The Helms–Burton Act: Tightening the Noose on Cuba

Joaquín Roy is a professor of international studies and senior research associate of the North–South Center of the University of Miami. The article below reflects portions of his new book Cuba, the US and the Helms–Burton “Doctrine”: International Reactions (University Press of Florida, 2000).

During the first half of the 1990s, the world observed with a combination of disdain and inertia the evolution of the prolonged United States embargo against Cuba. Hardliners in Washington and Miami hoped the demise of the Castro regime would soon follow the end of Soviet subsidies to Cuba. Meanwhile, during what it called the “special period” after the Soviet collapse, Cuba sought to cope with a deteriorating economy. It was forced to survive in a world inexorably leaning towards globalisation. Many Western democracies began to increase trade and investment links with Cuba as far as the economic opening of the Castro regime would permit, while indulging in wishful thinking that a political transformation would follow. This laissez-faire attitude was unacceptable to US hardliners, eager to maintain the hostile stances of the Cold War. Havana rose to their challenge with vigour and sought new ways to confront the colossus of the north.

 

In the aftermath of the shooting down by the Cuban Air Force of two planes belonging to the Cuban exile organisation “Brothers to the Rescue”, President Clinton signed into law in March 1996 an act of Congress that had been debated for months in the House and the Senate. The act was seen as a triumph for the Cuban American exile community in the United States, which was credited with mastering the lobby system. In the context of the overall domestic and international commitments of the US government at the end of the Cold War, Cuba was not of much concern. Yet this new law was to have great significance, doing far more than merely reinforcing the long-standing US embargo against Cuba.

Helms–Burton

The legislation had major international repercussions. America’s attempt to force economic and political change in Cuba by penalising foreign nationals outraged allies who viewed Washington’s dispute with Cuba as an exclusively bilateral quarrel. Two sections of the law were particularly controversial. Under Title III, a US citizen who had owned property seized by the Castro regime in the early 1960s could sue in US courts foreign nationals who dealt or “trafficked” in the confiscated property. Under Title IV, such foreign nationals, and their families, were denied visas to enter the United States.

 

The act, officially known as the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, but popularly labelled the “Helms–Burton law”, was swiftly condemned outside the United States as a violation of international law, a mistake and an embarrassment.

 

As a result of this vociferous criticism, President Clinton essentially neutered the law through subsequent suspensions of Title III, its thorniest part, thanks to an escape hatch provided by Congress on similar legislation. Truce compromises signed with the European Union in 1997 and 1998 managed to defuse a serious international confrontation. By exchanging concessions on limiting European investment in Cuba and other “rogue” states for US guarantees not to harass foreign businesses, Brussels and Washington managed to reach a pragmatic if fragile agreement. Nonetheless, the law has given mainly Canada, Mexico and the member states of the European Union (jointly or separately) a unique opportunity to show their independence of the remaining superpower’s overwhelming presence. Helms–Burton has also prompted some foreign actors to reshape slightly their relations with Cuba. While opposing the US embargo, the rest of the world has shown signs of inducing Cuba to reform and respect human rights. For Cuba, the embargo laws have given Castro an additional life-saving mechanism of being able to blame the country’s weak economy on the US sanctions.

 

Although the law reinforcing the embargo has proven to be politically and economically ineffective, in the US domestic arena it has served to strengthen the electoral power of its main backers. Helms–Burton has supplied the hard-core sector of the Cuban exile community with a guarantee that official US policy towards Cuba will remain unchanged. The codification of the embargo (i.e., stipulating the end of the Castro regime as a precondition for lifting the sanctions), through measures contained in Title II of Helms–Burton, has also revealed Congress’s apparent lack of concern at the historical consequences of the act and at the negative foreign perception of the United States as a world leader in the post–Cold War period.

