Chronicle on Cuba - December 2004

Economy

December 1: Cuba has become the second major tourist destination for Canadian vacationers during the second quarter of this year, according to the Canadian Office of Statistics. Tourists from Canada preferred Cuba over Mexico and other vacation destinations. The Office of Statistics reports that from April to June, 143,000 Canadians visited the Caribbean island, where they stayed for an average 8.9 nights. This accounted for an 88.4 percent increase in contrast to the same period last year. (Radio Habana Cuba, 1/12/04)

December 1: The Minister of the Economy of Guatemala, Mario Cuevas Quesada, has wrapped up an official visit to the island. During his three-day stay, the Guatemalan official met with Cuban Foreign Trade Minister Raúl de la Nuez and Foreign Investment and Economic Cooperation Minister Marta Lomas to review bilateral trade relations. (Radio Habana Cuba, 1/12/04)

December 2: Cuba decided to grant import preferential duties to another 114 Guatemalan products, increasing the list of Guatemalan goods under this category to 502, according to an official source. Guatemalan Vice-Minister of Trade, Enrique Lacs, said the agreement was reached during a visit to Cuba by Economy Minister Marcio Cuevas. (EFE, 2/12/04)

December 2: Cuba and Bolivia signed five cooperation agreements on health and education during an official visit to Havana by Bolivian Foreign Minister Juan Ignacio Siles. The Cuban Foreign Minister confirmed that his Bolivian counterpart delivered a message to Fidel Castro from Bolivia’s President Carlos Mesa. No further details were released. (Europa Press, 3/12/04)

December 3: Havana recently inaugurated a series of modern facilities to obtain biotechnological elements with which to produce more vaccines. The new centers are another example of the scientific possibilities and talent the island has developed in the sector over the past 45 years. The new high-tech labs are part of an extensive investment process backing the island's national Biotechnology Program to produce medicines. (Radio Habana Cuba, 3/12/04)

December 5: Cuba is hoping that Bulgarian tour operators will begin generating tourist flows to their country. The news was known upon the return of Rumen Petkov, representative of the Bulgarian Socialists Party, from Cuba. Petkov pointed out that the Cuban authorities are also expecting that Bulgarian businessmen will join the management of Cuban tourism spots. Cuba's Tourism Ministry has declared special interest in ship construction and sea trade. Interest has also been shown in the field of energy and construction. (Sofia News Agency, 5/12/04)

December 6: Sandals Resorts International will manage the brand new five-star Princesa Del Mar hotel in Varadero, Cuba, bringing to three the number of resorts now being run by the all-inclusive chain in the Caribbean island. The 434-suite hotel came under Sandals management after Sandals and Gaviota, one of Cuba's largest and well-respected hotel companies, signed the management contract. "We are excited about this new development," said Sandals director Dr Jeffrey Pyne. "Our travel partners, particularly in Europe, the UK and Canada, have given tremendous support to our business in Cuba and we are thrilled to be able to include such a spectacular resort in our Cuban operations. We are looking forward with great enthusiasm to welcoming our guests to this special world-class facility." (Radio Habana Cuba, 6/12/04)

December 7: Venezuela has reached a preliminary agreement with Cuba to supply the Communist-ruled island with 500,000 tons of coal a year which will fuel a thermo-electric plant to be built by a Chinese company, a senior Venezuelan official said. China also was interested in building a plant to produce stainless steel on the Caribbean island which would use Cuban nickel and Venezuelan coal, Deputy Minister of Mines Orlando Ortegano told the press. "We had a recent meeting in which we committed ourselves to providing 500,000 tons of coal a year for this Cuban-Chinese deal," Ortegano said in an interview. He added the three parties had reached what he called a "pre-agreement" but could not say when the Venezuelan coal shipments could start. "The Cubans are interested because it will solve an energy problem in the south (of the island)," Ortegano said. "Cuba has the nickel and we have the coal and the Chinese have the capital and are interested in a stainless steel plant," he added. (Reuters, 7/12/04)

