Chronicle on Cuba - February 2005

Economy

February 4: Entrepreneurs from Italy, Spain and South Korea and about 70 foreign companies are attending the EXPOCAM 2005 trade fair in Camagüey, one of the eastern Cuban provinces. The fair, sponsored by the Republic of Cuba’s Chamber of Commerce and supported by the Ministries of Foreign Trade and Investment and Foreign Collaboration, exhibits consumer goods, machineries, equipments, technologies and raw materials. (Prensa Latina, 4/2/05)

February 7: Cuba and Indonesia explored the possibility of mounting a cooperation program, mainly in the field of health, during an encounter on the issue held at the Dharmais National Cancer Center in Jakarta, the Indonesian capital. Attending the meeting were important representatives in health care in Jakarta, and from the Cuban pharmaceutical industry, as well as Cuban ambassador Miguel Angel Ramírez. (Radio Habana Cuba, 7/2/05)

February 8: China's oil giants began cultivating their virgin soil in Cuba. China Petroleum & Chemical Corporation (Sinopec), as the first comer, has inked a contract with Cuba Oil Company (Cubapetroleo) to jointly exploit oil in the Caribbean country. Under the terms of their contract, the two sides will join forces to prospect and exploit a potential oil-producing region. Chinese experts believe it is a significant beginning of the cooperation between China and Cuba in the petroleum industry. (SinoCast, 8/2/05)

February 9: Cuba, traditionally a sugar exporter, is expected to import more low-grade white sugar this year after this week's 7,000 tonnes from Colombia, industry sources said. "I expect the imports to continue as the industry goal is to export the maximum amount of raw sugar possible, given this year's low production," one industry insider said. A Cuban economist said the country needed to import to cover minimum internal demand. "The domestic market for whites includes around 9,000 tonnes per month through the ration system to the population. Then there is the food processing industry and tourism industry," he said. The worst drought in 64 years devastated this year's crop, with local analysts forecasting output at no more than 1.8 million tonnes of raw sugar, compared with the previous harvest's 2.53 million tonnes. (Reuters, 9/2/05)

February 9: Cuba has fixed a few export shipments of new crop sugar for the Black Sea and the Baltic, and further modest shipments of Colombian white sugar to Cuba are expected soon, brokers said. "There was a bigger volume of (export) shipments last year," one broker, who asked not to be identified, told Reuters, quoting Cuba-Black Sea freight steady at around $50 a tonne. Brokers estimated that some 25,000-28,000 tonnes of Cuban sugar exports had been fixed so far this season. (Reuters, 9/2/05)

February 10: Cuban Attorney General Juan Escalona Reguera believes that "(Cubans) are currently at the most crucial and difficult stage" of the nation-wide campaign against criminal activities. During a working visit to Santiago de Cuba, Escalona pointed that "(…) progress has been made; numerous irregularities and instances of economic transgressions have been exposed (…). We cannot say it’s anything to be alarmed about, (…) but obviously things have to change." (Radio y Diario Monitor, 10/2/05)

February 10: Cuba is concerned about possible forest fires because of a serious drought which has extended for months. Forest Rangers said the critical period of possible forest fires will be extended to June 30 due to the long dry spell. Under normal conditions this period concludes on April 30, but poor rainfall over the last three years has caused experts to extend the season and maximize measures to prevent disasters. "Cuban forests are facing a serious situation, since dry leaves and grass can combust anytime. This condition can whip a small flame into a fierce fire," said Manuel Lama Gómez, chief of the Forest Warden Department. Analysts say the average temperature in Cuba has increased 0.5 Celsius degrees because of climate changes and other environmental problems caused by global warming. (Prensa Latina, 10/2/05)

February 11: Aficionados of Cuba's famous hand-rolled cigars will be able to puff away without fear of running afoul of new anti-smoking laws during the island's annual cigar festival, organizers said. Cuba's tobacco exporting company Habanos S.A. announced its 7th International Habano Festival. The gala cigar fiesta, which will take place in Havana February 21 - 25, is expecting record-breaking attendance of nearly a thousand participants from 52 countries. Canadian Jazz musician, Jane Burnnet, is one of the Festival attractions since this year the traditional Distributors Dinner, called "a Cool Night in Hot Havana", will be dedicated to Canada. The 7th Habano Festival will again function as a trade fair offering scientific lectures and debates, contests, visits to tobacco plantations and factories, tasting sessions and master classes in hand-rolling cigars. (AP, Radio Habana Cuba, 11/2/05)

