Chronicle on Cuba - January 2007

Economy

January 2: The Dominican Republic branded as “very positive” the growth in trade with Cuba. Dominican ambassador in Cuba Daniel Guerrero said that numerous of the hotels there consume foods produced in Dominican soil, as well as construction material and furniture manufactured in the Dominican Republic. Guerrero pointed out that, notwithstanding the difference in the political and economic realities, Cuban firms and investors there “are interested in assessing Dominican products.” Among others, the Dominican Republic and Cuba exchange medical, agrichemical and food products. (EFE, 2/1/07)

January 3: Cuba estimates to have achieved record-high sales of its rum brand Havana Club of over 2.6 million cases of Havana Club rum for 2006, Havana Club brand director, Manuel Arias, said. Domestic sales represent 900,000 cases of the total. At the beginning of January 2007 Cuba will open a plant for the production of Havana Club rum in San Jose de las Lajas, Havana province, northern Cuba. Cuba targets to sell five million cases of Havana Club rum in 2013.  (Latin America News Digest, 3/1/07)

January 4: The Central American airline TACA announced that it will operate a direct flight between San Jose and Havana, replacing the existing flight to the island through El Salvador. The flights between Costa Rica and Cuba will have connections to El Salvador, Guatemala and Mexico. (EER, 4/1/07)

January 4: Cuba fulfilled its plan to produce 3.9 million tons of oil and natural gas in 2006, and it continues exploration activities at 30 wells operated by foreign firms and state-owned Cubapetroleo, officials said. That production is equivalent to 69.6 million barrels of crude and represents a nearly sevenfold increase over the figure for 1990. It is also sufficient to meet half of Cuba's demand for oil and natural gas. In addition, it means savings of $260 million for the communist-ruled island, according to estimates by Vice President Carlos Lage and published in the latest edition of the weekly newspapar Opciones. State television reported that in 2006, specialized brigades worked at 30 oil wells, six of them currently operated by Cubapetroleo, or Cupet. A spokesman for the state oil firm said that it planned to drill 12 new wells in 2007, guaranteeing the country an annual crude production level of 2.2 million tons. (EFE, 4/1/07)

January 4: Cuba's coffee harvest was winding down with output estimated by Reuters up by around 30 percent at between 180,000 and 225,000 60-kg bags, based on local media and sources reports. Reuters estimated the 2005/2006 crop at around 140,000 60-kg bags, one of the lowest in 50 years, due mainly to hurricane damage to eastern Santiago de Cuba, responsible for close to a third of national production, where output was halved.  Above-average rainfall has broken a three-year drought in eastern and central Cuba, where almost all Cuban coffee is grown, and the area was spared hurricane damage this season. "Santiago surpassed 1,950,000 cans of coffee collected, doubling what was collected last year," the official daily Granma reported, attributing the improvement to "more resources, better labor organization and normal rainfall." The state increased by up to 100 percent what it pays for beans this harvest. (Reuters, 4/1/07)

January 9: Cuban sugar mills were opening on time this month as the season began, with 11 in operation and another 15 to open this week, according to a sugar ministry statement published in the official weekly "Trabajadores."  Cuba is banking on this season marking the start of a new era for what was once its most important industry, after a 15-year decline from 8 million raw tonnes of sugar produced in 1990 to just 1.2 million tonnes in 2005. Rising sugar and ethanol prices led to a government decision last year to invest once more in the industry after a downsizing that closed more than half the country's mills and reduced plantations by 60 percent. "The number of mills grinding cane increased to 11 (…) during this week around 15 more mills will begin operations, with the remainder of the 50 mills opening as scheduled," the statement said, adding while a few mills opened late due to rainfall, others opened early to compensate. Cuban Sugar Minister Ulises Rosales del Toro told a parliament commission in December there was 28 percent more cane to grind and greater mill efficiency meant total raw sugar output would increase by 32 percent this year to around 1.6 million tonnes. (Reuters, 9/1/07)

