Chronicle on Cuba - December 2006

Economy

December 1: Haiti and Cuba signed a Cooperation Program for 2006-2007 to serve as a basis to the Joint Commission meeting of both countries. Haitian president Rene Preval and Esteban Lazo, Vice President of Cuban Council of State, penned the documents of the meeting that includes cooperation in 14 sectors and the continuation of Cuban medical aid. The document signed covers the fields of agriculture, fisheries, sports, communications, food production, the sugar industry, culture, steel and mechanic industry, and energy. (Prensa Latina, 1/12/06)

December 1: Cuba has launched full-tilt into the vaccine industry to compete on the international market with its products, some of which are unique.  Cuban scientists are devoting themselves to investigating therapeutic products against cancer, malaria and cholera, diseases that ravage the people of poor nations. However, the first destination of every new pharmaceutical is the Cuban market and the national hospital network. Medical sources indicated that eight of the 13 vaccines included in the national immunization program are produced locally.  "Half of our research projects deal with vaccines, which are financially unattractive to the big pharmaceutical companies," Carlos Borroto, deputy director of the Genetic Engineering and Biotechnology Research Center (CIGB), told the press. The "West Havana Scientific Pole" is made up of the CIGB, the Finlay Institute for Serum and Vaccines, the Center of Molecular Immunology, the National Center for Scientific Research and the National Biopreparations Center. The Pole institutions cooperate among them, and each project usually involves more than one unit. (IPS, 1/12/06)

December 6: The Minsk Automobile Factory (MAZ) plans to supply 50 MAZ-107 low-floor buses and 50 MAZ-105 larger-size buses to Cuba. The first batch of the urban coaches is expected to arrive at the island in December and all 100 units will be supplied to Havana by next June, the company's press office told the local press. This past October, the Belarusian enterprise delivered a shipment of six crane trucks, two dump trucks and spare parts to Cuba. (BelaPan, 6/12/06)

December 8: Cuba’s system of reservoirs began at their highest levels in December, since 1993, putting the country in favorable conditions to deal with the dry season that extends until May. Margarita Fontova, a specialist at the National Water Resources Institute, told the press that at the end of November the country’s 235 reservoirs were filled to an average of 80 percent capacity. For the provinces of Las Tunas, Holguin, Santiago de Cuba and Guantanamo —hard hit by draught in recent years— the total stored water in their reservoirs is at the highest level in the last thirteen years. (Granma, 8/12/06)

December 11: The first legislation passed by the government of Raúl Castro attempts to tackle workplace absenteeism and increase productivity in state-owned companies through a rigorous regulation of worlplace schedules. The Ministry of Labour resolution, published in the weekly government-run newspaper “Trabajadores”, introduces amendments in the existing legal framework established by the Labour Code and the body of regulations approved at the beginning of the so-called “Special Period,” declared in the wake of the collapse of the Soviet Union in 1991. The application of the new legislation and of another resolution, aimed at fighting “workplace indiscipline,” has been postponed for April 1. Among other things, the resolution establishes that absences from work without valid reason and the abandonment of post during the workday without authorization, as well as any infractions of start/end times, will not be counted as time worked. Furthermore, the resolution establishes that time away from work will not be remunerated even in cases where workers have been authorized to miss work for personal business on account of conflicting schedules. (EFE, 12/12/06)

December 11: Two nickel mines in the Moa region of eastern Cuba were closed due to the torrential rains and floods of the last few days. According to the state-run radio station Radio Progreso, all operations have stopped at the Moa open pits of the ‘Comandante Pedro Soto Alba’ y ‘Commander Ernesto Che Guevara’ nickel mining companies. (Reuters, 12/12/06)

December 16: Iran's ambassador to Cuba discussed expansion of economic and trade ties with Cuban deputy foreign trade minister. According to Iranian Embassy in Havana, Iran's Ambassador to Cuba Ahmad Edrisyan in a meeting with Deputy Minister of Foreign Trade Pedro Luis Padroon stressed the necessity of strengthening and expanding economic cooperation in different fields. "Iranian companies are ready to attend in Cuba and participate in executing industrial plans there”, the Iranian Ambassador said. The Cuban official, for his part, referred to the friendly relations between the two countries in recent years and called for enhancing the level of cooperation. He pointed out the economic and commercial ties between Iran and Cuba should be promoted further. (IRNA, 16/12/06)

