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SPECIAL REPORTS |
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The
Property Waiver Regime: Nicaragua’s
Continued Punishment
Written by Jamie Way
The fall of the Berlin Wall in 1989 was said
to symbolize the end of an era. The world
was no longer a bipolar battlefield of
superpowers. And without the constant threat
of a red invasion, the U.S. would
undoubtedly halt its "democracy" promotion
and harsh policies toward Latin America, or
at least it was assumed.
Unfortunately, although the Berlin Wall
collapsed two decades ago the U.S.
government continues not only to uphold
relics of the era, but to promote new laws
that force U.S. ideologies upon sovereign
Latin American nations. An embittered U.S.
policy toward Cuba has extended the reach of
this grudge to the rest of the region.
Antiquated legislation originally pertaining
to Cuba has not only been updated and
maintained, but has been applied to the
detriment of other countries, Nicaragua
included.
Currently, the U.S. government refuses to
provide aid to countries that have
expropriated U.S. citizen land, until the
President (or those under him acting on his
behalf) provides said country with a waiver.
If this does not occur, the U.S. government
not only withholds aid from the foreign
government, but votes against aid for the
country within all major global financial
institutions. Due to this policy, each year
countries like Nicaragua are forced to
anxiously await the announcement of whether
or not they will receive U.S. funding for
that fiscal year.
Roots of the Problem
This detrimental U.S. policy has its roots
in the tense U.S.-Cuban relations of the
Cold War era. In an attempt to galvanize
opposition to the Castro government, the
U.S. imposed a number of acts promoting a
rigid embargo against Cuba.
The first in a string of such acts was
passed by Congress in 1961. The Foreign
Assistance Act entailed an amendment of
vital importance to the fate of Cuba and
many other Latin American nations. Woven
within the thick of the bill was an
important section, known as the Hickenlooper
Amendment, (it can be found in the bill
under Title 22 Foreign Relations and
Assistance: Chapter 32 Foreign Assistance:
Sub-chapter III General and Administrative
Provisions: Part 1 General Provisions:
Section 2370).
The amendment was sponsored by the
Republican Senator from Iowa, Bourke
Hickenlooper, in response to a case that was
travelling through the court circuit at the
time. The case referred to a dispute over
who should be paid for filling a U.S.
company’s sugar quota. The case, Banco
Nacional de Cuba v. Sabbatino, thus
pertained to the rightful recipient of
funds. One U.S. company had agreed to
purchase sugar from another U.S. company,
however, before the transaction took place,
the sugar producing company was expropriated
by the Cuban government. The sugar producer
still filled the contract by delivering the
sugar, but the second U.S. company opted to
pay the company with which it had originally
signed the deal, rather than pay the Cuban
government. As the case traveled through the
court system, it seemed that the final
ruling may conclude (as lower courts had)
that it was necessary to uphold the Act of
State Doctrine, which states that what a
sovereign nation does within its borders may
not be challenged by a foreign court system.
In order to preempt the unfavorable Supreme
Court decision foreseen by Congress,
Hickenlooper pushed forward his amendment,
which stated that the U.S. would not provide
foreign aid to any country that expropriated
U.S. citizens’ property. Furthermore, it
required the U.S. to cast a vote against
loans to the country in international
lending agencies. Depending on the
institution, the U.S.’s nay-vote alone could
end the country’s hope of receiving a loan
from the institution.
In 1968 the bill was put to the test when
the Nixon administration had to face a
difficult situation over Peru’s decision to
expropriate the assets of a U.S. petroleum
company. Nixon chose not to enforce the law,
because, as Kissinger argued, it would
appear to other Latin American countries as
an act of intervention. The Nixon
administration then introduced an amendment
to the Foreign Assistance Act that would
allow the president to waive the application
of the Hickenlooper Amendment when it was in
the "national interest." In 1973, Nixon’s
wish was granted and Congress made the
application of the law discretionary. A year
before in 1972, however, the Gonzalez
Amendment was passed despite the
administrations disapproval, (Section 21 of
the Inter-American Development Bank Act, P.L.