Keeping up the Pressure

Harvard professor Jorge Domínguez sees the Helms–Burton Act as part of a long-established tradition in US foreign policy:

 

The Helms–Burton Act is quite faithful to the themes of the Monroe Doctrine and the Roosevelt Corollary. It claims for the United States the unilateral right to decide a wide array of domestic policies and arrangements in a nominally sovereign post-Castro Cuba ... The Helms–Burton Act rediscovers the ideological brio of imperialism. At the end of the twentieth century, as in centuries past, the United States is demanding the right to set the framework for the political and economic system it would tolerate inside Cuba.¹

 

This scenario began to take shape at the beginning of the 1990s. The end of the Cold War prompted the United States to search for a new role in the “New World Order”. The changed political climate, although far from facilitating the disappearance of the Castro dictatorship, could have transformed Cuba into a low-priority item politically and strategically. Cuba no longer posed a risk to US security, as numerous analyses by the Pentagon and the US intelligence community made abundantly clear. While in the past military intervention or assassination attempts were part of Washington’s theoretical agenda for dealing with the Castro regime, such drastic “solutions” were now ruled out.

 

The fact that European and Latin American interests were eager to improve commercial and investment links with Cuba confirmed this perception. At the same time, US companies had not only maintained indirect links (via subsidiaries based in non-US territory) with Cuba, but were anxious to establish direct commercial relations in the short or medium term.

 

None of this suited US hardliners or their counterparts in the Cuban exile community who feared that if action were not taken the only way the Castro regime would fall would be through inertia and the painfully slow internal evolution of Cuban society. The sudden collapse of the Cuban regime they had demanded and expected was in jeopardy unless a sense of tension could be maintained. These fears prompted some influential Cuban exile groups to convince US Republicans that it would be beneficial for them to remain loyal to a cause that had been part of their past agenda. The stubbornness of the Cuban regime in resisting even minimum political change, albeit while permitting moderate economic reform, gave the exile community and its allies in Washington sufficient ammunition to continue their attempt to oust the Castro dictatorship.

The Road to Sanctions

All previous US legal actions had been responses to the inexorable inclination of the Cuban government towards the Soviet political and economic orbit. It remains even now a matter of academic debate as to who started the confrontation between Cuba and the United States.² Did Washington “push” Cuba into embracing the Soviet Union by its intransigence towards Castro, or were Castro and his followers sincere Marxist–Leninists from the beginning? While some experts consider the spark that ignited the US reaction against Cuba to be Castro’s nationalisation of agriculture, others argue that Castro held global ambitions from the outset. On the latter interpretation, the centrepiece of Castro’s policies was the “liberation” of Latin America and the support for other revolutionary causes so that he could become a Third World leader.³

 

Castro’s Land Reform Law of 17 May 2024 initiated the friction with US property owners in Cuba. The conflict intensified as a result of agreements to exchange Cuban sugar for Soviet oil. In addition, Cuba received loans and considerable technological aid from the Soviet Union. In response, President Eisenhower progressively reduced the sugar quota—70 per cent of the island’s exports—that the United States had been importing from Cuba. On 6 July 1960, the American Sugar Bill completely eliminated the quota. US and British oil companies based in Cuba refused to refine Soviet crude. In retaliation, on 29 June 2024 Cuba began to nationalise all American and British properties. In October, Washington imposed an economic embargo on US exports (other than food and medicines) to Cuba. Washington’s response to Cuban actions culminated in the breaking of diplomatic relations on 3 January 1961. On 16 April 1961, Castro declared Cuba a socialist state. The following day, the Bay of Pigs invasion was launched, resulting in the defeat and imprisonment of the Cuban exile force backed by the United States and subsequently abandoned by President Kennedy.

 

On 22 January 1962, the government of Cuba was suspended from the Organisation of American States. On 3 February 1962, Kennedy used two laws, the Trading with the Enemy Act (passed in 1917 in the context of the First World War) and the Foreign Assistance Act of 1961, to establish a total embargo on trade with Cuba. On 19 March 1962, food rationing began in Cuba. In October 1962, the stand-off reached crisis point when Kennedy declared a blockade of the island in response to the placement of Soviet nuclear-armed missiles in Cuba. On 8 July 1963, the US Treasury Department announced the Cuban Assets Control Regulations Act, which forbade US citizens from engaging in any commercial or financial relations with Cuba apart from activities undertaken through subsidiaries. With the discovery of Cuban-sponsored political and guerrilla activities throughout Latin America, diplomatic relations between all the Latin American states (bar Mexico) and Cuba were terminated in 1964. In March 1968, the Cuban government nationalised most private businesses. In July 1972, Cuba became a member of the Council for Mutual Economic Assistance, the Soviet economic bloc.