February 12: Cuba's communist state was rising from the ashes of its post-Soviet economic crash with greater control over its economy and help from China and Venezuela, Fidel Castro said. "The state is rising again like the phoenix," Castro said in an almost six-hour speech to economists at an anti-globalization conference. For two years Cuba has been steadily centralizing control again over state companies, scaling back the autonomy allowed during the crisis that followed the collapse of the Soviet Union. It has also introduced foreign exchange controls, eliminated the dollar as legal tender, increased regulation of foreign companies and curbed private enterprise in a return to a classic command economy that is 90 percent state-owned. The centralization of state company operations would save Cuba between $500 million (R3.05 billion) and $1 billion, Castro said. He complained that previously 3 000 managers had authority to buy and sell, or run up hard currency debt. China's state-owned Minmetals Corporation signed an agreement in November to invest $500 million in a joint venture that aims to produce 68 000 tons of ferronickel a year. Castro called China the "new engine" of economic growth. Cuba's tourism industry, the island's top foreign currency earner that brought in $2 billion last year, has cut its costs to between 60c and 80c per dollar of gross income. Castro thanked Venezuela's president Hugo Chavez, his closest foreign ally, for assistance in shipping vital supplies of Venezuelan oil, officially 53 000 barrels a day, on preferential terms. (Business Report & Independent Online, Reuters, 14/2/05)

February 12: Spanish hotel chain Occidental will shortly open a hotel in Cuba, it was reported. The five-star hotel will be named Occidental Royal Hideaway Ensenachos and will be in Ensenachos, on the Cuban northern coast. The hotel will be one hour away from the airport of the central Cuban province of Villa Clara. The luxury hotel will have a total of 497 rooms. Occidental has 80 hotels in 13 countries including Spain, the Caribbean, Morocco and Tunisia. (Latin America News Digest, 14/2/05)

February 15: Hundreds of thousands of Cubans are suffering the consequences of the severe drought that has been punishing the island since 2003 and is expected to last at least through April. According to the government, over the past year and a half, the drought has cost Cuba more than $800 million, killed tens of thousands of heads of cattle and inflicted water shortages on upwards of 700,000 people. The most complicated situation occurs in the eastern part of the island, where rainfall between May 2003 and October 2002 totaled less than 70 percent of the historical average. The effects of the prolonged drought have spread from east to west down the length of the island. Authorities are trying to dig new wells, build new aqueducts and distribute water on cistern trucks as quickly as possible. (EFE, 15/2/05)

February 16: Participants in the 4th International Workshop on Rural Environment in the New Millennium: Challenges and Perspectives in Cuba are debating on how to use rural environment for economic purposes. Experts are trying to find alternatives to lessen the deep crises in the world’s rural zones caused by soil erosion and deforestation. The forum includes participants from Germany, Spain, the United States, Mexico, Brazil, Nicaragua, Venezuela and Colombia. Cuban experts presented a paper on the successes achieved in rural areas like the Turquino-Manati development project in eastern Cuba. (Prensa Latina, 16/2/05)

February 16: Fidel Castro said that the Cuban economy has climbed out of its decade-old economic slump, but it's unclear whether new subsidies from Venezuela and China will be enough to improve the quality of life for those in the island's increasingly state-controlled economy. Critics say that while Cubans are better off now than during the "special period'' of the early 1990s, daily life remains a struggle. "I do not see real economic recovery,'' said Mark Thornton, a senior research fellow at the Alabama-based Ludwig von Mises Institute, which defends the market economy. "Basically, the reason Fidel is optimistic is that (...) he's now found two new sugar daddies: Venezuela and China.'' In Cuba, the government provides free education and health care, heavily subsidized utilities and transportation and a food ration. The island doesn't have the kind of wretched poverty seen in South American mountain villages or Central American urban slums. But the monthly food ration lasts most Cuban families less than two weeks, and state salaries averaging less than $15 a month barely begin to cover the high prices of everything from canned food to toilet paper. Cuban officials estimate some 60 percent of Cubans have access to additional income, primarily through remittances sent from relatives and friends abroad or jobs in tourism that bring in tips and bonuses. The remaining 40 percent get by on their wits alone. (The New York Times, 17/2/05)

February 16: Official sources have admitted that scuffles on public buses, rocks being hurled at the vehicles and fraud in fare collection are some of the many ills affecting the public transit system in Cuba. The Director of the Provincial Public Transit Enterprise, Jorge Luis León, told the daily Juventud Rebelde that the problems besetting the state-run public transit system have experienced a turn for the worse in the last few months. He added that efforts to deal with the situation have been implemented with government and police support, and quick response teams are currently in place at all bus terminals. (Notimex, Juventud Rebelde, 16/17/2/05)

