Hotel caught in embargo trap

Posted on Thu, Feb. 09, 2006

MEXICO
Hotel caught in embargo trap

A U.S.-owned hotel faces sanctions from the Mexican government for
kicking out Cuban officials to follow U.S. embargo laws.
By JULIE WATSON
Associated Press

MEXICO CITY - Mexico's vow to prosecute an American-owned hotel for
following the U.S. embargo of Cuba puts American businesses in a
dilemma: Whose laws do they obey -- those of their homeland or those of
their host? No matter what they do, they could face prosecution.

Mexico issued a complaint Tuesday against Hotel María Isabel Sheraton in
Mexico City that -- at the request of the U.S. government -- expelled a
group of Cuban officials meeting with U.S. energy executives.

The expulsion outraged Mexicans, who take pride in rejecting the U.S.
embargo of Cuba, and alarmed American businesses.

''This is kind of one of the rare moments that really brings out the
ugliness of the Helms-Burton law that puts American business in a tight
position,'' said Al Zapanta, president of the 2,000-member U.S.-Mexico
Chamber of Commerce, referring to the 1996 U.S. law that strengthened
sanctions imposed against Fidel Castro's government in 1961.

''You have to go into the international marketplace and you have to
operate within the laws of the host country,'' he said Wednesday.

TRADE LAWS

Brookly McLaughlin, a spokesman for the U.S. Treasury Department's
Office of Foreign Assets Control, said the department asked Starwood
Hotels & Resorts Worldwide Inc., which owns the hotel in Mexico City, to
expel the Cuban delegation in compliance with the Trading with the Enemy
Act, established in 1917.

The meeting was moved to a Mexican-owned hotel Saturday.

U.S. officials say the act bans American businesses and their
subsidiaries from doing business with Cubans outside the United States.

Mexican officials, however, said the hotel violated investment and
trade-protection laws when its manager told the Cubans to leave.

The United States approved the Helms-Burton Act in 1996, threatening
sanctions against foreign investment involving Cuban properties
confiscated from Americans.

In response, Mexico, Canada and other countries produced ''antidote
laws'' meant to outlaw compliance with the U.S. measures, which they
said trampled upon their sovereignty.

While other American companies in Mexico quietly avoid dealings with
Cuba, few if any have been prosecuted under the ``antidote law.''

Larry Rubin, chief executive officer of the American Chamber of Commerce
in Mexico, said the hotel should have consulted Mexican authorities
before booting the Cubans.

''Corporations have to find a balance,'' said Rubin, whose 2,000 members
represent 93 percent of U.S. investment in Mexico. ``If it goes against
Mexican law, then we cannot apply it, because first we have to abide by
Mexican law. . . . I mean you don't see American corporations down here
breaking contracts and solving the matter in the U.S. court system. It
just doesn't operate that way.''

STUCK IN THE MIDDLE

In a statement, the hotel -- part of the chain of Starwood Hotels and
Resorts Worldwide, Inc. -- said it ``deeply regrets this incident and
any inconvenience it may have caused.''

It said Starwood's policy ``is not to discriminate against any person
because of their nationality or any other reason, and to always respect
the laws of countries where its hotels are located.''

Mexican authorities are threatening to slap the hotel with a nearly half
million-dollar fine and possibly shut it down.

But Zapanta said the U.S. legislation is hurting U.S. companies.

''This is a good example of how the U.S. Congress is somewhat myopic,''
he said, but added that the controversy ``will force the issue to be
dealt with.''

At least one Mexican businessmen already was caught in a similar squeeze.

The U.S. government told Javier Garza Calderón, president of the Mexican
company Grupo Domos, to drop his investment in Cuba's telephone company
or his family would lose its U.S. visas. Garza Calderón's children were
in U.S. schools at the time.

Mexican officials, however, warned Garza Calderón that if he complied,
he would face fines of up to $300,000.

The U.S. government later barred Grupo Domos' officers from entering the
United States.

http://www.miami.com/mld/miamiherald/news/world/americas/13826646.htm