Chronicle on Cuba - April 2005

Economy

April 5: Cuba's recent strengthening of its currency is designed to close the gap in the purchasing power of those who earn only pesos and those who receive US dollars from abroad, analysts say. But the peso's revaluation makes no economic sense because the communist-ruled island's economy is not strong enough to back up the 7-8 percent increase in the value of its currency, the experts added. A study released recently by Carmelo Mesa-Lago, one of the top US experts on Cuba's economy, called the currency changes ''a symbolic, political decision geared to the outside world and (…) Cubans who only have pesos.'' The report was released at the University of Miami's Institute for Cuban and Cuban-American Studies. ''The most important facet of what's going on here is that the basis Castro is using to trumpet these successes is solely the generosity of others'' such as Venezuela and China, said John Kavulich, who monitors Cuba's economy. "How is that a sustainable economic policy and how can they be proud of that rationale?'' (The Miami Herald, 5/4/05)

April 5: Low income families began receiving free TV sets donated by the Cuban government, in line with the announcement made by Fidel Castro last March 31. The distribution will start in all municipalities of the eastern province of Granma, including remote areas at the Sierra Maestra --the island highest mountains. (Radio Habana Cuba, 5/4/05)

April 6: The operator of China's second-largest Shengli oilfield is stepping up overseas exploration, spending more on such ventures this year as the world's No. 2 oil user grapples with falling reserves, officials said. Shengli Oilfield Administration Bureau, a unit of state-run Sinopec Group, will spend about $40 million drilling for oil and gas in Cuba, Iran and central Asia in 2005, company officials said. "This will be the heaviest spending in a year and we expect the pace to continue in the next few years," a Shengli executive told the press. Shengli, which is among the first Chinese companies to venture abroad, will sink a total of eight wildcat and appraisal wells this year, four in Kazakhstan, two in Iran, and one each in Cuba and Kyrgyzstan. (Reuters, 6/4/05)

April 9: Cubans awoke to a fresh revaluation of the "convertible peso," the second in less than a month. In recent days, many Cubans rushed to exchange their foreign currency before an 8 percent hike in the value of the convertible peso, until now on a par with the dollar, went into effect. In order to serve the flood of people wanting to exchange their foreign currency, primarily dollars, for CUCs or "chavitos," as the convertible pesos are known, Cuban banks were open until 9 p.m. the day before, Cuba's Central Bank said in the official press. Bank accounts consisting of US dollars, both previously existing ones and those opened until April 9, won't be affected, Castro said in a special telecast on March 24. (EFE, 9/4/05)

April 9: Truong Tan Sang, the top economic official of the Communist Party of Viet Nam (CPV), arrived in Cuba to promote bilateral cooperation. Sang, who is head of the CPV Central Committee's Economic Commission, discussed with Juan Carlos Robinson, a Politburo member of the Communist Party of Cuba Central Committee, actions to promote economic, commercial, scientific and technical cooperation between Viet Nam and Cuba. Sang and his entourage are scheduled to hold working sessions with leaders of the Party, Government, the Ministries of Sugar, Tourism, and Health, and the Central Bank of Cuba. (VNA, 10/4/05)

April 12: While Cuba has joined most of the rest of the world in adopting anti-smoking measures, the Caribbean island nation's scientists have also developed a new, less harmful variety of tobacco to lessen the ill effects of this health-threatening habit. The recently developed strain of tobacco, called IT-2004, was created through traditional cross-breeding methods and has a lower tar and nicotine content. It will be used to produce cigarettes for the domestic market. According to the state-run Tobacco Research Institute (IIT), the new variety of tobacco is also better able to withstand drought, as well as being more resistant to pests and disease. It also boasts a yield of up to three tons per hectare. Cuban experts say the cancer-causing potential of cigarettes does not depend solely on the type of tobacco used, but also the way in which the tobacco plants are grown, in terms of the distance between seeds when planted and the processes followed for irrigation, fertilisation and other procedures. The way the tobacco leaves are processed after picking also plays a role. (IPS, 12/4/05)

