The [London] Guardian May 8 1996

Diplomatic confrontation looms over Cuba law US. trade penalties outrage Europe

By John Palmer In Brussels, in The [London] Guardian, 8 May, 1996

THE European Union warned last night that it is heading for a serious diplomatic and trade confrontation with the United States over laws that would penalise European businesses trading with Cuba, Iran or Libya and bar their executives from entering the US.

EU governments, already outraged by the passing of US sanctions against Cuba which could lead to the blacklisting of thousands of European and other non-US businesses, fear that similar measures designed to hit trade with Iran and Libya could be adopted by Congress within days.

The British government has privately warned the Clinton administration that it may bar US citizens from entering Britain if British executives are prevented from travelling freely to the United States because of the anti-Cuban measures.

Congress has introduced the sanctions against Cuba after the shooting down of two aircraft piloted by Cuban exiles earlier this year. Havana said the planes were violating Cuban airspace.

The European Union last year began what it described as "a constructive engagement" with Cuba to encourage economic and political links but in a separate development yesterday the European Commission said that insufficient progress had been made on improving human rights in Cuba to start promised negotiations with Havana on a trade and co-operation agreement.

The European Union has also decided to continue its "critical dialogue" with Iran despite US declarations of disapproval. Libya, meanwhile, has been excluded from a new agreement linking the EU with Mediterranean coastal states.

United States officials flew to Brussels yesterday to brief European businesses on the practical impact of the Helms- Burton anti-Cuba legislation. They warned that senior executives and shareholders in companies trading with Cuba could be refused entry to the US and businesses accused of trading with Cuba also risked being refused the right to raise capital on American money markets.

"It is too early to say exactly how many people will be affected," one US official said, although he admitted: "It could be in the hundreds. it could be in the thousands."

Under the Helms-Burton law, any individual benefiting from investments in businesses or property confiscated by the Cuban government from American interests could be named as a "trafficker" and barred from entering the US. The officials said a special committee in Washington would identify traffickers.

European Commission officials reacted furiously yesterday to the threatened action. "This is a completely unjustified extra-territorial extension of US legislation," one said. The commission has already taken the issue to the World Trade Organisation in a step that could lead to full-scale legal action against the US.

The British government, which traditionally has sought to mediate in disputes between the US and the EU, is particularly indignant over Congress's action, Malcolm Rifkind, the Foreign Secretary, has issued a number of private and public warnings to Washington that the Helms- Burton law would create a dangerous precedent in international trade.

Although trade between the EU and Cuba is modest, European businesses are alarmed at the prospect of similar sanctions against non-US companies doing business with Iran and Libya.