before this Committee's
Subcommittee on International Economic Policy and Trade, so I will not repeat them here.
What is significant is that no comparable list of international and/or multilateral
activities exists before the enactment of the LIBERTAD Act.
When the LIBERTAD Act was introduced, no one would have predicted this level of
pro-human rights and pro-democracy efforts towards Cuba. The LIBERTAD Act raised the
stakes on Cuba and has advanced U.S. strategy to win unprecedented multilateral support
for common goals in Cuba.
Another objective of the Act is to prompt the U.S. Government to prepare for Cuba's
inevitable democratic transition. Prior to the enactment of the LIBERTAD Act, the U.S.
Government had done no formal planning to support Cuba's transition. It had contingency
plans to deal with another Mariel exodus, but no plans to address the broader and more
important question of democratic change in Cuba.
The LIBERTAD Act's authors wanted to send a clear message to the Cuban people that the
United States is prepared to assist fully a democratic transition on the island, while
respecting the Cuban people's right to self-determination. On January 28, 1997, the
President released a report on "Support for a Democratic Transition in Cuba," as
mandated by the LIBERTAD Act, outlining the areas where the United States is prepared to
help the Cuban people meet the challenges of democratic governance. As President Clinton
noted in his preface, "It is my sincere hope that it will contribute to a better
understanding of the international community's potential role in a transition to democracy
and underscore the strong commitment of the American people to support the Cuban people
when they embark upon that process of change." The Act allows the President to lift
the embargo, without further congressional action, once he determines that a democratic
government is in place in Cuba.
Castro's reaction to the plan was immediate and "indignant," reported the
Miami Herald. "Comparing Cuba to a lamb facing a U.S. dragon, Castro declared, 'You
will never devour this lamb...because this lamb is smarter than you, and its blood has and
will always have only venom toward you.' "(25)
While subject to review and adaptation to an evolving situation on the island, the
plan represents the first significant effort of the U.S. Government to deal with Cuba as
something other than an immigration problem.
Finally, Mr. Chairman, I want to discuss an objective which has now taken center
stage: the protection of property rights. In discussing the objectives of the LIBERTAD
Act, I have made reference to the bill having a "macro" and a "micro"
component when it comes to property rights. The "micro" aspect was the effort to
shut off Castro's escape route by complicating his foreign investment schemes. In this
area, the LIBERTAD Act has scored some successes.
Prior to first the introduction and then enactment of LIBERTAD, the number of joint
ventures was increasing steadily: Cuba entered into 11 such joint ventures in 1991, 33 in
1992, 60 in 1993, and 74 more in 1994. Just the introduction of the LIBERTAD bill in the
U.S. Congress in 1995 sent a chill through the foreign investment community: In 1995, only
31 new ventures were formed, and this at a time when Castro was trumpeting a new foreign
investment law.(26) The drop in the number of new joint
ventures from 1994 to 1995 was attributable, in part, to the LIBERTAD bill.(27)
Since its enactment, reports continue to show that the LIBERTAD Act's objective to
complicate Castro's foreign investment schemes is working. The Castro government claims to
have entered into more than 50 new joint venture agreements in 1996. While this number is
up from the 1995 level, there remains uncertainty in the international investment
community as to whether Cuba is worth the risk and it remains difficult to verify Cuban
Government statistics.(28) Cuban officials, for their
part, have acknowledged that the LIBERTAD Act is working.(29)
Since enactment of the LIBERTAD Act, at least 19 companies have ended or curtailed
their business operations in Cuba, including (according to the State Department and press
reports(30)) the following:
C Banco Bilbao Vizcaya, a Spanish bank, has backed out of
co-financing with ING packages worth nearly $60 million a year. This action forced Cubans
to accept terms from other European investors at rates as high as 20 percent.
ING Groep NV, a Dutch banking and insurance group, announced on July 4, 1996, that
it was ending its involvement in the Cuban sugar industry after it was discovered that 45
mills the group financed were claimed by Americans. It also backed out of co-financing
with Banco Bilbao Vizcaya packages worth nearly $60 million a year.
While Cemex, a Mexican cement company, owned no property in Cuba, it did have an
agreement to market Cuban-produced cement and provide technical assistance to the Mariel
cement plant. Cemex canceled its contract with Castro and withdrew its personnel from
Occidental Hotels, a Spanish hotel firm, pulled out of a contract with Cuba to
manage four hotels in Varadero.