December 7: Cuba and the Dominican Republic expressed their wish to increase bilateral relations, including those on trade, during a meeting in Santo Domingo, capital of the Dominican Republic. At the headquarters of the Center for the Promotion of Imports and Exports, officials of the two countries expressed their interest in increasing trade, according to the reports received in Havana. Diplomatic sources said the value of the commercial exchange between Havana and Santo Domingo amounts to nearly 50 million US dollars, which should double as a consequence of the results of the Bilateral Commission which convened in Santo Domingo last November. (Xinhuanet, 7/12/04)

December 10: Cuba's sugar harvest began with the drought-ravaged crop estimated at no more than 1.8 million tonnes, compared with 2.52 million tonnes a year ago, industry sources said. The last time Cuba, one of the world's largest sugar exporters, produced less than 1.8 million tonnes of sugar was in 1909. Just four of 65 mills were scheduled to open this month, with the rest coming on line in January and February, a top sugar reporter, Juan Varela Perez, said in a daily radio spot. (Reuters, 10/12/04)

December 10: Iranian Minister of labor and Social Affairs Nasser Khaleqi met with Cuban Minister of Sugar Industry Rosales Toro Ulises, discussing ways to bolster sugar industry cooperation. According to a report released by the Iranian Embassy in Havana, the Cuban and Iranian officials reached consensus to expand research cooperation and share experiences in the field of sugar cane industry. (IRNA, 10/12/04)

December 13: Cuban sugar Minister Ulises Rosales del Toro announced 23 mills would remain closed during harvest just getting underway, confirming reports that drought had hurt this year's crop, the official daily Granma said. Rosales, opening the harvest over the weekend, urged increased industrial efficiency to maintain output at the previous harvest's 2.52 million tonnes of raw sugar, despite the unanimous opinion of local experts that production will not exceed 1.8 million tonnes, the lowest since 1909. "The minister insisted efficiency was a determining factor to counter possible low yields that the intense drought has caused sugar plantations," Granma said. The harvest usually begins in November or December and runs into May, but Cuba is in the grip of the worst drought in 40 years, according to the government. Rosales said just three mills would open this month, 46 in January and six in February. There were 85 mills opened during the previous harvest, 79 of which produced raw sugar and the remainder derivatives. (Reuters, 13/12/04)

December 13: Cuban Government Minister, Ricardo Cabrisas is in Moscow with the purpose of expanding bilateral exchange. The agenda of the also President of the Cuba-Russia Intergovernmental Commission for Economic and Commercial Cooperation will be extended for a further five days and will include meetings with official government authorities. Cabrisas will also meet with Russian Foreign Minister, Serguei Lavrov and with the official in charge of Russia's Chamber of Commerce and Industry, Evgueni Primakov. The Cuban official will also meet Russian deputies and representatives of the Ministry of Economy and Trade as well as the Association of Industrial and Financial Groups. (Radio Habana Cuba, 13/12/04)

December 14: Fidel Castro and Hugo Chávez have deepened their strategic alliance with a range of new agreements that guarantee a price floor for Venezuelan oil at $27 a barrel, open wide doors to Venezuelan capital and exports, provide Venezuela with more than 15,000 Cuban doctors and health specialists, and set out the mutual opening of state bank subsidiaries, among other important political and economic provisions. The agreements also provide that Venezuelan investments on the island will retain 100% of property rights, as well as complete elimination of tariffs and import duties for imports from Venezuela, tax exemption for all Venezuelan capital in Cuba while investments costs are recovered, and 2,000 higher education scholarships in Cuba for Venezuelan students in any field annually. The 15,000 Cuban doctors in Venezuela will also be training specialists in that country. (La Jornada, 16/12/04)

December 14: Cuba has reopened its border to Canadian beef and beef products of any age, the Canadian Food Inspection Agency has confirmed. Canadian officials hope the agreement, which also includes the importation of certain Canadian pet food, will lead to the reopening of the border to live Canadian cattle. "This is a very important gain for Canada," Agriculture and Agri-Food Minister Andy Mitchell said in a statement. "We continue to make progress internationally, and this agreement further demonstrates the level of confidence that our trading partners have in Canada's human and animal health safeguards." The Cuban border will remain closed to mechanically separated meat, vertebral column, trimmings, and tissues derived from the head, the CFIA said in a news release. (CTV.Ca, 15/12/04)

