Will communist Cuba ever pay back the billions in property it confiscated?
Teo Babún Jr. has fond memories of the large blue and white corner house in Santiago de Cuba, where his grandmother, a wealthy matriarch in pre-revolution Cuba, gathered her family — her eight children and 21 grandchildren.
The Babún were industrialists who, like about 200,000 other wealthy Cubans, fled the island after Fidel Castro came to power. They left behind a railroad, a sawmill, a shipyard and a cement factory — in addition to the large property called “La Mesquita”.
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For a period, Raúl Castro, Fidel’s brother and former president, lived there. Almost seven decades later, the Cuban government uses the site to house an Arab civic association.
Known as “Casa del Arabe,” the house, which includes a restaurant, is among thousands of properties taken by the communist government from people who left Cuba — some with just the clothes on their backs — and never received compensation.
The Cuban system appears to be on the verge of collapse, and the United States government is showing interest in accelerating this decline.
As the two sides negotiate in secret, a decades-old thorny issue has resurfaced: the countless billions of dollars worth of homes, factories, farms, sugar mills and other businesses confiscated after the socialist revolution that nationalized companies and implemented sweeping agrarian policies.
“If you own something and someone takes it from you without any kind of compensation or resolution, that’s just not fair,” Babún said. “My family just wants justice.”
If the United States has influence in negotiations over Cuba’s future, former owners hope the issue will be addressed.
Resolving the confiscations is complicated and would take years. But experts say there are many precedents around the world, such as Vietnam, Germany and China, that offer a roadmap.
For years, Babún’s late father, Teófilo Sr., dedicated himself to helping exiles take up arms against the Castro government, including in the failed Bay of Pigs Invasion.
The son, now 78, ran a nonprofit religious organization funded by the U.S. government and tried to create a registry of properties taken from Cubans, hoping that the State Department would pressure Cuba over those losses.
But the effort proved too time-consuming and difficult, and the project ended with 8,000 claims filed — a small fraction of potential cases. (He said many people seemed hesitant, fearing that joining a collective demand would override their ability to negotiate larger individual deals with the Cuban government.)
The family hired consultants in 2018, who estimated the value of their assets at that time at $874.2 million, including $9 million for the house, he said.
But Babún said the passage of time and the worsening crisis in his home country have softened his outlook.
“We need to find a solution that protects the current occupants, if it is a house, and does not displace anyone,” Babún said. “And, at the same time, seek justice.”
Before 1959, Cuba was ruled by dictator Fulgencio Batista and known as a playground for American elites. Rich Cubans were often seen as oligarchs who exploited the poor.
The Castro brothers, seeking to end widespread corruption, stark economic inequality and dependence on the United States, led an armed guerrilla movement that overthrew Batista.
A few months after taking power, an agrarian law expropriated land measuring more than 405 hectares and prohibited foreign ownership. In 1960, Cuba confiscated American-owned oil refineries and nationalized large companies.
In retaliation, the United States announced a severe trade embargo against Cuba, which remains in place to this day.
A US government commission documented losses of US businesses and citizens, certifying nearly 6,000 claims valued at $1.9 billion. With 6% interest added, it is estimated that today these values reach around US$9 billion — a difficult amount for Cuba to pay.
Five of the top ten complainants were US sugar companies. Others were Exxon, Coca-Cola, Colgate-Palmolive and Woolworth’s.
Under US law, for the embargo to be lifted, the Cuban government must return property or compensate American owners whose losses have been certified by the US government.
American officials meeting with Cuban leaders in secret negotiations have made clear that compensation to Americans and U.S. companies remains a central priority.
The Cuban Ministry of Foreign Affairs did not respond to requests for comment for this report.
In the early 1960s, the United States and Cuba held negotiations for nearly a year over what would be considered “prompt and adequate compensation” for expropriations, said William LeoGrande, a professor at American University who wrote a book on the history of negotiations between the two countries.
“Cuba did not have the money to pay immediately and instead offered long-term government bonds, which the US considered neither quick nor adequate,” he said.