Paradores Nacionales, a Spanish hotel firm, suspended a $16 million deal to create
and manage eight hotels totaling 500 rooms.
Redpath Sugars, a Canadian sugar producer, was the largest Canadian importer of
Cuban sugar. In March, 1996, Redpath Sugars announced it would no longer use Cuban sugar.
Redpath is a subsidiary of Tate & Lyle International (UK).
Aero Republica, a Colombian airline, ended its twice weekly flights to Cuba.
Gencor, a South African mining company, has put on hold its operations in the
province of Pinar del Rio.
Grupo Vitro, a Mexican glass conglomerate, initially had plans to start a glass
factory, but has since announced that it will not continue the project.
Petroleros Mexicanos (PEMEX), the Mexican national oil and gas company, has halted
its project involving the Soviet-built oil refinery at Cienfuegos.
The Act's intent to deter third-country nationals from seeking to profit from
wrongfully confiscated properties and to deny Castro a source of hard currency is working.
Both the right of action (title III) and the denial of entry (title IV) provisions have
complicated the math for those who are attracted to the unsavory benefits of doing
business in Castro's Cuba. When legal accountability creeps into the calculation, some
investors have crept away.
These provisions also have had the effect of elevating international sensitivities
about property rights, generally, and the rights of American property claimants,
Although President Clinton suspended the right of American citizens to bring suits
under title III, he did allow the civil wrong of "trafficking" -- the unjust
enrichment of a third party through the unauthorized exploitation of a property wrongfully
taken from an American citizen -- to go into effect. This historic step recognized the
harm that continues to be perpetrated against American citizens by the actions of Castro
and those who would seek to benefit economically at the expense of a property's rightful
While many in the international community have cried "foul" about these
provisions, the debate generated has prompted increasing recognition that international
law lacks effective mechanisms to protect property rights and that the system needs to
evolve to better defend these rights.
EU-US Disciplines on Property
This brings me to the recently announced EU-US accord on property disciplines.
In April 1997, the EU and US agreed "to step up their efforts to develop agreed
disciplines and principles for the strengthening of investment protection, bilaterally and
in the context of the Multilateral Agreement on Investment (MAI)
disciplines seeking to] inhibit and deter the future acquisition of investments from any
State which has expropriated or nationalized such investments in contravention of
international law, and subsequent dealings in covered investments."
The fact that the EU was willing to discuss property "disciplines" confirmed
one of the underlying assumptions of the LIBERTAD Act that current international property
standards were inadequate. The disciplines, as negotiated, appear to further confirm - or
should I say, affirm - the LIBERTAD Act's finding that
The international judicial system, as currently structured, lacks fully effective
remedies for the wrongful confiscation of property and for unjust enrichment from the use
of wrongfully confiscated property by governments and private entities at the expense of
the rightful owners of the property (sec. 301(8)).
Mr. Chairman, while it is tempting to simply declare victory and take the EU-US
accord, and while the accord is a positive step forward in the evolution of an enforceable
international property regime, to accept it has implications that, I conclude, should not
be acceptable to the United States.
In reviewing the trade-off of current U.S. law, especially title IV of the LIBERTAD
Act, for these disciplines,(31) the Congress should take
into account the following:
First, the disciplines, in effect, admit that the LIBERTAD Act was right and then
commits the United States to condone and permit the use of wrongfully taken property -
property which the EU acknowledges was taken in contravention of international law - when
U.S. law says that such behavior is unacceptable. It does this by
"grandfathering-in" investments which are now acknowledged to be have been taken
in violation of international law. Does U.S. acceptance, then, legitimize these wrongful
U.S. officials argue that this is the best deal we can get as conduct such as that
prohibited in the disciplines (investments prior to May 18, 1998) is beyond reach. This is
not exactly correct: On March 12, 1996, with the signing of the LIBERAD Act, the United
States put all investors on notice of potential penalties, under titles III and IV, for
the use of wrongfully taken American properties in Cuba. And, on August 1, 1996, the
President did not exercise his authority to suspend liability accruing for
"trafficking" (as defined by the LIBERTAD Act, section 4(13)).
