Chronicle on Cuba - November 2005

Economy

November 2: Canada signed an agreement with Cuba calling for the sale of 100,000 metric tons of Canadian Western Red Spring Wheat during the 2005-2006 (August-July) crop year, according to the Canadian Wheat Board (CWB). This represents the largest amount of Canadian wheat sold to Cuba since 1990-1991 and is the first since 1997, the CWB said. Valued at approximately C$20 million, the deal is three times the most recent five-year average of CWB wheat sales to Cuba (about 37,000 tons). During the 2004-2005 season, Canada sold 77,000 tons of wheat to Cuba. (Dow Jones, 2/11/05)

November 2: Spanish businessmen are asking the Cuban and Spanish authorities to increase efforts to continue to expand investment in the island. The president of the Higher Council of Spanish Chambers of Commerce and the Association of Spanish Businessmen in Cuba (AEEC), which comprises 170 companies with interests in the island, requested "efforts" to increase Spanish participation at the Havana International Trade Show, FIHAV. (El País, 11/2/05)

November 2: H urricanes helped flatten third-quarter profits at Sherritt International Corp., but the company was also hit by lower prices for nickel and cobalt, which together account for nearly half of its sales. Sherritt reported a profit of $23.1-million or 13 cents a share for the three months ended September 30, compared with $35.2-million or 20 cents for the same period in 2004. Sales from its metal division fell to $83.8-million from $100.9-million. Sherritt said its oil and gas, mining and power operations in Cuba were affected by hurricanes. (Globe & Mail, 3/11/05)

November 3: Cuba is interested in intensifying supplies of the Belarusian trucks, construction materials and equipment, household appliances, clothes, footwear and foodstuffs from Belarus. A Belarusian delegation headed by Minsk mayor Mikhail Pavlov is on a visit in Havana to discuss its plans to increase the import from Belarus and to open an assembly production of the Belarusian tractors in Cuba. (The National Center of Legal Information of the Republic of Belarus, 3/11/05)

November 3: Repeated equipment failure in two key power plants in Cuba is the cause of increased power outages affecting the population, announced the Electrical Union, the national power company. With one of the thermoelectric power plants undergoing maintenance and generators unexpectedly going off-line at the Felton plant, "power supply to the population is being affected significantly," representatives from the Union told the press. (EFE, 3/11/05)

November 3: Trade exchange between Mexico and Cuba has grown rapidly with a total value of 200 million USD for the first six months of this year, 27 million USD more than last year, said the Mexican ambassador to Cuba. Speaking to reporters at the inaugural ceremony of the 23rd Havana Trade Fair (FIHAV 2005), the Mexican ambassador said 2004 was the most difficult time for the two sides to increase bilateral trade. The import-export turnover reached only 173 million USD, a 60 percent decline in comparison with the average figure of 1990s. (VNA, 3/11/05)

November 4: The governments of Cuba and North Korea signed in Havana a Protocol of Commercial Exchange, during the 24th meeting of the Intergovernmental Committee for Economic, Scientific and Technical Consultation between the two countries. Cooperation between the DPRK and Cuba encompasses the sectors of agriculture, sports, education, transport, oil, energy conservation, commerce, as well as scientific and technological exchange. (AFP, 7/11/05)

November 4: Venezuela hopes to double business with Cuba to $4 billion (euro 3.4 billion) next year, including investments in housing projects and two Cuban oil refineries, said a commerce official attending an annual trade fair on the island. The South American country is already Cuba's top trading partner with $1.4 billion in commerce annually -- the vast majority in exports of Venezuelan petroleum. But Roger Figueroa, Venezuela's vice foreign commerce minister, told the press that his country plans to invest at least $2 billion more for the new projects with Cuba, and that annual commerce could reach another $2 billion by year's end. The $2 billion in investments includes $1 billion to construct housing in both countries, and the rest for the operation of oil refineries in the southern region of Cienfuegos and the northern coast of Matanzas, he said. (AP, 4/11/05)

November 5: China is eager to increase its trading and cooperative relations with Cuba in all areas, Vice President of the Chinese Trade Promotion Council Zhang Nei said at the 23rd International Havana Trade Fair (FIHAV 2005). Nine Chinese enterprises were showcasing products, including electronics, informatics and telecoms equipment, computers, chemicals, electrical appliances and toys, at FIHAV 2005. Speaking at the China Day festival within the FIHAV 2005 framework, Cuban Minister of Foreign Trade Raul de la Nuez said that two-way trade between the two countries has so far this year increased by 48 percent over 2004. (VNA, 5/11/05)