December 18: Cuba's Central Bank issued new bank notes with enhanced security features to prevent growing counterfeiting of convertible pesos (CUC). The new bills add the denomination to the watermark and keep the revolutionary slogan "Homeland or Death, We Shall Overcome" in the security thread. "There are lots of false bills in circulation, especially 50 and 100 CUCs. That's why they are changing them," said a Havana bank teller. The Central Bank gave no details on counterfeiting, but a business source said the false bank notes were printed abroad, possibly in the exile community in Miami. "There has been a lot of counterfeiting. They are so easy to counterfeit that you could almost do it on a good copier," said a resident foreign businessman. Pegged at par with the dollar for a decade, the CUC was revalued in April 2005 to $1.08. The local script is worthless outside Cuba. (Reuters, 18/12/06) 

December 18: Cuba expects to conclude construction and renovation of 110,000 homes before year’s end, a National Assembly committee reported. The session, presided over by Cuban Vice President Carlos Lage and National Peoples Power Assembly President Ricardo Alarcon, heard a detailed report on the issue from Permanent Productive Activity Committee Chairman Leonardo Martinez. Martinez stated that as of November, 102,353 houses had been constructed and the plan is to conclude the year with 110,000. The important number of 101,000 had the participation of the population in construction labor. According to official figures, housing deficit is of 600,00.  (Prensa Latina, EFE, 18/12/06)

December 19: The Cuban sugar harvest began with the first of 51 mills grinding toward a hoped-for comeback to take advantage of higher world prices and increased ethanol demand, local media said. Authorities have said there is at least 25 percent more cane than the previous harvest that produced an estimated 1.2 million tonnes of sugar. "The Paquito Rosales mill in eastern Santiago de Cuba began milling," state-run television said, announcing the start of the harvest. "Local specialists announced there was 37.7 percent more cane in the province and raw sugar output would increase 51.2 percent" over the previous harvest's 90,000 tonnes, Santiago's Sierra Maestra weekly said in its online edition. Sugar Minister Ulises Rosales del Toro said in October the painful process of downsizing the industry was over.  (Reuters, 20/12/06)

December 22: A syndicate of Russian banks and Cuba's Aviaimport S.A. signed a $203.4 million credit agreement, Russia's state-controlled foreign trade bank Vneshtorgbank said. The credit is for 12 years and will be used to buy Russian Il-96-300 and Tu-204 passenger planes, said VTB, which is the credit organizer. Cuba will provide sovereign guarantees as loan security, while the aircrafts will be used as collateral. The bank said it is the largest deal on the export of Russian airplanes in modern Russian history, and the second-largest long-term project under the state program of financial support for industrial exports. (RIA Novosti, 22/12/06)

December 22: Cuban finance officials acknowledged in an unusually critical year-end report that the country's economy is still suffering the effects of the severe crisis of the 1990s but nevertheless grew 12.5 percent in 2006. Cuban Economics Minister Jose Luis Rodriguez defended the method used to calculate the island's gross domestic product growth figure, which includes the free health, education and other social services the communist country provides its citizens. "Cuba doesn't falsify its statistics, nor does it manipulate them with electoral ends," Rodriguez told a year-end session of the National Assembly, or parliament. Cuba's methodology makes the country's economic growth figures difficult to compare with those of other countries, prompting the United Nation's Economic Commission for Latin America and the Caribbean to leave the island's numbers out of its report last year. This year, the UN commission, known as ECLAC, appeared to have accepted the 12.5 percent figure, but said it was still studying some of the economic data. ECLAC reported earlier this month that Cuba's 12.5 percent growth figure was the highest in the region, which saw an average of 5.3 percent growth for 2006. On the streets of Havana's colonial section, many residents were little impressed with announcements the economy sprinted past last year's 11.8 percent growth and 5.4 percent in 2004. Nor were they wowed by an announcement to the Assembly that the government had pared the budget deficit to 3 percent of economic output. Instead, they wanted to see more tangible results in their daily lives: salaries that could stretch to buy chicken and beef, plus the mobilization of more buses, so that they needn't wait hours at bus stops. Many recalled better times before the demise of the Soviet bloc crippled Cuba's economy. [Informe del ministro de Economía y Planificación] (AP, Sun Sentinel, 22/12/06)

