Chronicle on Cuba - July 2004

Economy

July 2: The installation of 50 new water pumps in the eastern Cuban province of Camagüey could help alleviate the effects of the severe drought that is currently afflicting much of the island. The pumps are being built by the Centre for Applied Technology (CITA). Principal CITA engineer Boris Manzanares told the press that the pumps were initially scheduled for installation in November, but technicians have been working around the clock to bring that date forward. (Radio Habana Cuba, 2/7/04)

July 3: Cuba and the People's Republic of China have agreed to jointly produce some 15 million plastic bags of parenteral sera a year. For this purpose, a plant is being built, as replacement to an older one operating for the last 15 years. As part of the investment, the Eastern Pharmaceutical Laboratory Enterprise is planning a second project to incorporate the production of plastic bags to substitute glass containers. (Prensa Latina, 3/7/04)

July 3: A tornado with winds up to 200 kilometers (124 miles) per hour left 17 people injured and damaged some 200 homes as it roared through the eastern Cuban city of Manzanillo, local television reported. The high winds knocked down or partially damaged houses, roofs and walls while injuring residents of the port city located 906 kilometers (563 miles) east of Havana. (EFE, 3/7/04)

July 4: Foreign Minister Kamal Kharrazi underlined the need for expansion of trade and economic cooperation with the Latin American state of Cuba, it was reported. In a meeting in Havana with the Cuban Minister of Government, Ricardo Cabrisas, Kharrazi declared that the two countries' interests in further economic cooperation would prepare the ground for provision of more facilities, according to the Press and Information Department at Iran's Foreign Ministry. He also underlined the importance of mutual cooperation between Iran and Cuba in agricultural, industrial and scientific fields as well as participation of Iranian businessmen in Cuba's international exhibition in the current year. Regarding Iran's readiness to supply Cuba with consultation in the energy sector, Kharrazi stressed that Iranian firms enjoy outstanding capability in different fields of energy that could be used in the Caribbean. (IRNA, 5/7/04)

July 4: Between January and June, 412 forest fires broke out in Cuba, affecting natural forests covering nearly 6,048 ha, a man-made forest area of 5,398 ha, as well as 5,670 ha of marsh grass. According to Cuban Forest Ranger Corps (CGB) figures, the total economic loss is estimated at 16, 751, 306 pesos. (Juventud Rebelde, 4/7/04)

July 5: Brazil's largest oil company, and Cuba's national oil company, Cuba Petroleo, or Cupet, will together invest $20 million to build a new lubricant plant in Cuba, a top director said. Nestor Cervero, the international director at Petrobras, as the federally-owned Brazilian group is known, said the plant is expected to go on-line in about two years. Its production will be sold on the Cuban market and exported to Central American countries. (Dow Jones, 5/7/04)

July 5: The city of Havana suffered a power outage for more than an hour, temporarily leaving at least 2 million people without electricity due to power line difficulties in central Cuba. Residents in the western provinces of Matanzas and Pinar del Rio were also affected by the outage, caused by malfunctioning high-voltage lines connecting the central cities of Santa Clara and Cienfuegos to Matanzas, according to Union Electrica, the country's power provider. (AP, 5/7/04)

July 5: Repsol’s gamble in Cuba has attracted much attention. Last month, Spanish Repsol YPF hired a Norwegian drilling platform, the Eirik Raude, at a cost of around $200,000 a day to search for oil in Cuban waters, in a narrow sector of the Gulf of Mexico off the northwestern coast. The venture, established with Cubapetróleo, the government-owned oil company, is being watched about as closely in Houston's executive suites as any in the energy industry. A significant find by Repsol would be a boon for Cuba, which imports most of its fuel, mainly from Venezuela, and often struggles to find the hard currency to pay the bills. More broadly, it could shake up the dynamics of oil production in the Gulf of Mexico, dominated for decades by the United States and Mexico. And a big oil discovery could change the political debate in the United States over the decades-old sanctions against Cuba, which now prohibits most commerce with the country. (The New York Times, 5/7/04)

July 6: Drought has dashed Cuba's plans to increase raw sugar output any time soon from the historic lows that followed the outdated industry's downsizing in 2002, though damage will depend on precipitation in the coming months, industry sources said this week. "The plan was to build on the 2003/2004 harvest of 2.52 million tonnes toward more than 3 million tonnes in 2006," a local economist and sugar expert said. "Now we are talking about holding the line, something that may prove impossible." Output in 2002/2003 was the lowest in more than 70 years at 2.2 million tonnes following the closure of 71 of 156 mills and a 50 percent cutback in the area dedicated to cane. Prolonged drought from the eastern to the central parts of Cuba has destroyed and stunted cane earmarked for the coming harvest, and slowed planting for 2006. (Reuters, 6/7/04)

