Chronicle on Cuba - November 2006

Economy

November 1: Cuban unrefined nickel production may fall short of the 76,700 planned for the year due to a 3,000-tonne shortfall at one of three plants reported by joint venture partner Sherritt International. Sherritt said the joint venture Pedro Sotto Alba plant operated with state-owned Cubaniquel would produce 30,000 tonnes this year compared with the 33,000 tonnes it usually ships to the venture's Canada refinery. "Taking into consideration process bottlenecks experienced in prior quarters, full-year nickel production is expected to be approximately 30,000 tonnes," Sherritt said of the joint venture in its third quarter report. Sherritt also announced that plans to add 16,000 tonnes to the plant's capacity by 2008 had been postponed in favor of adding 4,000 tonnes by 2008, another 9,000 tonnes in 2009 and a final 3,000 tonnes in 2011. Sherritt said cobalt output would be unchanged from 2005. Cubaniquel operates two older plants in eastern Holguin province where the joint venture is located, exporting the product mainly to Europe and China. (Reuters, 1/11/06)

November 1: A varied range of Bulgarian dairy products (including yogurt) and iron materials attracted the attention of visitors at Havana s 24th International Fair, FIHAV 2006. Bulgarian commercial experts Virginia Todorova and Petia Stefanova told the press their company, LB Bulgaricum, is specialized in a wide variety of dairy products, such as cheese and yogurt. Bulgarian firm KCM 2000 SA s public relations specialist Mara Rusinova said her company produces iron material as well as 80,000 tons of zinc and 65,000 tons of lead -- and wants to make contact with Cuban and Latin American enterprises. Experts from both companies expressed their pleasure at participating in FIHAV 2006, and appreciated the possibilities offered by Cuban foreign trade. (Prensa Latina, 1/11/06)

November 1: Mexican Ambassador to Cuba, José Ignacio Piña Rojas, inaugurated the Mexico pavilion at the Havana International Trade Fair (FIHAV) and said that Mexico has many bilateral agreements with Cuba on investment, trade, tourism, energy and fishing, among others. The diplomat emphasized that Mexico’s main objective for participating at the Fair is to foster and promote business opportunities.  (Mural, 1/11/06) 

November 1: Commercial exchange between Cuba and Brazil has continued to grow with 352 million dollars this year, said Cuban Deputy Foreign Trade Minister Pedro Luis Padron at Havana's International Trade Fair (FIHAV). During a visit to the Brazilian Pavilion at Expocuba exhibition grounds,  Padron and Tilde Santiago, Brazilian ambassador to Cuba, highlighted the business potential of both countries and their increasing trade relations. The Cuban deputy minister underscored the presence of the South American Community of Nations (MERCOSUR) with its own stand at the Brazilian pavilion. Brazil is currently heading the regional organization. (AIN, 2/11/06)

November 2: Biotechnology has become one of Cuba’s top ten exports with revenues of more than $200 million a year, according to sector sources. The vice-president of the organizing committee of “Biotechnology Havana 2006”, Gerardo Guillén, pointed out that “the health benefits are much more important than the money these exports may generate”. (EFEAGRO, 2/11/06)

November 2: The Cuban government signed contracts and letters of intention for more than $400 million during the XXIV Havana International Trade Fair (FIHAV 2006), said the Cuban Minister of Foreign Trade, Raúl de la Nuez. De la Nuez indicated that the contracts signed include one with Vietnam for the supply of rice to the island and an agreement with Turkey for the supply of pipe joints and accessories. Some 1,125 companies from 48 countries took part in FIHAV. (EFE, 2/11/06)