February 16: Cuba’s Centro de Biofísica Médica (CBM) [Center for Medical Bio-physics] exported to Venezuela a first lot of 26 out of 100 Angiodin PD-300, an equipment to develop vascular research. The equipment, widely used in Cuba’s health care network of vascular hemodynamic labs, is a noninvasive devise designed for the early detection and diagnosis of peripheral vascular ailments. Its acquisition improves Venezuela’s sanitary system, especially its Bario Adentro campaign implemented by medical and paramedical personnel. (Prensa Latina, 16/2/05)

February 17: Cuba's central bank has begun prohibiting most foreign exchange transactions without its prior approval as of this week, in a move businessmen fretted could tie the economy up in knots. Businesses must prepare weekly budgets for prior approval and companies and banks cannot accept payments or deposits unless they have central bank authorization, according to guidelines implementing an earlier decree. Water, electricity and other utilities must go through the same process every three months, and any new suppliers must first be approved at the highest level. "There is no doubt some dubious practices have been squashed and a more rigorous business climate imposed," a mid-level employee of Cimex, the largest foreign exchange-priced retailer in the country, said of the guidelines. But the head of a Cuban company that upgrades production facilities predicted the new rules would be revamped. "It appears the measure will hamper our work (...) The mechanism we must use is too complicated to function in an agile and dynamic manner," he said. (Reuters, 17/2/05)

February 17: The management of the trade financing bank Bancomext reported 66% of the total US$480mil arrears portfolio refers to a US$320mil credit to collect from Cuba. Negotiations have been suspended after a political divergence in 2004. Bancomext hopes to collect at least US$50mil in amortizations during 2005. (El Financiero, 17/2/05)

February 18: Fidel Castro has warned the state-run pharmaceutical industry that he intends to crack down on illegal sales of medication, and pointed a finger at those in charge of producing and distributing legal drugs. Castro addressed the issue in his speech at a National Health Workers' Union congress to which the foreign press was not admitted but which was broadcast on state television. "You cannot have people selling medication on street corners. It is a shameless act on the part of anyone who does it and even more so on the part of anyone who tolerates it," he emphasized. The medications are obviously "stolen from either pharmacies or factories," he said, and those who cooperate in that activity must be "arrested and tried." Castro warned everyone linked to the pharmaceutical industry, from Public Health Ministry officials to pharmacy clerks, that if the practice continues "we will proceed to directly take over the (nation's) 2,000 pharmacies," which are already state run. Castro said he trusted "one warning will be enough." (EFE, 18/2/05)

February 21: Cuba started an action plan to fight the deficient water supply caused by an intense drought that has been affecting the island for several years. Jorge Luis Aspiolea, president of the National Hydraulic Resources Institute, explained the country has invested more than $20 million on public works in the last months to improve the situation. Aspiolea said that action plans and government measures will aim to face the possibility that 2005 may be another dry year. The official said Cubans will be forced to improve the custom of saving water and make the best use of their intelligence and initiatives to protect this precious resource. (Prensa Latina, 21/2/05)

February 21: Cuba urged its citizens to cut back on water use, announcing that new measures will be necessary to fight a long-lasting dry spell. Jorge Aspiolea, president of Cuba's National Institute of Hydraulic Resources, told Granma that the government has invested more than $25 million (Canadian dollars) in recent months to improve water infrastructure. But he also said it was crucial for the general population to start conserving water immediately. Of 235 reservoirs across the island, 114 contain less than 25 per cent of their capacity, Aspiolea said. Forty-one of those 114 have dried up and are out of use. Eastern provinces are the most severely affected, as reservoirs in Camaguey are only 14 per cent full, and those in Las Tunas, Ciego de Avila, Sancti Spiritus and Granma contain less than 30 per cent, he said. Only Pinar del Rio, Cienfuegos and Isla de la Juventud are at 50 per cent capacity, he said. Havana, the island's most populated city, is among the places that will be most affected by the water shortage, the newspaper said. (Canadian Press, AP, Granma, Prensa Latina, 21/2/05)

February 21: This year Mexico could recover US$50 million in debt that Cuba owes the the National Foreign Trade Bank (Bancomext), once an international court decides when it can gain access to this money, said Salvador Rojas Aburto, assistant director general of Finances at Bancomext. Rojas Aburto said that Mexican officials were trying to arrange talks with their Cuban counterparts to "sit down at the table and find a way out." In 2002 the Council of Ministers of Cuba issued a decree suspending the payment of the debt to Bancomext. At that time the debt was US$218 million, but there are another five loans and together they add up to around US$325 million. (El Universal, 22/2/05)

