Chronicle on Cuba - August 2006

Economy

August 2: Canadian companies are keeping a close eye on the temporary power shift in Cuba, but experts say little will change in the short term and US policy is likely to have a greater impact in the long run than a new leader. Canada is the Caribbean country's fourth-largest trading partner, and businesses from travel agencies to meat exporters will be monitoring any developments after an ailing Fidel Castro transferred his duties to his younger brother Raul. For us, it's business as usual," said Michael Minnes, spokesman for Sherritt International Corp., a natural resources company that's the largest foreign investor in the country. "We see Cuba as having a competent and capable government in place and we believe that they're doing what they need to do to manage the situation." Other Canadian companies are more reticent about their business in the country amid fear of reprisals from the US government. An Industry Canada spokeswoman would not immediately provide names of firms operating there. She said the information is confidential and companies typically don't discuss their involvement in Cuba. Sherritt's Cuban operations, meantime, continue to benefit from high commodity prices, Mr. Minnes said. The company, which will release its quarterly financial results today, plans to expand its metal, oil and power enterprises in the country. (Globe and Mail, 2/8/06)

August 2: Sherritt International Corp. has reported a 6.5 per cent increase in second-quarter earnings on an eight per cent revenue decline as strong prices for nickel and cobalt were undermined by lower volumes. Sherritt said it had its best-ever sales of coal, oil and power, but consolidated April-June revenue was $296.9 million, down from $322.5 million a year earlier. The diversified resources company, active in Canada and Cuba, said net earnings of $57.2 million, 36 cents per share, compared with a year-ago profit of $53.7 million, 29 cents per share. (Canadian Press, 2/8/06)

August 2: Commercial ties between Spain and Cuba "will remain excellent regardless of future developments on the island," asserted Fernando Puerto, director of International Relations for the High Council of Spanish Chambers of Commerce. According to Puerto, Spain has to make the best of "its excellent position and reinforce it" in the face of the island’s current economic boom, spurred by Chinese credit and Venezuelan fuel oil. (EFE, 2/8/06)

August 6: Military enterprises now control an estimated 90 percent of Cuba’s exports and 60 percent of its tourism revenue, and employ 20 percent of state workers. ''The military's job is to make money,'' said Frank Mora, a professor at the National War College in Washington. ``Power in Cuba is not just a question of who holds the guns, although that helps. More important is who controls what is profitable.'' In the early 90’s Raúl Castro formed GAESA, or Business Administration Group, the FAR's holding company for the Defense Ministry's economic interests. At the helm was Colonel Luis Alberto Rodríguez, Raúl's son-in-law, known as a Raúl loyalist and sharp businessman. Based on the fourth floor of the Armed Forces Ministry, GAESA did $1 billion in business in 2000 alone through a long string of GAESA-owned companies, experts say. The FAR's powers extend well beyond GAESA, however. Half of the now 20 members of the politburo are active military officers, and generals are in charge of several ministries, including sugar and fisheries. By 1996, Mora said, the FAR was generating enough revenue to pay half of its own budget. (The Miami Herald, 6/8/06)

August 9: Iran and Cuba discussed avenues for bolstering bilateral cooperation in the technical and industrial fields. Cuban Minister for Basic Industries Yadira Garcia Vera, during a meeting with Iranian Ambassador to Havana Ahmad Edrissian, outlined the two countries' cooperation in the field of electricity and in the oil and cement industry in past years and expressed her country's readiness to further promote mutual cooperation in the future. Tehran and Havana have ample grounds for cooperation, Garcia said, and expressed Cuba's interest in expanding cooperation with Iran in various areas. (IRNA, 9/8/06) 

