The Economic War Against Cuba

A Historical and Legal Perspective on the U. S. Blockade

Salim Lamrani

• Publisher: Monthly Review Press
• Year: 2013
• ISBN:
  9781583673423
• Topic: History
• Subtopic: Latin American & Caribbean History
• Index: History

It is impossible to fully understand Cuba today without also understandingthe economic sanctions levied against it by the UnitedStates. For over fifty years, these sanctions have been upheld byevery presidential administration, and at times intensified by individualpresidents and acts of Congress. They are a key part ofthe U.S. government's ongoing campaign to undermine the CubanRevolution, and stand in egregious violation of internationallaw. Most importantly, the sanctions are cruelly designed for theirharmful impact on the Cuban people.In this concise and sober account, Salim Lamrani explains everythingyou need to know about U.S. economic sanctions againstCuba: their origins, their provisions, how they contravene internationallaw, and how they affect the lives of Cubans. He examinesthe U.S. government's own official documents to expose what ishiding in plain sight: an indefensible, vicious, and wasteful blockadethat has been roundly condemned by citizens around theworld.

1.

Fidel Castro and the Triumph of the Cuban Revolution

The triumph of the Cuban Revolution in 1959 and the rise to power of Fidel Castro immediately provoked the hostility of the United States, whose faithful ally, the dictator Fulgencio Batista, was overthrown by a popular uprising. The Eisenhower administration had struggled to maintain Batista, the perpetrator of the March 10, 1952 coup, as head of state and thereby prevent a takeover by the rebels of the 26th of July Movement. On December 23, 1958, a few days after General Batista fled the island, the National Security Council, taking note of the insurgents’ inevitable advance from the Sierra Maestra toward Havana, had suggested, through the voice of President Dwight D. Eisenhower, that “a military action might be needed in Cuba.” Allen Dulles, the director of the CIA at the time, specified that “we must stop Castro’s victory.” Thus, as Christian Herter, Undersecretary of State noted, “The rejection of a regime dominated by Castro appeared to be unanimous.”³ But it was too late. On January 1, 1959, Batista fled aboard a plane destined for dictator Rafael Trujillo’s Dominican Republic.

Yet, at the time, it was impossible to build anything resembling a strong link between Fidel Castro and the communists of the Popular Socialist Party. The first provisional government was composed of rather conservative members of civil society. The judge Manuel Urrutia was named to the presidency of the Republic and José Miro Cardona was selected to fulfill the function of prime minister. No communist made the list of new directors, and Washington was satisfied with the composition of the new government.⁴ On the sixth of January, 1959, during a meeting of the National Security Council, the CIA underscored the fact that Urrutia was “fiercely anti-communist” and that “Fidel Castro had chosen him personally.” They saw the presidential cabinet as composed therefore of “moderate and reasonable elements.” The agency had also rejected the accusation of anti-Americanism on the part of the leader of the Revolution: “Fidel Castro has often expressed his desire to have friendly relations with the United States.” The sharp criticisms directed at Washington were the result of “U. S. assistance long extended to the Batista regime.”⁵

By February 1959, the dignitaries of the Batista dictatorship had emptied the coffers of the Central Bank and fled the island with $424 million. Washington, refusing to extradite the war criminals of the old regime, rejected a request for a loan from Cuba to stabilize its currency. This was the first sign of the hostility to come.⁶

The first economic and social measures undertaken by the revolutionary government did not sit well with Washington. The stranglehold that U.S. multinationals held over the Cuban economy was so strong that it became impossible to undertake any reforms without affecting their interests. As Ernesto Che Guevara recalled, except for land reform, all of the economic and social measures undertaken by the revolutionary government were nothing less than responses to United States aggression.⁷

The May 17, 1959, agrarian reform, one of the most advanced of the period, was predicated on the legal foundations of Cuba’s 1940 constitution. It aimed to allocate to farmers cultivable land that would allow them to meet their own subsistence needs as well as put an end to the latifundia system that had long prevailed in Cuba. Indeed, Article 24 authorized, subject to compensation, expropriation for the public good. Article 90 prohibited the latifundia, thereby substantially limiting the concentration of land.⁸

As early as June 24, 1959, Washington, for the first time, began to consider the imposition of sanctions against Cuba. In an internal memo, the Eisenhower administration suggested the possibility of ending the sugar quota. The State Department openly acknowledged its objective: “The sugar industry will suffer a rapid and abrupt decline that will entail general unemployment. Many persons will be without work and go hungry.”⁹