July 7: The United Nations warned that thousands of people might be at risk due to a severe drought afflicting parts of western Cuba, and said it had approved an aid package for the affected provinces. The UN said it fears acute food shortages in the three western provinces of Holguin, Las Tunas and Camaguey "where the drought has been particularly intense." The UN has approved 161,000 dollars in aid for the drought-hit areas, much of which will be sped to help over one hundred thousand children under five years of age, the UN said in a statement. "The drought has had a wide impact (…) there is also the possibility that infectious diseases could spread," UN representative Bruno Moro told the press after visiting Holguín with over 50 foreign diplomats. (AFP, 7/7/04)

July 9: While acknowledging Cuba's achievements in providing social services, a regional United Nations economics commission has recommended in a new report that the communist nation allow more private enterprise. The recommendations by the UN Economics Commission on Latin America and the Caribbean (ECLAC) come as Cuba is moving in the opposite direction. The report, "Social Policy and Structural Reforms: Cuba at the Beginning of the 21st Century," was presented at a Havana hotel with UN commission members and Cuban officials in attendance, including Economics Minister Jose Luis Rodriguez. "It would be pertinent in the coming years to redesign the parameters of competition in the public, private and cooperative sectors, to redefine the role of the state in the economy," the report stated. It suggested that Cuba could continue to maintain control over economic strategy while opening up to "diversification in relations of property, the decentralization of business activity and the role of the market." "It also would be good to be more flexible in the regulations concerning private activities and self-employment," the report said. (La Nueva Cuba, 11/7/04) [ECLAC Report, “Social Policy and Structural Reforms: Cuba at the Befinning of the 21st Century]

July 12: Camagüey, the traditional heartland of Cuban cattle farming, has been hit particularly hard by the lack of rain in the traditional May, June and July wet season. The average rainfall across the island reached only a mean 0.7 mm a day from November 2003 to May 2004, making the current drought one of the worst on record. Two thirds of the 52 reservoirs in the central province are now totally dry and emergency standpipes and new wells have been created to maintain domestic water supplies. 160, 000 Camagüey residents now have no access to running water. (Radio Habana Cuba, 12/7/04)

July 13: Cuban airline Aviaimport is to purchase two Il-96-300 jets from Russia’s Voronezh-based Ilyushin Finans Co in line with an agreement signed by the parties, Gazeta.Ru reports. The Cuban firm will pay $100 million for the jets, of which $85 million will be repaid within 9 years in the form of a loan guaranteed by the Russian and Cuban governments. Each plane will be furnished with a double cabin and a VIP-cabin for Fidel Castro. (Mos News, 13/7/04)

July 13: In the wake of the Mexican authorities' decision to close the Havana branch of the Foreign Trade Bank (Bancomext), Mexican entrepreneurs are negotiating with Cuba to establish a representation office on the island. "We wish to open a representation office for those companies willing to deal with Cuba," said Cuauhtemoc Martínez, president of the National Chamber of Transformation Industries (CANACINTRA). (AP, 13/7/04)

July 14: Signaling a recent move toward a re-centralization of the Cuban economy, clients of the Bank of Credit and Commerce, created as part of the national banking system overhaul undertaken in the 90s, have been informed that, as of last July 1, its Havana branches have been turned over to the Metropolitan Bank. Officials with the latter said that the decision includes the Havana branches of the People's Savings Bank. (EFE, 14/7/04)

July 15: As a Spanish firm enters the last stage of petroleum exploration off Cuba's coast, officials and economists are growing increasingly hopeful of news that could profoundly affect the communist country's struggling economy. "Supposing there is petroleum, it would really good news for the country," said Jorge Mattar, a specialist on the Cuban economy for the UN Economic Commission on Latin America and the Caribbean. Battered by world oil prices and a foreign exchange deficit, Cuba's spends "a good percentage" on the purchase of foreign petroleum, Mattar said. The Spanish petrochemicals company Repsol-YPF is currently doing exploratory drilling about 30 kilometers (18 miles) north of the island's coast in Cuban waters, spending US$195,000 a day to rent a Norwegian platform since early June. (AP, 15/7/04)

July 15: Tourism in Cuba has increased by a massive 12% in the first three months of 2004, according to statements given by the Cuban Deputy Minister of Tourism Oscar González. González spoke at the II National Congress of Conference, Event and Incentive Vacation Organizers that concluded in Havana, where he also noted that the tourist arrival per day rate had also increased significantly. (Radio Habana Cuba, 15/7/04)

