Chronicle on Cuba - December 2005

Economy

December 2: Fidel Castro recognized the critical situation of the country’s power generation network and promised that the service would improve soon with the operation of generators and the application of conservation measures. The government plans to make up for the shortfalls of power plants with the installation of hundreds of electrical generators in the whole country. In reference to the rationing card, Castro said that there is still no date for its elimination. [Fidel Castro’s speech] (EFE, 2/12/05)

December 3: Cuba wants to sign an economic complementary accord with Mercosur, Cuba's deputy foreign minister, Rafael Daussá Céspedes, said in Asunción during a news conference after signing two formal agreements with his Paraguayan counterpart Emilio Giménez Franco. Daussá explained that his country does not want to be a member of Mercosur and criticized the previous Uruguayan government (Jorge Batlle's) for creating difficulties during the negotiation of the economic complementary accord. "Those difficulties do not exist at the moment, and I think that there is a consensus of sorts about making the accord multilateral," he added. (ABC Color, 4/12/05)

December 3: Cuba's deputy foreign minister, Rafael Daussá Céspedes stressed the need to boost trade between Paraguay and Cuba, as it stands at a very low level. He said that his country could buy Paraguayan foodstuffs and that Cubans are prepared to export medical, pharmaceutical, biotechnological and other products to Paraguay. He said that he offered to send medical brigades to Paraguay and thanked Paraguay for condemning the US blockade. Fidel Castro has again invited his Paraguayan counterpart Nicanor Duarte Frutos to visit the island, Deputy Foreign Minister Daussá reported. He said that Foreign Minister Leila Rachid and Deputy Foreign Minister Giménez Franco are likely to travel to Havana in 2006. (ABC Color, 4/12/05)

December 5: A batch of 80 buses China built for Cuba is ready for shipment to the Caribbean island to be used in inter-provincial public transportation. Buses kept at the port city of Tianjin are part of a two-way deal under which China’s Yutong firm will provide Cuba with 600 altogether. Also, twelve Chinese locomotives, the first the Asian country has exported to Latin America, are en route to Cuba, the official daily Granma said. (Prensa Latina, Globe & Mail, 5/12/05)

December 6: Fidel Castro said more than half the gasoline in the country has been stolen in recent years but young people were now taking control of the fuel distribution system. Castro began mobilizing thousands of young people in October to fight corruption, pilfering and waste in what he described as a do-or-die struggle to save his 46-year-old revolution. The cash-strapped Communist-run country imports more than half its fuel and food. Young social workers and university students first took control of Havana's gas stations, which accept dollar-pegged pesos, and as of December were manning close to 600 of them nation-wide, as well as 1,450 pumps managed by state entities, refineries and fuel trucks, Castro said. The Cuban economy is more than 90 percent state-run and the fuel distribution system completely in state hands. Castro, in a televised speech, said gas station receipts had increased by more than $100,000 a day, more than twice the previous level, and most ministry pumps would be closed. "Diesel sales are up 20 percent, the cheapest gas 184 percent, regular gas 88 percent and special 142 percent," Castro said, at a ceremony marking six years since the successful fight began for the return of ship-wreck victim Elian Gonzalez from the United States to his father in Cuba. (Reuters, 6/12/05)

December 6: Algeria’s delegation at the 13th Session of the Intergovernmental Mixed Commission in Havana will sign cooperation agreements with the Cuban Transport Ministry and the Civil Aeronautics Institute. Cuba’s Foreign Trade Minister Raúl de la Nuez and Algerian Health, Population and Hospital Reform Minister Amar Tou head the event. They analyzed sectors like trade, health, sports, hydraulic resources, culture, fisheries, and sea and air transportation. (Prensa Latina, 6/12/05)