92-246; Section 12 of the International
Development Association Act, P.L. 92-247;
and Section 18 of the Asian Development Bank
Act, P.L. 92-245). This amendment required
the president to order his representatives
to vote against loans to countries that had
expropriated U.S. citizen’s property without
due compensation.
After Cold War Thaws, Icy U.S. Foreign
Policy Persists
Perhaps laws evidently reflecting the
presumed threat of the U.S.S.R. can be
justified as a symptom of the times.
However, despite the fact that the Cold War
had come to a close, the U.S. insisted upon
passing an additional series of legislation
that would pertain to Cuba, and, in many
cases, other countries in the region.
Throughout the 1990s, the U.S. passed a
string of detrimental policies toward Cuba
that would apply to Latin America more
generally. In an act displaying a complete
lack of compassion or concern for the
extreme economic hardships that were being
felt during Cuba’s "Special Period," the
Torricelli Law (Cuban Democracy Act of 1992)
was passed continuing a policy of strict
sanctions until Cuba would succumb to the
will of the U.S. This law dusted off the
antiquated policies of the 1960s and
insisted that they continue to apply. In a
clearly political move, Clinton, who was
attempting to pander to the Cuban vote,
endorsed the Torricelli Law that was
approved by Bush during the 1992
presidential campaign.
Continuing the string of imperialistic U.S.
laws passed in the 1990s, in 1994, Senator
Jesse Helms and Representative Henry
Gonzalez sponsored an amendment to the
Foreign Relations Authorization Act of FY
1994 and 1995, (Title V, Part A, Section
527).
Just four years after the Torricelli Law,
Congress built upon it by passing the
inappropriately titled "Cuban Liberty and
Democratic Solidarity Act" otherwise known
as the Helms-Burton Law. Despite the
disapproval of the vast majority of world
actors (including Canada, Mexico, Spain, the
OAS, and less vocally the EU), the U.S.
passed the controversial law. The Republican
bill was signed into law by Bill Clinton,
shortly after two small planes from the U.S.
were shot down when flying near Cuba.
The Helms-Burton Law included two especially
offensive measures. First, Title III allowed
U.S. citizens to bring lawsuits against
anyone who "traffics" in former U.S.
property confiscated by the Cuban
government. Used in this context,
"trafficking" refers even to the legitimate
business dealings of a CEO from a third
country who works for a corporation that
handles expropriated U.S. property.
Therefore, even businessmen and women from
countries outside the region can be seen as
criminals "trafficking" in "stolen" American
goods. Second, Title IV denied U.S. visa to
those who participated in the "trafficking"
of formerly U.S. property. Thus, the law was
not simply an invasion of Cuban sovereignty,
but instead brought the gaze of the U.S.
court system to bear on employees of other
foreign corporations that had some
connection to expropriated goods.
According to Joaquin Roy, an International
Studies scholar, Title III extends the
privilege to make reparations claims over
expropriated land to naturalized U.S.
citizens, who were not citizens at the time
of the confiscations. This retroactive
privilege had not applied to citizens of any
other background at this time. This seems to
be in direct contradiction with Title III
Section 303 of the bill, which states that
such property claims will not be extended
retroactively for the purposes for any
future negotiations that may take place with
a "friendly" government in Cuba.
Applying Distrust Elsewhere
Despite the fact that the source of
retroactive citizenship rights remains
unclear, it is evident that its application
presently expands past the island of Cuba
and further into Latin America. Each year,
the Nicaraguan government must wait to hear
if the Secretary of State (acting on power
derived from the president) will choose to
waive the laws and allow Nicaragua to
receive U.S. foreign aid for an additional
year due to claims from U.S. citizens
demanding compensation for their confiscated
land. So far, for a total of 16 years, the
Nicaraguan government has received a waiver
every year. Of the 274 claimants that
jeopardize the Nicaraguan waiver each year,
according to the Nicaraguan government, only
17 are actually U.S. born citizens. This
means that the remaining 257 claims belong
to naturalized citizens that were not U.S.
citizens at the time of the expropriations,
but are applying some form of retroactive
citizenship.