November 7: Cuba's state-run nickel producer, Cubaniquel, is in talks to reduce shipments to a Dutch company that buys around 50 percent of the island's nickel and perhaps divert the metal to China, diplomatic and banking sources said. Cubaniquel has told Rotterdam-based Fondel International B.V., through which it got about half of its $1 billion in revenues in 2005, it wants to cut back on the amount of nickel it sends. "The only question now is how much less they plan to export to Rotterdam," a European diplomat said. The Cuban nickel industry is operating at capacity at around 76,000 tonnes of unrefined nickel plus cobalt per year. The ambassador's statement was confirmed by a western banker who said, "they are in negotiations with some, not all, of the product on the table." The diplomat and banker said they believed Cuba planned to send more of the unrefined metal to China, though China and Cuba had no immediate comment. (Reuters, 7/11/06)

November 8: Eleven executives from CIMEX, Cuba’s main holding company, received sentences ranging from 4 to 20 years in jail for “fraud and corruption”, in a case connected to a Spanish company, reported the official weekly “Bohemia”. According to the story, the situation began in 2001 and was reported in 2003 by the Spanish manager of Provimar. The trial took place in November 2005 and the sentences were confirmed recently, after a process of appeal. (AFP, 8/11/06)

November 11: Cuban experts are studying the restructuring of Ecuadorian electric energy plants to facilitate the use of national fuel and thus contribute to the saving of millions of dollars in that nation. The Cuban technicians will assess the state of the plants in the province of Esmeraldas as well as in the cities of Guayaquil, in southern Ecuador, and Quito, confirmed the commercial office of the Cuban embassy to that capital. The restructuring project will allow the use of the heavy oil as fuel to generate electricity which will contribute to save millions of dollars as the country will not have to import diesel, expert Jose Padilla highlighted. The Cuban professionals arrived in Quito on November 6 and have worked at the Electricity National Council (CONELEC). (Prensa Latina, 11/11/06)

November 13: The 1,541 Basic Units of Cooperative Production (UBPC) that exist in Cuba, formed by workers on state lands, are under “general reorganization”. Thirteen years after their creation, only 44% are profitable, reported the official weekly “Bohemia”. The debt that credit co-operatives currently carry to start their activities will be forgiven in 2007. In Cuba’s centralized economy the Co-operatives of Agricultural Production (union of small farmers’ lands), with 721,000 hectares; the Co-operatives of Credit and Services (financial association and for collective use of machinery), with 858,000 hectares, and the independent small farmers who hold approximately 420,000 hectares coexist. The remaining 5.5 million hectares of farmland are in the hands of government companies. (AFP, 13/11/06)

November 13: Cuban authorities have intensified the campaign against corruption launched in 2005 by Fidel Castro and pursued by younger brother Raul Castro since becoming the island's "provisional" president in July. The official daily Granma published news of a new case of fuel theft from a state-run company that operates heavy machinery, along with specifics of the punishment being meted out to those responsible.  Bohemia magazine also reported that 11 people, some of them directors of the giant state holding company CIMEX, were sentenced to between four and 20 years for fraud and corruption. Such reports by the official media - independent news outlets are not tolerated - have made irregularities like these a constant part of the daily news since November 17, 2005. (EFE, 10/11/06)

November 14: Cuba's labor minister is acknowledging a "breakdown" of workplace discipline on the Communist-ruled island and that problems exist that must be resolved with organizational measures. "Recently, there has been a breakdown in labor discipline due, basically, to the lack of requirements and control by the (workplace) administrations," said Alfredo Morales Cartaya in statements published by the official daily Granma. He said that the implementation - beginning in January - of two new labor ordinances to attack illegalities and lack of discipline in the workplace is part of a "necessary process (that is) indispensible in our current situation." He added that the solutions have to be accompanied by measures in other areas, referring to the excessive bureaucracy at the administrative level. "Despite the efforts of the National Assembly to (...) simplify procedures, this problem has not been solved. It's a matter that remains to be resolved with the appropriate organizational measures," Morales Cartaya said. (EFE, 14/11/06)