April 13: Experts participating in the 4th International Meeting on Accounting and Finance that opened at Havana´s Conference Center, are analyzing aspects of the decentralization of the accounting process in Cuban state-run companies and environmental management as an alternative for the sustainable development of tourism. Over 250 experts from eight nations are involved in discussions about internal economic control, its impact in public management, and the prevention of corruption. (Prensa Latina, 14/4/05)

April 14: Cuba has kept its foreign debt in check in recent years despite serious financial difficulties and a weaker dollar, according to a government report. The hard currency debt, based on preliminary figures, was $12 billion last year, compared with $11.3 billion in 2003 and $10.9 billion in 2002, based on preliminary Central Bank figures, the report said. Cuba reports its foreign debt in dollars, but two-thirds is held in yen, euros and other currencies that have appreciated significantly against the US currency over the last two years. The report said official bilateral debt was up significantly at $6.25 billion, compared with $5.65 billion in 2003, due mainly to an increase to borrowing from foreign governments. Cuba's debt to suppliers was up $100 million at $2.16 billion, while debt to private financial institutions was reported virtually unchanged at $3.56 billion. Some 80 percent of the debt was principal and 20 percent overdue interest. (Reuters, 14/4/05)

April 15: For a decade, capitalist Russia has sought to rebuild ties with Cuba. "We have good political and diplomatic relations. What is failing is trade," Russian Embassy counselor Eugenio Gliok said in an interview. Bilateral trade amounted to little more than $200 million last year, a far cry from the billions of dollars in subsidized commerce -- mainly sugar-for-oil barter at preferential prices -- that benefited Cuba until 1991, when the collapse of the Soviet Union plunged the island into deep economic crisis. Cuba wants to buy Russian goods, such as new Ilyushin planes to renew its aging airline fleet including a last generation IL-96 for use by Fidel Castro, but the cash-strapped nation's debts have been a hurdle to signing deals. Moscow claims Havana owes 20.8 billion transferable rubles, or $23 billion. Havana does not recognize this debt and has presented a counter claim of $40 billion in damages caused by the demise of the Soviet Union, such as unfinished work on a nuclear power plant, an oil refinery and a nickel facility. "The problem is very complicated. Russia has forgiven many Third World debts. Talks are under way to resolve this but no agreement has been reached with Cuba," Gliok said. Cuba has also run up post-Soviet debt and is in arrears on a credit line opened in 1993 to pay for imports from Russia. Gliok said the new debt has become a problem for Russian companies trying to do more business with Cuba. "The state can no longer tell companies to do business with Cuba. The Soviet command economy no longer exists," the diplomat said. Russia is still a big consumer of Cuban raw sugar, and bought 1.5 million tons last year but did so through traders on world commodity markets with no government involvement. (Reuters, 15/4/05)

April 15: Cuba, severely squeezed for hard currency since the fall of the Soviet Union, managed to boost its foreign reserves by $1.48 billion in 2004 as it achieved its first current account surplus since 1993, according to a government report. The boost of nearly $1.5 billion, all in hard currency, last year dwarfed the net $107 million rise shown by central bank figures for the 1993-2003 period, when Cuba had been plunged into economic crisis by the loss of support from Moscow. The leap in hard currency on hand appears to provide a cushion as the Communist-ruled nation faces challenges including a stiffer US trade embargo and a rise in the world prices of its leading import items, food and oil. Cuba's central bank keeps its total reserve figures secret to hide information from its archenemy the United States, which has enforced sanctions against the Caribbean island since 1962. Last year Cuba achieved its first current account surplus since 1993, of $176 million, and posted a $1 billion increase in its capital account, the government report, parts of which was seen by the press, said. (Reuters, 15/4/05)

April 17: Fidel Castro reiterated his government’s will of revaluating again the Cuban convertible peso that was recently revaluated by 8 percent. “We have revaluated our currency, we will keep on revaluating it, and nobody will stop that”, Castro said to the press after voting in municipal elections. (EFE, 17/4/05)