November 7: Cuba's trade volume reached 7.5 billion dollars last year, with Venezuela heading Cuba's list of most important commercial partners, a Cuban official said. The communist-ruled island's imports were worth more than 5.6 billion dollars, with exports of 1.9 billion, leaving Cuba with a foreign trade deficit of 3.8 billion dollars, according to Deputy Foreign Trade Minister Antonio Luis Carricarte. Carricarte told the Cuban weekly Opciones that this year Cuban foreign trade grew 22 percent. "Exports tend to go down primarily because of decreased sales of sugar and its by products," the deputy minister said. "In addition, world prices for nickel have slumped. However, our exports of tobacco and non-traditional items have gone up." Meanwhile, imports including fuel, food, metals, chemicals and industrial equipment went up 34 percent, Carricarte said. The list of Cuba's main trade partners is led by Venezuela, whose share of trade reached 22 percent. It is followed by China (10 percent), Spain and Canada (both 8 percent), the Netherlands (7 percent), the United States (5 percent), Brazil (4 percent) and Vietnam, Italy and Japan (3 percent each). (Reuters, AFP, 7/11/05)

November 9: The governments of Cuba and Serbia and Montenegro inked an agreement of collaboration aimed at promoting tourist travel. The Cuban minister of Tourism, Manuel Marrero, said that this agreement would enable a valuable exchange of experience. (EFE, 9/11/05)

November 9: The Cuban government has launched a campaign against produce traders at the country's only private markets as part of a larger effort to rein in capitalist tendencies. Police and inspectors raided markets in Havana this week, shutting them down while they checked papers and fined and arrested some individuals. Similar measures in the provinces over the past few weeks have left markets bare and long lines at state markets for whatever produce and meat were available. The government strictly controls farm production but allows some sales on the open market after farmers meet state quotas. Farmers and cooperatives are expected to transport and sell their products without relying on middlemen, whom the government labels parasites. ''In general the people are not happy since the most visible result is there are less products, longer lines, and prices have not declined," a professor in Central Camaguey, where the drive began a few weeks ago, said in a telephone interview, adding that attempts to increase supplies at state markets had changed little. (Reuters, 10/11/05)

November 10: Cuba has expressed readiness to buy five new airliners from Russia in the next two years. This is a result of the recent bilateral recent talks held in Havana, where the sides agreed on the purchase of two Il-96-300 aircraft, two Tu-204-100 liners and one Tu-204C transport plane. (Novosti, 10/11/05)

November 14: The Cuban government has embarked on a new anti-corruption drive, a campaign that includes searches and seizures at farmers' markets and investigations into wrongdoing in the housing sector. Just one month after an anti-corruption drive targeting Havana's gas stations, including the temporary replacement of gas station attendants with thousands of young social workers, the government has launched an effort to tackle fraud in other basic areas of the island's economy. Inspections carried out in recent days in some of Havana's main "agromercados," or government-licensed farmers' markets, revealed serious infractions and prompted authorities to seize 170 tons of goods and impound 36 trucks whose cargo had been sold to intermediaries in the vicinity of private markets, officials said. Havana Mayor Juan Contino told local media that the government-run markets were short on supplies in recent months due to climatic conditions, while in the private farmers markets "food was offered at exorbitant prices," offered by people who "do not comply with their deliveries to the government (...) and sell their wares to the private markets." The battle against corruption, said Contino, will go beyond the markets and also include areas such as housing. He said authorities would investigate irregularities in rentals, theft of construction materials and unauthorized construction. During a meeting on strategies for combating corruption over the weekend, Contino also said authorities would monitor illegal sales on public roads and "all criminal activity that disturbs citizens' tranquility." (Reuters, Dominican Today , 14,15/11/05)

November 14: Farmer’s markets experienced an abrupt drop in the supply of products after a police operation was launched in Havana's "agromercados". The offensive immediately led to an abrupt drop in the supply of products in the city's farmers markets, which cannot be compensated for by the limited quantities sold in state-run shops at fixed prices. According to Cuban law, small farmers and cooperatives can only sell their products on the open market after they have fulfilled the quota that they are required to sell to the state. ( IPS , 18/11/05)