November 14: The number of tourists arriving in Cuba from Europe and Canada has fallen, according to a Tourism Ministry report. The number of tourists from Canada was down 1.9 percent in September from last September, the number of tourists from Spain fell 5.7 percent, Italy 15 percent, and Germany 9.8 percent and France 5.2 percent, with only Britain showing an increase of 5.7 percent. The report gave no reason for the drop.  Industry sources said earlier this year that partly because of changes to exchange rates, Cuba was becoming increasingly costly and less profitable for foreign tour operators, some of whom were switching to other Caribbean countries. The Canadian Association of Tour Operators complained this year to the Cuban Ministry of Tourism about the lack of adequate service for tourists, theft at airports and hotels, and jet fuel costing 33 percent more than elsewhere. Canadians are the most numerous at Cuba's beach resorts, followed by Europeans. (Reuters, 14/11/06)

November 14: The Biotechnology Havana 2006 convention got underway at the Havana Convention Center with specialists from more than 40 countries and an inauguration address by Dr. Luis Herrera, director of the Cuban Center for Genetic Engineering and Biotechnology (CIGB). The eminent Cuban scientists told participants that the national biotechnology sector now has 38 products of proven effectiveness and quality that have been registered and are being sold in more than 45 countries, making a significant impact in the lives of people around the world. (Granma, 14/11/06)

November 16: Venezuelan airline Aeropostal and Cuban airline Cubana de Aviacion have extended their cooperation agreement, which entered into force in 1999, the Venezuelan press reported on November 15, 2006. The extended agreement enters into force as of 2007. The agreement envisages extending the code sharing agreement to such destinations as Lima, Bogota and Medellin in Colombia, Port of Spain in Trinidad and Tobago, as well as all national destinations. The code sharing agreement also includes all flights of Cubana de Aviacion between Venezuela and Cuba. (Latin America News Digest, 16/11/06)

November 16: The benefits for Bolivia of its alliance with Cuba and Venezuela in the Bolivarian Alternative for the Americas “are long in coming”, said an expert prior to a meeting of that group in Havana. The general manager of the Bolivian Foreign Trade Institute, Gary Rodríguez, questioned the effectiveness “in commercial terms” of the People’s Trade Agreement. Bolivia brought in only $200 dollars in sales of “garments” to Cuba between January and September of this year, which reflects a sharp drop in relation to almost $3,800 dollars during the same period in 2005. (EFE, 16/11/06)

November 17: With Cuban leader Fidel Castro ailing, the inequities created by the dual dollar-peso economy that Cuba established to overcome the catastrophic collapse of Soviet subsidies may well become one of the major challenges faced by his successors, experts say. Cubans say the unequal system is the single most exasperating issue facing them. So much of the economy runs on the dollar that the typical family needs in Cuba  greenbacks to buy everything from razors to bedsheets to shoes -- items largely available only at government stores that price their goods in dollar equivalents. The average worker earns 250 pesos a month -- about $10. With state salaries barely able to cover less than half a month's living costs, those with dollars now live far better off than the rest. The dual dollar-peso economy is believed to be leaving Afro Cubans behind. Since lighter-skinned Cubans have migrated in higher numbers, their remittances mostly go to their lighter-skinned relatives on the island. Faced with the reality of too many things she could not afford -- and dollars she did not have -- before she moved to Hialeah, Lizette Fernández and a dissident organization that she ran, the Federation of Rural Latin American Women, launched the effort to demand that all establishments sell goods in pesos. She said 28 women around the island are organizing small cells of women who are gathering signatures backing the campaign, dubbed ''With the Same Coin.'' A dissident still in Cuba said people support the move, but are afraid to sign. ''We can't be second-class citizens just for being Cubans,'' said Fernández. ``We have no rights, just because we have no dollars.'' (The Miami Herald, 17/11/06)