Under the proposed disciplines, the United States is required not only to recognize
investments prior to May 18, 1998, but must also accept that those investors remain
eligible for governmental commercial assistance. And, the United States must agree that
that wrongfully taken property remains immune from sanction in perpetuity (or,
effectively, until a new Cuban government decides how to deal with Castro's confiscations
- a decision, which given Castro's efforts to cloud title, may cause further complications
and lead to charges of a wrongful taking of the rights of the Castro-period foreign
claimant). Admittedly this is limited by that investor's willingness to forego new
property rights in wrongfully taken property. But the bottom line is the same: The United
States is being asked to accept a wrongful act in the name of remedying a wrongful act.
Second, what is the enforcement mechanism for the disciplines? As I read the
disciplines, they are voluntary and have no legal effect. One must ask, if the European
Union's "Common Position" is legally binding and appears to be honored in the
breach as much as in effect, then what is one to think of these disciplines?
The disciplines do have symbolic significance and that should not be dismissed, as the
symbolism is that the EU is willing to undercut their own investors. The disciplines
should have an additional chilling effect on investment in Cuba, specifically. However,
they would be far more effective if they were legally binding, at least as I understand
the term. Giving EU member states an open-ended discretionary authority to interpret the
disciplines is not my definition of "legally binding" in anything more than a
hortatory sense. The text of the disciplines does not seem to hold up the impression left
by U.S. officials that there is more "there" than there really is.
Third, during my tenure with the Foreign Relations Committee, U.S. officials assured
Congress that they agreed that there are certain categories of states, namely rogue
states, which merit heightened scrutiny and standards. I am informed that this same view
continued to be the U.S. position and that the United States actually proposed language
that when "there has been an established record of repeated expropriations in
contravention of international law
[then the discipline participants] will apply
specific disciplines that inhibit and deter acquisitions of and dealings in property that
was expropriated as part of that established record
This stronger "established record" language is not in the disciplines. I
have no illusions that the EU would fight us at each determination of what States fall
into such a category, but the inclusion of such strong standards is in the interests of
the both the US and EU (as well as all other investors). Frankly, to be effective, States
should know that there is a threshold beyond which their wrongful property takings will
receive more forceful sanctions. This makes both policy sense and common sense.
Fourth, the creation of a registry is a positive step forward, especially if it gives
some form of international notice to prospective investors and contributes to the
deterrent effect against those who would invest in wrongfully taken properties. But the
disciplines give each participant State the right to determine the validity of what
constitutes a valid claim. Does this mean that all certified U.S. property claims are
subject to some type of second, EU assessment as to their validity? This would mean, then,
that the EU, and others, including Castro, may find that some of the 5.911 certified
properties fall outside the disciplines. That would create a new gap in existing U.S.
property law. Congress needs to make sure, at the least, that all 5,911 certified claims
are covered and not open to any second-guessing.
Fifth, what happened to the other American claims, specifically the non-certified
claims? It appears that the agreement does little, if anything, to protect their rights.
At a time when international human rights law has evolved, in some cases at the prodding
of the United States, and when there is a consensus that there are certain behaviors which
merit international sanction, basic rights to the fruits of one's legitimate labor remain
to be advanced in a significant way. The disciplines should be an important building block
in international human rights law.
The United States, in the case of Cuba, should not condone wrongful takings that
occurred under the previous or current regimes. However, the clearly targeted,
discriminatory takings engaged in by the Castro regime should be taken into account by the
United States, the EU, and the disciplines. The United States should not be engaging in a
process that allows the international community to legitimize the taking of property
against norms that reject governmental actions against individuals because of reasons of
race, religion, or personal beliefs, etc..
Sixth, and finally, Congress should question the reference to a permanent title III
waiver in exchange for continuing EU efforts regarding democracy and respect for human
rights in Cuba. The EU's interest in doing away with the current six-month waiver process
is not new, nor is it surprising. However, the law requires that a waiver be
"necessary to the national interest of the United States and will expedite a
transition to democracy in Cuba" (sec. 306(b)(2), emphasis added).
In my opinion, the President and Ambassador Stuart Eizenstat used the July 1996 waiver
decision to focus positive attention on the Castro regime. And the January 1997 waiver
came primarily as a result of the European Union's adoption of a "Common
Position." But since then, the evidence for a waiver rests more on hope than reality.
Waivers should be based on the implementation of concrete steps - not more promises.(32) The disciplines imply that the United States will trade
title III for more promises.
More Needs to be Done
As with any piece of legislation or policy objective, there remain areas that need to
be addressed or which could be pursued more aggressively.