April 19: Cuba has gradually increased oil consumption to 173,000 barrels per day, thanks to rising imports despite high prices, according to preliminary figures from the country's National Statistics Office. The NSO reported local production last year declined to 68,000 bpd, the same level as in 2002, after increasing slightly in 2003. Petroleum and derivative imports increased from 84,000 bpd in 2002 to 98,000 bpd in 2003 and 105,000 bpd last year, the NSO said. Canadian companies Sherritt International (S.TO) and Pebercan Inc. (PBC.TO), in conjunction with state-run Cubapetroleo (Cupet), account for 60 percent of the output, plus 2 million cubic meters of natural gas per day. (Reuters, 19/4/05)

April 19: Pharmaceutical and medical equipment companies from 29 countries, including the United States, are exhibiting their products in Havana at the XII International “Health for All” Fair. Among the 91 exhibitors are American Medrad, which produces medical equipment and Navarreta Group-Wotham Laboratories, a producer of clinical, biological and pharmaceutical products. (EFE, 19/4/05)

April 19: The governments of Venezuela and Cuba are setting aside $200 million each to provide export credits to increase bilateral trade between the two Caribbean allies, Venezuelan President Hugo Chavez said. Left-winger Chavez announced the export scheme during a meeting in Caracas of business executives from both countries. Venezuelan manufacturers planned to increase exports to the Caribbean island of products like cocoa, sardines, clothes, shoes and condensed milk, Chavez said. "Both governments have decided to set aside $200 million each to support exports," he told the meeting, which was attended by Cuba's Internal Trade Minister Barbara Castillo. The Venezuelan export credits would be channeled through state banks, he added. Chavez, who said he would attend a trade meeting in Havana next week, also announced a plan to create a Venezuelan-Cuban joint venture to study alternative sources of energy. (Reuters, 19/4/05)

April 20: Trade between Venezuela and Cuba could reach as much as $1 billion by the end of this year, Venezuelan President Hugo Chavez said. "This year we could reach US$1 billion in trade with Cuba," Chavez said in a televised speech during a visit by Chilean President Ricardo Lagos. There's a bad rumor that Fidel doesn't pay. That's not true. Fidel does pay," said Chavez, one of Castro's closest political allies. The Venezuelan leader met with Cuban business representatives earlier this week and plans to visit the Caribbean island next week for a meeting to boost business between the two Latin American nations. (AP, 20/4/05)

April 20: The worst Cuban sugar harvest in a century is nearing its conclusion, with output not expected at much more than 1.3 million tonnes of raw sugar, barely half of last year's output, industry sources said this week. "We were just over a million tonnes when the month began, at 1.2 million last week, and should end milling in early May at a little over 1.3 million tonnes," an industry insider said, asking his name not be used. Cuba produced 2.52 million tonnes of raw sugar last year. A prolonged drought affecting much of the Caribbean island was viewed by local experts as the main reason for the close to 50 percent drop in output this year. But they added neglect of the state-run industry since the collapse of the Soviet Union denied it a guaranteed market at subsidized prices just as output peaked at 8 million tonnes, was also to blame. "Since the early 1990s there has been little fertilizer and other inputs to cultivate plantations," a Havana University professor who specializes in agriculture said. "Once privileged agricultural and industrial workers have seen their living standards deteriorate markedly and at the same time faced harsher working conditions," the academic added. (Reuters, 20/1/05)

April 21: Fidel Castro announced an increase in the island's minimum wage, more than doubling salaries of nearly 1.7 million Cuban workers. Farmhands, plumbers and other low-wage workers currently making 100 Cuban pesos (about $4.20) a month will earn 225 pesos ($9.40) starting May 1, he said. Castro made the announcement in a televised address marking his eighth speech in the last 11 days. Castro said this would raise the average monthly wage in Cuba to 312 pesos ($14.20) from 282 pesos ($12.80) at a cost to the government of $48.4 million. Cubans welcomed the raises, but said it was still too little to live on. Rent and public services are heavily subsidized in Cuba, but essential consumer goods are more expensive than in the United States. (Reuters, AP, Prensa Latina, 22/4/05)