November 17: The significance of the Bolivarian Alternative for the Americas (ALBA) was emphasized before Cuban parliamentarians in a meeting in Havana. The Commission on Economic Affairs of the Cuban National Assembly listened to reports on progress in carrying out agreements signed by the countries that are participating in the integration effort –Cuba, Venezuela and Bolivia--, noting the positive results that have been witnessed to date and discussing plans for the future. At the opening of the deliberations, commission president Osvaldo Martínez noted that in the past the nations of the area were not able to make progress around regional integration due in large to their dependence on foreign capital. In the plenary session, Vice Minister of Foreign Investment and Economic Collaboration Ramón Ripoll presented a general report on the state of agreements being executed by Cuba with both Venezuela and Bolivia, highlighting accomplishments in the fields of health, education and sports. (Granma, 18/11/06)

November 20: The Cuban minister of foreign trade, Raúl de la Nuez, said at the end of October that the economy grew by 12.5% in the first six months of 2006. This is higher than the official forecast of 10% GDP growth announced at the end of 2005. It suggests that a growth rate surge in 2005, to 11.8%, has been sustained into the current year. Cuban official GDP figures are calculated using a different measure from the standard international method, in that the valuation of freely provided services is higher than the cost. On the basis of the latest available official data, the Economist Intelligence Unit estimates that GDP growth in 2005 was 9.5%. The latest national accounts published by the Oficina Nacional de Estadísticas (ONE, the official national statistics agency) show the engine of growth has shifted from tourism since the 1990s, to services and construction. (Economist Intelligence Unit, 20/11/06)

November 20: The rate of increase of tourist arrivals has fallen sharply in 2006: after a 13.2% increase in 2005, unofficial estimates suggest growth of only around 4% this year. In some important markets—notably the Canadian market, which is the largest source of tourists and accounts for 25% of the total—the number of tourists has fallen. Some of the slowdown can be explained by the appreciation of the Cuban convertible peso, which has damaged competitiveness relative to other tourist destinations in the region. It is also partly the result of the fact that the strong increase in 2005 was inflated by the thousands of Venezuelans arriving in Cuba as part of official bilateral programmes for education and healthcare. These trends imply that the slowdown is part of a more long-standing trend since the start of the decade. It seems that the industry has started to reach maturity. Annual average growth of tourist arrivals in the 1990s was 25%; since 2000, it has fallen to less than 4%. Although tourism is an important source of employment—it directly employs more than 100,000 people—and has played a significant part in lifting hard currency demand for Cuban manufactures of consumer goods, it is no longer the main engine of growth. Other services have become more important in terms of driving hard currency income, and industry is diversifying towards production of construction materials and consumer goods for domestic consumption. This explains the shift in policy emphasis away from the expansion of tourism and towards other sectors. (Economist Intelligence Unit, 20/11/06)

November 20: Venezuelan oil experts Humberto Calderón Berti and José Toro Hardy rejected as "swindle" an oil agreement between Venezuela and Cuba, claiming the deal amounts to a mere "barter." According to Calderón Berti, under the agreement Venezuela originally undertook to provide 53,000 bpd of oil, a figure that now exceeds 100,000 bpd. "And Venezuela is receiving no payment for these volumes of crude oil exported." He added that Venezuelans were told Cuba would provide free healthcare services to Venezuela under the agreement, and so far the island has failed to meet this obligation. Calderón Berti stressed that out of the oil exports from Venezuela to Cuba so far -which amount to USD 2.2 billion- USD 555 million are long-term debt, with a three-year grace period and a 15-year term for repayment, which he described as a bad debt. "Venezuela will never get this money back. This debt is endorsed by promissory notes issued by the National Bank of Cuba at a 2 percent interest rate which mean nothing and have no value." He added that Cuba is supposed to pay the remaining USD 1.66 billion by providing free healthcare services in Venezuela. But according to Toro Hardy, and based on the first addendum to the agreement, dated January 1st, 2000, the institutions, agencies and companies of the Bolivarian Republic of Venezuela have to pay for Cuban healthcare goods and services, which means that "Cuba is not giving anything." (El Universal, 20/11/06)