December 22: Cuba’s Minister of Finances, Jose Luis Rodriguez told lawmakers that the country had still not fully recovered from the so-called "special period" of the 1990s, when Cuba imposed austerity measures to survive a crushing economic crisis caused by the Soviet Union's collapse. Rodriguez also said that much still needs to be done to increase economic efficiency. Worker productivity, for instance, has not kept up with salary increases, he said. Rodriguez said authorities also worry about the island's dependence on food imports, which he said have grown 35 percent in the last two years. Deficiencies in urban transportation and high petroleum costs are also worrisome, he added. (AP, 22/12/06)

December 22: Cuba will dedicate 22.6 percent of its Gross Domestic Product in 2007 to guarantee the development of social programs including education and public health for all citizens. Cuba’s Finance and Prices Minister Georgina Barreiro presented the country’s proposed 2007 budget to the Cuban Parliament meeting at Havana’s Convention Center. Barreiro said that financial resources will be increased for health care, education, culture, and social assistance, the payment of pensions, as well as the country’s defense and homeland security. The proposed budget also prioritizes public transportation, energy and water resources, the minister announced. Important resources will be used to subsidize the population’s basic food and personal hygiene supplies, for which the country will invest a billion US dollars, said the Cuban government official. Barreiro also noted the need to include a sizeable emergency fund to face potential natural disasters during the year. (ACN, 22/12/06)

December 22: In response to public and governmental discontent with transportation, Cuban Transport Minister Jorge Luis Sierra announced a million dollar investment in the sector for 2007. At the urging of First Vice President Raul Castro, who pointed out inefficiencies on transportation ranks with housing and food for citizens, Sierra explained to National Assembly deputies current difficulties in freight and public transportation. Immediate priorities include reorganization and strengthening of his ministry’s role for a more efficient use of investments, and better discipline and energy saving, the minister said. In 2007 the plan is to buy 200 buses from China, 50 used Mercedes Benz, and 344 school buses, as well as trucks for moving both human and cargo in the mountains while the railroads undergo major renovation to the tune of 230 million dollars. Sierra was severe in his criticisms of public transport, especially of workers in the sector, which has a high turnover; mentioning lack of drivers, incompetence, petty theft and illegal sale of tickets, particularly in the capital. He also noted lack of spare parts and deterioration of repair shops as well as lack of organization and financing for maintenance. (Prensa Latina, 22/12/06)

December 23: Acting president Raul Castro complained to legislators about inefficiencies in the island's economy, telling them in comments made public by the Communist party newspaper Granma that there is no excuse for the transportation and food production problems that anger many Cubans. "In this Revolution we are tired of excuses," he said, giving the strongest sense yet of the frank and demanding leadership style he will likely adopt if his ailing older brother Fidel Castro does not return as president. "The Revolution cannot lie," he said in the comments published by Granma. "This isn't saying that there have been comrades who have lied, but the imprecision, inexact data, consciously or unconsciously masked, can no longer continue." Castro spoke the day before during a year-end meeting of the National Assembly. During the parliamentary session, he criticized the "bureaucratic red tape" preventing the government from completing payments to the individual farmers and cooperatives producing 65 percent of the island's vegetables. In excerpts of his comments aired on state television, Castro also criticized efforts to improve Cuba's dilapidated public transportation, saying it is "practically on the point of collapse."  He did not address the two-hour session that international journalists were allowed to attend in the morning. Excerpts of his comments aired later on state television showed him looking gruff and almost angry as spoke in a strong, controlled tone about problems affecting average Cubans. (Globe and Mail, AP, 24/12/06)