It is well to remember that in 1959 Cuba relied upon the United States for 65 percent of its exports and 73 percent of its imports.¹⁰ The Cuban economy was, therefore, totally dependent on the U. S. market. Moreover, U. S. investments in Cuba were carried out under conditions often favorable to the multinationals. Thus, for the exploitation of nickel, the Batista regime had granted a concession to the Moa Bay Mining Company. This contract was so profitable that in just five years Moa Bay was able to obtain a return of $120 million on its initial investment. These enterprises were often exempted from paying taxes and were allowed to repatriate their profits. They therefore contributed little to the development of the Cuban economy. Between 1950 and 1960, the balance of payments was favorable to the United States to the tune of one billion dollars.¹¹

On August 27, 1959, on the recommendation of Washington, the U.S. electricity firm, American Foreign Power Company, cancelled a $15 million investment. Intended to upgrade the Cuban electrical grid, the project had been in the planning stages for some time. This measure, an action that signaled increased hostility toward the Havana government, was taken following the new government’s 30 percent reduction in the price of Cuban electricity.¹²

The United States was not the only country affected by the nationalizations. Most European nations—Spain, France, the United Kingdom and Switzerland, for example—also had interests in Cuba, if to a lesser degree. These nationalizations were carried out in accordance with international law that grants any nation the sovereign right to nationalize companies operating on its territory in exchange for compensation. The amount of compensation paid was based on the enterprises’ most recent corporate tax returns, returns that were, for obvious reasons, often less than the real value of the assets. Agrarian reform vouchers, bearing a 4.5 percent interest rate, were issued to owners affected by nationalizations.¹³

All of the nations affected by the expropriation process negotiated with the Cuban government and accepted global compensation agreements, all with the exception of the United States. Indeed, on June 12, 1959, the Eisenhower administration demanded, as a “minimum standard,” an indemnification “rapid, adequate and effective for the nationalization of U.S. assets.”¹⁴

However, this procedure is not recognized by international law, which prohibits a third country from imposing conditions on sovereign nations, that is to say, involving itself in that nation’s internal affairs. Indeed, this principle of sovereign equality has been universally accepted since the Congress of Westphalia in 1648 and is based on two essential principles, the sovereignty of states and their equality before the law. State sovereignty is expressed through the right to freely determine their internal and external affairs without infringing on other states or violating international public law. Legal equality consists of the right of any state to be considered the equal of any other in matters of sovereignty. Thus, all sovereign states are legally equal and without risk of subordination to another, independent of economic, geographic, demographic or physical factors. This principle is inscribed in Article 2 of the United Nations Charter, which states that “the Organization is founded on the principle of the sovereign equality of all members.”¹⁵

Moreover, on December 21, 1952, during the 7th Session of the United Nations General Assembly, Special Resolution No. 626, approved by a majority vote, states that “the right of peoples to freely use and exploit their wealth and natural resources is inherent in their sovereignty and in accordance with the purposes and principles of the United Nations Charter.”¹⁶ This is what is commonly called economic self-determination, an inalienable and imprescriptible right of all peoples, which stipulates that in case of nationalization, compensation will be paid in accordance with the norms in force in the country that proceeds with the nationalization.¹⁷

In accordance with Article 308 of the International Court of Justice, the first source of law one should refer to in the case of conflict between nations—in the process of expropriations, for example—are international treaties.¹⁸ Now, for the period 1959–62, no international treaty existed between Cuba and the United States that might bear on this question. We must look therefore to international custom for evidence of a general practice accepted as law. In Latin America, Mexican nationalization in 1917, Bolivian in 1952, and Guatemalan in 1953 were made based on recognized international law, and accepted as the inalienable sovereign right of states, for which “every people has permanent sovereignty over its natural resources.”¹⁹

Moreover, according to Resolution 1803 of the United Nations, dated December 14, 1962, concerning “permanent sovereignty over natural resources,” it is stipulated that “the right of permanent sovereignty of peoples and nations over their riches and their natural resources should be exercised in the interest of national development and the well-being of the state involved.”²⁰ Thus it recognizes the sovereign right of states to nationalize foreign assets that reside on their territory.