January 10: Havana Club, the rum maker owned by French drinks company Pernod Ricard SA, said it is opening a new factory just outside Havana, Cuba. In a statement, Havana Club said the move is aimed at meeting rising demand for its rum. The plant will have a capacity of 12,000 bottles an hour. Havana Club wants to lift sales of its rum to 5 million crates a year by 2013. (Dow Jones, 10/1/07)

January 10: Vice President Carlos Lage toured several important production centers in the province of Havana including the Conrado Benitez Electrical Cables Production Plant. New investments at the plant that operates under the trademark ELEKA have doubled the industry’s production of copper wire and pre-processed aluminum bars for making electrical conductors to supply the countries needs. The vice president asked questions about the work environment, labor discipline and control measures against workplace theft. At the national warehouse for Cuban and imported pharmaceuticals, manager Jorge Carballo reported that the number of products considered in low availability (products with a limited 30-day supply) had dropped to 41 and that there are only 3 products that are currently not available at all of a total of 849 medicines required by the ministry of Public Health. He said that adding the state of the raw materials and the production of pharmaceuticals to the database are still pending in order to complete a comprehensive product inventory. The Cuban vice president appealed to permanent vigilance against theft in this entity, where every month about 700 tons of medicine is handled. Lage also visited the Vita Nova Pastas Production Plant that represents an investment of $4.3 million USD. (Granma, 10/1/07)

January 11: Belize’s Minister of Agriculture Vildo Marin and Chief Agriculture Officer Eugene Waight are presently on a one week visit to Cuba. While in Cuba Minister Marin will meet with his counterpart Maria del Carmen Perez to discuss possible areas of cooperation. A Government press release said special areas of interest will be visits to urban and peri-urban cooperative agriculture production areas. Belize has expressed interest in getting technical assistance from Cuba in the area of biological control of pests and diseases. Cuba has developed a number of commercial products that is used in organic and sustainable agriculture production systems. Belize has also initiated with Cuba the preparation of an M-O-U for cooperation in plant health. Once agreed upon, Belize will be able to exchange plant genetic material with Cuba. (LoveFM News, 11/1/07)

January 12: The Cuban power industry produced the economy´s most outstanding achievement in 2006: the elimination by 90 per cent of damaging and annoying electricity shortages. In less than a year, over 1,000 Megawatts of generating capacity have been installed. The electrogen groups responsible for the increase were distributed in 116 of the 169 municipalities of the island. Investment in the diesel power generators (for 1,311 MW) is practically completed. They will supply all the needed electricity in the hours of highest demand. The annual report of the Ministry of Basic Industry confirmed that 6,301 electrogen groups have arrived in the country. Of that figure, 3,798 generators are already in operation. (Prensa Latina, 12/1/07)

January 16: About 300 businessmen and specialists from 23 countries from Latin America, Europe and Asia gathered in Havana to talk about the production and commercialization of honey. The First Meeting of Latin-American Beekeepers, was attended by delegations from Brazil, Cuba, Canada, Jamaica, Granada, Trinidad and Tobago, Ecuador, Costa Rica, Venezuela, Germany, Spain, Argentina, Guadalupe, Mexico, Bolivia, India, Italy, among other nations. (EFE, 16/1/07)

January 16: Cuba is forecasting a 32 % increase in sugar production this year as a result of higher volumes of sugar cane as well as improved industrial practices that will lead to better processing, said sector sources. According to unofficial figures, the island produced 1.2 million tons of the product last year, much lower than historical figures, and four years after a major restructuring of this traditional industry. (AP, 16/1/07)

January 18: A Quebec company is offering to arrange speedy health-care services for a fee in Cuba, but patients have to book their own flights. Services Sante International charges $200 per medical file and patients must make their own flight and insurance arrangements. President and founder Lucie Vermette said that hip replacements cost between $5,000 and $6,000 and cataract operations cost $2,000 in Cuba. The Cuban doctors also do esthetic surgery. (Canadian Press, 18/1/07)