Having just discussed the EU-US disciplines on property, title IV is an area in which
more aggressive implementation is required. State Department officials, especially in the
Legal Advisors' office, are expected to keep things at a "go slow" pace by
creating evidentiary and "due process" hurdles regardless of the weight of the
evidence. Before reaching any conclusions about changing title IV, Congress should receive
a full accounting from the State Department on title IV implementation. Further, title IV
sanctions should be made public. The United States does not have to protect the names of
those found to be violating U.S. law.
Second, the LIBERTAD provision conditioning U.S. bilateral assistance to states of the
former Soviet Union on their relationship with Cuba (Section 106) remains to be
implemented. The United States has a number of interests involving the states of the
former Soviet Union. Their relationship with Cuba, especially to the extent that it
continues to subsidize Castro's repression, is one of those interests. It should be taken
seriously by the administration. Proof of the Cuba-connection and its potential harm to
U.S. interests recently emerged when the Miami Herald reported that Moscow
intercepted strategic communications during the Persian Gulf War in 1991. These intercepts
reportedly came from the Russian (and former Soviet) facility in Cuba. The same article
noted that Cuba wants to increase the "rent" it receives from the facility from
$200 million to $1 billion annually in oil, weapons, and military spare parts.(33)
A third area is United States' activity at the United Nations. During his confirmation
hearing, Ambassador Bill Richardson said that Cuba would be a priority for him. It is time
to ask him for the evidence of his commitment. We may be in a minority within the UN on
the question of Cuba, but that is all the more reason to be engaging on the issue. We also
were a minority in the UN on the question of "Zionism is racism." U.S. policy is
not predicated on winning a popularity contest. We were right to object to the UN's
stupidity on that resolution; we are right to be challenging member states on Cuba.
Finally, the United States should be looking at avenues to support civil society.
There are tools in the Cuban Democracy and LIBERTAD Acts that can - and must - be used. I
have no illusions as to how easy this will be; it will not be a simple task. We must be
creative and indirect in many of the avenues to be pursued. In this area, we should be
able to deal with a number of other countries, if their commitment to democratic change in
Cuba is genuine. In this regard, we do have "allies" - and they have an ally in
us. Building or sustaining the foundation for a civil society in Cuba is a challenge which
accrues to the benefit of the Cuban and world communities. It also represents a challenge
to Castro. He should be tested every day.
From the Congressional Record
1. ** Dan Fisk is currently a member of Board of Directors of the Institute for
U.S. Cuba Relations, an Adjunct Fellow with the Center for Strategic and International
Studies, both of which are nonpartisan, public policy research institutions based in
Washington, D.C., and a Teaching Associate in the Department of Political Science, Arizona
State University, Tempe, AZ. Until August 1997, he was a member of the Republican Senior
Professional Staff and an Associate Counsel of the Committee on Foreign Relations, U.S.
Senate, where he was responsible for Western Hemisphere affairs. The views and opinions
expressed are those solely of the author and do not necessarily represent the views of the
institutions listed above.
1. For a discussion of secondary boycotts see "Arab
Boycott," Hearings before the Subcommittee on International Finance of the Committee
on Banking, Housing, and Urban Affairs, U.S. Senate, 95th Cong., 1st
2. See, Stanley Elkins and Eric McKitrick, 1993, The Age of Federalism
(Chapter IX, "American and Great Britain"), New York: Oxford University Press.
3. Kim Richard Nossal, 1989, "International Sanctions as International
Punishment," International Organization 43 (2): 301-22; quote at p. 304.
4. James Barber, 1979, "Economic Sanctions as a Policy
Instrument," International Affairs 55 (3): 367-84; quote at p. 367.
5. James M. Lindsey, 1986, "Trade Sanctions as Policy Instruments: A
Re-examination," International Studies Quarterly 30 (June): 153-73; quote at
p. 154 (emphasis in original).
6. Gary Clyde Hufbauer, Jeffrey J. Schott, and Kimberly Ann Elliott, 1990, Economic
Sanctions Reconsidered: History and Current Policy, 2nd ed. Washington,
D.C.: Institute for International Economics (quote at p. 2).
7. For example, see, National Association of Manufacturers, "A Catalog
of New U.S. Unilateral Economic Sanctions for Foreign Policy Purposes, 1993-96, March
8. For discussions of the pipeline controversy, see, George P. Shultz,
1993, Turmoil and Triumph: My Years as Secretary of State, New York: Scribner's;
and Peter Schweizer, 1994, Victory, New York: Atlantic Monthly Press.
