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WASHINGTON -- The economic sanctions adopted under the 1996 Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton law, remain an essential element of U.S. policy towards Cuba, according to State Department Coordinator for Cuban Affairs Michael Ranneberger.

The three other key elements are: developing a multilateral effort to promote democracy in Cuba; supporting the Cuban people and their efforts to gain democratic freedoms; and maintaining procedures for safe, orderly and legal migration by Cubans.

Ranneberger's outline came in testimony submitted March 12 to a panel of the House of Representatives' International Relations Committee, which is evaluating the implementation and impact of Helms-Burton two years after its passage into law.

According to the State Department official, the law's increased penalties for those who seek to break the U.S. embargo against Cuba "helps send the message that violations ... will not be tolerated."

Title IV of Helms-Burton -- which denies U.S. visas to persons "trafficking" in property confiscated from U.S. nationals in Cuba -- has had a "significant impact" on investments in Cuba, he said. Since implementation, 19 firms have changed or canceled their investment plans in Cuba, and U.S. officials are currently investigating the activities of an additional 12 companies, Ranneberger said.

Thus far, Title IV determinations have affected executives from three companies -- Sherritt International, Grupo Domos of Mexico, and the Israeli-owned/Panama-based BM Group. Ranneberger noted, however, that Grupo Domos executives are again eligible to enter the United States after having presented evidence that their company is no longer involved with U.S.-claimed property in Cuba.

He also noted that if the United States and the European Union reach agreement on investment disciplines on confiscated property, President Clinton will ask Congress for authority to suspend Title IV. The disciplines under discussion would increase protections for U.S. investors around the world and would "have a more far-reaching impact than the Title IV provisions for case-by-case actions," Ranneberger said.

Regarding another controversial aspect of Helms-Burton, he said that Clinton had "changed the terms of the debate about Cuba" by periodically waiving Title III of the law, which allows U.S. citizens to sue foreigners who traffic in their confiscated property. Through those waivers, Ranneberger said, the administration has been able to encourage European and Latin American allies to step up their efforts to promote democracy in Cuba.

He stressed that Clinton "expects to continue" the 6-month waivers as long as U.S. allies keep exerting pressure on behalf of Cuban democracy.

On this and other points, some House members expressed concern that the Clinton administration is being insufficiently aggressive in its implementation of the law.

Democrat Robert Menendez of New Jersey said he feared that Title III waivers were in danger of becoming "automatic" and that European support for Cuban democracy was a "facade that does nothing to help ordinary Cubans."

Two Republicans, Lincoln Diaz-Balart of Florida and Dan Burton of Indiana, stated emphatically that Congress would refuse any request to suspend Title IV or to otherwise soften the law. "Our resolve is not going to change as long as this Congress is constituted the way it is," said Burton, who was an original co-sponsor of the legislation.

In his testimony, Ranneberger also noted that Helms-Burton and the 1992 Cuban Democracy Act both encourage humanitarian and pro-democracy assistance to Cuba. Since 1992, the United States has issued 50 licenses for exports of medicine and medical equipment to Cuba, and approved more than $2,000 million in humanitarian donations to the island, he reported.

The United States has also approved $1.5 million for non-governmental projects that support peaceful independent groups in Cuba and projects worth another $1 million "are near final approval," he said.

Following is the text of Ranneberger's testimony as submitted to the House Subcommittee on International Economic Policy and Trade:

(Note: In the text "billion" means 1,000 million)

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Statement of Michael Ranneberger
Coordinator for Cuban Affairs, Department of State
To the House International Relations Committee
Subcommittee on International Economic Policy and Trade

March 12, 1998

Introduction

Madame Chair, Members of Congress. Good afternoon and thank you for the opportunity to speak to you today on the subject of the Cuban Liberty and Democratic Solidarity Act -- the Libertad Act -- on the second anniversary of its enactment. I would like to make brief remarks and submit this more comprehensive statement for the record. Of course, I look forward to your questions.

Let me begin by recalling that we recently commemorated the very sad day two years ago when Cuban MiG's ruthlessly shot down in international air space two civilian airplanes, killing three U.S. citizens and a U.S. permanent resident. This cruel, cowardly act outraged the Administration, Congress, and the American people, and led to the swift passage of the Libertad Act as an appropriate response.

