The Cuba USAID project: Developing an approach to property-claims settlement for a democratic Cuba


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The Havana skyline and waterfront, with Che’s image in iron on the Interior Ministry building in the Plaza de la Revolución. (Courtesy  Arthury Pearstein)
By Arthur Pearlstein Some conflicts present enormous challenges for those of us in the field of dispute resolution and take years, even generations, to get resolved (if they ever do). Imagine an island paradise where individuals and companies lose everything from their homes, to their Chevys, to their factories, rum distilleries, villas, hotels and even boat docks, seized by a dictator who claims to have acted on behalf of an aggrieved people. Imagine over 40 years pass without settlement and now you are asked to devise a process to bring about a solution. This is the challenge that was presented to Creighton University, starting near the end of 2005. When Fidel Castro took power in 1959, he nationalized virtually all foreign-owned property in Cuba. He also seized homes, land and businesses belonging to Cuban nationals who eventually fled to the U.S. The claims of Americans, including U.S. corporations, are still outstanding, and Cuba remains obligated under international law to compensate them. Cuban exiles also remain dispossessed but do not have the status that foreigners, such as Americans, enjoy under international law. Creighton University received a grant from the State Department’s U.S. Agency for International Development (USAID) to investigate and report on the thorny matter of developing an approach to property-claims settlement between Cuba and the United States after the end of the Castro regime. None of us could have predicted that Castro himself would step down (due to illness) before our report was issued. A cross-disciplinary team of Creighton professors and graduate students worked on the project and issued a report late last year (see sidebar). The report recommends an international tribunal to hear the claims of American citizens and corporations whose property was seized by Castro’s regime and who since then have had their claims certified by the U.S.-based Foreign Claims Settlement Commission, mostly during the ’60s and ’70s, the decades following the seizure. The Creighton team’s report also suggests creation of a special Cuban court to hear the claims from the Cuban-American exile community. The Werner Institute for Negotiation and Dispute Resolution at Creighton was created to become a leading national center for education, training and development in how to manage and resolve conflicts. Our role in the USAID grant was limited to a focus on more consensual resolution of claims: approaches more likely to build a foundation of cooperation that would be beneficial to claimants, the governments and nonclaimant citizens of each nation. Although the primary effort of the Creighton USAID project was to develop a model for adjudicating claims through appropriate tribunals, we at the institute concentrated on ways of providing opportunities for the parties to structure alternative, collaborative resolution processes. As part of our work, I actually journeyed to Cuba along with my colleague Jacqueline Font-Guzman, associate director of the Werner Institute and a member of our conflict-resolution faculty. Jackie is a native of Puerto Rico, an island with a substantially similar cultural heritage to Cuba. She has been key to the success of the Werner Institute’s graduate program; in our trip to Cuba she was indispensable. Her total comfort with the culture and ability to engage with people in all walks of life opened many doors for us. (Not to mention that the high-speed Caribbean Spanish spoken in Cuba would have left me in the dust if I had been forced to fend for myself). An Edsel in Cuba. (Courtesy Arthur Pearlstein)Not surprisingly, Jackie and I found a very problem-ridden paradise. Cuba is blessed with natural beauty, warm weather, exquisite beaches and a rich culture. One benefit of the economic stagnation that has accompanied Cuba’s communist economy has been in creating a place frozen in time: Havana is remarkably well preserved, from the historic buildings to the 1940s and ’50s Buicks and Plymouths that are everywhere (I came across more than one Edsel still on the road). The people we encountered were friendly beyond description. But it did not take any detective work for Jackie and me to uncover boundless economic misery. Though the Communists may have tried to divide the economic pie slightly differently, more than anything they have managed to shrink the pie. The society that has emerged is anything but classless. In Cuba, best as I could tell, there are three economic classes: the government class - people who work for the regime and who therefore have it pretty good; the impoverished - those who seem to make up the vast majority of the population and barely eke out a living; and what I like to call the “tourist class” - those who have found a way to insert themselves into Cuba’s growing tourist industry and thus gain access to the black market in hard currencies. One surprising phenomenon was the evidently robust underground trade in the small bottles of shampoo and conditioner and tiny bars of soap delivered to hotel rooms of visiting Europeans and Canadians (the U.S. is one of the few countries in the world that bans its citizens from going as tourists to Cuba). A common form of transportation and commerce (horse and cart) in Cuba. (Courtesy Arthur Pearlstein)The impoverishment of Cuba is part of the reason why the American claims for homes and businesses seized by the Communists, valued at about $6 billion in current dollars, could not be paid back in hard currency even if a change in government or in heart led Cuba to agree to settle the claims. Realistically, the Creighton study concluded, the payback might be only a few cents on the dollar at most. At the same time, the idea of an American role in resolving property claims in Cuba is not one that automatically brings enthusiasm in Cuba, where some have tried to raise the alarm of foreigners meddling and exiles returning to reclaim land and money. But the claims of American citizens and corporations are subject to international law, and Cuba has long since signed compensation agreements with a number of other countries, including Mexico, Canada, Britain and France. Part of the key in resolving property claims in Cuba in the long run may be found in finding ways of settlement that foster the island’s economic growth by giving claimants the chance to prosper along with an ascendant Cuba. Creighton’s Pat Borchers, the dean of the Law School (since promoted to academic vice president) who headed the study team along with International Law Professor Mike Kelly, has long maintained that the last thing we would want from a claims process would be to contribute to continuing economic misery on the island. Potential solutions might include incentives to create new investment in Cuba, creation of development rights and issuance of tax breaks for legitimate claimants. Along with suggestions for creation of appropriate tribunals, the Creighton report proposes a claim-resolution process facilitation stage, prior to any formal adjudication, aimed at addressing the range of issues in process selection and in meeting the enormous challenge of identifying and/or designing dispute resolution methods, techniques and providers likely to be most effective for each claim. The aim would be to help the parties mutually determine how to resolve their dispute: what process to use, how the third party neutral should be selected, who the neutral should be and ground rules for the chosen process. The largest claims are likely to be the most complex and controversial. They are also likely to represent the best opportunity for economic development and advancing the mutual prosperity of both a new Cuba and the United States. Moreover, a consensual resolution of these large claims is more likely to build a foundation of cooperation that will be beneficial to claimants, the governments and nonclaimant citizens of each nation. It is therefore critical to provide the opportunity for the parties to structure alternative, collaborative resolution processes in dealing with large claims. Cuba’s experience with international arbitration, mediation and other conflict-resolution methods affirms that an effort to include alternative processes has potential for success. The approach recommended in the report takes the principles of voluntariness and party ownership over process selection carefully into account. Rather than requiring the parties to participate in one or another pre-adjudication process, what is contemplated is a “meta-process,” pursuant to which the parties would work with a facilitator to design/select a mutually acceptable dispute resolution process and a provider offering the most potential for constructive and productive problem solving. Parties to conflict involving huge stakes cannot be expected to pursue new approaches unless they have great confidence in those offering the suggestions. The real job of conflict-resolution professionals, when we are called upon in such situations, is to help those in conflict rediscover their own abilities and explore what they already know about constructive ways to learn from and deal with conflict. When people work things out for themselves, whether or not they get a hand from outside conflict-resolution specialists, the trust issue is overcome. Rebuilding trust between Cubans and Americans (and Cuban Americans) will take time, but the potential payoff in economic and human terms is enormous.

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Executive summary of the report on the ‘Resolution of Outstanding Property Claims Between Cuba and the United States’

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