[Congressional Record Volume 142, Number 143 (Monday, October 21, 1996)]
[Senate]
[Pages S12441-S12442]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     REPORT CONCERNING THE CUBAN LIBERTY AND DEMOCRATIC SOLIDARITY 
                         [LIBERTAD] ACT OF 1996

 Mr. HELMS. I wish to bring to my colleagues' attention a 
report submitted by the Secretary of State on ``The Settlement of 
Outstanding United States Claims to Confiscated Property in Cuba'' as 
mandated by Public Law 104-114, the Cuban Liberty and Democratic 
Solidarity [LIBERTAD] Act, and I ask that it be printed in the Record.
  The report follows:

                                          Department of State,

                               Washington, DC, September 27, 1996.
     Hon. Jesse Helms,
     Chairman, Foreign Relations Committee, U.S. Senate.
       Dear Mr. Chairman: In accordance with the provisions of the 
     Cuban Liberty and Democratic Solidarity Act of 1996, we are 
     filing with the Senate Foreign Relations Committee the report 
     entitled the Settlement of Outstanding United States Claims 
     to Confiscated Property in Cuba, required by Section 207 of 
     the Act.
       Copies of this document are also being filed with the House 
     International Relations Committee, the Senate Appropriations 
     Committee and the House Appropriations Committee.
       Please do not hesitate to contact us if you have any 
     questions on this issue or on any other matter.
           Sincerely,

                                               Barbara Larkin,

                                              Assistant Secretary,
                                              Legislative Affairs.
       Enclosure: Section 207 report.

Settlement of Outstanding United States Claims to Confiscated Property 
                                in Cuba

    (Report to Congress Under Section 207 of the Cuban Liberty and 
                   Democratic Solidarity Act of 1996)

       Section 207 of the Cuban Liberty and Democratic Solidarity 
     (LIBERTAD) Act of 1996 requires the Secretary of State to 
     ``provide a report to the appropriate congressional 
     committees containing an assessment of the property dispute 
     question in Cuba.'' Pursuant to section 207(a), included in 
     this report are the following areas of review:
       An estimate of the number and amount of claims to property 
     confiscated by the Cuban government that are held by United 
     States nationals in addition to those claims certified under 
     section 507 of the International Claims Settlement Act of 
     1949, 22 U.S.C. 1643f;
       An assessment of the significance of promptly resolving 
     confiscated property claims to the revitalization of the 
     Cuban economy;
       A review and evaluation of technical and other assistance 
     that the United States could provide to help either a 
     transition government in Cuba or a democratically elected 
     government in Cuba establish mechanisms to resolve property 
     questions;
       An assessment of the role and types of support the United 
     States could provide to help resolve claims to property 
     confiscated by the Cuban government that are held by United 
     States nationals who did not receive or qualify for 
     certification under section 507 of the International Claims 
     Settlement Act of 1949; and
       An assessment of any areas requiring legislative review or 
     action regarding the resolution of property claims in Cuba 
     prior to a change of government in Cuba.


                           estimate of claims

       Under the Cuban Claims Program, established by Title V of 
     the International Claims Settlement Act of 1949, as amended 
     in 1964, 8,816 claims were filed with the Foreign Claims 
     Settlement Commission (FCSC). In 1972, the FCSC completed its 
     Cuban claims program and certified 5,911 claims against the 
     Cuban Government. The value of these claims was originally 
     $1.8 billion, but is now estimated with interest to be 
     approximately $6 billion.
       No systematic accounting has ever been done for claims of 
     U.S. nationals in addition to those claims cetified under the 
     FCSC's Cuban Claims Program. Virtually all such claims are 
     held by individuals and companies that were not U.S. 
     nationals or entities at the time of the loss. Based on the 
     approximately 1.5 million Cuban-Americans in the United 
     States and the U.S. government's previous experience with 
     claims resolution, we would estimate that there may be from 
     75,000 to 200,000 such claims. It is more difficult still to 
     estimate the value of these claims, but it could run easily 
     into the tens of billions of dollars.


         significance of prompt resolution to the cuban economy

       The prompt resolution of confiscated property claims is 
     essential to the revitalization of the Cuban economy under a 
     transition or democratic government. Cuba's recovery from 
     decades of economic mismanagement will require the creation 
     of a climate friendly to investment, and a clear commitment 
     to property rights is indispensable for creating such a 
     climate. Progress in resolving uncompensated claims will 
     serve as a signal to new investors, foreign and domestic, 
     that transition and democratic governments understand and 
     respect the importance of private property.
       It will also be particularly critical to clear up questions 
     concerning title to commercial properties that play, or could 
     play, major roles in Cuba's economy. Delays in doing so will 
     almost certainly delay investment necessary to continue, 
     restore and/or upgrade operations at commercial facilities. 
     Delays of this kind would constitute serious setbacks to a 
     new government's efforts to increase employment and restore 
     the country's fiscal health.
       Beyond building confidence in Cuba among potential new 
     investors, the process of claims resolution, if carried out 
     creatively and effectively, may itself generate investment in 
     Cuba by the holders of claims. Negotiating a resolution of 
     certified claims will be an important step. Holders of 
     certified U.S. claims in Cuba include some of the United 
     States' largest and most successful corporations, many of 
     which may be interested in renewing their involvement in Cuba 
     under the right conditions. Resolution of non-certified 
     claims will also be important to attracting new investment.
       While prompt resolution of property claims is essential, it 
     will not be easy. Experience in other countries making the 
     transition from Marxist to market economies has shown that 
     resolution of most expropriation claims can take several 
     years, even when governments move expeditiously to set up the 
     proper mechanisms to do so. While they are engaged in these 
     efforts, these new governments have also been faced with a 
     myriad of other political and economic challenges. The United 
     States' goal in these transitions has been--as it will be in 
     Cuba--to help the new governments maintain stability, 
     overcome these many challenges and firmly establish 
     democratic governments and market economies. Within this 
     broader context, and balancing objectives when necessary, 
     prompt resolution of property claims is a priority for the 
     U.S. government, both in order to protect the interests of 
     U.S. claimants and to stimulate investment in a new Cuba.