9. See, Confiscated Property of American Citizens Overseas: Cases in
Honduras, Costa Rica, and Nicaragua, A Republican Staff Report, U.S. Senate,
Committee on Foreign Relations, S. Prt. 103-77, March 1994.
10. See, National Association of Manufacturers, "A Catalog of New U.S.
Unilateral Economic Sanctions for Foreign Policy Purposes, 1993-96" (March 1997);
Advisory Committee on International Economic Policy, Sanctions Working Group, "U.S.
Unilateral Economic Sanctions: A Strategic Framework," submitted to the U.S.
Department of State (September 1997); and William C. Lane, testimony before the
Subcommittee on International Economic Policy, Export and Trade Promotion, Committee on
Foreign Relations, U.S. Senate (March 25, 1998).
11. Dana Priest, "Chaos Tests Ties to the Pentagon: Despite Recent
Access, U.S. Now Lacks Window on Strife in Indonesian Army," Washington Post,
May 15, 1998, page A1.
12. Nicholas Kristof, "Analysis: Capitalism, Suharto's Stealthy
Foe," The New York Times, May 20, 1998.
13. R.W. Apple, Jr., "Analysis: Hopes of Post-Cold War Era Shaken by
Asian Events," The New York Times, May 30, 1998.
14. Dana Priest, "Chaos Tests Ties to the Pentagon: Despite Recent
Access, U.S. Now Lacks Window on Strife in Indonesia Army," The Washington Post,
May 15, 1998: A1.
15. A recent RAND study also noted that Castro "has made the embargo's
lifting his number-one foreign policy priority. He has more confidence than do some U.S.
policy critics that his regime can withstand the corrosive effects of the embargo's
lifting on society while benefiting from the new infusion of American tourist and
investment dollars" (p. 74). Edward Gonzalez, 1996, Cuba: Clearing Perilous
Waters? Prepared for the Office of the Secretary of Defense. Santa Monica, CA: RAND.
(This is to not to imply RAND's or Edward Gonzalez's endorsement of the LIBERTAD Act or a
particular approach to U.S. policy toward Cuba.)
16. "Castro Rebuffs Canadian's Reform Plea," by Andrew Cawthorne,
Reuters, The Washington Post, April 29, 1998: A27. Despite his send-off by
Castro, the Canadian Prime Minister apparently saw "signs of political progress"
during his Cuba visit, but that "progress" appeared to be more along the lines
that "American business organisations were now pressing for an end to the blockade
[embargo]" than anything of substance in Cuba itself. See, Paul Casciato,
"Canada's PM tells Clinton of progress in Cuba," Reuters, May 18, 1998.
17. For a discussion of "self-employment" see the work of Philip
Peters, Senior Fellow at the Alexis de Tocqueville Institute, Arlington, Virginia,
including "Cuba's Small Business Experiment: Two Steps Forward, One Step Back," Cuba
Briefing Paper Series, Georgetown University, Number 17, March 1998.
18. See, for example, "The graying revolution: Cuba's economy is a
mess, its people restive, but Castro remains defiant," U.S. News & World
Report, September 26, 1994: 55-63. A brief discussion of the importance of foreign
investment to Cuba can be found in Gillian Gunn, Cuba in Transition: Options for U.S.
Policy, 1993, New York: Twentieth Century Fund Press. Also, see, Maria C. Werlau,
"Foreign Investment in Cuba: The Limits of Commercial Engagement," in Cuba
In Transition, Vol. 6, Proceedings of the Fifth Annual Meeting of the Association for
the Study of the Cuban Economy (ASCE), held at the University of Miami, Miami, FL., August
8-10, 1996: 456-495.
Werlau notes that "the most decisive element of this [Cuba's] economic opening
has been a drive to attract foreign capital, essentially in the form of joint venture and
economic cooperation agreements between state enterprises and foreign investors" (p.
19. Werlau, ibid., pgs. 471 and 484.
20. "Cuba Survey, The Economist, April 6, 1996: 13.
21.Jeane Kirkpatrick, "Haiti But not Cuba?" New York Post,
October 4, 1995.