November 14: Cuban nickel output is right on track, despite technical problems and heavy rains in the Moa mining region of western Cuba, the director of Cuba's state-run nickel company said. Communist Cuba aims to produce 76,000 tonnes of unrefined nickel and cobalt this year, up from 72,000 tonnes in 2004. "Thanks to the workers' efforts, we have reached 99 percent fulfillment of the production plan," the Trabajadores weekly newspaper reported Cubaniquel director Ricardo Gonzalez saying. The Pedro Sotto Alba plant, which is operated by a joint venture with Canada's Sherritt International, has produced 300 tonnes more than planned, Gonzalez told workers at a meeting in Moa marking the day of the geologist. A conveyor system supplying ore to the older Rene Ramos Latour plant in Nicaro will be completed before the end of the year, he said. The conveyor belt will allow output to increase from 10,000 to 17,000 tonnes a year. New boilers will improve production at the Che Guevara plant in Punta Gorda, he said. (Reuters, 14/11/05)

November 16: Confronted with record levels of sugar production on the world market, the Cuban Ministry of Sugar is involved in the diversification of that industry. The office is concentrating its efforts on "Operation Alvaro Reynoso" – converting old sugar mills and factories into more than 240 new facilities for the production of a wide range of food items. Work is going on in the building of huge silos that will be used for the storage of grains and cereals. The ministry will also control grain mills and plants that will be dedicated to pasta production, cocoa processing and roasting sunflower seeds. Several of these conversion operations involve close working relationships and coordination between the sugar and the food industry ministries. The Minister of sugar reported that following the prolonged drought that caused a significant decline in past sugarcane harvests, the latest production estimates for September showed an increase of 3.8 tons per hectare due to the effects of recent rainfall. "Though still at a weak level of output, it is certainly a positive indicator," the official noted. One of the objectives of "Operation Alvaro Reynoso" is to produce enough sugarcane to assure sugar for national consumption and sufficient surplus to honor foreign trade commitments, the minister explained to the participants in a seminar organized by that industry’s labor union. (Granma, 16/11/05)

November 17: Fidel Castro has mobilized an army of young Cubans on a crusade to stamp out rampant theft hobbling Cuba's state-run economy and shore up its communist society. ``In this battle against vice, nobody will be spared,'' Castro warned in a speech to Havana University students. "Either we defeat all these deviations and make our revolution strong, or we die,'' the 79-year-old leader said. Castro railed against Cuba's "new rich'' spawned by reforms that allowed limited private enterprise a decade ago after the demise of the Soviet Union plunged the island of 11 million into deep economic crisis. He vowed to eliminate differences that emerged in Cuba's officially egalitarian society between those who have access to hard currency -- mainly cash remittances from relatives in Miami -- and those who do not and struggle to make ends meet. Current targets of his wrath are owners of small restaurants allowed to seat no more than 12 people, private taxis who drive gas-guzzling vintage 1950s American cars, and gas pump attendants accused of pocketing millions of dollars. "I'm not theorizing. We are acting. We are marching toward a total renewal of our society,'' he said. "The work of these young people will put an end to a lot of vices, pilfering and sources of dishonest money for the new rich,'' he said. Castro said hard currency stores could be targeted next in the drive to stop stolen goods and also subsidized medicines being sold on the black market. He indicated that Cuba might revalue its currency again, a step taken in April that reduced the purchasing power of Cubans who receive cash from relatives the United States. [Fidel Castro’s speech] (EFE, Reuters, 17,18/11/05)

November 17: The Cuban government has launched a wide-reaching anti-corruption campaign that is aimed at curbing diversion of funds, theft and abuse of power in state-owned companies and businesses. Specialists consulted concur that the shortage of products and services available through legal channels and the high prices for goods sold in both Cuban pesos and hard currency serve to encourage theft and illegal businesses. In addition, wages are often extremely low. A survey conducted in Havana at the start of the decade found that an average family of four would require seven times the average salary - which is roughly 260 pesos, equivalent to 10 dollars a month - to meet their basic needs. ( IPS, 18/11/05)

November 20: Cuba welcomed its two millionth visitor, 40 days earlier than last year. The news was made public by Cuban Tourism Minister Manuel Marrero Cruz, at an event held at the Varadero International Hotel in Playa Azul, which is celebrating its 55 th anniversary. The minister said that, despite this year’s adverse weather conditions, so far this year tourism is up 12 percent from last year, counting for 87 percent of this year’s 2.3 million target. The tourism minister indicated that these numbers are due to a significant increase of tourists from Canada, the United Kingdom, Spain and Mexico, as well as from newer markets such as the Netherlands, Portugal, Brazil, Argentina and the Nordic countries. Marrero Cruz said that this winter’s tourist season will see a seven percent increase in flights to Cuba, compared to last winter, with 100 airlines in 40 cities worldwide offering direct flights to Cuba, as well as four new hotels offering a total of 1,921 rooms. (Granma, 21/11/05)