Papal Visit and Human Rights

But we also mark the second anniversary of the Libertad Act on a more hopeful note. During his historic visit, Pope John Paul II brought a message of truth, hope and support for the Cuban people. The Pope's moral and spiritual leadership, his achievements on behalf of freedom, and his expressions of solidarity with people of every faith who suffer because of oppression, poverty, and war were for the people of Cuba the first real sign in decades that there is reason to hope for a better, brighter future.

The Pope's presence in Cuba was electrifying. I attended the Mass in Revolution Square and was deeply moved by the sight of at least half a million Cubans listening to, welcoming, and cheering the Pope's forceful, direct call for freedom and human rights. During those moments the people of Cuba held the attention of all of us who care about their struggle for freedom and justice. We must continue to support them in their aspirations.

U.S. Cuba Policy

Before I turn to our enforcement of the Libertad Act, let me place the Act in the context of our Cuba policy. Our goal is to promote a peaceful transition to democracy and respect for human rights. We do this through four essential elements: pressure on the Cuban government through the embargo and the Libertad Act; development of a multilateral effort to promote democracy; support for the Cuban people consistent with the 1992 Cuban Democracy Act (CDA) and the Libertad Act; and measures to keep migration in safe, legal, and orderly channels. We also seek, through the Libertad Act, to protect the legitimate interests of U.S. citizens whose property has been expropriated in Cuba.

The Administration has thoroughly and diligently implemented the Libertad Act, but has had to do so in the face of strong international opposition. In the time available today, I cannot address all our efforts, but would like to highlight some key aspects.

Title I

The Administration continues to believe that maintaining pressure on the Cuban government for fundamental change through economic sanctions is essential. The increased penalties and clarifications in Title I of the Libertad Act help send the message that violations of the embargo will not be tolerated. The State Department strongly supports the embargo enforcement efforts of the Treasury Department's Office of Foreign Assets Control (OFAC), the Department of Commerce, and the U.S. Customs Service.

Equally important, we work closely with OFAC and the Department of Commerce on license requests for humanitarian assistance encouraged by the Libertad Act and the Cuban Democracy Act. I am pleased to announce today that, since the passage of the Cuban Democracy Act (CDA) in 1992, OFAC and the Department of Commerce have issued 50 licenses for exports of medicines and medical equipment from U.S. companies or US-owned subsidiaries, subject to appropriate end-use monitoring. These licenses include 12 authorizations for travel to Cuba by representatives of American pharmaceutical companies to explore possible sales. Since the passage of the CDA in 1992 over $2 billion in humanitarian donations has been licensed, including nearly $275 million for medicines and medical equipment.

Fostering the development of independent civil society in Cuba through support for the Cuban people is a key element of our policy that has been bolstered by the Libertad Act. Section 109 of the Act calls for programs to support the Cuban people. With valuable input from many agencies and the Congress, USAID has approved six projects worth $1.5 million by US non-governmental groups in programs to support peaceful, independent groups in Cuba. Five additional projects totaling nearly $1 million are near final approval. A number of other proposals are under consideration.

These projects are wide-ranging, promoting the free flow of information to, from, and within Cuba. Among other activities, they will enable independent community grassroots organizers, professional organizations, and the private agricultural sector to meet their counterparts in Latin America, the Caribbean and the U.S.; facilitate contact between Cuban environmentalists and environmental NGO's in other countries; and promote best business practices for foreign investors not involved in confiscated property to follow inside Cuba in order to promote workers' rights.

Support for broadcasting to Cuba is an important element in to the Administration's efforts to promote the development of civil society in Cuba. The free flow of information is vital to encourage a transition to a free and democratic society. Cuba's continued jamming of TV Marti led to legislation requesting conversion of TV Marti from VHF to UHF. Equipment has been installed and testing has begun. There have been delays in the testing of signal strength because of bad weather and the precarious condition of the Aerostat balloon. We will keep the Congress informed.

We have enforced the Act's telecommunications provisions, maintaining the improved information flows allowed under the Cuban Democracy Act while prohibiting any involvement by U.S. firms in developing Cuba's internal telephone system.