23. 22. U.S. initiatives towards Haiti are referenced
in two sections of the LIBERTAD Act. The Act's Findings (Sec. 2) take notice that:
"(25) In the case of Haiti, a neighbor of Cuba not as close to the United States
as Cuba, the United States led an effort to obtain and did obtain a United Nations
Security Council embargo and blockade against that country due to the existence of a
military dictatorship in power less than 3 years.
"(26) United Nations Security Council Resolution 940 of July 31, 1994,
subsequently authorized the use of 'all necessary means' to restore the 'democratically
elected government of Haiti,' and the democratically elected government of Haiti was
restored to power on October 15, 1994.
"(27) The Cuban people deserve to be assisted in a decisive manner to end the
tyranny that has oppressed them for 36 years,..."
And Section 101 expresses the sense of Congress that "the President should
advocate, and should instruct the United States Permanent Representative tot he United
Nations to propose and seek within the Security Council, a mandatory international embargo
against the totalitarian Cuban Government pursuant to chapter VII of the Charter of the
United Nations, employing efforts similar to consultations conducted by United States
representatives with respect to Haiti."
23. House Report 104-468, 104th Cong., 2d Sess., at 46 (1996).
24. "Castro condemns U.S. promise of aid," Miami Herald,
January 30, 1997.
26. 25. Joint venture statistics for 1991 to 1995
period, are taken from Gareth Jenkins, "European Investment in Cuba: Scope,
Opportunities and Challenges," remarks prepared for the "Cuba Transition
Workshop, Foreign Investment in Cuba: Past, Present, and Future," sponsored by Shaw,
Pittman, Potts & Trowbridge and Oceana Publications, Inc., Washington, D.C., January
26, 1996. In his spoken remarks to this workshop, Jenkins ascribed the drop in joint
ventures in Cuban to the LIBERTAD bill, then pending before the U.S. Congress.
26. For example, see, "Cuba's appeal as investment is cooling
off," Miami Herald, June 23, 1995; and "Helms to Cuba: See You in
Court," National Law Journal, July 10, 1995.
27. The continuing complications of the LIBERAD Act were referenced in
"Development of Foreign Investments in Cuba, Business Opportunities and their
Prospects," by Dr. Miguel Alejandro Figueras, an advisor to the Cuban Ministry for
Foreign Investment and Economic Collaboration, in Business Tips on Cuba,
September 1997: 17-23. (Business Tips on Cuba is a publication of the National
Office in Cuba of the Technological Information Promotion System (TIPS), a project of the
U.N. Program for Development (UNDP).
What is of note is that Figueras' statement places the total number of
"associations" between Cuba and foreign investors at 260, but later makes
reference to "functioning associations" (p. 21). Werlau, op. cit., concluded
that "it has been impossible to arrive at actual figures for overall materialized and
direct foreign investment in Cuba" (p. 461), further noting that Cuban figures may
include " 'announced' investments which may be contingent on events that do not
[and] canceled deals" (p. 463).
29. 28. For example, see, "Cubans Blame Slowdown
on Helms-Burton Act," Washington Post, January 25, 1997, at A16; Radio
Rebelde: Straight Talk (Havana Radio Rebelde Network broadcast, January 29, 1997)
(transcript from Foreign Broadcast Information Service, FBIS-LAT-97-021, 29 January 1997);
"Cuban economy feels blow of U.S. law; Investors scared off by Helms-Burton," Miami
Herald, November 28, 1996; "Cuban economy 'will survive US sanctions,'
Washington's Helms-Burton law will not stop growth, Vice President Carlos Lage tells
Pascal Fletcher," Financial Times, July 18, 1996, at 6; and "Rising
Expectations Blur Cuban Economic Revival," Washington Post, August 27, 1996,
30. 29. Since this list is based on public reports, it
is possible that some of the listed companies have quietly re-entered the Cuban market,
not publicizing their presence or are using subsidiaries.
30. My discussion of the "Understanding with Respect to Disciplines
for the Strengthening of Investment Protection" is based on the agreement as posted
on May 20, 1998, on the following UK website
31. Questions about the performance of the EU in Cuba were raised in Cuba
at the Crossroads: The Visit of Pope John Paul II &; Opportunities for U.S. Policy,
a staff report of the U.S. Senate Committee on Foreign Relations and U.S. House of
Representatives Committee on International Relations, March 1998.
32. Juan O. Tamayo, "Soviets Spied on Gulf War Plans from Cuba,
Defector Says," Miami Herald, April 3, 1998.