Statement of Administration Policy: H.R. 927 - Cuban Liberty and Democratic Solidarity Act

(Senate)
(Burton (R) IN and 43 cosponsors)

The Administration supports the central objective of H.R. 927, i.e., to promote a peaceful transition to democracy in Cuba. However, H.R. 927 contains a number of seriously objectionable provisions that would not advance U.S. interests in Cuba and would damage other U.S. interests. Therefore, the President's senior advisers would recommend that H.R. 927 be vetoed unless the following provisions are deleted or amended:

— The bill would encroach upon the President's exclusive authority under the Constitution to conduct foreign affairs, or otherwise unduly limit the President's flexibility, by purporting to require the President or the Executive branch to pursue certain courses of action regarding Cuba. Mandatory provisions should be replaced with precatory language in the following sections: 102(b); 110(b); 112; 201; 202(e); 203(c)(1); and 203(c)(3)

— The effectiveness of civil penalties as a tool for improving embargo enforcement is greatly limited by the exemption in section 102(d) for activities related to research, education and certain other purposes, and the burdensome requirement for an agency hearing for civil penalties in other cases. Section 102(d) should be amended to address this shortcoming.

— Section 103 should.be amended to make the prohibition of certain financing transactions subject to the discretion of the President.

— Section 104(b), which would require withholding U.S. payments to International Financial Institutions, could place the U.S. in violation of international commitments and undermine their effective functioning. This section should be deleted.

— Sections 106 and 110(b), which would deny foreign assistance to countries, if they, or in the case of section 110(b), private entities in these countries, provide certain support to Cuba, should be deleted.

— Section 106 would undermine important U.S. support for reform in Russia. Section 110(b) is cast so broadly as to have a profoundly adverse affect on a wide range of U.S. Government activities.

— Section 202(b)(2)(iii), which would bar transactions related to family travel and remittances from relatives of Cubans in the United States until a transition government is in power, is too inflexible and should be deleted.

— Sections 205 and 206 would establish overly-rigid requirements for transition and democratic governments in Cuba that could leave the United States on the sidelines, unable to support clearly positive developments in Cuba when such support might be essential. The criteria should be "factors to be considered" rather than requirements.

— By failing to provide stand-alone authority for assistance to a transition or democratic government in Cuba, Title II signals a lack of U.S. resolve to support a transition to democracy in Cuba.

— Title III, which would create a private cause of action for U.S. nationals to sue foreigners who invest in property located entirely outside the United States, should be deleted. Applying U.S. law extra-territorially in this fashion would create friction with our allies, would be difficult to defend under international law, and would create a precedent that would increase litigation risks for U.S. companies abroad. It would also diminish the prospects of settlement of the claims of the nearly 6,000 U.S. nationals whose claims have been certified by the Foreign Claims Settlement Commission. Because U.S. as well as foreign persons may be sued under section 302, this provision could create a major legal barrier to the participation of U.S. businesses in the rebuilding of Cuba once a transition begins.

— Title IV, which would require the Federal Government to exclude from the United States any person who has confiscated, or "traffics" in, property to which a U.S. citizen has a claim, should be deleted. It would apply not only to Cuba, but world-wide, and would apply to foreign nationals who are not themselves responsible for any illegal expropriation of property, and thus would create friction with our allies. It would require the State Department to make difficult and burdensome determinations about property claims and investment in property abroad which are outside the Department's traditional area of expertise.

Pay-As-You-Go Scoring

H.R. 927 would affect receipts; therefore, it is subject to the pay-as-you-go. requirement of the Omnibus Budget Reconciliation Act (OBRA) of 1990. In view of the unpredictability of the number of lawsuits that may be brought under Title III, OMB has not yet been able to estimate the paygo effect of receipts from filing fees for such lawsuits. (However, discretionary costs to the Government from lawsuits could be significant and could place a heavy burden on the court system.)