The Right to Nationalize vs. the Right to Confiscate

The article written by Lázaro Barredo and published in Cuban government media, was illustrated with this picture with the caption “dos camajanes” (colonialists), referring to U.S. Senators Marco Rubio and Bob Menendez, both of Cuban extraction. (Bohemia)

14ymedio biggerElías Amor Bravo, Economist, 7 May 2019 — In a recent article Lázaro Barredo rails against “camajanes” or colonialists. I cannot think of a more embarrassing epithet to use in discussing Fidel Castro’s nationalizations. From my own personal point of view, I cannot disagree more.

Many lies have been written about the confiscations, which were neither expropriations nor nationalizations, carried out by the Castro regime from 1959 until 1968, when the so-called “revolutionary offensive” came to an end. Rivers of ink were used to create demagogic propaganda which was written to confuse and create a hostile environment for the legitimate owners of financial assets and real estate, who are the real victims in this story.

How does one assess the systematic and organized theft of property — large, medium and small — from all Cubans, which dates back to the start of the Revolution? What rational basis or justification was there for undertaking a structural transformation of the economy, which led to its decline and loss of value, as has been evident for the last 60 years?

Not even Cuba’s original revolutionary warriors, the Mambisas, behaved this way towards the Spaniards, who controlled all the country’s assets at the start of independence in 1898. Quite the opposite. The young republic was honest and generous with all its children. It had a clear enough vision of the future to respect the existing legal framework of property rights established four centuries earlier. These were the foundations for the development of a great nation that was lost forever in the dark days of the Castro regime.

Respect for private property and property rights are enshrined in the UN’s Declaration of Human Rights, specifically Article 17, which states that “everyone has the right to own property alone as well as in association with others” and that “no one shall be arbitrarily deprived of his property.”

Respect for this right would have provided many advantages and few disadvantages as the Cuban economy evolved after 1959. The violation of this right by the communist regime injured many people, who were not able to recover their losses because the regime never had any intention of compensating them, however much it now tries to say otherwise.

There was no reason for such disproportionate action against the right to property other than communism’s totalitarian ambitions and the desire to plunge Cuba into chaos. Nor was there justification for the confiscation of “embezzled” property or property owned by foreigners and US citizens who had businesses in Cuba. It was the opening of a new  and ultimately unsuccessful front in an ongoing conflict.

Initially, the Argentine ambassador acted as mediator between the Cuban government and the Eisenhower administration in an initial effort to win some sort of compensation for the confiscated properties. In the end, however, it was Cuban citizens —in greater numbers than  Americans and other foreigners — whose properties were confiscated. They were expelled from the country and forced into an impoverished exile by their own government just as many were beginning to enjoy a well-deserved rest after a lifetime of work, effort and dedication.

These are not “frantic attacks stemming from years of pent up frustration with the many policy failures that has led to uncontrolled rage.” What is happening in regards to Cuba with enforcement of Title III the Helms-Burton Act is nothing more and nothing less than a process that has been long anticipated but was delayed for reasons that are now of no interest. It reflects a process born of a desire for justice, not revenge.

Secondly, it has nothing to do with scaring away foreign investors. I would hope they might be able to develop their projects in Cuba with total freedom and in sectors they themselves choose, not in properties that were confiscated. Opportunities exist, but the communist regime does not make them available. Why is that?

I see no need to discuss here the powers governments have to nationalize property. Of course, they exist and are used routinely, but they are based on legal procedures whose main objective is respect for private property whose ownership is to be transferred to the state for the social good and in exceptional circumstances. How else would highways, telecommunications networks, airports, railways, hydro-electric dams, renewable energy plants and the like get built?

A state acquires title to financial assets through expropriations, generally of real estate, which allows it to take on these projects. Because they are essential to national development, the United Nations recognized their legality in 1974 but stipulated a fair price must be paid, in a timely and reasonable manner, for the expropriated property.

However, what was done in Cuba after 1959 in no way complied with international norms. Rather than being examples of nationalization or expropriation, they must correctly be referred to as expropriations. It was a move clearly intended to provoke tensions with the United States with the malevolent intent of transferring all private property to the state at no cost, then managing those assets using Stalinist planning methods and state control of the economy. The results in Cuba are plain to see.

A negotiation with the United States — carried out publicly and with transparency, without ad hoc and unsupportable claims over the costs of a so-called “blockade” or “embargo,” and with payment based properties’ true, current monetary value, duly verified by independent international organizations (unlike the Castro regime’s ludicrous agricultural reform junk bonds paying 4.5% over twenty years, pieces of paper in which no one puts any faith) — would, at the very least, serve as a reasonable starting point towards better relations between the two countries. Had the United States been given such an offer, no one would have been surprised if it had cancelled the sugar quota in 1960. Any other creditor would have done the same.

But, in fact, not only did Fidel Castro have no interest in resolving the conflict, he actually wanted to make it worse in order to build his power base on the pretense of seeking justice. The communist regime falsely claimed it had come up with some proposal which involved real, objective compensation. An example of this approach is the embarrassing negotiation with the socialist government of Felipe Gonzalez in 1986 involving claims over property seized from Spanish citizens, a case better left forgotten.

The implementation of Title III of the Helms-Burton Act represents an exercise in justice, not an attempt to cause embarrassment over the seizure of private property in Cuba after 1959. It is good that this provision is now being enforced because it sends a clear and transparent message to any government, regime or dictatorship of any ideology which believes it has an absolute right to confiscate the financial assets of its citizens. The law establishes not only the permanence of the human right to property, but the primacy of the private over the public when governments behave illegally, as the Cuban communists did after 1959.

There is no justification for what has been done. But history marches on and it is impossible to keep a country sealed in a time capsule, as though it were still in the Cold War. In an era of globalization and the start of a fourth industrial revolution, countries need to demonstrate credibility and confidence to attract investors, capital and talent. None if this is possible in Cuba because its interventionist and totalitarian stance frustrates any efforts at economic freedom, rationality, a better life and prosperity for its citizens, who are the keys to national development. The regime maintains a suicidal position

Even if the confiscations were truly done with the best of intentions — “to give the Cuban people a decent quality of life” — it is quite obvious that the result did not turn out as expected. Despite the promises of “free education and health care” (which are subsidized, and highly subsidized, with tax and non-tax revenues totaling almost 70% of GDP), Cubans who remember what the country was like before 1959 know there few countries in the world whose evolution has been in reverse.

And Cuba is the most significant case of economic regression, one characterized by low salaries, ongoing rationing, lack of choice and decimated real estate. After sixty years, the aspiration of many Cubans is to leave country for a different life abroad based on progress and well-being.

Since that is quite impossible in Cuba, those who oppose Helms-Burton and demand that the Castro government stand firm in the face of legal claims should reflect on whether or not it is worth it to remain fixed in their positions and refuse to change. All they have to do is look around; the conclusion cannot be more obvious. Cuba’s “patriotic and pro-independence” aspirations would fare better in an environment of freedom, choice and property rights. Let’s try it out.


The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.