December 8: Cuba's Centresoft Corp. and Cimex Corp. have partnered with Sentai Software Corp. of Edmonton and Indcom Trading Co. of Orleans, Ontario, to create an international software consortium called CubaSoft Solutions Inc. CubaSoft is recruiting Cuban Information Technology (IT) talent to work on projects for the Canadian companies and is also developing domestic IT projects. While baby steps are a necessary part of the learning process, industry insiders are confident that Cuba has what it takes to develop a critical mass and knowledge base that will position the island as an attractive option for IT outsourcing contracts — particularly for software development in the medical, financial, biotech and education fields. (Globe & Mail, 8/12/05)

December 12: A working group for biotechnological cooperation between China and Cuba examined the possibilities of bilateral collaboration in Beijing. Representatives of the two countries began revising the work of each party in this field, to define common interest areas and joint projects. The meeting responds to a memorandum signed between China and Cuba in November 2004, when Chinese President Hu Jintao officially visited Cuba. This taskforce was created to strengthen institutional cooperation, foster collaboration in biotechnology, and study the establishment of joint ventures and research projects, among other activities. (Prensa Latina, 12/12/05)

December 14: Cuba has scrapped the standard method used to measure economic activity and replaced it with its own formula that substantially boosts the value of its economy and performance, while making a statistical comparison with other countries practically impossible. Fidel Castro, who has announced that the economy is growing at more than 9 per cent, insists the standard method was designed for capitalist societies and Cuba's "socially sustainable GDP" formula better measures progress in his socialist land where no value is assigned to readily available social services and wages are low due to subsidized utilities and some basic products. Last year, Havana first reported growth based exclusively on its formula as 5 percent, while the UN Economic Commission on Latin America and the Caribbean (ECLAC) said the GDP was up 3 per cent and estimated 5 per cent growth this year based on the traditional formula. ECLAC officials have held at least two rounds of talks with the Cuban economy ministry seeking clarification on GDP and expressing concern that the UN body will no longer be able to include Cuba in regional tables and comparative analysis. Cuban authorities have said that the island’s GDP grew 11.8 percent based on exports. Meanwhile, ECLAC’s executive secretary, José Luis Machinea, said that this Cuban method “is being analyzed by ECLAC”. “For the moment, Cuba has not been included in the regional annual rate growth”, warned the UN institution. (Financial Times, EFE, 14/12/05)

December 16: A syndicate of Russian state-owned banks signed a deal with Cuban airline Aviaimport to provide a $94 million 10-year loan for the purchase of two long-range Russian Ilyushin-96-300 passenger planes. Following the signing, Roseximbank Chairman Nikolai Gavrilov called the deal a "historic event," as it was the first time Russian commercial banks have provided long-term credit for the purchase of Russian high-tech production. According to the agreement, the price of the two planes is $110 million, 15% of which Cuba has already paid and the other 85% of which will be financed by the loan. (Novosti, 16/12/05)

December 18: The Cuban economy, despite tensions generated by insufficient material resources and financial liquidity is closing 2005 with satisfactory numbers. Speaking before the Cuban Parliament Commission for Economic Affairs, Economy and Planning Minister Jose Luis Rodríguez explained the priorities for Cuba’s development, Granma daily reported. Rodríguez indicated the new path of the national economy is aimed at increasing people’s quality of life and centering on strategic development issues. (Prensa Latina, 18/12/05)

December 20: China granted Cuba a line of credit worth 50 million yuans, about US$6.2 million, as part of an agreement signed during a visit by a senior Chinese Communist Party official, Cuba's state-run press reported. The line of credit will be used to buy "general materials" from China and carry out several economic projects, the island's domestic news agency AIN reported. The official, Luo Gan, is a member of China's ruling Politburo Standing Committee and he was meeting with several top Cuban officials including Parliament Speaker Ricardo Alarcón and Vice President Carlos Lage. (Businessweek Online, 21/12/05)

