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, including Nicaragua. Nicaragua has given out a significant portion of its annual budget in government bonds to U.S. claimants since 1990 as remuneration for land seized under agrarian reform programs.
The fall of the Berlin Wall in 1989 was said to symbolize the end of an era. For Americans, the age of duck-and-cover drills and bomb shelters had come to an end. The world was no longer a bipolar battlefield of superpowers. And without the constant threat of a red invasion, some assumed that the U.S. would undoubtedly halt its “democracy” promotion and harsh policies toward Latin America. Unfortunately, however, 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, including Nicaragua. In addition, claims being made by Nicaraguan landowners who are now-U.S. citizens have had a major impact on Nicaragua’s finances. Nicaragua has given out a significant portion of its annual budget in government bonds to U.S. claimants since 1990 as remuneration for land seized under agrarian reform programs.
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 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, and, 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 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 individual, 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.