Chronicle on Cuba - May 2004

Economy

May 4: Argentine companies have reached agreements to export $15 mln (12.6 mln euro) in goods to Cuba in 2004, mainly foods, following a recent trade mission to the island country, it was reported. A total 34 Argentine companies visited Cuba last April. Over 400 meetings between the Argentine companies, local companies and representatives of foreign companies, operating on the island, were carried out within the visit. Argentina will sell to Cuba 3,000 tonnes of black beans and 10,000 tonnes of wheat flour under the agreements, and 5,000 tonnes of cotton pellets, 100 tonnes of powder milk and 300 tonnes of poultry. (Latin American News Digest, 4/5/04)

May 6: Bolivian airline Lloyd Aereo Boliviano (LAB) will start offering two weekly flights to Cuba as of August 2004, compared to one weekly flight offered currently. The flights are for the route LAB Santa Cruz de la Sierra-Panama-Havana. LAB has been maintaining contacts with the Cuban market for three years. The airline plans to open an office in Havana in the last quarter of 2004. (Latin America News Digest, 6/5/04)

May 5: Cuba is imposing tighter limits on private sector workers — from auto body repairmen and masseuses to children's clowns and used book sellers — as the government tries to reassert control over the unofficially sanctioned private economy. Under a Labour Ministry decree scheduled to take effect Oct. 1, no new licences will be allowed for 40 categories of self-employment. The list includes an array of professions, such as stonemasons, computer programmers and television antenna repairmen. The measure has not yet been made law by publication in the official gazette, but probably will be by the end of May. (The Toronto Star, 6/5/04)

May 6: Sherritt International Corporation boosted its first-quarter profit by 52 per cent as revenue rose 16 1/2 per cent, the mining company reported. Sherritt, which also has significant oil, gas, power generation and tourism assets, mostly in Cuba, said it earned $52.9 million or 35 cents per share in the first three months of 2004, compared with net earnings of $34.8 million or 26 cents per share in the first quarter of 2003. Revenue climbed to $224.9 million from $192.9 million. (The Toronto Star, 6/5/04)

May 6: According to Mexican Economic Affairs Secretary, Fernando Canales, his country asked Cuba to pay US $450 million worth of outstanding debt obligations incurred with the government-owned National Bank for International Trade (Bancomext). "That sum will have to be paid since it is an investment of the Mexican people's savings," stressed the government official. On March 30 th, Bancomext announced it was closing its Cuban branch offices, acknowledging that it was leaving behind over US $400 million in debts it had been unable to collect. (AFP, 6/5/04)

May 6: Cuban raw sugar production topped 2.3 million tonnes with little chance an additional 100,000 tonnes can be churned out before the last mill closes later this month, local analysts said. "Production passed the 2.3 million tonne mark when the month began," a source close to the Sugar Ministry said. Reuters estimated output at 2.32 million tonnes May 1, based on official media and provincial source reports. The world's fourth-largest sugar exporting country sells abroad all but 700,000 tonnes of the crop. More than half of 80 mills have already closed, according to official media reports, including most of the industry's larger ones. (Reuters, 6/5/04)

May 8: Sherritt International Corp. plans to boost electricity production in Cuba by 71 per cent over the next three years, supplying about 20 per cent of the island's needs. Energas, a natural gas-fired generator one-third owned by Sherritt, will add about 150 megawatts of new capacity, chief operating officer Jowdatt Waheed said in a conference call yesterday, one day after Sherritt announced a 52-per-cent increase in quarterly profits. The expansion plans are still being worked out, but Sherritt executives hope the two-phase development will proceed. The Toronto-based company says it will finance its share of the project with its Cuban cash flows. (The Globe and Mail, 8/5/04)

May 10: Cuba is taking drastic steps to deal with the effects of new US government measures designed to tighten the embargo against the island and step up pressure on the government of Fidel Castro. Among the 15 measures announced Monday night on Cuban television in response to the new US policy was one restricting stores that accept US dollars on the island to selling only food and cleaning products. Prices in the dollar stores and the cost of fuel will also rise. The exchange rate for the Cuban peso, convertible peso and the US dollar, however, will stay the same. Many depend on dollar stores to supply goods that have not been offered in state shops since the Soviet Union crumbled in the early 1990s. The statement warned, "days of work and sacrifice lie ahead" and exhorted all Cubans to "elevate their revolutionary consciousness." [Nota oficial] (EFE, Sun Sentinel, 11/5/04)