December 20: Parliamentary committees brought to a close a series of meetings prior to the December 22 Sixth Ordinary Session of the National Assembly. With another annual unemployment rate below two percent, the Cuban economy this year boosts a new achievement, more than 5 million citizens received wage increases in 2005. Alfredo Morales Cartaya, the minister of Labor and Social Security, announced the figure, which corresponds to increases made across the board in salaries, retirement benefits and social assistance, and added that the public can expect more raises in the near future. The minister, addressing the Economic Affairs Parliamentary Committee, specified that future wage increases will be made in correspondence to earnings made through productivity increases and worker discipline as well as from revenues derived from resource management initiatives. (Granma, 21/12/05)

December 20: Based on assessments from the Ministry of Agriculture, the Productive Activity Committee of the Cuban Parliament reported that production of secondary meat products (from sheep, goat and rabbit) were down for 2005, in general due to inefficient management. Among the problems cited in this industry were a lack of training of primary producers along with shortages of veterinary products like antibiotics and others. Further deficiencies noted were repeated failures to meet contractual production levels, a delay in payments for products received and a failure to pick up animals in the agreed timeframe. Parliamentary representatives said that this industry should be targeted for growth. They noted that it could become an important source of employment and bring about a more efficient use of available farm land, while increasing the availability of meat for the public and forming a live reserve of protein for emergency situations such as in times of war. (Granma, 21/12/05)

December 20: Francisco Silva, vice-minister of Domestic Commerce (MINCIN) addressed the Service Industry Committee of the Cuban Parliament, reporting on changes made in 2005 to subsidized products and changes expected for 2006. The vice-minister reported that new subsidized food products, such as chocolate, were welcomed by the public, along with measures implemented to insure the quality of existing products such as coffee. He also released results of a study carried out looking at ways to improve egg distribution in rural communities. Silva said that additional measures are being taken to cut down on fraud in the consumer register for the coming year, noting that there have been cases recorded where families continue to register as members persons no longer living or who had emigrated. He added that, in order to collect subsidized consumer product ration books for 2006, each family would be required to present identification cards for each family member along with proof of residence. (Granma, 21/12/05)

December 21: Auckland manufacturer Atrax Group has snared the chance to overhaul Havana Airport's ancient baggage-handling system. Atrax's promotion at the 15th general assembly of the Airports Council International conference in Auckland last month sparked interest from Cuba, Romania and Poland, international sales manager Ian Walton said. Havana Airport executives were among those showing interest at the conference and are now in talks with Atrax's US agent, Walton said. (The Independent Business Weekly, 21/12/05)

December 22: Cuba announced it had turned a corner in its recovery from severe financial crisis, reporting 11.8 percent growth in 2005 using its own method for calculating gross domestic product. Addressing the communist nation's lawmakers as Fidel Castro looked on, Economics Minister José Luis Rodríguez said the Caribbean nation had fully recovered from the 1990s, when austerity measures were adopted to survive the economic crisis caused by the Soviet Union's collapse. ''This could be considered the highest in revolutionary history,'' Rodriguez said of the growth figure, referring to the 47-year-long administration of Castro. The economics minister also projected economic growth of 10 percent for 2006. Rodríguez said the biggest income earners for Cuba this year were tourism, nickel, and the exportation of services -- especially doctors and other medical workers hired by other countries such as Venezuela to provide free care to poor people. Cuba's methodology for calculating economic growth, adopted in recent years, takes into account the country's vast social safety net and subsidized services. That differing methodology makes Cuba's growth figures difficult to compare with that of other countries, prompting the United Nation's Economic Commission for Latin America and the Caribbean (ECLAC) to omit the island's numbers from its report for this year. (The New York Times, 22/12/05)

December 22: Cuba’s economic growth of 11.8 percent this year is based on the export of services, among other incomes. Cuba began bartering medical and other services for 90,000 bpd of Venezuelan oil this year and the South American country also began paying Cuba for additional medical and other services, for a total value estimated at close to $3 billion by local economists. "The biggest change is that Venezuela began this year paying for 25,000 doctors working there, 8,000 sports trainers and others, and for more than 150,000 eye operations carried out in Cuba," said a foreign banker based in Havana. "That is $3 billion odd of new revenues over a total gross domestic product of 35 billion, or 8,5 percent of the increase," he said. (Reuters, 22/12/05)

