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Can Obama administration settle Cuba claims issue before time runs out?

Published May 31, 2016

Two key criteria have to be met before Congress can even consider lifting the economic embargo against Cuba: The Castros must be out of power and U.S.-certified claimsagainst Cuba for American properties and businesses nationalized in the 1960s need to be settled.

Father Time took care of the former. Fidel Castro resigned as president in 2008. His successor and brother Raul Castro promises to do so by February 2018.

Those close to the claims issue now wonder: With less than 250 days remaining in President Barack Obama's administration, is there enough time for negotiations, and if not, what does that mean for the president's efforts to normalize relations with Cuba.

"Without a settlement of certified claims, every Obama administration initiative becomes less secure in terms of post-Obama administration survival," said John Kavulich, president of the New York-based US-Cuba Trade and Economic Council that reports business trends between the nations.

Kavulich questions if the next president will want to place a similar emphasis on Cuba.

Presidents typically do not focus on their predecessor's legacy projects, which Cuba is for Obama, Kavulich said. Nor might a first-term president still facing reelection be as flexible in the give-and-take with Cuba.

"President Obama has the political capital to get this done now so his successor will not have to deal with the issue in an uncertain future," said Antonio C. Martinez II, the chief operating officer of New York-based Cuban Strategic Partnerships Inc. "With the claims issue resolved, Congress will be able to rapidly move and end the embargo."

Much has been accomplished since U.S. policy on Cuba switched from isolation to engagement. Diplomatic relations are restored. Trade and travel opportunities have increased. A bilateral oilspill clean-up agreement is pending.

Still, this new relationship is based primarily upon executive orders that can be reversed by future presidents.

For Obama's policy of engagement to remain, the Cuban Embargo must be lifted by Congress. If certified claims are settled and neither Castro is president, Congress may struggle to justify the embargo even if communism still rules Cuba.

U.S. government officials met with their counterparts in Havana last week to discuss further détente.

The U.S. State Department says there are 5,913 certified claims against Cuba totaling $1.9 billion plus interest. They are labeled a priority, though officials acknowledge dealing with them is a complex process that will take time.

"I would love this to be settled before Obama leaves office, but it is doubtful at this point," said attorney Raul Valdes-Fauli, chairman of the Miami-based Cuban Claims Owners Association, which provides legal analysis on the issue.

Cuba's government is slow to make decisions, he said, and the issue of claims -- an explosive one on the island - will be no exception.

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A sticking point is that the Cuba government says it is owed at least $121 billion in reparations incurred by the embargo.

"The Cuba claims issue is complex and challenging," said Doug Jacobson, a sanctions lawyer in Washington D.C. "There is no doubt it will have to wait until the next administration."

But there remains the concern that a future president will not be inclined to make Cuba a priority.

It's why those "actively close to the Cuba issue" say Obama wants Vice President Joe Biden to travel to the island to serve as a "closer" on certified claims negotiations, said the US-Cuba Trade and Economic Council's Kavulich.

But certified claims are not the only claims that could prevent full detente.

There are $4 billion in civil judgements against Cuba, $3.2 billion of which is owed to Gustavo Villoldo,a South Florida man who says the Cuban government forced his father to turn over his assets in Cuba and commit suicide to prevent the murder of his family.

While Cuba remained on the U.S. State Sponsors of Terrorism list from 1982-2015, it was stripped of its sovereign immunity in the U.S. protecting it from lawsuits such as Villoldo's.

Until settled, plaintiffs can freeze Cuban government money that makes its way through the American banking system. They can also confiscate Cuban goods that enter the U.S. market in a post-embargo world.

Villoldo's attorney Andrew Hall doubts this administration will settle the civil claims.

His pessimistic tone was a far cry from November, when he excitedly emailed, "There is a global settlement in sight!" weeks before the State Department officially announced it would begin negotiating all American claims against Cuba.

Since then, said Hall, "the government has shown no interest in informing us on what they are doing." This leads him to believe little is happening.

But he has a message for this and future administrations:

"We are not going away."

Contact Paul Guzzo at (813) 226-3394. Follow @PGuzzoTimes.