December 15: Over 1,000 people have been evacuated in the eastern Cuban province of Holguín due to floods caused by the Sagua de Tanamo river, swelled by 300-mm rainfalls. Castro and Santa Teresa, two of Sagua de Tanamo river’s tributaries, forced neighbors to seek refuge with friends and relatives or resort to government shelters. Damages to agriculture have not been yet assessed in coffee-producing areas. Holguín has been suffering the worst drought in 50 years, forcing authorities to adopt measures to guarantee water supply to the population, and secure productions and services. (Prensa Latina, 15/12/04)

December 15: Cuba’s economy grew by 3.0 pct in 2004, according to the preliminary annual report of the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC). The country managed to post the economic growth in 2004 despite the continuous drought and damages caused by the hurricanes. Another adverse impact on the Cuban economy in 2004 was caused by the energy crisis, ECLAC added. One of the main problems of Cuba in 2004 was the currency deficit caused by the higher crude oil prices and lower foreign investments to Cuba, said ECLAC. The fiscal deficit of the country totaled 3.5 pct in 2004, almost unchanged from 3.4 pct in 2003. The current revenue expanded 9.6 pct year-on-year in 2004. The current account deficit dropped to 0.3 pct of the gross domestic product (GDP) in 2004. [Balance Preliminar de las Economías de América Latina y el Caribe.pfd] (Latin America News Digest, 16/12/04)

December 20: Cuba hosted the Thomas Cook World Tour “Cuba's 2004”, aimed at promoting the Caribbean island's attractions in the German market. The event, sponsored by the tour operator Thomas Cook, contributed to the effort to turn Cuba into one of the main destinations for German vacationers. Sources from the tourism sector said that during their stay in Cuba, the German tour operators visited resorts and tourist facilities in various parts of the Caribbean island. (CubaXP, 20/12/04)

December 21: Cuba's exports were up 37 percent as of October 2004 compared with the same period last year, according to state media reports citing figures from the communist government's Foreign Trade Ministry. About 74 % of those exports were comprised of products traditionally sold abroad, such as nickel, sugar, tobacco and rum, the Communist Youth's Juventud Rebelde newspaper said. According to the Juventud Rebelde report, nickel was the main export, totaling 61 % of all Cuban exports. The remaining exports were nontraditional products such as generic medicines, steel and even bee's honey. Primary destinations for Cuban exports are Netherlands, receiving 28 percent of the island's exports, followed by Canada, Venezuela, Russia, Spain and China. There are 239 Cuban firms that export products abroad, 137 of them fully government owned and operated and another 102 run by the government in conjunction with foreign capital and management. (AFP, AP, 21/12/04)

December 22: Cuban parliamentarians expressed concern over soil degradation, which affects 70% of farmland on the island, indicated the official press. The National Assembly’s Commission on Education, Culture, Science, Technology and the Environment heard a report by Abilio Cárdenas, director of the Ministry of Agriculture’s Soil Institute, who said those soils suffer from the effects of erosion, acidity, salinisation, low organic matter, reduced fertility and poor drainage. (AFP, 22/12/04)

December 23: Cuban tourism and the economy overall continued the steady growth of recent years in 2004 despite a pair of devastating hurricanes, increased US sanctions and higher oil prices, the island's top economic planner said. In his annual year-end report, Economics Minister Jose Luis Rodriguez told Cuba's National Assembly that 2004 had been "extraordinarily difficult" in part because of more than US$2 billion ($A2.61 billion) in damage caused by Hurricanes Charley and Ivan. The UN Economic Commission for Latin America and the Caribbean, using traditional criteria for calculating gross national product, reported that Cuba's economy grew 3 per cent in 2004. Growth was 2.6 per cent the year before. Rodriguez, using a different formula Cuban planners devised to take into consideration the communist nation's broad social safety net and heavily subsidized services, said the economy grew 5 per cent this year. Rodriguez said the government's expectations for 2005 were low for the sugar industry. The news was brighter for nickel. Rodriguez projected production would reach 77,000 metric tons next year to be sold at favourable prices on the international market. (AP, 23/12/04)