 

Many Latin American governments began to re-establish diplomatic relations with Havana in 1975, but Cuba’s entry into the Angolan civil war ended ongoing discreet negotiations between Cuba and the United States. In spite of this difficulty, in 1977 President Carter allowed passport restrictions on travel to Cuba to lapse, thus enabling American citizens to visit the island as tourists. Interest sections (one step below full embassy level) were established in Havana and Washington. The gradual improvement in relations was severely undermined by the Mariel boatlift of 1980 which saw the mass migration of more than one hundred thousand Cubans to Miami. Following the election of Ronald Reagan as US president, travel restrictions were reimposed in 1982. The Republican administrations of Reagan and George Bush exerted pressure on US companies to eliminate their indirect links with Cuba. However, trade links between US subsidiaries and Cuba were not banned until the passing of the Cuban Democracy Act of 1992 (the Torricelli Law)—ironically, when the Cold War was over.

Reform and Compensation

Anticipating an eventual end to Soviet aid, Cuba had begun to foster economic reforms and investment since the early 1980s. In 1982, Havana approved a law to regulate the activities of business consortiums. In addition, long-term leases of properties were contemplated. Labour regulations were modified in 1990 to facilitate the establishment of tourism-related enterprises. In response to the economic crisis caused by the loss of aid and trade from the Soviet Union, the Cuban constitution was adapted in 1992 to soften the prevailing Marxist–Leninist hostility to private enterprise. Accordingly, a series of successive measures that are the basis of capitalist markets were adopted, the result being a modest opening to economic activity. In September 1995, Law No. 77 was issued to regulate foreign investment, and foreign business activity in Cuba experienced modest growth. At the end of 1995, a total of 212 joint ventures were registered. By the end of the decade, total foreign investment was estimated at between $2 billion and $5 billion.

 

For more than thirty years, the United States had allowed the question of properties confiscated by Cuba to languish unresolved. Washington and Havana had never negotiated a settlement on the issue. While the United States insisted on full compensation, Cuba responded that it should be reimbursed for the damage caused by the US embargo. The figure consistently quoted by the Cuban government was $60 billion. While some other nations quietly negotiated compensation settlements of modest lump sums, the claims of the former US owners remained in a legal limbo.

 

The lack of a well-defined compensation process in the Cuban case was an anomaly in the US tradition. After the end of the Second World War, the global decolonisation process forced the United States and other developed countries to come to terms with the reality of nationalisation and expropriation. Consequently, they enacted systems to recover at least part of their losses. The United States, like other developed countries, negotiated collective compensations. In 1949, Congress passed the International Claims Settlement Act and created the International Claims Commission, which transferred its functions to the Foreign Claims Settlement Commission in 1954. In 1964, Title V was added and was known as the “Cuban Claims Act”, yet no agreement was ever reached with Cuba.

 

Initially, US claims for property confiscated in Cuba were calculated at about $1 billion. Given that only about $60 million in Cuban frozen assets were available, a process of adjudication was set in motion with the result that a figure of about $1.8 billion was registered covering 8,816 claims. The Foreign Claims Settlement Commission then ruled that a simple annual interest of 6 per cent should be applied, raising the total value of US claims to as high as $5.5 billion by 1994. Never settled, and with huge accumulated interest, the compensation claims hang over the head of any future government in Cuba.

 

The US law on expropriations did not cover companies in which fewer than 50 per cent of the shares were owned by US citizens; neither did it apply to the properties of Cuban Americans who were not US citizens at the time of the expropriations. Conservative estimates valued such properties as at least ten times higher than the original certified claims. While arguments from morality and justice might have mandated compensation for these companies and people, the law and tradition were strict.

 

The hardliners backing the embargo considered it useful to form a coalition first with the certified claimants—mostly indigenous US corporations and citizens—who had been unable to pursue any avenue for compensation other than the usual settlement through lump sum (which Cuba refused to pay). Those advocating new approaches then also began to entice “uncertified” claimants––Cuban Americans who were not US citizens at the time of the confiscations—to press for additional policies and legislation that would make it possible for both types of claimants to be paid sums closer to the real value of their confiscated properties.