April 21: Dealing with rising oil prices, Fidel Castro has made a call not to waste electricity. The Cuban leader recalled that 20 percent of the electricity generated in the country is lost in transmission and distribution. Hundreds of millions of dollars are wasted on energy because of problems in the systems used to take the electricity to the final consumer. The country needs to take short-term measures to cope with this problem. Cuba has already purchased modern equipment for the manufacturing of wire and the necessary raw material to produce insulation. "We will carry out an intense work on this regard and a total revision of existing networks," Fidel Castro said. Castro announced the purchase of a huge number of energy saving light bulbs and fluorescent lamps to substitute incandescent light bulbs units. (Prensa Latina, 22/4/05)

April 21: Cuba's 2004 production of unrefined nickel plus cobalt was actually little changed from 2003's level, despite a government report four months ago that said output increased substantially, industry and government officials said. Economy and Planning Minister Jose Luis Rodriguez said in December that 2004 output rose 7.5 percent over 2003's production of 71,700 tonnes. "The initial report (on 2004 production) was a bit optimistic, more the plan than the reality. Preliminary data now show there was little change in production last year," a mid-level government official told the press. The official said 2004 output was around 72,000 tonnes of mainly nickel sinter and sulfides, with plans to reach 77,000 tonnes this year. Unrefined nickel plus cobalt had consolidated its position as Cuba's largest export over sugar even before high prices led to an estimated $800 million to $1 billion in revenue last year. (Reuters, 21/4/05)

April 21: A huge fire that scorched more than 2,600 hectares (6,419 acres) of forests in the mountains of the eastern Cuban province of Cienfuegos is under control, the AIN news agency reported. One section of the fire, covering 1,090 hectares (2,691 acres), affected the communities of La Sierrita, Cafetal and Vegas del Cafe, while the other, near Lake Habanabilla, burned some 1,560 hectares (3,851 acres). Forest rangers and workers from nearby agricultural centers, backed by aircraft, worked to put out the blaze. This was the first fire to break out in the mountainous Escambray region, in Cienfuegos, an area rich in plant and animal life. (EFE, 21/4/05)

April 23: Russia and Cuba wound up talks in Moscow during the 6th Inter-Governmental Commission for Economic, Commercial and Scientific-Technical Cooperation. Cuba expressed an interest in purchasing fertilizers, metals, pharmaceutical products, spare parts and Russia is interested in participating in the modernization of energy facilities. (Radio Habana Cuba, 23/4/05)

April 25: World Health Organization (WHO) inspector David R. Buckley praised the scientific and technological level of the Cuban pharmaceutical industry, local mass media reported. After giving a conference in the 3rd International Forum on Aseptic Processing in the Bio-pharmaceutical Industry, the expert highlighted the training of Cuban professionals and rigor of those regulations currently in force in the island for the production of medicines. The meeting was attended by experts from Spain, Italy, France, Sweden, Switzerland, Czech Republic, Australia, Argentina, Mexico and Uruguay. (Prensa Latina, 25/4/05)

April 25: Malaysia agreed to allow Cuba to use Malaysians for clinical trials of vaccines in a bid to boost cooperation in the pharmaceutical sector between the two countries. The deal was reached between visiting Cuban Defense Minister Raul Castro, the younger brother and designated successor of Fidel Castro, and Malaysian Deputy Prime Minister Najib Razak. It involves procurement, manufacturing and research of vaccines and pharmaceutical products, Najib said. Cuba's strength is in production of pharmaceuticals and vaccines, having developed a cheaper vaccine to treat childhood meningitis in 2003. (AP, 25/4/05)

April 25: Cuba, facing its worst sugar harvest in a century, will import more sugar this year in order to have enough to meet its export contracts, local experts and industry sources said. Cuba has imported around 10,000 tonnes of low-quality whites each month so far this year, mainly from Colombia, according to international media reports. Local experts speculated imports would continue at least at a similar tonnage through the end of the year. "This year's export plan was 900,000 tonnes of raw sugar based on a minimum 1.5 million tonnes output, a tight fit anyway, but now it is clear we will come in around 200,000 tonnes short of our target," an industry insider said. "I think we have little choice but to keep importing, at least at the present rate. We are even importing alcohol," he said. Cuba traditionally exports all but 700,000 tonnes of the crop, mainly to Russia and China, but has imported sugar in the past to meet export commitments when production has fallen short of expectations. The always hermetic sugar ministry has not commented since January on the harvest. (Reuters, 25/4/05)

