Thread by @geoffreygertz

Today @StateDept announced Americans whose property was expropriated in Cuba 60 years ago can sue in US courts–a move aimed at Cuba but that is mostly going to annoy Europe & Canada. If that sounds complicated it’s because it is. A (not so brief) thread 1/ wsj.com/articles/new-u…

Let's start from the beginning: When Castro came to power in 1959 he expropriated lots of property owned by Americans, from big sugar plantations and power plants down to individual family homes and apartments. 2/

The Foreign Claims Settlement Commission (FCSC) – a self-described “quasi-judicial” US gov’t agency – is tasked with resolving these kinds of mass claims against foreign gov'ts. The FCSC is a fascinating, understudied agency – read more about them here 3/ justice.gov/fcsc/about-com…

Typically the way this works is FCSC listens to everyone who has a claim against a sovereign, decides if it’s valid and how much $$ it’s worth. Then the US gov’t and the foreign gov’t negotiate a lump sum payment. This lump sum is then divided up among the claimants 4/

For example, in the 1980s the FCSC heard claims against Vietnam, and ruled in favor of 192 claimants. Nothing happened for a decade, then in 1995, as part of broader rapprochement, US and Vietnam negotiated a deal where Vietnam paid $203 mil, which FCSC then distributed 5/

Similar programs exist for China, East Germany, Italy, Yugoslavia, and many other countries. See them here 6/ justice.gov/fcsc/completed…

The Cuba claims are the biggest program the FCSC has ever run. In 60s & 70s, FCSC evaluated 8821 claims, decided 5913 had merit. Worth a total of $1.9 bn in principal; add in 6% annual interest, and it’s about $8 bn today. 7/ justice.gov/fcsc/claims-ag…

Again, the normal way for these to be resolved is a negotiation between US & Cuban gov’ts on a lump sum payment. Everyone agrees it wouldn’t be anywhere close to $8 bn, and claimants would have to accept a pretty steep haircut. But that's happened before. 8/

Back when Obama was trying to normalize relations with Cuba, there was a flurry of activity on these claims, and hope that the two governments might negotiate a deal. That’s now clearly going nowhere. 9/

What today’s decision means is that these 5913 claimants can take their cases to the US court system. But instead of asking Cuban gov’t to pay (since we know it won’t), they’ll be able to claim assets of third parties that ‘traffic in expropriated property’. 10/

So if you’re a US hotel chain who’s property was taken over by the Cubans 60 years ago, and there’s now a European-owned hotel chain operating that property, you can use the US court system to try to seize the US-based assets of that European chain 11/

This is why Europe (and Canada) are so furious – it’s their companies, who do business in both Cuba and the US, who are really threatened by this policy. 12/

The US goal is that European and Canadians will decide it’s not worth the risk, and will pull out of Cuba, thus squeezing Cuba. I doubt that will happen, but foreign companies that were considering going in to Cuba might now rethink it 13/

To make life more complicated, the EU and Canada are apparently setting up retaliatory measures, so if an American company claims a European company's US-based assets, that European company will be able to go after the American company’s European-based assets. It’s a mess. 14/

The EU is also saying it might challenge the measure at the WTO (though I’m not sure on what grounds) 15/

To sum up:
1) The US claims against Cuba was already a thorny issue, and this is going to make it worse
2) Claims settlement commissions are a fascinating and understudied issue in int’l politics & int’l law, and would be a great topic for PhD students to dig in to…

16/16

(cc’ing @ThisStJohn, because I vaguely remember us talking about this before…)