November 22: Progressive Arch, a group of moderate oposition organizations, called upon the government of Fidel Castro to implement reforms to eradicate corruption in the country. “Fighting such wide-spread and deep-rooted corruption will be no easy endeavor either under the current government or the next" and the only way to succeed is by implementing reforms that root out the underlying causes, said Progressive Arch spokesman Manuel Cuesta Morúa. (AFP, 22/11/05)

November 23: A week after announcing a government campaign against stealing and "skimming" by workers in the state-run economy, Fidel Castro decreed hikes in wages, pensions and electricity rates. The wage hike - the third this year - will bring the average worker's monthly salary to about 16 dollars, up two dollars from the previous rate. Wages are extremely low in Cuba, with the average worker earning in a month what a plumber in the United States makes in a half-hour. "A wage system has been established based on the principle of socialist distribution," said a note from the Labor Ministry accompanying the decree. The note described that system as: "From each according to his abilities, to each according to his work," which is a modification of the classic Marxist paradigm of "From each according to his abilities, to each according to his need." The ministry note said the system was "aimed at making the salary the main material stimulus that the worker receives for his contribution to society." The raise in pensions for some 1.2 million retirees brings their monthly stipend to about $6.80 from the previous $6. (EFE, 23/11/05)

November 23: A decree signed by Fidel Castro increased the cost of electricity for small consumers from 20 to 30 cents of a Cuban peso ($0.01) per kilowatt-hour (kwh). Cubans who consume more than 300 kwh a month will see their rate rise from 30 centavos (cents) to 1.30 pesos ($0.06) next month. "The lack of concern about electrical consumption is evident in our country due to the very low rates," the decree published in the ruling Communist Party newspaper Granma said. Power outages are frequent in Cuba whose thermoelectric generators built decades ago are obsolete and do not produce enough electricity to meet demand at peak consumption. Castro warned that rates would have to go up in a speech in which he attacked private businesses, such as family restaurants, for benefiting from subsidized electricity and using up too much power. Foreign companies, which pay a higher rate and will not be affected by the new increase, praised the move as realistic. "It's a step in the right direction, to get people who can afford it to pay for electricity, as opposed to everybody not having any," said a foreign company executive. "They cannot afford to subsidize everybody, and the fact is that everybody was getting very little electricity," she said. (CNN, 23/11/05)

November 24: Cuba's economic growth may surpass nine percent in 2005, said Economy Minister Jose Luis Rodriguez, identifying tourism, international medical assistance, technology and computers as the island's key income sources. He explained that 2005 has involved significant economic changes, such as centralizing hard currency management to develop programs to meet domestic priorities. One of the major factors attributable to the country’s economic growth this year is the export of services, particularly medical services, he said. According to the minister, Cuba has set a target of welcoming 2.3 million foreign tourists this year, with earnings of more than 2 billion USD. The nickel, cigar and rum industries are the country’s hard currency-earning sectors, with strong growth. However, the sugar industry, once the economy’s spearhead sector in the 1980s, has been in recession due to droughts and the sugar yield in the 2004-05 crop just stood at 1.3 million tones, the lowest since 1960. (VNA, 24/11/05)

November 24: PetroChina Great Wall Drilling Co., Ltd. and Petroleum Company of Cuba held a ceremony for signing two drilling service contracts on November 3, 2005. It is the second-time cooperation between Great Wall Drilling Co., Ltd. and Petroleum Company of Cuba after the signing of a one-year petroleum service agreement on one 1500HP drilling rig and one 2000HP rig on April 8 this year. The contract signed this time includes three 2000HP drilling rigs. The contract has a period of one year and a value of over US$24 million. The project will be launched in January 2006. (China Chemical Reporter, 24/11/05)

November 25: The UN Economic Commission for Latin America and the Caribbean (CEPAL) has recognized Cuba as among regional countries which direct most of their GDP to social spending. According to CEPAL calculations, Cuba, along with Argentina, Brazil, Costa Rica and Uruguay, devotes more than 18 percent of its GDP to social spending, while Ecuador, El Salvador, Guatemala and the Dominican Republic allocate less than 7.5 percent. Cuba devotes 80 percent of her budget to health, education, sports and culture. [Desarrollo Social de América Latina 2005] (Prensa Latina, 25/11/05)

November 26: The president of the Central Bank, Francisco Soberón, affirmed that in the course of the last year, US dollar bank accounts held by the population decreased by 57 %, while National Peso and Convertible Peso accounts grew by 35 % and more than three-fold respectively. Delivering the closing remarks at the Congress of Economists and Book-keepers of Cuba, Soberón added that there has been a substantial reduction in the country’s US dollar cash intake. "While in the past the US dollar accounted for more than 80 % of the nation’s foreign revenues, today it only represents about 30 %, with other currencies such as the Euro, the Canadian dollar and the pound sterling now taking its place." (AFP, 26/11/05)