February 21: Nearly one thousand participants from 52 countries are attending the 7th International Habano Festival. This year the event is focusing on the Partagas brand on its 160th anniversary, one of the most prestigious brands of Habanos. The Festival's agenda includes a trade fair, scientific debates, sommeliers contest, visits to tobacco plantations and factories, tasting sessions, master classes on rolling cigars and more. (Prensa Latina, 21/2/05)

February 21: The Cuban Ministry of Tourism (Mintur) has passed a resolution that regulates relations between the more than 100,000 Cubans who work in the tourism industry, and "foreign personnel." Employees in the sector are forbidden to accept gifts and invitations "of a personal nature," or to take part, without the authorities' permission, in meals and parties organized by foreigners. The first article of the Mintur resolution, passed in January, asks staff to limit relations with foreigners "to those that are strictly necessary." It also instructs them "to be vigilant at all times of any deed or attitude that could be harmful to the state"; and to refuse "remuneration, gifts, donations, accommodation or services that go against dignity and respect and create commitments that threaten the healthy spirit of collaboration" between the parties. The document, which consists of 10 chapters and 22 articles, likewise calls upon tourism employees to "be discrete and rational in the use and transmission of information within their reach," prohibits dealing with foreigners to obtain scholarships or invitations to travel abroad, and obliges personnel to declare, in writing to their immediate superior, all gifts received from a foreigner with whom they have work-related contact. The norms apply both inside and outside the country, and it is even recommended that negotiations between Cuban business people from the tourism sector and foreign colleagues be conducted, "whenever possible, in the presence of a witness." (El País, 21/2/05)

February 22: As part of the framework for a return to centralized controls of hard currency expenditures, new operational restrictions for Cuban business enterprises have been introduced by the Cuban government. According to a new resolution by the Cuban Central Bank (BCC), Cuban enterprises can no longer issue checks in excess of $5,000 convertible pesos (a Cuban currency on a par with the US dollar) without prior authorization from the “Committee for Approval of Convertible Currency Expenditures.” The resolution, signed by BCC President Francisco Soberón, prohibits the endorsement of checks for payment to third parties and reminds that only bank account check deposits are allowed. This resolution complements another approved last December that compels Cuban enterprises to deposit all their revenues in convertible currency into a single BCC account. (EFE, 22/2/05)

February 23: According to the Gaceta Oficial (Official Gazette), the Cuban government implemented exemptions on import duties and revenue taxes for Venezuelan transport companies operating in Cuba. Two resolutions from the Ministry of Prices and Finances declare Venezuelan air and maritime transport companies bringing goods to the island exempt from “payment of tonnage or revenue taxes.” A third resolution, co-signed with the Ministry of Foreign Trade, lifts all “customs duties on imports originating from the Bolivarian Republic of Venezuela.” (AFP, 23/2/05)

February 25: Hundreds of cigar lovers, including British actor Jeremy Irons, wrapped up an international cigar festival with an extravagant gala dinner featuring flamenco dancing and sleek acrobatic performances. Elaborate humidors signed by Fidel Castro were auctioned off at the event. Expert Bjorn Ericsson, from The Fummoik bar in London Claridges Hotel, ranked first in the fourth Habanosommelier contest where competitors must show their abilities in selecting, cutting and lighting a Cuban cigar. He was followed by Cuban Orlen Guerra, from Old Havana Palacio de O'Farrill Hotel. French Laigle Xauiu, from Le Forum Bar, in Paris, ranked third. Regarding the Commercial Fair, Cuban Edel Quintero was recognized as Best Amateur Cigar Maker, and the Chateau du Tariquet, from France, was the most crowded stand. The annual festival brought together nearly 1,000 cigar connoisseurs from more than 50 countries this year. Participants visited tobacco plantations and factories and attended cocktail parties. (AP, Prensa Latina, 25/2/05)

February 26: Cuba's Varadero beach resort set a new record of foreign visitors for a single weekend with 24,200 tourists from different parts of the world. Canada, France, Germany and the United Kingdom have been Cuba's main tourist destinations during the ongoing winter travel season. Varadero features more than 15,000 rooms scattered in 46 hotels and resorts. By the end of 2005, the 13-mile-long beach strip will add 1,517 more accommodations to its stock of hotel rooms. (Radio Habana Cuba, 26/2/05)