November 20: Spain is no longer Cuba’s main supplier. Excluding oil, Spanish companies ranked first in sales to the Caribbean island for decades. However, China has become the island’s number one supplier. Trade and economic councillor for the Spanish Embassy in Cuba, José Luis Lancho de León, said that in 2005 Spanish exports to Cuba grew 13%, up to $605 million. But this increase was below the 95% growth of Chinese exports to Cuba, which reached $630 million. (El Correo Digital, 20/11/06)

November 21: Vice President Carlos Lage, during a visit to the eastern city of Holguin with Sugar Minister Ulises Rosales, said the regime has made "significant investment" in reinvigorating the sugar industry. This year's "zafra," or sugar cane harvest, produced 1.2 million tons of the crop, a far cry from the several million tons per year of the 1960s and '70s, and the much-heralded and eventually failed national mobilization to reach the 10-million-ton mark in 1970. Authorities see good prospects for cane-derived products such as alcohol in the growing global market for alternative fuels. They have projected a 25-percent increase in the 2007 zafra, and a five-fold hike in production of cane alcohol.  Recovery of the sugar industry follows the wholesale reorganization effected in 2002, when nearly 100 refining mills nationwide were closed and half the acreage dedicated to cane was given over to other crops. An estimated 350,000 workers are employed in the sugar industry in this nation of 11 million people. (EFE, 21/11/06)

November 21: "The year 2006 has been a year of accomplishments in different areas but also a year in which we could have done much better," said Cuban Vice President Carlos Lage at the end of a tour of state projects underway in the eastern province of Holguin. Referring to the ongoing national effort to conserve energy, Lage said "we are still a long ways away from the savings that are possible" and called for maximum efficiency in the use of fuels. (Granma, 21/11/06)

November 21: Belarusian Deputy Foreign Minister Viktor Gaisyonok has called on Belarus and Cuba to build strong economic relations on the basis of their "very warm and close" political ties. "Today we are above all interested in the stabilization of trade between Belarus and Cuba, the development of relations in the banking and finance spheres, cooperation in biomedicine and an increase in supplies of machines and equipment to Cuba," the official told reporters. Mr. Gaisyonok led a Belarusian delegation to the seventh meeting of the Belarusian-Cuban commission on trade and economic cooperation, which wrapped up in Minsk. (BelaPAN, 22/11/06)

November 22: The Cuban Agriculture Ministry now works in 28 joint development projects in Venezuela, together with the Venezuelan agricultural authorities. A total of 1,092 Cuban technicians are involved in these projects, including 639 destined to Venezuelan mission Barrio Adentro, by means of which Cuban and Venezuelan doctors are taking care of whole communities with few financial resources for free.  This information was provided by Venezuelan substitute Agriculture Minister Maria del Carmen Perez to the participants in the recently held Parliamentary Hearing on the programs of the Bolivarian Alternative for the Americas (ALBA) in Havana. (Prensa Latina, 22/11/06)

November 23: Cuba hopes to take advantage of improved weather to increase rice output and reduce record imports in the coming years, state-run Radio Reloj reported. "This year the state sector will harvest 61,000 tonnes of rice and the popular movement 141,000," the report said, similar to 2005. Cuba has nine large provincial state farms with a capacity of 250,000 tonnes and has been developing municipal level farm and cooperative rice production, the so-called popular movement, with technical assistance from China and Vietnam. "According to government plans output should tripple by 2015 (...) unless there is an intense drought," the report concluded. Rice is the Caribbean island's main staple with its 11.25 million residents and 2 million tourists consuming around 1 million tonnes annually, according to the government, of which 500,000 tonnes is rationed to the population at subsidized prices. (Reuters, 23/11/06)

November 25: Vietnam and Cuba are ready to deepen formal cooperation after signing a memorandum of understanding for the construction of a biotechnology center with Cuban assessing in this Asian nation. The protocol was inked by Luis Herrera, general director of Havana-based Center for Genetic Engineering and Biotechnology (CIGB), and Nguyen Thu Van, general director of Company for Vaccines and Biological Production (VABIOTECH). Cuba will grant technical assistance for the designing of a center in Hanoi, and will train technical and specialized staff who will work in that institution. (Thanhnien News, 25/11/06)