December 22: Cuba's combined oil and natural gas production fell by 3.7% in 2005, following a similar decline in 2004, the country's Economy and Planning Minister said. Minister José Luis Rodríguez said oil production fell and gas output increased over last year's reported 22.8 million barrels of oil (62,300 b/d) and 24.9 billion cubic feet of gas, without providing further details. "While gas output increased, crude declined (…) due to problems such as drilling delays and hurricanes," Rodríguez said in a year-end speech to parliament, adding that drilling would increase in 2006 in hopes of upping production. Cuba imports at least 92,000 b/d of oil and derivatives in exchange for medical and other services from Venezuela. Canadian companies Sherritt International and Pebercan, in cooperation with Cupet, account for around 60% of domestic output. Spanish oil company Repsol YPF has signed a contract to look for lighter oil in the deep waters off Cuba's coast in partnership with ONGC of India and Norsk Hydro. ONGC also has two separate deepwater blocks and Sherritt four. Sinopec of China signed an agreement earlier this year to jointly produce heavy oil with Cupet in westernmost Pinar del Río province, with drilling expected to begin in 2006. (The Oil Daily, 27/12/05)

December 24: The Cuban parliament late at night approved a 33.3 billion peso budget for 2006, a huge 32 percent increase over this year's spending of 25.3 billion pesos and evidence that authorities are confident a 15-year crisis is over. “Our public finances are in good health despite the genocidal imperialist blockade, hurricanes and drought and higher oil prices," Finance Minister Georgina Barreiro said on introducing the budget. Barreiro said next year's budget deficit would be 3.4 percent of the gross domestic product, based on expected revenues of 31.5 billion pesos, a 35 percent increase over 2005, when the deficit came in at 4.2 percent of GDP. Barreiro said increased spending was largely earmarked for defense, social services, wages and pensions, emergency reserves and a doubling of investments to 6.4 billion pesos. Increased revenues would come with economic growth, more efficiency, higher utility rates and the sale of more appliances and food to the population, Barreiro added. (Reuters, 25/12/05)

December 27: Foreign Trade Minister Raúl de la Nuez said services account for 50 per cent of Cuba’s export income. At a ceremony marking the 45th anniversary of this ministry, de la Nuez highlighted the launching of new biotechnology products, which are able to generate more than 200 million dollars. They have become alternatives in the competitive world market for staple products like nickel, rum, tobacco, sugar derivatives and iron-and-steel, the minister said. De la Nuez especially noted that 51 per cent of Cuba’s exchange is centered in Latin America, namely Venezuela, plus Europe, Africa, the Pacific and Asia, China being its second commercial partner. (Prensa Latina, 27/12/05)

December 28: Cuba will complete, by mid-2006, the installation of 80 percent of new generation capacities, a modern system backed up by emergency plants in vital locations, all of them with much more fuel-saving equipment. This achievement will quadruple power generation making all provinces independent by connecting thousands of synchronized generators. This network is designed to eliminate interruptions due to generation deficit. The old power plants will be replaced by modern combined-cycle plants, which will use gas derived from oil production. Fidel Castro said that the whole project will save the country nearly $1 billion in convertible currency, compared to current costs of production. (Prensa Latina, 28/12/05)

December 28: Cuban Government Minister Ricardo Cabrisas closed a ten-day visit to China. Cabrisas said economic and commercial relations with China substantially increased in 2005 and would continue to augment in 2006, as the Asian nation is practically present in all sectors of the Cuban economy. Cabrisas was in Beijing as the head of Cuba’s delegation to the 18th Inter-Government Commission for Economic and Commercial Relations. (Prensa Latina, 28/12/05)