January 18: Cuba celebrated the first anniversary of the energy revolution being undertaken across the island which has made a remarkable progress in the development of clean sources of energy and in the increase of power generation. The ceremony was attended by Cuban vice-president Carlos Lage and Minister of Basic Industry, Yadira Garcia, who highlighted the success of the policies implemented in the island since 2006 to save energy.   Garcia said that in two years Cuba will have a more efficient electric system thanks to its modernization. (AIN, 18/1/07)

January 24: President Hugo Chávez of Venezuela and Cuban Vice-President Carlos Lage strengthened relations between their friendly governments, by sealing 16 agreements harbouring promises of co-operation and greater joint efforts in agriculture, finance, telecoms, energy, tourism, transport and industry. The meeting, which took place in the Miraflores presidential palace in the Venezuelan capital, Caracas, was largely unexpected. One of the accords will translate into the construction of a 1,552-km fibre-optic connection between the two countries to secure rapid telecom access to Cuba. Commitments to future mixed companies on maritime, railway, insurance and tourism sectors were also ratified. They aim in particular to bolster Venezuela's tourism to Cuba and improve parts of the island's infrastructure. Another mixed company should also be created to ensure the supply of nickel to Cuba. Additionally, and as part of the mixed-company plan, Venezuela's Basic Industry and Mining Minister José Khan confirmed that US$240,000 will be invested in iron and steel and US$280,000 in stainless steel.  All of the subscribed accords fall within the Bolivarian Alternative for the Americas (ALBA), which Chávez has promoted in Latin America as an alternative scheme to the Free-Trade Agreement of the Americas (FTAA) led by the US administration in Washington. [Discurso de Carlos Lage en la firma de los acuerdos] (Prensa Latina, Global Insight, 25/1/07)

January 24: Venezuela and Cuba took a new step toward expanding their economic alliance, with Caracas joining efforts to find possible petroleum reserves in Cuban waters of the Gulf of Mexico. With daily deliveries of 98,000 barrels of oil, leftist-led Venezuela is not only the communist-ruled island's top supplier but also its most important trade partner and the pillar on which a good portion of the foreign trade sector rests, with bilateral trade reaching $2.6 billion last year. With the assignment to PDVSA of four of the 59 exploration blocks into which Havana has divided the offshore area, Venezuela entered into competition with six foreign oil companies to find petroleum in the gulf.  Cuba opened its portion of the Gulf of Mexico's waters to foreign oil companies in 1999.  Spain's Repsol YPF, Canada-based Sherrit, India's state-owned Oil and Natural Gas Corporation, Norway's Norsk Hydro and Malaysia's Petronas have signed exploration contracts with state-owned Cuba Petroleo, or Cupet. A sixth company, whose name Cuban authorities have not revealed for fear that the United States might retaliate against it under Washington's economic embargo against the island, also signed an exploration deal. (EFE, 25/1/07)

January 25: President Hugo Chávez' Government said Cuba, jointly with Venezuelan state-run oil conglomerate PDVSA, is participating in the quantification of oil reserves in heavy-crude oil Orinoco belt. In a press release, they explained that both countries are taking part in joint projects of prospecting and certification of hydrocarbon reservoirs at the Orinoco oil belt and in Cuban waters of the Gulf of Mexico. Under these two agreements, initialed by PDVSA and Cubapetroleo (Cupet), both countries are to conduct prospecting and reserve certification at Boyacá Norte Block of the Orinoco oil belt, as well as in blocks N53, N54, N58 and N59 in Cuban waters of the Gulf of Mexico. (El Universal, 26/1/07)

January 25: In Havana, representatives from Cuba and Mexico began the 30th Annual bilateral meeting of Fishery Authorities to assess the operation of the Fishing Agreement they have had for more than thirty years. Among the topics for discussion is the formalization of an agreement that will apply for the 2007 fishing season. (EFE, 25/1/07)