December 23: For 2005, Cuban authorities have earmarked $1.469 billion for defence, out of a total budget of 22.704 billion. The Cuban government also announced further centralization of the economy. The Minister of Economy, José Luis Rodríguez, said that proper functioning of the economy requires “increased centralization of important economic decisions”. Similarly, the President of the Parliamentary Economic Commission, Osvaldo Martínez, indicated that in a centralized regime “business efficiency, rather than diminish, would increase”. “Among the main objectives for 2005 is increasing the country’s defence capabilities”, added Rodríguez. (AFP, 23/12/04)

December 24: A Swiss company in the business of information technology solutions for Latin America launched a website dedicated to money transfers to Cuba. The new service is provided by AWS Technologies SA through its web page and will be marked by its personalized attention, speed and efficiency, said the company. Any user having a credit card can use the new service to send money to family or friends in Cuba, where the money can be withdrawn in US dollars or in Cuban convertible currency in offices available throughout the island. (AIN, 24/12/04)

December 25: The budget and development guidelines for 2005 were approved in the last ordinary session of the Cuban Parliament. Fidel Castro attended the session to pass the 2005 budget, which assigned over two-thirds of the earmarked sum to social programs. Allocations for education, health and social assistance, culture, sports, sciences and technology amount to 10.5 billion pesos (same as US dollars in the current official exchange), and account for 68 percent of expenditures included in the budget. Education (4.1 billion pesos), health and new programs to improve medical and assistance services (2.3 billion pesos) and payments for social security pensions (2.3 billion pesos) registered the highest increases compared to 2003. Allocations for these three sectors rose by 11.3 percent, 9.4 percent and 5 percent, respectively. (Prensa Latina, 25/12/04)

December 25: Fidel Castro told his country's National Assembly that he had "good news" regarding the beleaguered economy, including announcements of unprecedented investments in nickel mining, the discovery of oil deposits and Venezuela and China's pledges to extend major loans as well as donate funds to the island. Castro made the announcements at the closing session of the 2004 Congress, at which the government budget and other economic and social plans were adopted, according to a summary published in the local press next day. China will be extending close to $2 billion in loans for joint nickel and nickel-iron mining ventures, he said. In addition, China has donated $6.1 million for the purchase of fabrics for school uniforms and a similar amount for hospital and medical equipment, and extended unspecified credit toward the purchase of television sets. Cuba's own resources plus an oil agreement in the works with Venezuela, Cuba's principal ally in Latin America, should ensure that the island's fuel needs are fully met in 2005, he said. In return, Cuba will provide a range of services - including medical care - to the South American country on "substantially preferential terms." Venezuela's state-owned PDVSA oil company is negotiating the partial purchase of Cuba's oil refinery at Cienfuegos and the possibility of forming a three-way partnership with China to produce stainless steel in Venezuela, among other projects. (EFE, 26/12/04)

December 25: An oil deposit with an estimated 100-million-barrel reserve has been discovered off Cuba's coast by Canadian companies Sherritt International Corp. and Pebercan Inc., Fidel Castro said. "We have a new oil discovery (...) the first since 1999," Castro said during a closed-door speech to parliament deputies, parts of which were carried by official media next day. "The oil has a density of 18 API (...) and contains less than 5 percent sulfur," he said, pointing out it was of better quality than the heavy crude associated with the area, which averages 16 API and 8 percent sulfur. The new Santa Cruz field, 33 miles east of the capital, will go into production in 2006, Castro said, while the Canadian firms will drill two new test wells, and explore three other potential deposits nearby in 2005. (Reuters, The Globe and Mail, 26/12/04)

December 25: Cuba and Yemen have signed a protocol to strengthen cooperation in sectors such as health, agriculture, sports, higher education and radio and television as
part of the 17th session of the Inter- governmental Joint Commission that concluded in Havana. (AIN, Radio Habana Cuba, 25/12/04)

December 26: Cuba's tourism minister said that 2 million people visited the Caribbean island so far this year, achieving a long sought after goal despite US efforts to undermine the country's main foreign exchange earner. "This year the US government increased the unjust blockade imposed on our country and pledged to affect the unstoppable development of our industry," Tourism Minister Manuel Marrero said. "These 2 million visitors represent an 8 percent increase over last year and are one more demonstration that Cuba is not alone," he added. Tourism and related activities earned revenues of $2.1 billion in 2003 and those earnings increased 15 percent this year, Economy and Planning Minister Jose Luis Rodriguez said earlier in the week. "The tourism industry accounted for 4 percent of foreign exchange earnings in 1990 and 41 percent this year," Marrero said. Last year, about 1.9 million foreigners visited Cuba. Canadians top the list of tourists, followed by Europeans, primarily from Italy, France, Germany and Spain. (Reuters, AP, 26/12/04)