A Colder War

In principle, the normalisation of America’s international relations following the collapse of the Soviet Union might have been expected to encourage commercial exchanges with countries such as Cuba which previously had been a source of confrontation between the superpowers. However, the prospect in Cuba of economic evolution without parallel political reform (apparently following the Chinese model) was observed with extreme caution in the United States. Instead of collapsing after the loss of Soviet subsidies, the Castro regime survived through its “special period”. Inevitably, there was a US backlash. In the words of Jorge Domínguez, “US–Cuban relations went from Cold War to a colder war.”⁴

 

The consolidation of Cuba’s other foreign economic links was guaranteed to encounter serious opposition from the United States. On 23 October 1992, during the US presidential election campaign, President George Bush approved the Cuban Democracy Act, a bill originally sponsored in April of that year by Congressman Robert Torricelli (Democrat, New Jersey). This new tightening of the screw consisted of a threat to impose sanctions on US companies that maintained dealings with Cuba through subsidiaries. The law also barred the use of US harbours to ships that had previously docked in Cuban ports. Nonetheless, the law gave the executive branch the option of “calibrated responses” (i.e., partial lifting of sanctions) to positive changes by Cuba.

 

The end of the Cold War did not, in fact, remove the alleged Cuban threat to US national security, although its nature was believed to have changed. As envisioned by Richard Nuccio, the chief White House adviser on Cuban policy during the Clinton administration’s first term, the new danger derives from the ultimate goals of US policy:

 

The fundamental national security threat facing the U.S. from Cuba is a societal collapse that leads to widespread violence. This scenario is the most likely to produce either significant outflows of refugees, or active involvement of U.S. forces and of Cuban Americans in Cuba. U.S. policy should, therefore, attempt to promote a transition in Cuba, but in a way likely to maximize a peaceful outcome.⁵

US Isolation

World opinion has come to view the US embargo as a failure (in that it has not dislodged Castro) which at the same time causes suffering to the Cuban people. The United States, meanwhile, believes that foreign willingness to improve relations with Cuba is failing to produce the desired political changes. In keeping with this polarisation, the United States has faced a litany of annual resolutions at the United Nations General Assembly urging it to end its embargo against Cuba.

 

As the 1990s progressed, all the US allies changed their positions, from an ambiguous attitude to a voting pattern explicitly opposing coercive measures against Cuba. In 1992, 59 countries voted to condemn the United States, while 71 abstained and only 3 voted against. In 1993, 88 voted for the resolution opposing the embargo, 57 abstained and 4 voted against. In 1994, 101 nations voted against the embargo and 48 abstained; the United States was left with Israel as its sole partner in opposing the resolution. In 1995, during the fiftieth anniversary celebrations of the United Nations, and after applauding a speech to the General Assembly by Fidel Castro, 117 countries voted against the embargo. After the approval of the Helms–Burton law, and despite the controversy caused by the shooting down of the Brothers to the Rescue planes, the voting in 1996 confirmed and deepened the isolation of the United States: only 3 countries supported it, 137 voted against and 27 abstained. In 1997, 143 countries demanded the end of the embargo; only 17 abstained. In 1998, Israel was again the only country to side with the United States in the vote.

 

Predictably, the Cuban government was quick to seize the opportunity provided by the United States’ isolation, making the controversy over the embargo the centrepiece of its public relations campaigns in world forums. However, Castro has failed to derail US efforts in the annual balloting of the UN Human Rights Commission, which has regularly condemned Cuba’s sorry record of political abuse.

 

Simultaneously with the economic reforms that were taking place in Cuba, relations began to normalise with Western European states. The history of relations between revolutionary Cuba and Western Europe during the Cold War provides some clues to the disagreements between the United States and the European Union in the 1990s. Although in the 1960s and 1970s there was nothing to compare with today’s incipient EU common foreign and security policy, there were similarities in the way that different European states dealt with Cuba. Each one, according to its own needs and market interests, maintained a link with Cuba despite US pressures and admonitions.

 

In 1989, Cuba’s trade with today’s European Union states was only 6 per cent of the total trade between Havana and the rest of the world. Just five years later, in 1994, 38 per cent of Cuban imports and 29 per cent of its exports were with the European market. More than half of all joint ventures established in Cuba today have European investments. On the other side of the Atlantic, Canada and Mexico, close neighbours of the United States and partners in the North American Free Trade Agreement, have been two of the most blatant challengers of US policy towards Cuba, leading the hemisphere in investment, trade and tourism in the island.

