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.

On Wednesday the GAO issued a report on U.S. funding initiatives designed to promote democracy in Cuba. The highly critical report concluded that these programs need better oversight and management. It pointed out the lack of competitive bidding for these programs. The report also documented examples of waste, including program funds that were used to buy Godiva Chocolates, cashmere sweaters, crab meat, Nintendo Game Boys, and Sony Playstations.

One of the purposes of these democracy initiatives was to supply to dissidents and others on the island goods and services that had been cut off by the U.S. embargo. Although the report stated that most of the means whereby the goods were delivered to Cubans were classified, one part of the report revealed the practice of paying “mules” $4 to $20 per pound to transport the donated goods to Cuba.

An immediate reaction to the report was a call for easing the embargo on Cuba, starting with recent restrictions on travel to Cuba. Jeff Flake, a Republican member of the House who is one of the members who requested the GAO report, said:

The U.S. has spent millions of dollars in democracy assistance to Cuba with little or nothing to show for it. When people see what we’re doing now and how taxpayers’ funds are being misused, I think they will demand a change in policy, particularly if they understand we can accomplish the same objectives simply by allowing family members to travel more frequently and take with them goods.

When a Republican member of Congress (albeit a somewhat independent-minded one) calls for loosening the Cuba embargo, it is not irresponsible to suggest that the 110th Congress, which will be controlled by Democrats, may revisit the 40-year-old embargo.