July 21: According to a newly-released economic report, Cuba has managed to maintain its social achievements despite the serious economic problems affecting the island since the late 1980s, following the collapse of the Soviet Union and the socialist bloc in Eastern Europe. The report was released by the Santiago de Chile-based Economic Commission for Latin America and the Caribbean (CEPAL), along with economist Jorge Máttar and representatives of the United Nations Development Program and Cuba's National Institute of Economic Research. The ECLAC, UNDP and INIE study underlines the importance of placing social welfare at the centre of development policy, which requires maintaining high growth rates and dealing with challenges such as infrastructure (especially transportation and housing) needs, the ageing population, care for vulnerable groups, and dealing with the differentiated effects of the crisis in the early 1990s, apparent in the relative backwardness of some Oriente provinces and major differences in productive performance between the different economic sectors. [Cuba Able to Maintain Social Progress] (Radio Habana Cuba, ECLAC, 21/7/04)

July 24: Drilling of an exploratory well in Cuba's virgin Gulf of Mexico waters has been completed, a senior official said. Work on the well by Spain's Repsol YPF (REP.MC) began in June and captured the attention of the industry and governments due to its potential economic and political consequences. "The drilling has ended and the Spanish company is assessing the results. We don't know if there is good quality oil yet. We expect to be informed in two weeks," the Cuban official, who spoke on the condition he was not identified, said. (Reuters, 25/7/04)

July 27: Canadian mining and energy company Sherritt International is analyzing 3D seismic work on four blocks offshore Cuba, the company's investor relations and corporate affairs VP Ernie Lalonde told the press. Sherritt acquired exploration rights to the N16, N23, N24 and N33 deepwater blocks, which span 2 million acres, in 2002. "We have shot the seismic and we are doing the analysis," Lalonde said, without saying when the analysis could be completed. Cuba's government opened up 51 blocks to foreign investors in 1999 for their subsequent development as a means of stimulating oil production in light of the 255,000 barrel a day deficit that in the past was provided by the Soviet Union. (BNAmericas, 27/7/04)

July 27: Guillermo Rivera, a spokesman for the Mexican Foreign Trade Bank (Bancomext), confirmed that Mexico will be making progress in the on-going negotiations to collect the nearly US$ 400 million the island owes. The official added that, although the matter has been taken to court, it is expected that part of the debt can be paid off through diplomatic channels with temporarily "frozen" assets pertaining to ETECSA, a Cuban government-owned telecommunications company. According to Rivera, the "frozen" assets amount to between US$ 40 and US$ 50 million, currently deposited in Italian accounts and resulting from the business operations of Empresa de Telecomunicaciones de Cuba S.A. (ETECSA) and Telefónica Antillana S.A. (TelAn). (Notimex, 27/7/04)

July 28: Brazil's federal oil company Petroleo Brasileiro SA (Petrobras) has delayed the signing of a contract for the construction of a lubricant plant in Cuba in partnership with local oil monopoly Cubapetroleo (Cupet). The project, worth $20 millions was supposed to be officially signed by Petrobras and Cupet officials on August 2 when the Brazilian company's president, Jose Eduardo Dutra, will visit the country. According to Petrobras, there has been no agreement on some aspects of the contract that are still subject of negotiations. The company said there was no possible new date for the contract to be signed. (Latin American News Digest, 28/7/04)

July 28: A new marina has begun operations on the western tip of Cuba in the province of Pinar del Río. The Gaviota Los Morros de Piedra provides services for boats passing through the area of the Guanahacabibes Peninsula, known for the conservation of its landscape and the beauty of its seabeds. (Radio Habana Cuba, 28/7/04)

July 29: Spanish oil and gas company Repsol YPF said it had found high-quality oil in an exploratory well in Cuban waters but it had decided the well was not commercially viable. "The first well drilled in Cuba has partially met our initial expectations," Chief Operating Officer Ramon Blanco told an analysts' conference call, according to a text provided by Repsol. "The existence of a petroleum system has been confirmed. Also we have been able to prove the presence of high-quality reservoirs," he said. "Nevertheless, the well has been considered non-commercial and, at this stage, the group is defining future exploration activities in the area," Blanco added. A company official said Repsol had found no gas. Michael Rodgers, a senior director at PCF Energy, a Washington-based energy consulting firm, said it is not uncommon for oil companies to come up empty in early exploration efforts, especially in untested areas such as Cuba's Gulf of Mexico waters. He said it may take several more wells before Repsol or another company learns whether the vast area off Cuba's coast contains enough light crude oil to justify investing $1 billion or more to develop a major oil field. "It's rare that the first well in a frontier basin finds a commercial discovery," Rodgers said. "This is a puzzle, and this is the first piece in the puzzle. The fact that they have proven the existence of a petroleum system is good news." (Reuters, Chicago Tribune, 29/7/04)

July 30: Cuban state-owned record company Egrem is getting an international launch for the first time in its 60-year history. The label's catalog features major names in Cuban music, including members of the Grammy Award-winning Buena Vista Social Club: Compay Segundo, Ruben Gonzalez, Omara Portuondo and Ibrahim Ferrer. Egrem will enter the UK market with 10 CDs to be released through a deal with Beckenham, England-based Proper Music Distribution. Similar independent deals are set for other European territories in coming months. (Reuters, 30/7/04)