Like many post-revolution countries,
Nicaragua experienced land reforms after the
Sandinista Revolution which overthrew the
Somoza dictatorship in 1979. Deep
inequalities exemplified and reinforced by
the high concentration of much land in the
hands of an elite few led to the necessity
of a post-revolution land reform. Land
reform focused largely on improving the
application and benefits of land formerly
owned by Somoza and his supporters. It is
estimated that Somoza himself owned
approximately 20-25% of the country’s arable
lands. For this reason, 56% of all land
confiscated during reforms was land that
previously belonged to Somoza and his close
allies and supporters. The other 44% of the
land was confiscated under a variety of
circumstances. A great portion of the land
was taken from those that fled the country
during the revolution, as well as debtors
that perpetrated capital flight, taking
large loans and then fleeing the country
with no intention of repayment.
The claims being made by now-U.S. citizens
have had a major impact on Nicaragua’s
finances. Nicaragua has given out $1.232
billion dollars in government bonds to U.S.
claimants since 1990, and pays the servicing
on that debt each year. These debt payments
amount to large percentages of the
Nicaraguan budget. In 2008 for example, the
government paid US$132.3 million to the bond
holders which was the equivalent of 56% of
the government’s total expenditures on
health care, or 39% of the government’s
total expenditures on education, or, perhaps
even more shockingly, 19.3% of Nicaragua’s
gross domestic productivity. Clearly, these
numbers take a huge toll on Nicaragua’s
budget.
Claims Under Ortega
The Ortega administration has taken large
strides toward addressing the issue of
compensation in the cases that provide
adequate justification for their claims. 191
claims have been satisfactorily settled.
Moreover, the Ortega government has upheld
the agreement reached with the U.S. in late
2008. This agreement included the creation
of the Office of Attention to U.S. Citizens
under the Prosecutor General of the
Republic. The Nicaraguan government also
agreed to send monthly reports of
settlements to the U.S. embassy.
Additionally, for claims that were filed
without all required documents, the
Nicaraguan government agreed to notify
claimants.
Ortega has, however, challenged the
legitimacy of some claims, revoking 270 due
to the fact that the properties had been
owned by Somoza and some of his closest
associates. Furthermore, the Ortega
government has challenged the U.S. State
Department on a number of claims. He asserts
that 52 claimants have not presented
adequate documentation of ownership.
Additionally, he states that he is unable to
settle claims with those insisting on
compensation for the "nostalgic value" of
properties, rather than merely their tax
appraisal values. Other properties on the
list have already been passed on to
legitimate beneficiaries. Currently, Ortega
is seeking review of the waiver list in
order to dismiss the claims of those who
have lived outside of Nicaragua for ten
years without naming a legal representative
in the country.
U.S. Action Required
It is evident that the laws enforcing a
continuing policy of U.S. interventionism in
the sovereign nations of Latin America must
be reviewed. While this policy at least
enjoyed a vague veil of legitimacy from the
fearful right wing during the Cold War, it
is evident now that it actually promotes a
system of harsh economic punishment for
already financially strained countries.
In order to ensure that the U.S. is actually
promoting democracy, as it claims, it is
important to revoke laws that benefit only a
handful of individuals, while economically
punishing the vast majority of those in the
region. Until the Helms-Burton Law and its
predecessors are removed from the books, a
relationship of distrust will remain a
characteristic of Latin American-U.S.
relations. In order to promote a policy of
mutual respect between the U.S. and the
region, Latin America must be afforded
recognition of its sovereignty and be
allowed to control its internal land reform
policies without punishment from its
neighbor to the north. It is only then that
the imperialistic legacy of Cold War U.S.
can begin to be forgiven and forgotten.
Jamie Way holds an M.A. in Political Science
from Colorado State University. She is
currently fills the position of Research
Coordinator at Alliance for Global Justice. |
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