December 25: Carlos Lage Davila, secretary of the Executive Committee of the Council of Ministers, toured water supply infrastructure in the central province of Villa Clara. Lage said that government’s efforts are directed not to building more reservoirs or other water sources but to promote savings and improved water quality. The official noted that leaks in the water distribution system are a problem throughout the country with aqueducts being 50 to 100 years old and in dire need of repair. (Granma, 26/12/06)

December 25: After visiting a new housing project in Villa Clara, Carlos Lage Davila, secretary of the Executive Committee of the Council of Ministers spoke about the population’s discontent with the progress in the program to maintain and restore houses. He said that in 2006 a total of $300 million USD went for maintenance and home building but that an even greater effort is still needed. (Granma, 26/12/06)

December 26: The final stage of installing a large area of wind generators on the Isla de la Juventud in southwestern Cuba is near completion. "The alternative energy source is part of the island’s Energy Revolution," explained Yadira Garcia Vera, minister of Basic Industry, during a tour of the project site. Garcia’s ministry is charged with electricity generation for the island. Garcia spoke with workers in charge of erecting the 55-meter-high generators built with French technology. Unlike earlier models, these generators can be dismounted in case of an approaching hurricane. The Isla de la Juventud was selected for the project because of its continuous winds. The system hopes to generate 1,650 KW of electricity. (Granma, 26/12/06)

December 26: Energy production from natural gas originating in wells on the northwest coast of Cuba will reach 400 megawatts of power starting the first semester of 2007. The increased output is the result of investments by the ENERGAS Company, said Engineer Alberto Villalonga, the vice general manager of the company. At the facilities, like those in nearby Varadero, gas from oil wells is extracted, cleaned and processed for use in the generation of electricity that is supplied to the nation’s power grid and as raw material for gas manufacturing plants in Havana. ENERGAS is the first company on the island whose equipment was designed especially for this type of high efficiency output, cleaning 90 percent of the gas that it receives. (Periódico 26, 26/12/06)

December 26: Nickel has been Cuba's top traditional export product since 2000, and in 2005 it was once again the country's top source of foreign exchange, along with services and the biotechnology sector. However, Canadian firm Sherritt International announced an estimated shortfall of 3,000 tons at an ore-processing plant it operates in partnership with Cuba. This means that the national production target of 76,700 tons for this year, a modest increase over production in 2005, is unlikely to be met. The Cuban-Canadian joint venture Moa-Níquel (formerly Pedro Soto Alba) S.A. said in its report for the first quarter of 2006 that it would have to readjust its planned output target of 33,000 tons for 2006 downward to 30,000 tons, because of bottlenecks in the production process, apparently in the first quarter. "So far, strong prices have compensated for the decline in production," a Cuban researcher who wished to remain anonymous told the press. Total Cuban nickel production in 2005 amounted to 75,900 tons, similar to output for 2004, and a very modest increment of 1.1 percent was planned for 2006. Given the upward trend in international prices, which crossed the $20,000-a-ton mark in 2000, the Cuban government designed an ambitious plan for a gradual increase in production. Last year, Cuba reached an agreement with Sherritt International for expanding production at the Moa-Níquel plant, and incorporating the latest technology at a Canadian cobalt-nickel refinery, financed with more than $500 million contributed equally by both partners. The expansion of the Moa-Níquel plant was intended to increase output by 16,000 tons year, or about 50 percent, by the end of 2008. But Sherritt itself has now announced that the plans to increase Moa-Níquel's capacity will have to be reviewed, and are now forecasting staged production increases of 4,000 tons for 2008, 9,000 tons in 2009, and a further 3,000 tons by 2011. (IPS, 26/12/06)