While the U.S. government negotiates on behalf of Americans or companies with certified claims, this does not technically happen for the many Cuban exiles who left homes and businesses behind.
Cuba considered these properties “abandoned” and took them under the justification of redistributing wealth. But the government kept many of them. Only Cubans who remained in the country were compensated for lost property, said Lisandro Pérez, a Cuba scholar at the John Jay College of Criminal Justice in New York.
An official survey of properties confiscated by the Cuban government has never been released. There is no reliable estimate of how many there are or how much the exiles could receive.
“We weren’t Batista supporters, we weren’t politicians, we weren’t committing crimes — we should get it back,” said Nicolás Gutiérrez, a Cuban-American lawyer in Miami whose family lost an estimated $50 million fortune in the early 1960s.
The assets included two sugar mills, 15 cattle farms, a rice mill, a coffee plantation, a bank, an insurance company and a wholesale food distribution company.
Gutiérrez, corporate secretary of the National Association of Cuban Landowners in Exile, also serves as a consultant to other families and is involved in a lawsuit against Expedia for booking clients in hotels built by the Cuban government on confiscated beach land.
Expedia argues that the plaintiffs do not have standing to sue, although the case continues.
Gutiérrez, 61, has never been to Cuba. But he claims that if the government returns his family’s properties, they will put them back into operation and help the country’s ailing economy.
“Not everyone in the family is going to run back. I’m going to run,” he said. “In my view, Cuba is in such a deep hole that, to get out of it, it will need to attract serious new foreign investment.”
Experts agree that it would be unfeasible to return houses that were given to tenants or divided into multi-family apartments. Nobody advocates mass evictions. But many stately mansions are being used by international diplomats or government ministries.
A house that the Gutiérrez family owned in the Vedado neighborhood of Havana is occupied by Lloyd’s of London. Neighbors on a Havana street where the family had another home said “abandoned” properties should not be returned.
“If they left the country,” said a neighbor, Jorge González Amores, “it means they weren’t interested in the property.”
Experts have proposed several solutions, including creating public-private funds to rebuild Cuba’s electrical grid and using part of the profits to compensate former owners, said Jason Poblete, a lawyer who represents American and Cuban property owners.
Examples include Vietnam and Germany, which in the 1990s used assets frozen in the United States to pay claims. In the Soviet Union and China, owners received only a fraction of the value of confiscated goods.
In other countries, compensation funds were generated by the privatization of state-owned companies.
But Cuba also claims to have claims against the United States.
In 1999, a Cuban court found the American government responsible for deaths and damages caused by its “aggressive policies” against Cuba, including the Bay of Pigs invasion and trade embargo. The estimated value at the time: US$ 181 billion.
Carlos Fernández de Cossio, Cuba’s vice minister of foreign affairs, stated in a recent interview with Drop Site News that, in the 1960s, Cuba had proposed a “holistic agreement” on the properties of Americans and US companies, with a single payment, but that the United States refused.
According to him, a collective payment would be the only solution. In this scenario, the Cuban government would pay the American government, which would then distribute the amounts to those affected.
Richard Feinberg, a researcher at Florida International University who has studied these claims, said resolving the issue is important to normalizing diplomatic relations and establishing a trustworthy business environment in Cuba.
The issue was discussed in two meetings between Cuba and the Barack Obama government, but without a solution. Feinberg spoke to Cuban officials as part of his research and said they didn’t seem interested.
“The Cuban government didn’t seem to understand,” he said. “They asked me: Richard, why are you giving so much importance to something that happened 50, 60 years ago?”
“This shows how little the Cuban government understood about economics and capitalism,” he added. “They didn’t understand private property.”
Enrique Carrillo, whose family owned the Santa Cruz rum distillery east of Havana, said he was eager for Cuban families to be compensated so they could help rebuild the country.
“We have been waiting a long time for this moment, for an alignment of circumstances,” Carrillo said. “My father worked hard for many years to build the company, and I don’t intend to just accept that. My family doesn’t intend to give up their own history.”