November 27: For the first time in nearly a generation, Cuba's moribund economy is showing signs of life because of a new program financed by Venezuelan President Hugo Chavez to provide residents across Latin America and the Caribbean free eye surgery. Called Mision Milagro, or Miracle Mission, the campaign has provided more than 122,000 cataract and other eye operations this year to patients from Venezuela to Jamaica to Bolivia. It is part of a major shift in the Cuban economy away from traditional foreign investment and mainstream tourism to a web of favorable agreements with Venezuela, an oil-rich nation that now is Cuba's closest ally. Though neither country has released official numbers, economists and diplomats believe Cuba could be earning $1 billion a year from eye operations and other medical treatment provided to foreigners under Venezuelan-financed programs such as Mision Milagro. The revenue is used to cover the cost of receiving 98,000 barrels of discounted Venezuelan oil daily, essentially canceling what traditionally has been Cuba's largest import bill and its greatest drain on hard currency resources. "This is an excellent business for Cuba," said Pedro Monreal, an economist at the University of Havana. "This is like striking gold." While Monreal argues that the Venezuelan assistance gives Cuba its first opportunity in years to develop economically, others say hitching Cuba's economic wagon to Venezuela risks repeating the mistake Castro made by aligning himself with the Soviet bloc after he took power in 1959. (Chicago Tribune, 27/11/05)

November 28: Cuba temporarily cut prices on selected food and other products at state-run hard currency stores as part of a campaign to make goods more accessible to Cubans of lesser means. The temporary markdown added to good news for government workers who recently received pay raises. It covers all stores selling goods in a currency known as “the convertible Cuban peso” until December 9, according to a government announcement published by state media. A survey of some stores found that prices on some, but not all products had been marked down by 10 to 20 percent, including canned and other packaged goods. A bottle of cooking oil was marked down from 2.20 ($2.37US or euro2) to 1.95 ($2.10US or euro1.80) convertible Cuban pesos. The vast majority of consumer products in Cuba are sold in these stores, all of which are run by the communist government, in convertible Cuban pesos. The convertible peso replaced the US dollar as a major form of currency during the island last year. (AP, 28/11/05)

November 29: Losses from Hurricane Wilma surpassed $704 million in Cuba, the government announced, for the first time offering a damage estimate on the devastating storm that flooded Havana before taking a swipe at South Florida in October. Granma, Cuba's Communist Party daily newspaper, said the storm cost $704.2 million, including seven days of lost productivity in the days before and after the storm. After several days of preparations and evacuations, the hurricane hit Cuba on October 23, causing an unprecedented storm surge in the capital, leaving many blocks in waist-high water. More than 7,500 homes were damaged, 446 of them destroyed, the paper said. The tobacco industry in the western Pinar del Río province lost some 2,000 storage facilities and 54,000 seed boxes. Although the paper did not offer details, it said the fishing, wood, honey, transportation and construction industries suffered either directly or indirectly. (The Miami Herald, 29/11/05)

November 28: The Uruguayan-Cuban bilateral commission began a working session, attended by representatives from both nations' Foreign Affairs Ministries. This is the first time that both nations' official delegations meet since the re-establishment of diplomatic relations on March 1, 2005. Uruguayan exports to the island stepped up 30 percent in these eight months, and Cuba's sales to this nation increased. (Prensa Latina, 28/11/05)

November 29: The Trinidad business sector plans to dominate the Cuban market while an embargo restricts US businesses from conducting any business in and with Cuba, with a few exceptions. Minister in the Ministry of Trade in Trinidad, Diane Seukeran in a statement says the idea that Cuba is a security threat to the region because of its communist ideology, as being sometimes touted by the United States, is no reason for Trinidad and Tobago not to increase trade with Cuba. The Minister’s views follows the passing of a Bill in the Trinidad Parliament which allows for trade and economic co-operation agreement between Caricom and Cuba. Trinidad and Tobago from January to August this year has exported TT$83 million in goods and services, while importing TT$599,600 in goods and services from the communist state. (Caribbean Net News, 29/11/05)

November 29: A sting operation against pedicab drivers in the municipality Old Havana resulted in confiscated pedicabs, fines, arrests and deportations to different provinces. One hundred and fifty detainees were taken to a police station on Dragones street. (Cubanet, 29/11/05)