The Administration continues to closely monitor economic and commercial ties between Cuba and Russia and the newly independent states. One of the most important aspects of this is monitoring activities related to the Juragua nuclear power plant. The U.S. is opposed to completion of the plant and has effectively discouraged foreign funding for that effort.

The Administration has submitted in a timely manner all required reports. In June 1996, January 1997, and January 1998, the Administration submitted the Section 108 report on assistance, trade, joint ventures, and economic activity between Cuba and other nations. The required information continues to be available only from sources that we are bound to protect, so we have provided classified reports to Congress.

Title II

In January 1997 the President submitted to Congress and released publicly a major report entitled "Support for a Democratic Transition in Cuba," as mandated by Title II. To develop the plan, an inter-agency team drew on lessons learned from assistance programs to Latin American countries and the former Communist countries of Eastern Europe.

The transition plan describes the many issues that will confront a democratic transition government in Cuba, and how the United States and other nations will be able to assist. The report indicates that a democratic transition government can expect to receive between $4-6 billion in international assistance. The report is an incentive to all those in Cuba who favor a democratic transition.

We have translated the report into Spanish, and over 10,000 copies have been distributed in Cuba. Radio Marti has described the plan to the Cuban people. The extent to which the Cuban government fears the impact of this message was evident from the vitriolic propaganda offensive the Cuban government launched against it. Castro required military officers to sign loyalty oaths specifically denouncing the transition report.

Title III

The President allowed Title III to enter into force on August 1, 1996. At the same time, because of the intense interest in the Act among our allies, he saw an opportunity to increase international pressure for change through a US-led multilateral initiative to promote democracy in Cuba. In order to achieve this, the President in July 1996 suspended the right to file suit under Title III for six months, while calling on our friends and allies to step up efforts to promote a transition to democracy in Cuba. This initiative has changed the terms of the debate about Cuba.

In August 1996, the President appointed then Commerce Under Secretary Stuart Eizenstat to what many viewed as the Herculean task of developing support among our European and Latin American allies for a U.S.-led multilateral effort to support a transition to democracy and respect for human rights in Cuba. Under Secretary Eizenstat's determination, integrity, and clarity of purpose -- exhibited in a grueling series of diplomatic missions -- have resulted in more international pressure on Castro to change than ever before. He has traveled over 50,000 miles to more than 20 countries to advance this multilateral approach. The Secretary of State has strongly supported this effort.

When the President announced his most recent decision on January 16, 1998 to again suspend Title III, he said: "This decision is consistent with my strong commitment to implement the Cuban Liberty and Democratic Solidarity Act (Libertad Act) in a way that best advances U.S. national interest and hastens a peaceful transition to democracy. I have taken this action to continue the effort we began in July 1996 to strengthen international cooperation in the effort to promote democracy in Cuba."

Key achievements in this multilateral initiative include, among others:

-- The European Union has renewed its historic Common Position, linking improved relations with Cuba to fundamental democratic changes.

-- The EU nations recently created a Human Rights Working Group among their embassies in Havana to increase contact with dissidents, human rights groups, and independent elements of civil society.

-- EU member states have pressed the Cuban government to release imprisoned dissidents and to stop the harassment of those who seek peaceful democratic change. Last month, the EU strongly urged the unconditional release of political prisoners and, echoing the Pope's message, emphasized that they should be permitted to reintegrate into Cuban society.

-- Last summer, Under Secretary Eizenstat visited four Central American countries to energize their efforts to promote change in Cuba, with positive results.

-- At the United Nations General Assembly in December 1997, more countries than ever before co-sponsored the U.S. resolution on the human rights situation in Cuba.

-- In April 1997, the ruling Dutch political parties held a conference on human rights and a peaceful democratic transition in Cuba, organized by the Liberal Party International. This conference called for release of Cuba's political prisoners and "a peaceful transition to a democratic society ruled by respect for rule of law."

-- Nongovernmental organizations (NGOs) are increasing their support for peaceful, democratic change on the island. Pax Christi, the Dutch human rights organization, is leading a coalition of European NGO's to focus on the deplorable human rights situation in Cuba, and has held two major conferences.

-- In August 1997, Amnesty International issued a special 38 page report entitled "Cuba: Renewed Crackdown on Peaceful Government Critics," which documented the Cuban government's campaign against those who work for human rights and democracy.