May 11: A top-level Brazil-Cuba business meeting and trade exhibition began in Rio de Janeiro in what has been described as an important step in ratifying growing co-operation between the two countries. The event is taking place in the Rio de Janeiro Industrial Federation's (FIRJAN) headquarters with the participation of the President of the Cuban Chamber of Commerce Bertha Delgado, the Cuban Vice Minister of Foreign Trade Antonio Carricarte, representatives of the Brazilian government and more than 40 business people from both countries. (Radio Habana Cuba, 11/5/04)

May 11: Cuba's dollar-only stores displayed "closed for inventory" signs after the communist government suddenly shut them down, blaming new US measures aimed at squeezing the island's economy. Long lines stretched from state stores with food and personal hygiene products -- nearly the only items still sold to Cubans in dollars -- as people scrambled to buy shampoo and soap from rapidly emptying shelves. The government did not say whether the stores would reopen. Three floors selling clothes, mattresses and electrical goods were cordoned off in Harris Brothers, where employees stood behind empty counters looking confused. Other workers catered to dozens of shoppers buying cooking oil, Spam and deodorant in the store's only open section. Dozens of stores along Old Havana's commercial Obispo Street selling toys, shoes and fancy furniture never opened Tuesday. Gift shops in upscale hotels and other tourist stores, however, were still selling T-shirts, crafts and camera film in dollars. (CNN, 11/5/04)

May 12: Spain's Sol Melia, one of the world's largest holiday resort chains, is building two new hotels in Cuba. Sol Melia has reported a jump in first-quarter net profit, driven by Latin America and the Caribbean where tourism picked up with US economic recovery. Latin American and Caribbean markets represented about half of the company's core earnings in the first quarter. "Our resorts in Mexico, the Dominican Republic and Cuba are mainly benefiting from the economic recovery in the US, the increasing flow of American travelers and the positive trends in travel by European clientele with increased purchasing power thanks to the euro appreciation," it said in a statement. (CNN, Gaceta de los Negocios, 12/5/04)

May 12: Cuba's dollar-only stores are closed temporarily to assess the impact of "brutal measures" announced last week by US President George W. Bush and will reopen, possibly with higher prices, Cuba's UN envoy said. Ambassador Orlando Requeijo Gual didn't know whether the stores would be back in business in days or weeks but said, "Don't worry about the situation because we should normalize the situation as soon as possible." Asked if Bush's new measures would lead to higher prices when the dollar stores reopen, Requeijo said the assessment the government is undertaking would also take into account higher prices for oil, gas and milk -- so an increase in prices in the dollar shops might not be "directly related" to Bush's actions but to rising international prices. (AP, 12/5/04)

May 13: Cuba is bracing for a new financial crunch as soaring oil prices, shipping rates and harsher US sanctions threaten the import-dependent country's scarce hard currency resources, local analysts said. "Thanks to increased tourism and higher nickel prices we were doing a bit better this year, but forecasts that oil will remain above $40 per barrel and Bush's increasing hostility are forcing us to rethink plans," a Cuban economist said. "Here we go again, it looks like payments will be late or stop now," one diplomat said. With oil prices up 25 percent this year, freight costs twice what they were a year ago, and fuel costs pushing up tourist travel bills, the government had to act, said the Cuban economist. "The Bush measures were the icing on the cake. They closed the stores to let everyone know just how serious the situation was," he said. Cuba imports 50 percent of its fuel needs, or 80,000 barrels per day, and a similar percentage of its food requirements. Food imports amounted to $1 billion in 2003. Tourism, family remittances and spending by Cuban-Americans visiting Cuba account for more than 50 percent of hard currency revenues, estimated at just over $5 billion. (Reuters, 13/5/04)

May 18: Italian clothing maker Nemo, owned by Giordano Ferrarini, has recently opened its eighth single-brand store in Cuba, it was reported. Nemo runs a total 32 single-brand stores in Italy's southern region of Apulia. (ANSA, 18/5/04)

