Vol. 16, No. 6 June 2008 www.cubanews.com In the News End of Fidel’s rule sparks new interest in settling old U.S. claims against Cuba Cellphones to Cuba As Obama, McCain battle for presidency, BY ANA RADELAT cans who had lost property or other assets to Castro’s nationalizations in the early 1960s. Bush says he’ll let exiles send cellphones idel Castro’s fade from power and the ex- pectations there may soon be momentum In 2005, the FCSC reopened the claims pro- to those they left behind ...............Page 3 Ftoward normalizing relations between gram, received five new claims and certified Washington and Havana has awakened new in- two. One of them belonged to the giant Star- CANF upsets exiles terest in decades-old American claims against wood hotel group, for $51.1 million. the Cuban government. Most Cuba claims, which are now valued at Study on where USAID funds end up coin- But Mauricio Tamargo, head of the U.S. For- about $6 billion, have been dormant for decades. cides with scandal in Havana .......Page 4 eign Claims Settlement Commission (FCSC), is While Cuba has settled all of its property claims warning holders of certified claims against Cuba with other nations, frosty U.S.-Cuba relations Newsmakers to be wary of offers to buy them. have prevented any serious talks about settling “We’ve received a lot of inquiries by certified the American claims. Mavis Anderson, senior associate at Latin claimants who have been approached about the U.S. laws prohibit negotiations with a Cuban government that has not carried out substantial America Working Group, fights the Cuba possibility of selling their claims,” Tamargo told CubaNews. “But the purpose is unclear.” economic and political reforms. embargo on Capitol Hill ................Page 6 The FCSC is the federal agency with authori- Also blocking any settlement are nearly $190 ty to settle disputes over American property billion in counter-claims proposed by Cuba for Exploring Nipe Bay seized in Cuba and other countries. In its first what it says is the economic harm caused by the Cuba claim program, held between 1966 and 46-year-old trade embargo. Holgúin province’s forgotten ports of 1972, the agency certified 5,911 claims of Ameri- See Claims, page 2 Antila, Felton and Nicaro ..............Page 8 Illiquid debt Cuba’s permuta system may disappear Investors debate relative merits of buying defaulted Cuban debt ..................Page 11 if reforms let people sell homes legally Business briefs BY DAVID ADAMS cials enact a reform that until now has only been alk down almost any street in Havana, hinted at by Raúl Castro’s administration: giving Sherritt to expand electricity plant; Cuba and it’s easy to spot the cheap hand- people the right to sell their homes. It would provide a source of taxable income for the gov- hopes to revive India trade..........Page 12 Wpainted cardboard signs saying “Se Per- muta,” meaning “home for swap.” ernment, and its effect on the cash-starved pop- When Cubans want to move, these are the ulace would be just as profound. Fidel’s secrets words they use. The “for sale” sign familiar to Since about 90% of Cubans hold title to their Ex-CIA analyst Brian Latell wonders what Americans is banned; after all, you can’t sell homes, said Antonio Zamora, a Miami attorney and expert on Cuban property issues, “Over- will become of the Castro archives once what you aren’t allowed to own. So a family look- ing for an apartment with an extra bedroom for night, the government could hand them an Fidel is gone .................................Page 14 a new baby might swap with an older couple asset with capital value.” whose children have moved out. Run largely on Gladys Jane said she had been looking for a Brothers in Arms word of mouth, the permuta is typical of the year with mounting desperation to swap her elaborate schemes Cubans have developed to small, one-bedroom apartment and her 81-year- New documentary chronicles Cuba’s mil- work within the country’s socialist strictures. old mother’s apartment for a larger place where itary role in Africa .......................Page 15 “It may sound odd, but it works,” said Gladys they could live together along with her son. Jane, 60, hunting for a house swap the other day Her mother recently had undergone cancer surgery and could no longer climb the stairs to CubaNews (ISSN 1073-7715) is published monthly on the Prado, a shady street on the edge of the by Luxner News Inc. © 2008. All rights reserved. historic colonial district that serves as Havana’s her second-floor apartment. Subscriptions: $429 for one year, $800 for two years. unofficial