          assistance and support for resolving property claims

       Consistent with long-standing practice and international 
     law, the United States would expect to assist U.S. nationals 
     with claims against the Government of Cuba. One aspect of 
     such assistance may be the negotiation of a lump-sum 
     settlement of certified claims, as forseen by the FCSC's 
     Cuban Claims Program under Title V of the International 
     Claims Settlement Act. The timing of any such negotiation 
     cannot be predicted now.
       Resolution of non-certified property claims and disputes in 
     Cuba could be facilitated by technical and other assistance 
     from the U.S. government. Programs of this kind could assist 
     officials of a transition or democratic Cuban government in 
     the development of policy alternatives, formulation of legal 
     and administrative mechanisms, public education campaigns and 
     institution-building. Such assistance may enhance the 
     government's ability to resolve claims and thereby improve 
     claimants' prospects of obtaining compensation or restitution 
     for confiscated property. Assistance in this area could 
     include help in interpreting and evaluating the experience of 
     other countries in resolving property issues, assessing the 
     potential impact of various alternatives, and training 
     officials in consensus-building processes in Cuba. In one 
     instance, a U.S. technical adviser worked with a government's 
     ministry of finance to develop a compensation program based 
     on indemnification bonds.
       American assistance would reflect the lessons learned from 
     major property disputes with respect to governments in 
     transition to democracy. Elements of a successful claims 
     resolution strategy include:
       Rapid establishment of a legal framework for property 
     ownership.
       An administrative process for claims resolution that is 
     centralized, transparent and simple.
       A credible and fair system for payment of compensation to 
     legitimate prior owners where restitution is not provided.
       Effective enforcement of both restitution and the payment 
     of compensation from national treasury reserves.
       U.S. assistance and support for resolving property claims 
     might therefore include the following elements:
       U.S. technical advisers could assist in the drafting of 
     legislation and supporting regulations which are essential to 
     creating a functioning compensation program. Some elements of 
     a program might include establishing legal bases for 
     arbitration mechanisms, creating financial instruments and 
     other reforms to underpin compensation schemes, and 
     suggesting property titling or registration reforms related 
     to providing secure and transferable ownership rights of both 
     claimants and individuals in Cuba.
       U.S. experts could review for a democratic or transitional 
     government in Cuba the institutional support required for 
     resolving

[[Page S12442]]

     property disputes. This could include an assessment of the 
     best institutional practices developed elsewhere, and 
     development of the information and administrative systems 
     necessary for effective implementation. Key to getting such a 
     program started could be various sorts of training, advice 
     regarding information systems, hardware and software, 
     property surveying and registration systems, and assessing 
     operational, management and staffing costs for 
     administration.
       U.S. advisers could help in the development of a plan for 
     educating the Cuban public about the nature and basis of such 
     a system. Such a program could require a significant 
     commitment of effort and resources by a future Cuban 
     government and the U.S. government. This effort could focus 
     on gauging public opinion and identifying concerns and issues 
     of potential stake holders in the reconciliation process to 
     ensure policy and legal solutions are responsive.
       Intenational financial institutions could develop and carry 
     out programs with similar goals and along these lines.
       Various agencies of the U.S. government may be available to 
     provide such assistance. For instance, the FCSC may be able 
     to offer technical assistance to a transition or democratic 
     government in Cuba, as well as to interested NGOs and 
     independent organizations, in the efforts to resolve property 
     disputes. Such assistance could include advice on structuring 
     a claims adjudication or arbitration mechanism is Cuba, 
     assistance in devising procedures for collecting, hearing and 
     disposing of the claims, and advice on principles to follow 
     in resolving claims involving property that has been 
     substantially altered subsequent to being taken.


           assisting u.s. nationals without certified claims

       Assisting a democratic or transition government in its 
     efforts to establish an efficient property resolution 
     mechanism will directly support the efforts of non-certified 
     claimants to obtain compensation in Cuba. In addition, the 
     U.S. government may provide various forms of support to U.S. 
     nationals wishing to present claims to such a domestic Cuban 
     body. Such support could include ensuring that interested 
     persons obtain the necessary papers to file their claims; 
     encouraging a transition or democratic government to resolve 
     such claims promptly and effectively; monitoring the progress 
     of claims settlement and, where necessary, offering creative 
     solutions to difficult problems; and providing informal 
     assistance to claimants seeking to understand the process and 
     present a claim. In the case of Central and Eastern Europe, 
     for instance, the U.S. government--principally through the 
     special envoy for property claims in the region--has actively 
     promoted the resolution of claims arising from both Nazi 
     confiscations and Communist nationalizations.


                           legislative review

       At this time, there are no areas requiring further 
     legislative action regarding the resolution of property 
     claims in Cuba prior to a change of government in Cuba. Once 
     a transition or democratic government comes to power in Cuba, 
     however, it will be important for the Administration and 
     Congress to consult closely as conditions change in Cuba to 
     assist in the resolution of property claims in Cuba in a 
     manner that contributes both to the development of a strong 
     bilateral relationship with a democratic Cuba and to Cuba's 
     economic recovery.

                          ____________________