The Charter of Economic Rights and Duties of States, approved by the General Assembly of the United Nations on December 12, 1974, also stipulates that all states have the right to

nationalize, expropriate or transfer ownership of foreign property, in which case appropriate compensation should be paid by the State adopting such measures, taking into account its relevant laws and regulations and all circumstances that the State considers pertinent. In any case where the question of compensation gives rise to a controversy, it shall be settled under the democratic law of the nationalizing state and by its tribunals.²¹

Thus, under the international public law initiated in 1959, the process of expropriation—nondiscriminatory since it concerns all foreign assets—respected the legal agreements in force. Having been recognized as legitimate by the bulk of all nations with assets in Cuba, the compensation offered was accepted. Indeed, five agreements relating to the payment of claims were held in Cuba: with France and the Helvetic Confederation in March 1967, the United Kingdom in October 1978, Canada in November 1980, and Spain in January 1988.²² Only the U.S. government rejected the compensation process.

2.

Economic Sanctions from Dwight D. Eisenhower to Barack Obama

The Eisenhower Government

On March 17, 1960, one month before the resumption of relations between Havana and Moscow, the Eisenhower administration made a formal decision to overthrow the Cuban government. The new U.S. foreign policy would be built upon several pillars: the cancellation of the Cuban sugar quota, an end to the deliveries of energy resources such as oil, the continuation of the arms embargo imposed in March 1958, the establishment of a campaign of terrorism and sabotage, and the organization of a paramilitary force designed to invade the island and overthrow Fidel Castro.²³

On June 29, 1960, the oil companies Texaco, Shell, and Esso stopped deliveries to Cuba, thereby forcing the island to obtain supplies from the USSR in exchange for sugar. Responding to a new directive from Washington, the U.S. multinationals also began refusing to refine Soviet oil, thereby automatically triggering the nationalization of the refineries on the island.²⁴

On July 5, 1960, Washington imposed its first coercive measures. Through Public Law 86-592, which amended the Sugar Act of 1948, Eisenhower abolished the current year’s Cuban sugar import quota of 700,000 tons.²⁵ It should be noted that sugar accounted for 80 percent of all exports to the United States, Cuba’s natural and historical market, and employed almost 25 percent of Cuba’s population.²⁶ In response, Havana passed Act 861 on July 6, 1960, which authorized the nationalization of all U.S. properties.²⁷ On December 16, 1960, President Eisenhower decided that the United States would not import Cuban sugar for the first quarter of 1961. On January 3, 1961, Washington unilaterally broke off diplomatic relations with Havana and banned its nationals from traveling to Cuba.²⁸

The Kennedy Administration

On March 31, 1961, the Kennedy administration extended the suspension of sugar imports until 1962. On September 4, 1961, the U. S. Congress passed the Foreign Assistance Act, which prohibited foreign aid to the government of Cuba and authorized the president to impose a total embargo on trade with the island.²⁹

On February 3, 1962, by means of Executive Order 3447 and through the use of the Foreign Assistance Act and the Trading With the Enemy Act of 1917, President Kennedy imposed a total embargo on Cuba.³⁰ It went into effect on February 7, 1962, and, in violation of international humanitarian law, included a ban on drugs and food products.³¹

Indeed, Article 23 of the Fourth Convention for the protection of civilian persons in times of war, Geneva, 12 August 1949, and ratified by the United States, stipulates:

Each High Contracting Party shall allow the free passage of all consignments of medical and hospital stores and objects necessary for religious worship intended only for civilians or another High Contracting Party, even if the latter is its adversary. It shall likewise permit the free passage of all consignments of essential foodstuffs, clothing and tonics intended for children under fifteen, expectant mothers and maternity cases.³²

On March 23, 1962, Kennedy expanded the embargo to all products that contain Cuban materials, including those manufactured in other countries.³³ Similarly, from August 1962, every nation providing assistance to Cuba was automatically ex...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Dedication
• Prologue by Wayne S. Smith
• Foreword by Paul Estrade
• Introduction
• 1. Fidel Castro and the Triumph of the Cuban Revolution
• 2. Economic Sanctions from Dwight D. Eisenhower to Barack Obama
• 3. The Impact of the Economic Sanctions on Health Care
• 4. United States Justice Contends with the Economic Sanctions
• 5. Extraterritorial Applications of the Economic Sanctions
• 6. The U.S. Government Accountability Office Report
• 7. The Opposition of American Society to the Economic Sanctions
• 8. Attempted Genocide?
• Conclusion
• Appendix
• Bibliography
• Notes
• Index