Effects in Cuba

After losing the support of the Soviet Union, the Cuban economy hit bottom in 1993 before beginning to recover between 1994 and 1996, when the Helms–Burton Act was passed. The official Cuban response to Helms–Burton was seemingly contradictory. First, Havana insisted that foreign investment had continued to grow. Second, it admitted that the law had had an effect in delaying the investment projects of certain companies. While the Castro regime accepted that the codification of the embargo had done considerable damage to the Cuban economy, it considered the trend temporary.

 

Havana argued that many investments could be made in Cuba without involving confiscated properties, but it also recognised that some enterprises had postponed investment plans because of the climate of uncertainty. In sum, Cuba admitted that Helms–Burton caused real harm, but claimed that the damage was limited. After all, foreign joint ventures employ only 5 per cent of the Cuban work force and generated only 3 per cent of the island’s net income in 1995.

 

Whatever the negative economic impact of the law, politically there have been some benefits for the Castro regime. In the words of Carlos Lage, Cuban minister of the economy, Helms–Burton has helped to unite the international community against the US embargo and has confirmed Cubans in the belief that “the success of the US policy toward Cuba would mean hunger and misery for our people”.⁶ Blaming the United States for proclaiming itself a “major stockholder” in the International Monetary Fund, the World Bank, and other financial institutions, Cuban officials have been able to complain about the “discriminatory treatment” imposed on Cuba and its creditors.

Human Suffering

Besides its campaign at the United Nations to condemn the US embargo, Cuba has tried to win the backing of world public opinion on the issue. While the United States defines Helms‑Burton as a national security issue and as one involving unjustly confiscated property, Cuba has emphasised the civilian suffering inflicted by the sanctions, especially by the embargo on food and medicine. The impact of the US embargo on the health of Cuba’s population has been the subject of frequent controversy, with liberals in the United States siding with the Cuban government on humanitarian grounds. Numerous US organisations have condemned the embargo, blaming it for causing shortages of food, medicine and school supplies in Cuba.

 

The Cuban government has issued what can be described as a “bill” to the United States for losses suffered under the embargo. The figures of $40 billion (until 1993) and $60 billion (until 1998) as the cost of the US measures since 1962 have been put forward by Cuba.⁷ It is impossible to quantify the economic damage inflicted by the embargo. The University of Pittsburgh’s Carmelo Mesa Lago grants that lifting sanctions would bring some benefits to Cuba, but says it would not solve all the problems caused by a “disastrous economic model” and the loss of Soviet trade and aid. According to Georgetown University researcher Gillian Gunn, the embargo may be dragging the Cuban economy down by 10 to 15 per cent.⁸

 

Regarding the political impact of Helms–Burton, my personal impression, based on interviews in Havana with Cuban scholars, government officials and diplomats, is that Cuban leaders believe the law has actually been a “regalo” (gift). This description matches most of the analysis coming from moderates in the Cuban exile community. Most studies and reports in Cuba exult in describing the embargo and Helms–Burton as a “fracaso” (failure). However, while admitting that US sanctions supply Cuba with a useful political excuse for economic shortcomings, Cuban officials would prefer to be able to operate without the political, and especially the economic, limitations imposed by the United States.

Policy Suggestions

On balance, the evidence shows that the US sanctions regime has actually impeded the democratisation of Cuba. As British-Italian researcher, Maurizio Giuliano, has pointed out, the embargo

 

helps legitimize the Cuban regime in the eyes of the population ... it persuades elites to refrain from making political reforms, it provides the regime with a convenient explanation of the country’s economic crisis, and gives the government a rationale for imposing repressive measures and resisting calls for democratic opening.⁹

 

If democratisation is the aim, then lifting sanctions makes sense because it would force Castro to ask Cubans to remain united in order to resist “ideological poisoning” caused by the economic opening. European and Latin American governments could then no longer continue to back him. No excuses would then be available.

 

Regarding the United States’ economic relationship with its partners and allies, the latter should make all necessary efforts to convince Washington that a serious confrontation with them over trade and investment in Cuba would be unwise and disproportionate to whatever threat Cuba may be said to pose to US interests. Irreparable damage to global relationships should be avoided. Although total success in persuading Washington is doubtful, America’s partners should systematically and publicly sustain this message, if only for the record.