April 26: Venezuela's state-run company Petróleos de Venezuela, or PDVSA, will open an office in Cuba during a meeting aimed at boosting trade between the two Caribbean nations, the Venezuelan government news agency reported. The PDVSA office will be located in Havana, according to the Bolivarian News Agency. Hoping to further deepen economic relations, an estimated 400 Venezuelan business people will begin exhibiting their goods during a four-day trade fair in Havana. (AP, BNAmericas.com, 26/4/05)

April 27: Venezuela's government-controlled Banco Industrial de Venezuela and the state oil company Petroleos Venezolanos were opening offices in Havana -- moves that could help the growing bilateral trade. Venezuela has increased oil shipments to Cuba to 80,000-90,000 barrels a day and will make Havana the headquarters for its Caribbean energy operations, Venezuelan Oil Minister Rafael Ramirez said. Venezuela's state oil company, Petroleos de Venezuela (PDVSA), will open an office in Havana when President Hugo Chavez visits Cuba to strengthen a growing political and economic alliance. Ramirez said PDVSA is now looking beyond oil supplies to the building of storage and tanker terminal facilities in Cuba, and exploring joint ventures to refine petroleum for distribution to other Caribbean islands. An agreement to build a lubricants plant in Cuba will be signed, and Brazil's state oil company, Petrobras (PETR4.SA) (PBR.N), has been invited to join the venture, he said. Brazilian diplomats said no agreement has been reached with Petrobras in ongoing talks on the lubricants project. Venezuela, the world's fifth-largest oil exporter, is also studying involvement in the completion of the Soviet-built refinery in Cienfuegos, Cuba, to process Venezuelan crude for distribution in the Caribbean. Another refinery project under study by PDVSA would be in Matanzas, Cuba's main tanker port, he said. (La Jornada, AP, Reuters, 27/4/05)

April 28: Venezuelan state oil giant Petroleos de Venezuela SA will prospect for, pump and refine oil from Cuba's Gulf of Mexico economic zones, the company announced. The announcement came as Venezuelan President Hugo Chavez paid a visit to Cuba to bolster the countries' economic co-operation, and open a PDVSA office in Cuba. Spain's Repsol YPF SA also has been prospecting off Cuba. PDVSA will work with Cuba "in prospecting and production [on new wells located in territorial waters] as well as in refining and marketing," PDVSA said. In January, Brazilian ambassador Tilden Santiago said Brazil's state oil giant Petrobras SA, also now boosting energy co-operation in Cuba, could team up with Canada's Sherritt International Corp. or Repsol as it moves to explore two new prospecting zones off Cuba. Cuba is paying for the estimated $1 billion a year oil bill with medical and educational services. Officials said 30,000 Cuban doctors and medical personnel are working in Venezuela. (The Globe and Mail, Reuters, 28/4/05)

April 28: With an eye toward boosting bilateral commerce, the Banco Industrial de Venezuela opened a branch in the Cuban capital with some $400 million allocated for joint trade operations on non-petroleum products. Cuba is hoping to buy all sorts of consumer goods from Venezuela, everything from canned sardines to chocolate, clothing, furniture, electric appliances and more, all of which will be sold at subsidized prices at a chain of stores that is to open on the island. Banco Industrial de Venezuela chief Luis Quiaro told the press that the new office will operate under a special license, the first that Cuba has granted to a foreign bank, which will allow it to receive and authorize loans and financing. To explore the possibilities of the Cuban market, more than 200 firms are attending the 1st Venezuelan Products Trade Fair. Cuban ministers and their visiting Venezuelan counterparts also signed a range of future cooperation accords in the areas of nickel production, transportation and agriculture, among others. Chávez said the cooperation agreements with Cuba were "one more step (...) toward Latin American integration, but not under the instructions of Washington." (Sun Sentinel, EFE, Reuters, 29/4/05)