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Why Castro's demand for reparations from US could backfire

Cuban President Raúl Castro demanded this week that the United States pay hundreds of millions of dollars in economic reparations for damages caused by the US embargo on Cuba. But Cuban-Americans have claims on Cuba, too.

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Cuban President Raúl Castro listens on a headphone during the summit of the Community of Latin American and Caribbean States in San Antonio de Belen, Costa Rica, Wednesday.

Roberto Carlos Sanchez/Presidency of the Republic of Costa Rica/AP

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Cuban President Raúl Castro had a surprise for the Obama administration when he issued a new and considerably tougher set of demands this week for reaching normalized relations with the United States.

Return of the Guantánamo Bay naval base to Cuban sovereignty was perhaps the most stop-and-take-notice condition Mr. Castro set in a speech Wednesday. But it was the brother of Fidel Castro’s demand concerning reparations that could end up stirring the bitterest pot and posing the highest obstacle to normalization.

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Castro said United States payment of hundreds of millions of dollars in economic reparations for damages caused by the five-decade-old embargo, and indeed a lifting of the embargo Cuba considers a “blockade,” would also have to take place before the two adversaries can renew relations that were severed soon after the Cuban revolution of 1959.

But Castro’s reparation demands also carry a risk. That’s because they virtually guarantee reawakening the sensitive issue of the estimated billions of dollars in reparations that US citizens, American businesses, and Cuban-Americans claim are owed for properties and businesses seized from them in the revolution. 

The eye-catching demands, delivered in a speech to a Latin American summit in Costa Rica, seemed aimed in part at burnishing Cuba’s image as a tough adversary of Yankee imperialism even as bilateral talks on reestablishing diplomatic ties proceed.

In a further sign of the momentum behind President Obama’s opening to Cuba, a bipartisan group of senators on Thursday introduced legislation to lift the travel ban on Americans going to Cuba. It was the first piece of legislation to be introduced in the wake of Mr. Obama’s executive orders easing trade and travel restrictions with Cuba.

The tough stance Castro assumed appears aimed at calming concerns – both domestically among Communist Party stalwarts, and among Cuba’s leftist supporters throughout Latin America – that the US-Cuba rapprochement announced in December might suggest Cuba was going soft on its longtime foe.

The speech followed on the heels of Fidel Castro’s first pronouncement on the new direction in bilateral relations. In a letter published Monday, the former leader signaled his cautious approval by saying he would “always defend cooperation and friendship with all the people of the world, including with our political adversaries.”

He also said that while “I don’t trust the policy of the United States ... this does not mean I reject a peaceful solution to conflicts.”

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But Raúl Castro’s demand for US reparations for the economic embargo seemed likely to stir a pot that has never stopped simmering since 1960.

In 1961 the US Commerce Department put a price tag of $1.8 billion on the Cuban property seized without compensation from Americans, who ranged from small vacation homeowners to giant corporations like Coca-Cola, Texaco, and Freeport-McMoRan. Today, conservative estimates place the value of the 6,000 property claims at $7 billion.

Further complicating the compensation issue are the thousands of cases of Cubans who saw their homes and businesses seized by the Cuban state when they fled the revolution, largely for Miami.

Indeed a recurring fear among Cuban families that were given a house as seized residential properties were redistributed following the revolution is that the day will come when the Miami Cubans will return to claim their property.

In the weeks since Obama and Raúl Castro announced their intentions to move toward normalized relations, much has been made of the fact that it would take an act of Congress to lift the trade embargo. But the same US law that codifies the embargo, the Helms-Burton Act of 1996, also requires compensation for confiscated properties before the trade embargo can be lifted.

Resolving Americans’ property compensation demands won’t be any easier than meeting Cuba’s condition that it be paid reparations for the economic impact and “human toll” of the trade embargo – a cost Cuban authorities last year estimated at $1.1 trillion.

But in his speech Castro did seem to allow himself an out for advancing relations even if the prickliest bilateral issues are left unresolved.

The new course the two old adversaries have embarked on might lead to renewed diplomatic relations at some point in the near term, Castro said. But normal ties and exchange between the two countries won’t be possible, he added, until all the complicated issues of six decades of rancor and distrust have been addressed.