permuta market. On the Prado, Jane stopped by to talk to Jesús For editorial inquires, please call (301) 452-1105 But this peculiarly Cuban tradition — ineffici- Valdes, a corredor — the closest thing Cuba has or send an e-mail to: [email protected]. ent and often corrupt — could disappear if offi- See Permuta, page 3 2 CubaNews ❖ June 2008 nal and Colgate-Palmolive (see box below). The Creighton group proposed the estab- — FROM PAGE 1 Claims The largest single claim, for $267.6 million, lishment of a tribunal with a minimum of nine Despite the impasse, Tamargo said his is held by Cuban Electric Co., while the No. 2 members — one-third from the United States, agency began to receive calls from Cuba claim is that of ITT Corp., for $130.7 million. one-third from Cuba and the remaining third claimants last summer and that the inquiries But in an unusual twist, that claim includes elected through an agreement by the other are increasing. He said most of the claimants members — to resolve outstanding property who contacted his agency have sizeable TOP 50 CERTIFIED CLAIMS* disputes between the United States and a suc- claims, and some of them said they had been cessor government in Cuba. The tribunal offered payments for their claims. COMPANY VALUE would have the authority to reassess the value But Tamargo declined to identify the 1. Cuban Electric Co. $267.6 of the claims and pay off the smaller ones. claimants. He also wouldn’t divulge the identi- 2. ITT Corp. 130.7 Larger U.S. claimants could chose to re- ties of individuals who have contacted the 3. North American Sugar Industries 97.4 ceive payments or swap their claim for devel- FCSC about investing in a Cuba claim. 4. Moa Bay Mining Co. 88.3 opment rights, tax credits, rights in Cuban Tamargo is advising prospective investors 5. United Fruit Sugar Co. 85.1 government-owned property or other incen- tives to investment. that federal law prohibits a new owner from 6. West Indies Sugar Corp. 84.9 being compensated for more than what was “Claimants are going to be a lot better off 7. American Sugar Co. 81.0 looking forward than looking back,” said Bor- paid for the claim should there be a settle- 8. Standard Oil Co. 71.6 ment between Cuba and the United States. chers. He also suggests that the value of these “Buyers may not know about the anti-spec- 9. Francisco Sugar Co. 58.5 decades-old claims be reassessed. ulation clause,” he said. People who are con- 10. Starwood Hotels 51.1 Borchers said he attempted to clandestine- sidering buying a claim should be aware there 11. Texaco Inc. 50.1 ly research four of the larger claims during a is a restriction.” 12. Manati Sugar Co. 48.6 trip to Cuba and found it difficult because 13. Bangor Punta Corp. 39.2 FCSC certifications were vague in the descrip- CLARINBRIDGE BUYS SIBONEY OIL CLAIM 14. Nicaro Nickel Co. 33.0 tion and location of claims. The FCSC’s Tam- The clause apparently didn’t deter one com- 15. Coca-Cola Co. 27.5 argo declined to comment on the report. pany from purchasing a claim. In December, 16. Lone Star Cement Corp. 24.9 The Creighton group also proposed estab- Nevada-based Clarinbridge LLC purchased a 17. New Tuinucu Sugar Co. Inc. 23.3 lishing a similar tribunal to settle Cuban- claim from the Siboney Corp. for its oil explo- 18. Colgate-Palmolive Co. 14.5 American claims. The claims of exiles who ration rights in Cuba. Siboney, which sells 19. Braga Brothers Inc. 12.6 lost property were not certified because they weren’t U.S. citizens at the time of Castro’s educational software, once owned the assets 20. Boise Cascade Corp. 11.7 of Siboney Caribbean Petroleum, which is a expropriations. In addition, international law 21. American Brands Inc. 11.7 does not give the exile claims any weight. certified U.S. claimant. 22. West India Co. 11.5 According to filings with the Securities and But the Creighton report said “if the prop- 23. Atlantic Richfield Co. 10.2 erty claims of the Cuban-American exile com- Exchange Commission, the Siboney claim 24. Burrus Mills Inc. 9.8 was valued at nearly $2.5 million. But it was munity are left unresolved, their political and 25. Pan-American Life Insurance Co. 9.7 economic power could be turned against sta- sold for a little more than $1 million. 26. United States Rubber Co. Ltd. 9.5 Clarinbridge LLC could not be reached for bilizing a new government in Cuba, much to 27. William A. Powe 9.5 the detriment not only of the island, but also comment. But SEC records listed Mark 28. Estate of Sumner Pingree 9.3 to potentially fruitful U.S.-Cuba relations.” Entwistle, the former Canadian ambassador 29.