 

At the same time, European and other allies should show some consideration for the United States’ concerns. This is most important if their shared goal is to encourage a painless and peaceful transition to democracy in Cuba. Among the possible mechanisms for compromise is the projected (and hitherto blocked) Multilateral Agreement on Investment, by which foreign investors would be subject to regulations regarding the status of expropriated properties.

 

As for the European Union, it should continue its cautious balancing act between Cuba and the United States and maintain all its previously approved measures. For example, the EU Regulation of 1996, giving legal guarantees and protection to European companies investing in Cuba and prohibiting the acceptance of US demands, should be fully implemented. At the same time, however, the European Union should also maintain its Common Position and Joint Action of 1996, which were imposed on Cuba as conditions for better economic and aid relations.

 

This may not be the most ambitious course for the European Union, but it is the most advisable in view of the unpredictability of the Cuban regime and the uncertainty of the US response to changes on the island. EU member states must co-ordinate their policies to prevent the United States or Cuba from taking advantage of any divisions in the European front. EU mandates should not be violated, as they were when the Italian phone company Stet was allowed to pay compensation to the US telecommunications company ITT for agreeing with the Cuban government to operate Cuba’s telephone system, which was formerly partially owned by ITT.

 

For both the United States and its trading partners, improving human rights in Cuba should be a goal, but it should not be made a precondition of providing aid to the island. Aid distribution through non-governmental organisations, even though hampered by obstacles imposed by Havana, may still be the best guarantee of success. Europe’s opposition to the US embargo, together with its own co-ordinated policy towards Cuba emphasising human rights and democratic change, will be judged by history as the wisest course.

 

The best course for the new US government after the November 2000 elections is to entrain a gradual dismantling of the embargo, giving the impression that it remains in place, but in an eroded fashion. This solution would produce no clear losers or winners, but it would reassure US hardliners and the Cuban exiles with a sense that the embargo was continuing, while allowing liberals to feel that its end was in sight.

 

A slow erosion of sanctions would impose on the Cuban government the pressures of political and economic transition, but without the dangers of a suddenly opened floodgate of overwhelming political, economic and social change. Gradual pressure of this nature would meet the wishes of US security experts who seek a “soft landing” in Cuba, i.e., an end to the Castro regime without upheavals that could rebound on the United States.

 

Ultimately, all plans are subject to the Cuban regime’s willingness to change. That regime has so far shown little indication of being prepared to move beyond its authoritarian orthodoxy. However, as Americans say, don’t blame the world for trying.

Endnotes

1. Jorge Domínguez, “US–Cuban Relations: From the Cold War to the Colder War”, Journal of Interamerican Studies and World Affairs 39, no. 3 (1997), p. 58.

 

2. Donna Rich Kaplowitz, Anatomy of a Failed Embargo: US Sanctions against Cuba (Boulder, Colo.: Lynne Rienner Publishers, 1998), p. 35.

 

3. Wayne Smith, The Closest of Enemies: A Personal and Diplomatic History of the Castro Years (New York: Norton, 1987), pp. 47, 49.

 

4. Domínguez, “US–Cuban Relations”, p. 55.

 

5. Memorandum for Assistant Secretary of State for Inter-American Affairs Alexander Watson, 1 August 1993, quoted in Richard Nuccio, “Cuba: A US Perspective”, in Transatlantic Tensions: The United States, Europe, and Problem Countries, ed. Richard N. Haass (Washington, D.C.: Brookings Institution, 1999).

 

6. “Lage Discusses Economic Issues”, Prensa Latina, 21 September 2024 (Foreign Broadcast Information System, Latin America, FBIS-LAT-96-193).

 

7. Peter Schwab, Cuba: Confronting the US Embargo (New York: St Martin’s Press, 1999), pp. 88–9.

 

8. Opinions collected and reported by Mimi Whitefield, “Embargo Isn’t What Ails Cuba”, Miami Herald, 26 September 1994.

 

9. My translation. Giuliano cited in La transición Cubana y el bloqueo Norteamericano [The Cuban transition and the US blockade] (Santiago de Chile: Ediciones CESOC, 1997), pp. 105–46.