-- In August 1997, the American Bar Association awarded its annual "International Human Rights Award" to Dr. Rene Gomez Manzano and Dr. Leonel Morejon Almagro, two members of the Dissident Working Group in Cuba who were unable to receive the award because they had been arrested by the Cuban government.

-- There has been substantial activity within the foreign private sector to promote the development of best business practices for companies doing business in Cuba (but NOT on confiscated property).

-- The Transatlantic Business Dialogue, composed of chief executive officers of leading European and U.S. corporations, called for businesses operating internationally to observe "best business practices" and to support human rights in international operations. At their meetings, Under Secretary Eizenstat called specifically for businesses operating in Cuba to observe best business practices.

-- The largest Dutch Business group -- VNO/NCW, representing some 85,000 businesses, 80 percent of the Dutch private sector -- publicly endorsed the TABD's statement on business principles. The Confederation of British Industries also approved a strong statement on best business practices.

-- On January 7, 1998 in Washington, D.C., Under Secretary Eizenstat gave the keynote address to a major conference on best business practices in Cuba sponsored by the North American Committee of the National Policy Association. This committee is comprised of over 100 business, labor, and academic leaders from the United States, Canada, and Mexico. The International Federation of Free Trade Unions (IFCTU), an important labor organization, has also endorsed best business practices for Cuba.

The U.S.-led multilateral approach to promote a democratic transition in Cuba must be intensified and expanded by encouraging countries to take additional specific, concrete steps. The President has said that he expects to continue to suspend the right to file suit provisions of Title III so long as our friends and allies continue their stepped-up efforts to promote a democratic transition in Cuba. As a result of these efforts -- the rhetoric of the Cuban regime notwithstanding -- Cuba is hearing a concerted message on the need for fundamental, systemic change.

Title IV

Through a special unit established in the Office of Cuban Affairs, the Department continues to implement Title IV of the Libertad Act based on facts and the terms of the law.

-- Determinations have been made involving three companies: Sherritt International, Grupo Domos of Mexico, and BM Group, an Israeli-owned firm registered in Panama, and over 15 executives and their family members have been excluded from entry into the U.S. Because Grupo Domos has presented evidence that it is no longer involved with U.S.-claimed property in Cuba, the company's executives are once again eligible to enter the U.S.

-- Implementation efforts have had a significant negative impact on the Cuban economy. Since enactment of the Act, nineteen firms from over six countries have changed their plans for investment in Cuba or have pulled out of investments there. There are many indications that the investment environment in Cuba is unstable and risky. Interest rates for projects in Cuba have been driven to as high as 22 percent. The Cuban government is finding it more difficult to obtain financing, and potential investors face the same problem.

-- As part of our investigative effort, we have contacted an additional twelve companies from seven countries about their activities in Cuba. Companies may provide additional information to demonstrate that their activities are not covered under the Act, or they can explain their plans to discontinue activity in Cuba in order to avoid Title IV action. Among companies contacted for additional information, as the press has reported, have been three firms involved with petroleum exploration. As a result, one has already ceased its operations in Cuba.

I want to review our procedures for implementing Title IV. Implementation guidelines were published following enactment of the law.

-- First, we gather information about a firm's business activities in Cuba, including any information about the location of those activities. We seek information (including contacting both certified and uncertified claimants) about the location of any property subject to claims owned by U.S. nationals in the area of the firm's operations.

-- Second, if it appears the firm may be involved with confiscated U.S. property, we will contact the firm and offer it an opportunity to provide us with any information or explanation it believes to be relevant.

-- Third, if it still appears the entity is involved with confiscated U.S. property, the Department would send an advisory letter, notifying the company its activities are under review and inviting it to provide any information it believes to be relevant. The advisory letter is another step in the investigative process. It does not mean that a final determination of trafficking will follow in every case.

-- Fourth, if the matter is not resolved after the advisory letter, then the Department would proceed to review carefully all the facts and circumstances available (including whether any new act of trafficking has occurred since March 12, 1996). If warranted by the facts, the Department would then move to the next phase -- the making of a determination under Title IV. At that point, the Department would notify the company in writing that a determination has been made, and in another 45 days action will be taken to cancel visas and deny entry into the United States.

