Economic Sanctions and Private Property Rights

Fifty-six years ago, President John F. Kennedy sent a reasonable message to the international community that governments choosing to expropriate the properties of U. S. citizens need to compensate them for their losses. Governments that choose to simply steal the properties of U. S. citizens should expect some form of retaliation from the U.S. government. That message remains valid today as an expression of a government’s duty to protect the private property rights of its citizenry in foreign countries where the rule of law does not prevail.

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By José Azel l July 20, 2017


Monument to communist theorists Karl Mark and Friedrich Engels in Berlin

Libertarians would all agree that the fundamental reason for the existence of governments it is to protect our life, liberty, and property. These are the principles articulated by John Locke (1632-1704). Locke, who deeply influenced our own Declaration of Independence, is regarded as the principal architect of liberal thought in the historical European use of the term.

Within a democratic realm, citizens are expected to rely on domestic institutions for the protection of these rights. For instance, an independent judiciary is essential for the resolution of property claims and other matters. But what is a citizen to do when his property rights are violated by a foreign totalitarian regime where no recourse to the rule of law is available?

It would seem that when a U.S. citizen’s property is expropriated by a foreign government the property rights principle, so dear to libertarians, would take center stage. And yet, libertarian think- tanks such as the Cato Institute and politicians such as U.S. Representative Rand Paul take a different view.

They argue that unilateral economic sanctions do not work, and that individuals should be free to invest as they choose and undertake the risk of their investments. Agreed, but that leaves open the question as to how a government should protect its citizens property rights when a foreign government capriciously and arbitrarily changes the rules of the game.

U.S. economic sanctions against Cuba are a case in point.

These sanctions were first authorized in 1961 when President John F. Kennedy issued an executive order in response to the Cuban government’s expropriation of pre-Castro-era assets without compensation of American properties – an issue that remains unresolved to this day.

It is valid to state that the sanctions have failed to change the course or nature of the Castro regime, but the failure argument is peculiarly offered in a form of isolated reverse logic. It is also necessary to point out that the alternative policy, pursed by the international community, of engaging with the Cuban government has also failed to change the nature of that totalitarian regime.

Currently, over 190 nations engage economically and politically with Cuba, while the United States remains alone in enforcing its economic sanctions policy. If U.S. policy is deemed as one case of failure to change the nature of the Cuban government, there are 190 cases of failure on the same grounds. By a preponderance of evidence (190 to 1), the case can be made that engagement with that regime has been a dismal failure.

Fifty-six years ago, President John F. Kennedy sent a reasonable message to the international community that governments choosing to expropriate the properties of U. S. citizens need to compensate them for their losses. Governments that choose to simply steal the properties of U. S. citizens should expect some form of retaliation from the U.S. government. That message remains valid today as an expression of a government’s duty to protect the private property rights of its citizenry in foreign countries where the rule of law does not prevail.

It is one thing to argue, as those of us that value personal freedoms do, that investors should be free to invest and accept all the risks of their decisions when the rules of the game are known in advance and where the rule of law prevails. It is a different situation when the rules are changed after the fact, as the Castro regime did, and where no legal recourse is available.

Investors in communist regimes cannot expect their government’s protection; they know in advance what they are getting into – investors beware. After all, Karl Marx makes it clear in chapter two of the Communist Manifesto that “…the theory of the Communists may be summed up in the single sentence: Abolition of private property.”

Independent of their usefulness, the utilization of economic sanctions as a foreign policy tool is neither new nor particularly American. Pericles’ decree banning the Megarians from the Athenian market and ports helped incite the Peloponnesian War in 431 B. C.

Unintended and undesirable consequences are inherent in the use of economic sanctions. Arguably they should not be used to compel a democratic transformation or even to advance human rights or other laudable goals. They seem, however, an appropriate, measured, and in-kind response to the economic aggression of another country such as expropriations without compensation. What are the policy alternatives to protect the property rights of a citizenry?


José Azel arrived in the U.S. in 1961 from communist Cuba as a 13-year-old political exile with Operation Pedro Pan, the largest unaccompanied child refugee movement in the history of the Western Hemisphere. He is currently a Senior Scholar at the Institute for Cuban and Cuban-American Studies (ICCAS) at the University of Miami. Dr. Azel earned a Masters Degree in Business Administration and a Ph.D. in International Affairs from the University of Miami, and is author of Mañana in Cuba: The Legacy of Castroism and Transitional Challenges for Cuba, and Reflections on Freedom. He is also a contributor to SFPPR News & Analysis of the online-conservative-journalism center at the Washington-based Selous Foundation for Public Policy Research.

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