May 20: Cuba's sugar harvest is all but over, but not much more than the previous crop which yielded the least sugar in 70 years. The current crop was put at 2.4 million tonnes of raw sugar, local analysts said, with only a dozen of 80 mills still grinding, according to local media and source reports. The 2002/2003 sugar crop amounted to 2.2 million tonnes, making it the lowest in 70 years. "They are at 2.38 to 2.4 million tonnes and only a few small mills are still open, processing cane that had to be demolished anyhow and with yields at less than 8 percent," a source close to the Sugar Ministry said. It is estimated an output at 2.4 million tonnes, based on official media and provincial source reports. According to a Cuban economist with access to Sugar Ministry information, "2.4 million tonnes, give or take 10,000 to 20,000 tonnes, is right for the season." (Reuters, 20/5/04)

May 20: Cuba's Foreign Trade Vice Minister Antonio Carricarte continued a series of talks with important Argentine executives, aimed to explore ways to increase bilateral relations. Carricarte is heading a large delegation of organizations and enterprises exhibiting Cuban export products and services in Argentina. He has held talks with Antonio Eduardo Seward, undersecretary of Foreign Trade, Eduardo Sigal, undersecretary of the chancellery for American Economic Integration and MERCOSUR, the presidents of the import and export chambers, and other trade officials, seeking ways towards bilateral negotiations. (Prensa Latina, 20/5/04)

May 20: A continued drought in eastern Cuba has prompted emergency measures -- including the construction of a 50-kilometer long conduit from the River Cauto to Holguín, where the situation is most serious. Water from the river will supply area reservoirs that are almost completely dry from the lack of rainfall. (Radio Habana Cuba, 20/5/04)

May 21: New decoder cards introduced in the US late last month put an end to satellite TV piracy in Cuba, as well as the lucrative black-market dish racket, which until now had enabled many to have access to foreign channels. A dish and receiver, complete with a decoder card activated for six months, would sell in the Cuban black market for US $800-900. Local residents are not allowed legal access to cable TV. The crackdown affected illegal video rental clubs, as well. (Cubanet, 21/5/04)

May 22: According to Mexican authorities, an Italian court ordered the seizure of Cuban Telecommunications Inc. (Etecsa)'s bank accounts in Italy, worth a combined US $40 million, as part of legal litigation initiated by Mexico to receive payment of Havana's outstanding debt to that country. The director of the National Bank for International Trade (Bancomext) said that the amount seized covers about 10% of the total figure owed. A Bancomext official indicated that the ruling is part of one of two legal suits launched by Mexico two years ago to ensure payment of the debt. (El Nuevo Herald, 22/5/04)

May 24: Cuban shoppers expressed dismay at hiked-up prices on goods sold in US dollars as stores selling everything from deodorant to electronic goods reopened two weeks after the communist government abruptly shut them down to reprice items. The Cuban government abruptly shut them down to raise prices, blaming US measures aimed at squeezing the island's economy. The reopening of more than 5,000 dollar stores across the island was announced in a full, front page article in the Communist Party daily Granma. An increase in gasoline prices also went into effect. At one local station, the cost for regular gasoline had been raised to 80 US cents from 75C per liter. The newspaper article, entitled "Information for the People," said prices at the dollar stores were increasing an average of 15.4%. (AP, 24/5/04)

May 25: Cuba officially published the list of Argentine slaughterhouses authorized to export fresh beef and pork to the island, the Argentine health service said. The list was drawn up by the Cuban Veterinary Medicine Institute (IMV), following a visit to Argentina and plant inspections, officials said. The IMV authorized imports of fresh, refrigerated and frozen beef from countries free of foot-and-mouth disease and that vaccinate their herds, as is the case in Argentina. During the first four months of this year, Argentina exported 67,879 tons of fish and milk to Cuba, valued at $13.1 million. (EFEAgro, 24/5/04)