August 9: Cuba left behind a serious draught period, thanks to favourable rains in the last months that have contributed to increasing water levels to 73 percent of the total capacity. In the period between June and July it rained the most, being one of the most humid periods in the last five years, after a long and harsh drought, considered the worst in 100 years. The country has 224,636,594 cubic feet of water in reservoirs, a situation that allows comfortably carrying out its production plans and guarantee water consumption by the population. The provinces most favored by the recent rainy season were central Sancti Spiritus and eastern Camaguey, Holguin, and Las Tunas, Granma daily reported. Those with more water in reservoirs are Santiago de Cuba at 95 percent, Guantanamo and Cienfuegos 91 percent, and western Pinar del Rio at 90 percent. (Prensa Latina, 9/8/06)

August 14: Gary Rodríguez, head of the Bolivian Institute of Foreign Trade (IBCE), said that, apart from 5 thousand dollars’ worth of bilateral trade posted in 2005, nothing has been imported from Bolivia by the Cuban market. The IBCE indicated that this drop would cast doubt on the efficiency of the Peoples’ Trade Agreement (TCP), signed by all three countries last April in Havana. (EFE, 15/8/06)

August 16: The Cuban government said that it has built 67% of the total number of residences scheduled to be completed by late 2006. According to the official newspaper Granma, the government is planning to build 119,000 private residences by the end of 2006, down from the 150,000 target announced in September 2005. Cuba has a housing deficit in excess of half a million residences and, according to official studies, 43% of all available housing is in bad repair. (Reuters, 16/8/06)

August 17: Cuban Finance Minister Georgina Barreiro Fajardo concluded a visit to Vietnam, which was termed very positive for its exchange and future perspectives. "Talks took place frankly in an atmosphere of friendship and cooperation. They were always on the alert to give us all the information we need," the minister told Prensa Latina. Barreiro arrived in Hanoi on August 15, accompanied by deputy ministers Alejandro Gil and Jose Eloy Llaguno, to fulfill an intensive two-day working agenda. The aim, she said, was to learn the strategy of development of three issues: budget control, the tax system and the treasury. Vietnamese Finance Minister Vu Van Ninh welcomed the Cuban delegation, and expressed his willingness to strengthen and expand working relations. The Cuban official, Gil and Llaguno flew to the southern Chinese province of Quangdong, an important industrial zone. Then, the visitors will go to Shanghai, relevant financial center, and finally to Beijing. The aim of this visit, said the minister, is to revise aspects of the Finance and Prices Ministry and the role played in all cooperation programs we have with China. (Prensa Latina, 17/8/06)

August 17: The Cuban Minister of Finances Georgina Barreiro arrived in the southern Chinese city of Guangzhou on the first stop of a work visit and exchange of experiences with the Asian nation. The minister is accompanied by the vice ministers Alejandro Gil and Jose Ely Llaguno, and will go to economic centers of Guangdong province, an important industrial center of the southern part of the country. "The objective of our stay is to strengthen ties between the Cuba Finance Minister and the China Treasury Department," Barreiro said. (Prensa Latina, 17/8/06)

August 17: Long held in check by Fidel Castro, Cuban entrepreneurs ranging from plumbers to pizza makers hope to enjoy some slack while his brother Raul is in charge.But the self-employed tradesmen and owners of family businesses in the communist-run country do not expect Cuba's economy to embrace the private sector overnight. “Paladares,'' family restaurants that can only seat 12 people at a time, and bed-and-breakfast inns still face multiple restrictions, heavy taxes and a constant threat of losing their licenses even though they have been allowed for more than a decade. ``Raul could continue opening up the economy. We want less state control,'' said Gilberto, a book seller in central Havana, displaying a photo of Fidel Castro prominently on his stall. Raul Castro supported economic reforms in the early 1990s and is said to favor a Chinese path. As defense minister, he introduced Western management practices in the armed forces, which now run Cuba's most efficient and profitable companies. ``They say Raul is more open. The truth is nobody knows what is going to happen here,'' said the owner of a paladar in the converted garage of a house who asked not to be named. The numbers of self-employed have declined since peaking at 209,606 in January 1996, shrinking to 166,700 at the end of 2004, according to official figures. (Reuters, 17/8/06)