December 28: Cuba has informed that the metallurgical and mechanical industry increased its exports by 16% in 2004. The Vice-Minister of the industry, Vicente De la O Levi, said that exports of that sector – heavy machinery – amounted to $90 million in the year coming to a close, which is an “all-time record”. (Granma, 28/12/04)

December 29: Despite having achieved full-employment category three years ago, Cuba is developing new policies to tackle renmants of unemployment in 2005, according to its Labor and Social Security Minister, Alfredo Morales. “Without losing this category in any way, we admit there is still 2 percent of unemployed people, though the entire population has access to jobs or education," assured Morales. (Prensa Latina, 29/12/04)

December 30: Moving to further centralize the communist state's control over the economy, the government's Central Bank announced that individual state companies would no longer handle foreign exchange. Beginning January 1 st, a single government account will be established for foreign currency and for convertible Cuban pesos, an exchangeable currency that trades 1-1 to the US dollar and that is now used as the primary form of legal tender on the island. Under a series of steps to be introduced in the coming months, state enterprises will relinquish control over foreign exchange and convertible Cuban peso accounts. Any profits from sales or services will have to be deposited into that single government account. Also, a state company that now wishes to buy any goods or services available only in foreign currency will need special approval from a new Foreign Exchange Approval Committee. A note signed by bank chief Francisco Soberon and published in daily official Granma said that, "next year, there will be a considerable increase in financial in-flows from abroad," thanks to deals with China, Venezuela and an oil exploration and production deal with Canada's Sherritt International Corp. (AP, AFP, The Globe and Mail, National Post, 30,31/12/04)

December 30: Cubans are bidding farewell to 2004 with a mixture of anxiety over the difficulty of making ends meet under the current economic conditions and hope that the economic growth reflected in official statistics will translate into improved quality of life. Insufficient income and nutrition are among the most serious problems affecting daily life in Cuba, according to a study conducted in 2003 by the National Institute for Economic Research. But in his year-end report to the Cuban national assembly (parliament), Economy Minister José Luis Rodríguez said that the average daily nutritional consumption in 2004 was 3,305 calories and 85.5 grams of protein. According to Rodríguez, these rates are above the minimum required levels established by experts at the UN Food and Agriculture Organisation (FAO). For the second consecutive year, the government used a methodology that factors in social services like health care and education that are provided free of charge to the country's 11.2 million inhabitants when calculating this past year's economic growth. According to the government's estimate, Cuba experienced a five percent increase in gross domestic product (GDP) in 2004 - two percentage points higher than the growth predicted by the Economic Commission for Latin America and the Caribbean (ECLAC). (IPS, 30/12/04)

December 31: Sherritt International Corp. has confirmed "promising" exploration results from an offshore oil prospect in Cuba, but made no predictions as to when or if the prospect could be brought into production. Shares of Sherritt and exploration partner Calgary-based Pebercan Inc. soared following reports of a joint oil discovery in Cuba. The discovery is in Block 7, an area off the northwest coast of Cuba. Sherritt, the largest foreign oil producer in Cuba, holds a 45-per-cent working interest in Block 7. Pebercan holds the remaining 55-per-cent stake and is the operator. (The Globe and Mail, 31/12/04)

December 31: Iran’s ambassador to Havana Ahmad Edrisian, meeting with Cuban Minister of Government Ricardo Cabrisas Ruiz conferred on the establishment of the 10th Iran-Cuba Joint Economic Commission slated for January 2005. Cabrisas who is also the chairman of the Iran-Cuba Joint Economic Commission welcomed the expansion of relations between the two countries particularly in areas such as commerce, waterworks and transportation, and referred to the joint commission as an opportune and important chance for exchanging views and paving the grounds for the implementation of joint venture projects as well as signing banking agreements. (MNA, 31/12/04)