May 25: Cuban authorities informed that the country's eastern provinces' water reserves, affected by a severe drought, will barely last another 3 months. Thousands of dollars were approved to increase land irrigation and special steps were taken to ensure adequate water supply for the population. According to official daily Granma, Rafael Vivar, a Ministry of Agriculture official, said that 19 of the 467 land irrigation reservoirs are depleted while the rest remain only at 25% capacity. Tanker trucks are delivering water for 18,000 cattle, and a similar number have been herded to other locations. Central government authorities had to authorize the expenditure of an additional US $800,000 for land irrigation. Fuel allocation for that purpose was also increased. (AP, 25/5/04)

May 26: The Cuban-Canadian joint venture PROSA looks forward to a significant production growth and expansion on the local and foreign markets this year. Located in central Matanzas province, PROSA expects to soon increase sales up to eight million dollars, which would translate into eight percent growth with respect to 2003. The company's products include toilet paper, tissues, handkerchiefs and other items, which are sold on the Caribbean market and in Cuba's dollar shops. (Radio Habana Cuba, 26/5/04)

May 27: A leader from China National Offshore Oil Corporation (CNOOC) said he had listened to the introduction of the Cuban petroleum and natural gas exploitation plan and some relative projects, which were made by Cuban Petroleum Corporation. The leader said CNOOC still has no plan to prospect and exploit the petroleum and natural gas in Cuba. (SinoCast, 27/5/04)

May 27: The Cuban Tourism Office for Spain, Viajes Corte Ingles and Melia tour operators opened the 2004 promotion campaign seeking to increase the number of people traveling to Cuba beyond the number of travelers during the last two years. Antonio Esquivel, who runs the Cuban firm, Rosa Paramio, World Tourism executive manager of Corte Ingles, and Luis Jimenez and Oscar Pau, representatives of Cuban Air Lines and Melia Hotel group, respectively, presented the project before entrepreneurs and specialized media. (Prensa Latina, 27/5/04)

May 28: A Cuban official complained that its cigar brands have been the object of trademark infringement and other abuses and revealed that it has filed suit against more than 100 foreign companies trying to cheat it out of legitimate profits. In Spain, the Dominican Republic, France, New Zealand, Honduras, Nicaragua and Australia, Cuban brands of cigars are being sold illegally, Cuban specialist in industrial property, Raul Sanchez, told the local press. Sanchez, who works for the Cuban government agency Corporacion Habanos S.A., said Cuba's position as the world's top exporter of Havana cigars entails "serious work registering all its trademarks." "It's a major responsibility because there will always be competitors trying to imitate, appropriate and in many cases forge not only our products but our trademarks as a means of making a profit," he said. (EFE, 27/5/04)

May 29: With summer coming, the continuing reparation of a large thermoelectrical plant will oblige Cubans to take "exceptional energy-saving measures", the state power company Union Electrica reported. Union Electrica head of energy management Victor Puentes told the National Information Agency (AIN) that despite steps already taken in some state and residential areas to diminish energy consumption, "efforts must be doubled" in order to meet power needs in the coming months. The official attributed the electricity crisis to the prolonged repair process at the Antonio Guiteras electrical plant in the eastern province of Matanzas, which has a maximum generating capacity of 330 megawatts. The plant's turbine has been damaged and will be out of commission throughout the summer. (EFE, 29/5/04)

May 30: Cuba celebrated the arrival of a million tourists in record time, despite US efforts to undermine the Communist nation's most important economic sector and amid a shake-up over corruption. "In 2002, we reached the figure (a million visitors) on July 29 and in 2003 on June 29," said a statement from the Tourism Ministry, read out amid dancing and spiced rum drinks at Havana's Hotel Nacional. The statement said the industry was on track to attract a record 2 million tourists this year. (CNN, 30/5/04)

May 31: The Cuban Territorial Flora and Fauna Unit (UTFF) has announced that Cunagua, one of Cuba´s 36 protected areas, is benefiting from a program of reforestation of precious woods. The ecological characteristics of Cunagua, 261 miles east of Havana, are propitious for many endemic animals, including reptiles and birds such as the tocororo, cartacuba and the tiny hummingbird, making this a relevant natural laboratory. In addition to the planting of cedar and other valuable trees on 74 of the over 6,400 mountainous acres, the program includes elimination of weeds and construction of living fences to contain soil mineral erosion, particularly in areas devastated by fire, UTFF assistant technical director Sergio Martinez Vega explained. (Prensa Latina, 31/5/04)