We have publicized our efforts with U.S. claimants, including in the Cuban-American community, through radio, newspapers, U.S. mail, and the internet, and have vigorously sought information about foreign business involvement in U.S. claimed properties in Cuba. However, in the past two years (since March 1996), we have received only one inquiry from a certified claimant. We have received more than 150 inquiries from potential non-certified claimants, but, when asked, only two provided adequate documentation to support their claims, and these involved the same case of possible trafficking.

Since claimants themselves have not approached us with sufficient facts to make determinations, we have developed a comprehensive strategy to obtain more information. We are systematically contacting claimants, beginning with letters to the largest 129 claimants with claims worth over $1 million of the 5,911 claimants certified by the U.S. Foreign Claims Settlement Commission (FCSC) over 25 years ago. Our letter to them describes the provisions of the Act, asks for information about the location of their confiscated property, and about possible foreign activity involving their property.

In addition to seeking information from claimants about their claims, we are making maximum use of the limited amount of information available from all sources on foreign investment in Cuba. The Cuban government claims there are over 300 joint ventures with foreign firms, without regard to whether they are involved with U.S.-claimed property. We believe this number is inflated, but we are developing a database to track activities of joint ventures and gather information on the location of property subject to certified claims. Gathering reliable information is a difficult and time-consuming process.

The US-EU Understanding

Enforcement of Title IV has been carried out at a substantial price with our friends and allies. As you know, the European Union challenged the Libertad Act in 1996 in the World Trade Organization (WTO). The U.S. made clear its view that the WTO was not the appropriate forum to resolve what was essentially a foreign policy dispute.

In April last year, Under Secretary Eizenstat succeeded in negotiating an "Understanding" with the EU under which, among its other provisions, the EU suspended its WTO case, reconfirmed its commitment to stepped up efforts to promote democracy in Cuba, and entered into negotiations with us to develop disciplines to inhibit and deter investment in confiscated property. We also agreed to develop principles on conflicting jurisdictions.

Significant progress has been made in these negotiations. Agreement on investment disciplines would substantially increase protections for U.S. investors throughout the world and respond to the problem of Cuba's illegal expropriations. Adherence to effective disciplines would have a more far-reaching impact than the Title IV provisions for case-by-case actions, and would directly benefit U.S. claimants with expropriated property in Cuba.

Once these negotiations are concluded, the Administration would seek from Congress Presidential authority to suspend Title IV. Under Secretary Eizenstat and Assistant Secretary Larson are consulting closely with Congress regarding these discussions.

What's Next?

What does the future hold for Cuba policy and the Libertad Act? We are closer today than ever before to a democratic transition in Cuba because the Castro regime is weaker, more isolated due to our multilateral effort, and under more pressure. As a government and a people, we are closer to the Cuban people. The Libertad Act has played an important role in this and will continue to do so.

Our talks with the EU are in a crucial phase. Agreement on effective investment disciplines would substantially strengthen the multilateral effort to promote democracy in Cuba, and will further chill the investment climate there. In the meantime, we will continue to enforce Title IV.

We must intensively pursue our multilateral efforts to bring about change in Cuba. Equally important, we will work to support those brave dissidents and human rights activists who risk their lives for freedom in Cuba. We must find additional ways to encourage non-governmental groups here and abroad to support peaceful efforts in Cuba to develop independent civil society. We hope that the Pope's visit will prove to be an accelerator of change in Cuba, and that the opening for religious freedom will be consolidated and expanded.

One measure of our effectiveness has been the Cuban government's hysterical reaction to the Libertad Act. It has heaped invective on our Title II transition plan out of fear that ordinary Cubans would read it. The Cuban government has worked hard against the multilateral initiative and has strongly criticized our talks with the EU. And it has admitted that the Libertad Act has had a negative impact on the willingness of foreign businesses to invest in Cuba.

While we can be pleased that our Cuba policy and the Act are having an impact, we must remember the continuing reality faced by millions of Cubans who must live under the Castro regime. As we implement the Act and our Cuba policy, we must find ways to increase support for the Cuban people while maintaining pressure on the Cuban government for fundamental, systemic change. We should strive to do that on the bipartisan basis that has characterized our Cuba policy for decades. In that way, we will maintain international leadership on this issue. And we will send a strong, effective message to the Cuban government, the Cuban people, and the world. Thank you.

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