November 25: Labor realignment and further productive efficiency in Cuba were highlighted by the member of the Cuban Communist Party’s politburo Jose Ramon Machado Ventura. Upon a visit to the Central province of Cienfuegos, Machado Ventura praised union efforts to improve economic education and to reinstate labour discipline. (Prensa Latina, 25/11/06)

November 26: “Disorganization” and “inefficiency” seriously affect workplaces in Cuba, concluded an official inspection in which more than 55% of production and service entities perform “fairly” or “badly”. The National Office of Workplace Inspection [Oficina Nacional de Inspección del Trabajo], which has conducted three reviews in the last two years, “rated ‘good’ only 904 of the inspected entities” (44.6%), of a total 2,027, last May and June. That means that the remaining 55.4% perform poorly. The last inspection included 3,502 companies, of which 59%, “showed unsatisfactory performance”, “a tendency that is ongoing”, said the general manager of the Office, Felicia Villarreal. (AFP, 26/11/06)

November 27: Cuba's recovery from an economic crisis caused by the collapse of the Soviet Union continued this year with double digit growth expected and good prospects for 2007, the state-run news agency said. "Cuba will register 12.5 percent economic growth this year, and the perspective for 2007 is promising," Economy and Planning Minister Jose Luis Rodriguez was quoted as saying at a meeting of economists. Cuba reported growth of 11.8 percent in 2005 and 5 percent in 2004, based on a locally devised formula that estimates the market value of free social services and subsidized goods and services. It also includes massive medical and other services exported mainly to Venezuela. Independent sources such as the Economist Intelligence Unit and UN Economic Commission for Latin America and the Caribbean estimate the formula overstates Cuba's gross domestic product by between three and four percentage points.  The news agency did not give a reason for Cuba's 12.5 percent economic growth. (Reuters, 27/11/06) 

November 27: Belarusian president Aleksandr Lukashenko, gave his consent for the signing of a Belarusian-Cuban draft agreement on air traffic. The agreement would establish a legal framework for regular air services between the two countries, the Belarusian leader's press office said. It would allow "certain air enterprises" to fly over the territory of the other country without landing and also to land in the other country for "non-commercial purposes." The agreement specifies grounds for cancelling, limiting or suspending licenses to conduct flights, rules for exemption from the payment of duties and taxes, air safety requirements and the operation of agreed services on specified routes, according to the press office. (BelaPan, 27/11/06)

November 27: Power cuts have increased in several sectors of the City of Havana, reported an official of the provincial Electric Company. The official said that the interruptions were due to breakdowns in the electrical lines. The most affected municipalities have been Plaza de la Revolución, Cerro and 10 de Octubre. (Cubanet, 27/11/06) 

November 28: Venezuelan Minister of Estate for Integration and Foreign Trade, Gustavo Márquez, said that his country’s exports to Cuba exceeded $1,250 million this year. Although he did not specify the value of Venezuelan exports to the island in 2005, the minister said that “foreign trade with Cuba this year will be greater than last year”. (El Universal, 29/11/06)

November 29: Cuba's foreign-exchange earnings swelled by some $3 billion this year due mainly to a jump in service exports, a government source with access to trade data said. The communist-run country's balance of payments will be in the black for the third year running as a result, he said, without saying by how much. "Increased nickel prices and pharmaceutical exports resulted in more than a $500 million increase over last year's $2 billion in exports, and service revenues jumped by over $2.5 billion to around $7.5 billion," he told the press, asking his name not be used. Cuba apparently has spent most of the increased revenue on infrastructure and machinery. This includes $1 billion on an energy grid and hundreds of millions of dollars on waterworks and transportation. It also has boosted imports of food and some consumer goods. Economy and Planning Minister Jose Luis Rodriguez recently said imports were up by more than 27 percent this year over $7.5 billion in 2005. (Reuters, 29/11/06)