In the stocks

Facing a deadline Tuesday, Clinton had to decide whether to waive a provision in a law that would allow Americans who lost property in Cuba during the revolution to file suit in U.S. courts against foreign firms now trafficking in those assets.

The provision, Title III of the controversial Cuban Liberty and Democratic Solidarity (Libertad) Act (better known by the names of its Republican sponsors, Sen. Jesse Helms of North Carolina and Rep. Dan Burton of Indiana), had been bitterly criticized by U.S. trading partners, including Canada and several European countries, who are worried their firms would become targets of such lawsuits. Many of these countries, arguing that the United States is violating international law by extending its trade policies beyond American shores, threatened reprisals against U.S. firms and their executives if Clinton allowed the law to go into effect.

But Clinton also faced domestic political pressure from the pro-provision Cuban-American community, which could swing electoral results in the key states of Florida and New Jersey.

Clinton's response was a careful compromise. While he opened the way for legal action, he also decided that no lawsuits can be filed before Feb. 1, utilizing a clause in the law that allows him to review his decision every six months. At that time, President Clinton has the option to render meaningless his decision to allow legal action against foreign firms doing business with Cuba.

The compromise was worked out over the weekend at Camp David, where President Clinton, Commerce and State Department officials and the president's top political adviser, Richard Morris, discussed the commercial, legal, diplomatic and political implications of allowing Title III to go into effect.

The roiling dispute underscored the difference between U.S. policy toward Cuba, which Washington has boycotted for 35 years, and the policies of other governments, who have chosen to engage Castro's regime as a way to encourage change. The United States follows a similar policy of "constructive engagement" with the Communist regimes in China and Vietnam.

Administration officials say that over the next six months, Clinton will try to coordinate Cuba policy with U.S. allies so that it will no longer be necessary to invoke Title III. At the same time, they add, the fact that the provision is now hanging over the heads of investors in Cuba will make them think twice about remaining in Cuba or initiating new investments.

One trade official characterized Clinton's decision as an attempt to give all parties to the controversy something to tide them over until the issue of Cuba policy can be finally resolved with America's trading partners. "He can say to the Cubans that they still have the right to file suit and the firms are still being pressured," the official said. "He can say to the Europeans that their companies are not being sued because of the delay, so let's talk about reaching a common policy on Cuba. As far as Congress is concerned, I don't think he sees any benefit coming out of this, but at least now he has some arguments to counter their criticism."

Predictably, initial reaction to Clinton's compromise decision has been mixed, with Republicans blasting the president for what one called "his attempt to have it both ways" and business leaders and trading partners cautiously praising Clinton's formula.
"He didn't exactly waive the law, but he also delayed the date that law suits can be filed. So we think this is definitely a good first step," said Christopher Mustain of the European-American Chamber of Commerce, which had warned the administration about the retaliatory measures facing U.S. businesses abroad if Title III were allowed to go into effect immediately.

"We think it allows more time to consult with our allies about a common Cuba strategy and to check out the legality of this law, both under the constitution and under international law," Mustain said, adding that the legislation had been rammed through the Senate and House without ever having been reviewed by the Judiciary committees of both chambers.

Mustain said he had received favorable reactions to Clinton's decision from several trading partners, including Canada and Spain.

But business people and trade officials note that under U.S. law, foreign companies doing business with formerly American-owned firms in Cuba are still accruing liability as of Nov. 1, the date when law suits could have been filed had President Clinton not postponed the filing date. "So firms still face the threat of lawsuits, and they are continually going to have to wait on this six-month cycle for extensions of the waiver," Mustain said, noting the only way companies can get out of that situation is to disinvest before Nov. 1.

Marc Thiessen, spokesman for the Senate Foreign Relations Committee, which is chaired by Helms, said that continuing the threat was the only good thing to come out of Clinton's decision.

"Just the threat of these lawsuits will have an enormous effect in deterring business investment in Cuba," he said. "Businesses make their investment decision not on six-month projections, but on projections of years and decades. Businesses already have been fleeing Cuba because of this threat, and that threat is going to continue hanging over their necks, whether Clinton had the courage to implement the law or not."

Thiessen sarcastically described Clinton's compromise as "another example of the president taking a firm stand on both sides of an issue. The president wants to have it both ways, but the fact of the matter is he had a choice today that was very clear: He could either let people file law suits against people who are trafficking in their stolen property or not let them. And he chose not to let them sue. So he capitulated to Castro and his business collaborators."

A legal expert on trade with Cuba, who spoke on condition of anonymity, said the law, even if its implementation is postponed repeatedly, promises to complicate any future discussions between the United States and its trading partners about a common Cuba policy.