August 21: Cuba is optimistic that better weather, improved organization and higher prices will bring a recovery in coffee production from last season's record-low crop, industry sources and local media said. Coffee picking is gradually getting underway in Cuba's eastern mountains, where 85 percent of the crop is grown.  "If there isn't a hurricane again this year, we are going to harvest coffee for real," a farmer in the mountains near Santiago de Cuba said in a telephone interview. "We have had perfect weather, a lot of rain but not too much. I'm going to pick three times what I did last year," he said, asking not to be named. There was similar optimism in Guantanamo province, last year's top producer, accounting for 70 percent of 2005 exports. (Reuters, 21/8/06)

August 19: Cuba's largest citrus orchard expects output at near capacity of 600,000 tonnes of oranges and grapefruit during the 2006-2007 harvest, following a difficult prior season due to a hurricane and drought, official radio reported. Radio Rebelde said the 23,000 hectares state-run Jaguey Grande orchard, the largest contiguous planting of citrus trees in the world, "at this moment has a yield of 25 tonnes per hectare, the highest in the country," for an estimated final output of 575,000 tonnes by the time picking ends in June. Output at the orchard in western Matanzas province fell by at least 50 percent last season when Hurricane Dennis in early July downed the ripening grapefruit and also damaged orange groves. (Reuters, 21/8/06)

August 24: According to the Cuban electrical company, there was an interruption in the high tension line that links the province of Matanzas with the power station located in Havana. The incident provoked a power outage that blacked out Havana City and Pinar del Rio and a large portion of Havana Province. The reestablishment of electricity in the western provinces took place in four hours. Power service has been markedly improved in 2006 compared to previous years before a new energy saving and generation plan was
put in place. (Periodico 26, 25/8/06)

August 27: The upcoming sugar cane harvest could see a yield greater than last year’s, thanks to the increased availability of fertilizers and more rainfall, Sugar Minister Ulises Rosales del Toro said. Improved conditions have sparked optimism, though the productive potential of sugar cane plantations is still greater than expected output, newspaper Granma reported. Rosales said that an upcoming evaluation in September will determine a more exact estimation of sugar cane production and the strategy to be followed during the harvest. He also announced that processing of cane could begin before January at some sugar mills. (Prensa Latina, 27/8/06)

August 29: Eighteen-wheelers stacked with hundreds of Chinese-made Haier fridges stopping door-to-door in the remote Cuban countryside and on city streets have been as common a sight as Cuban military transports. An estimated 300,000 households, in a country of 11 million people, are replacing aging appliances -- all in the name of an effort to lower the country's total energy use. The replacements are mandatory, and many people have had to take out loans from government banks to pay for the new appliances. ''Don't think that because we're in a socialist regime that the fridges are free,'' said a religious leader in a coastal city. ``Actually, they're quite expensive. I'm paying the equivalent of $286. My wife and I make about $25 a month. So, like most people, we're financing it over a 10-year period at 10 percent interest.'' The government in March bought 300,000 of the energy-efficient fridges from China under a deal to assemble them in a Cuban plant. Late last year, one million color televisions were bought under the same plan and, soon, so will air-conditioners and electric stoves, rice cookers and fans.   For now, the five-foot-tall Haiers have made their appearances in some homes where, mostly because of endemic poverty, there may have not been new appliances in half a century. (The Miami Herald, 29/8/06) 

August 30: Cuba is testing wind as a source of electricity at the Aeolian Demonstrative Park in Turiguano Island, Ciego de Avila province. Granma daily reported that two towers, 11,083 feet above sea level, is supplying 2,248 people with electricity produced by the north winds. Engineer Adonis Perez Lorenzo, in charge of the two turbine engines, said this first program will counterbalance rising oil prices and depletion of world oil reserves, as well as raise awareness of this renewable alternative energy source. (Prensa Latina, 30/8/06)