Earlier this month, the Scandic Edderkoppen Hotel in Oslo, Norway, canceled reservations that had been made by a Cuban delegation to an Oslo travel fair. The hotel, a subsidiary of Hilton Hotel Corp., said that it was forced to do so in order to comply with the U.S. embargo on Cuba.

This created an uproar in Norway, at least to the extent that the Norway can ever be said to be in an uproar. One national labor union called for a boycott of Hilton Hotels and another asked for the government to bar Scandic from continuing to do business in Norway. One union spokesman justified the boycott on the grounds that it was “unacceptable for the U.S. to dictate to the whole world.”

Christina Karlegran, a regional spokesperson for Hilton, defended the hotel’s actions:

We have to follow American law. We can’t see that we have broken any Swedish or Norwegian law. If it turns out to be illegal, we will address that.

Unfortunately, Ms. Karlegran is wrong. E.U. Council Regulation (EC) No 2271/96 forbids European subsidiaries of American companies from complying with the U.S. embargo on company and directs the member states to impose sanctions for violations of this rule that are “effective, proportional and dissuasive.” Regulation 2271/96 is binding in Sweden, which is a member of the E.U., and in Norway, which is not a member of the E.U. but which has agreed to extend the effect of that regulation (and others) to Norway through the European Economic Area Agreement.

Additionally, the Anti-Racist Center in Oslo filed a police complaint that the action was discrimination based on citizenship in violation of Norwegian law.

This situation illustrates the untenable situation that the Cuba embargo creates for U.S. companies doing business in Europe and elsewhere. The E/U Directive is no defense to the violation of the U.S. law; neither is the U.S. law a defense to violation of the E/U Directive. Companies, therefore, are forced to pick between penalties, which is rather like being forced to place a bet on a Yankees-Orioles game.

UPDATE: This post has been revised, thanks to reader Anna, to note that the hotel involved was a Scandic hotel in Oslo, Norway, not a Scandic hotel in Stockholm, Sweden, as I mistakenly thought.

Permalink


Copyright © 2007 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)