January 25: The number of tourists visiting Cuba dropped 3.6 per cent last year due to high prices and not political uncertainty over Fidel Castro's illness, travel industry sources said. An outbreak of mosquito-born dengue fever also scared some visitors away, they said this week. A tour operator in Havana reported only one cancellation – by a group of Russian tourists – due to fears of political turmoil if and when the ailing Castro dies. Cuba's cash-strapped economy relies heavily on tourism for foreign currency earnings. But visitors fell to 2.2 million last year from 2.3 million in 2005, the Cuban government said. It was the first drop since the September 11 attacks on the United States hurt the travel industry worldwide in 2002. Canadian tourism, source of 27 percent of Cuba's arrivals or about 600,000 a year, dipped for the first time in years, according to Cuban government figures. “Cancun and the Dominican Republic offered better deals,” a Canadian diplomat said. Tour operators said Cuba lost its competitive edge when it revalued its currency by 8 percent in 2005. They said tourists get more quality for their money elsewhere. The Canadian Association of Tour Operators warned Cuba last year that it was losing out to other Caribbean destinations due to the lack of adequate service for tourists, theft of luggage at airports and hotels, and a failure to attend to complaints. (Reuters, 25/1/07)

January 28: A Quebec travel agency is offering clients a $300 discount on its travel packages to Cuba in exchange for taking a suitcase full of personal items into the country. The company says it is simply acting as a middleman for expatriate Cubans wishing to send hard-to-find everyday items to Cuba. Montreal-based Antillas Express offers clients a rebate if they take a suitcase past Cuban customs. A spokesperson who did not want to be identified said the practice is legal and that the company assumes full responsibility for what's inside the luggage. "We check all the merchandise because it's in our interests that it reaches its destination," the spokesperson told the press. "It's not in our interest that the merchandise be confiscated at the Cuban border." She said relatives often use the service to send such items as Aspirin, clothing and pens to family members back home. Company representatives pick up the suitcase at the airport, and then deliver the items to their intended recipients. (Canadian Press, 28/1/07)

January 29: The number of foreign companies operating in Cuba has continued to decline and a new investment expected from China has not materialized, a Cuban cabinet minister said. Joint ventures between Cuba's communist state and foreign investors fell to 236 at the end of 2006, down from 258 a year ago and 313 at the end of 2004, Foreign Investment and Economic Cooperation Minister Marta Lomas told the press. "We ended the year with 236," she said after a meeting with Prime Minister Aristides Gomes of Guinea Bissau. "We are not interested in doing too many (joint ventures), we are only interested in those that have an impact on the economy," she said. (Reuters, 29/1/07)

January 29: A senior Cuban official said Venezuela had replaced China in local plans to produce fero-nickel at a partially completed plant in eastern Holguin province. "The Chinese are not continuing, we are redoing the project with Venezuela," Cuban Minister of Foreign Investment and Economic Cooperation, Marta Lomas, told the press, when asked about the Camarioca nickel works. "We are forming a joint venture with Venezuela for Camarioca," Lomas said. China's state-owned Minmetals Corporation signed an agreement in 2004 to invest in Camarioca, but nothing has happened since then, according to western businessmen who supply the industry. Venezuela's taking over of the project should allow Cuba to start up the unfinished Las Camarioca plant, which has been mothballed since the demise of the Soviet Union 15 years ago. The two countries announced plans to produce stainless steal in Venezuela using Cuban fero-nickel. Plans call for $500 million to be invested in the fero-nickel part of the project and $600 million in the steel plant. Cuban officials have said in the past Camarioca could produce 68,000 tonnes of ferro-nickel annually (21,000 tonnes nickel). Ferro-nickel is an iron-nickel combination mostly used in steel-making. (Reuters, 29/1/07)
  
January 30: In Cuba, where the state controls 90 percent of the economy and the average wage is 367 pesos ($17) a month plus full benefits, residents are complaining bitterly about food prices. As the country enters a period of transition due to Fidel Castro's illness, authorities are well aware they must quickly reverse a food production decline in the last two years that has caused many produce prices to double. Acting President Raul Castro, who temporarily took over the communist government from his brother six months ago, has put food supplies at the top of his agenda. At a session of Cuba's legislature in December, he criticized the state bureaucracy for arrears in payments to private farmers who provide 60 percent of Cuba's produce and called for economists to study the food supply problem. (Reuters, 30/1/07)