December 26: The ferronickel factory, also to be located in Moa, is expected to produce 68,000 tons a year of iron-nickel alloy. Conceived as a joint venture, Cuba will own 51 percent of the shares and the Chinese Minmetals group the remaining 49 percent. There are plans for China to invest in a fifth processing plant, to be built close to the ore reserves at San Felipe in the eastern province of Camaguay, which would increase Cuban nickel production to 120,000 tons a year (up from its current 76,000 tons) in the future. China is to invest more than $1 billion in the Cuban-Chinese San Felipe project, according to the agreements signed by Fidel Castro and President Hu in Havana. Without going into details, Venezuelan President Hugo Chávez said in Caracas on December 14 that Venezuela and Cuba are planning to manufacture stainless steel with Cuban nickel and Venezuelan iron. It is estimated that China absorbs half of Cuba's total nickel output, and would be capable of buying up the other 50 percent, according to experts, because China is the world's top producer of steel, and its industry is still expanding. Experts concur that until the day oil starts gushing from the underwater reserves in the Cuban zone of the Gulf of Mexico -- China is also involved in oil exploration there -- nickel is important as collateral for the loans Beijing has given Havana in recent years. China is now Cuba's second-largest trading partner, after Venezuela. Trade between Cuba and China was worth more than $1 billion in 2006, and the Asian giant is providing the Caribbean country with large amounts of soft credit. According to the US Geological Survey, world nickel production stood at 1.5 million tons in 2005. Russia, the United States, Canada, Australia, Norway and Cuba are the world's foremost producers of nickel, a non-ferrous metal used in a large number of industrial processes. (IPS, 26/12/06)

December 27: On November 10, 2006, as part of the disclosure pertaining to its financial results for the period ended September 30, 2006, Pebercan Inc. (the "Company") indicated that Cubapetroleo S.A. (Cupet) was almost 2 months late in its payments owed to Peberco Ltd., a subsidiary of the Company, pursuant to the procedure set out in the production-sharing and sales agreements. The Company, through its subsidiary, sells all its oil production to Cupet. Pursuant to such agreements, as at December 31, 2006, there will be an amount totaling approximately US$69 million owing in relation to the development and operation of Block 7, 55% or US$37 million of which is to be paid to Peberco and the balance to its partner, Sherritt International (Cuba) Oil and Gas Limited. This amount varies monthly and is based on the amount of contractual payments outstanding, namely those remaining unpaid 90 days after their respective billing date. The Company has intensified the negotiations with the Cuban authorities to find solutions to this matter. In addition, pursuant to the production-sharing agreement, the Company must confirm the amount it will undertake to invest, in 2007, to develop the oil assets. The Company's proportionate share of the expected cost of such investment totals approximately $65 million, which corresponds to its interest in Block 7's operations. The Company is concurrently pursuing all the abovementioned negotiations with Cupet and hopes to reach an agreement on the amount required to be invested during 2007 as capital expenditure during the third week of January. (Rigzone.Com, Globe and Mail, Toronto Star, 27/12/06)

December 28: Cuba is interested in joint projects with Belarus that would involve other Latin American countries, Cuban Ambassador Omar Medina Quintero said at a news conference held in Minsk. According to the Ambassador, such trilateral cooperation could be established with the participation of Venezuela, Bolivia, Brazil and Nicaragua.  "There is quite a number of areas for the development of cooperation between our states," Mr. Quintero said. The ambassador noted that Belarus and Cuba would continue developing bilateral cooperation in education, healthcare and transportation. Institutions of higher learning have already submitted their specific cooperation proposals, he said.  A Belarusian-Cuban agreement on cooperation in the educational sphere would provide for the expansion of ties between educational institutions, and an exchange of teachers, postgraduates and students, Mr. Quintero added. (BelaPan, 29/12/06)

December 28: The flow of tourists from the Ukraine into Cuba doubled up during 2006 compared to 2005, Cuba’s ambassador in Kiev said. In a meeting with representatives of more than 125 Ukrainian tour operators, ambassador Julio Garmendia said all the companies worked very close with the Cuban consulate. The Cuban mission presented the four most successful companies in sending travelers to the island with certificates of recognition for their work. (AIN, 28/12/06)