The United States has already made regime change in Venezuela a priority, and now it is leaning on Cuba to help it. A key Venezuelan ally, the Cuban government has provided extensive military and security assistance to Venezuela for nearly two decades. Now, the Trump administration is pressuring Havana to end this support. But tightening the noose on Havana could have financial consequences for foreign investors in Cuba, including Canada and the European Union.
For 23 years, U.S. administrations waived Title III of the Helms-Burton Act (formally the Cuban Liberty and Democratic Solidarity Act of 1996) over fears of complicating U.S.-European relations. On April 17, the Trump administration announced it will not renew the waivers before they expire on May 2. The expiration of the waivers will allow Americans to file suit in U.S. federal courts over property expropriated by the Cuban communist government. This opens the way for some 6,000 lawsuits worth an estimated $1.9 billion (not including decades in interest), including major claims by some Fortune 500 firms including ExxonMobil.
U.S. Strategic Intent Puts Third Parties in Legal Jeopardy
The Cuban government has been a firm ally of left-wing Venezuelan governments for nearly two decades. By making it more difficult for Cuba to maintain — and receive future — foreign investment, Washington hopes Havana will end its support for Caracas, thus accelerating regime change in Venezuela. The United States also hopes the move will help reassert its influence in the Western Hemisphere, reducing opportunities for outside powers like Russia to expand their military presence in Venezuela.
By making it more difficult for Cuba to maintain — and receive future — foreign investment, Washington hopes Havana will end is support for Caracas, thus accelerating regime change in Venezuela.
The removal of waivers sows a legal minefield for foreign companies, particularly Canadian and European multinationals, with business operations in Cuba. Since Cuba would be highly unlikely to honor judgments against it from claimants seeking redress for property expropriations, the law enables U.S. entities to recover damages from companies in Cuba now in possession of once-expropriated assets. Businesses from the European Union — the largest investors in Cuba, having made an estimated one-half of total foreign direct investment there — are thus most risk at risk of legal liability in the United States.
The EU and Canada Will Respond
The move comes as the United States has embarked on a broader unilateral push to achieve its goals, a push that includes unilateral sanctions on Iran, Russia and Cuba and avoiding international institutions when possible on trade policies. The European Union and Canada are likely to strongly resist the latest U.S. unilateral move.
Both have already said they will launch trade cases at the World Trade Organization to challenge any liability over Cuban expropriations. They could also make it illegal to comply with the U.S. law. And they could pass countermeasures allowing EU companies affected by the waiver expiration to seek redress against U.S. persons or firms who file claims in federal court under Helms-Burton that affect EU firms, countermeasures that might actually have teeth to them.