The White House announced on Wednesday it would allow US citizens to sue foreign firms that do business deals involving property seized during the 1959 Cuban Revolution. The new rule, which will likely open EU businesses up to lawsuits from America, comes amid a backdrop of US-EU trade tensions and a hardening policy in Washington against the Caribbean state.
Radio Sputnik has discussed the new rule imposed by the US with regard to US-EU trade tensions and the Venezuelan situation with Nicola Borri, an economics and finance professor at Rome's LUISS Guido Carli University, Italy.
Sputnik: The EU has called the move an exterritorial use of sanctions which hits European businesses, and is going to fight the measures in court. How can Europe protect its businesses now and in future?
Nicola Borri: I think that the recent EU-Canada-US-Cuba dispute must be framed in the recent trade fight between Trump on one side, China on the other side and Europe that is stuck in the middle. So all what is happening now is to be evaluated in terms of this bigger picture. In my opinion, the US authorities are using the Cuba case to push further in the direction of their interest more globally.
More specifically, the EU is fighting this new law by the United States according to which former Cuban people who have emigrated from Cuba could bring to court companies that in the meantime invested in Cuba. And a lot of European Companies have done so.
Nicola Borri: Just to give you a number, the EU is currently Cuba's second most important trading partner accounting approximately for 20 percent of total Cuban trade. So definitely there is an important relation currently between Europe and Cuba and the interests at stake are very high.
Sputnik: The EU warned that enforcement of the law would lead to reprisals in Europe. What legal efforts can be taken? What are the ways to bypass the sanctions, if there are any?
Nicola Borri: It is difficult to bypass sanctions and we know that because very recently European banks have received large fines from the US authorities, etc. because they were bypassing sanctions. In particular, UniCredit, an Italian bank was recently sanctioned for bypassing sanctions with Iran. So I think that bypassing the sanctions is not the way to go. The EU and Canada will have to go through the legal path and it is not going to be easy.
Sputnik: The European Union and Canada say they are ready to defend their companies' interests in Cuba before the World Trade Organisation. What's your forecast for this dispute?
Nicola Borri: What can the EU do and as well as Canada? Surely, they can go to WTO. So that is I think the first step that they will take. However, I think that it will be difficult for the EU and Canada to completely solve this issue within the WTO because the opponent is not a small country, but is the United States. And we noted in WTO [that] large countries have a larger voice. For this reason, I think that all these are pieces of a larger bargain that is at the table. And in a sense, I think that only when the biggest trade dispute will be solved that also this smaller dispute will be solved as well.
Nicola Borri: This also makes us think about the recent dispute about Iran. So that is a deal that has hit particularly Italy which has invested quite a bit in Iran both in the energy sector, in the railway sector, and in the construction sector. So all these disputes are having a negative economic impact on European countries and that's why Europe is trying to push hard against this.
Sputnik: Europe has backed the United States in putting pressure on Venezuela's Maduro, but opening a trade dispute and hitting Cuba's economy could lead to losing support from key allies. What can be the long-term effect of the US measure?
Nicola Borri: In terms of the last question. So, the Venezuela question, of course, it is very complicated and I think that Cuba is not going to have a large impact on the Venezuela situation. The Venezuela situation I think is more complicated. And I think that it will require a lot of attention from international authorities because there is currently a crisis because the population doesn't have food and supplies.
There is conflict within Venezuela between two supposed leaders. And we know that Venezuela is a country with one of the largest proven reserves of oil. So I think that the outcome of the Venezuela situation will depend on what the United States together with Europe will think is the best. But I don't see that immediately relating to the Cuba situation.
The views and opinions expressed by thespeaker do not necessarily reflect those of Sputnik.