in the news despite the obstacles, cuba’s alimport is ... · exporting to cuba,” complained jim...

BY VITO ECHEVARRÍA

Cuba — a country known around the globefor its advances in education, medicineand biotechnology — is light-years behind

its neighbors when it comes to telecom.According to a 2006 study by the UN Confer-

ence on Trade and Economic Development(UNCTAD), Cuba has one of the world’s lowestmobile telephone penetration rates, with only134,480 cellular subscribers for its 11.2 millioninhabitants in 2005.

That translates into a penetration rate of just1.2 per 100, which is on par with Eritrea, the far-flung Solomon Islands and the Democratic Re-public of Congo. Even impoverished Haiti, thepoorest country in the Western Hemisphere,has far more cellphone lines in use than Cuba.

Five years ago, the situation was even worse.In 2001, according to UNCTAD, Cuba had only8,579 subscribers. Yet the example of EasternEurope suggests those numbers would sky-rocket in a post-Castro Cuba.

Formerly communist countries there enjoysome of the planet’s highest mobile penetrationrates, led by Estonia (108 cellphones per 100),the Czech Republic (115) and Lithuania (127).

Cubacel (www.cubacel.cu), the cellular spin-off of Cuban state telecom monopoly Etecsa,controls cellular services on the island, and lim-its availability of such services to foreigners andCubans who happen to reside abroad.

Even without that restrictive policy, mostCubans would be priced out of the market evenif they were allowed to have cellphone accounts,since current rates far exceed the monthly earn-ings of most local residents.

For instance, Cubacel charges 50c per minutefor calls made to other cellphones, and 60c/minfor calls made to land lines. Unlike most celloperators abroad, Cubacel actually charges itssubscribers for incoming calls (44c/min).

There’s no shortage of foreign telecom oper-ators hoping to claim Cuba as their next emerg-

BY LARRY LUXNER

Relations between the United States andCuba have never been worse — but that’shardly dampened the island’s ravenous

appetite for American food products.In 2006, state-run purchasing agency Alim-

port says it contracted for just over 1.4 millionmetric tons of U.S. agricultural commoditiesworth $544.1 million. That was up slightly fromthe $540.9 million Alimport spent on 2005 pur-chases from U.S. suppliers, even though volumedropped from the 1.8 million tons of food com-modities shipped in 2005.

It should be noted that not everyone acceptsAlimport’s numbers. John Kavulich of the U.S.-Cuba Trade and Economic Council Inc., quotingU.S. Commerce Department and USDA figures,says 2005 U.S. food exports to Cuba came toonly $350.2 million, down 11% from 2004 sales.

Yet if Alimport’s figures are to be believed,the obvious conclusion is that in every year

since passage of the Trade Sanctions andReform Export Enhancement Act (TSRA) — aloophole which authorizes such exports in thefirst place — Cuba’s purchases from the UnitedStates have gone up.

And it’s not just food the Cubans are buying. Utility poles — because they’re made of wood

— qualify as an agricultural export under TSRArules. In the last eight months, around 30,000 ofthem have been shipped to Cuba, 99% of themfrom Alabama (see our interview with AlabamaAgriculture Commissioner Ron Sparks, page 8).

Likewise, Alimport CEO Pedro Alvarez sayshis agency has purchased $37 million worth ofU.S. paper products since TSRA’s passage morethan six years ago.

But grains still dominate U.S. exports toCuba, the most important being wheat ($402.7million in 2006 exports) and yellow corn ($368.5million). Other leading commodities includechicken; milled and paddy rice; soybean meal;

In the News

Rice exporters hopefulCuba’s a big market, despite Alimport banon genetically modified rice ..........Page 3

No more excusesRaúl Castro tells National Assembly thatCuba must get its act together .....Page 4

Encouraging signs?The number of political prisoners in Cubaand migrants stopped at sea by the CoastGuard both fell in 2006 .................Page 5

Ethanol futureWith proper planning, Cuba can cash inon world ethanol boom .................Page 7

NewsmakersRon Sparks, Alabama’s commissioner ofagriculture, has become a poster child forU.S. food sales to Cuba .................Page 8

Raúl ready to deal?Jaime Suchlichi says U.S. must play hard-ball with Cuba’s new leader .........Page 9

Nickel reboundsRecord high prices make up for a drop inCuban nickel production ............1

Business briefsNorway protests hotel’s anti-Cuba policy;IT revolution underway ..............Page 12

Provinces: Ciego de AvilaSparsely populated province hopes tour-ism will take sugar’s place ..........Page 14

www.cubanews.com

Vol. 15, No. 1 January 2007

See Alimport, page 2

See Cellular, page 6

CubaNews (ISSN 1073-7715) is published monthlyby Luxner News Inc. © 2007. All rights reserved.Subscriptions: $429 for one year, $800 for two years.For editorial inquires, please call (301) 452-1105or send an e-mail to: [email protected].

Despite the obstacles, Cuba’s Alimportis spending more than ever on U.S. food

Regional cellular operators can’t waitto crack Cuba’s pent-up mobile market

2 CubaNews ❖ January 2007

soybeans; milk powder; refined soybean oil;peas, chickpeas and lentils; animal feed;beans and supermarket products (see chart atbottom of this page).

One reason Cuba is buying more U.S. food— despite the Bush administration’s ever-increasing hostility toward Havana — is thatit has more money to spend.

With a GDP growing at 12.5%, thanks toVenezuelan oil and record-high prices fornickel and other export commodities, Cuba’seconomy is in better shape than at any timesince TSRA was passed by Congress in 2000.

But that’s not the only reason.“People are getting used to dealing with the

obstacles,” says Kirby Jones, president of theUS-Cuba Trade Association. “Everybody hasto deal with them — the seller, the port, theshipper and Alimport. They all suck it up andjump through the hoops and over the hurdles.Having said that, I believe Pedro [Alvarez]when he says that if these obstacles were notthere, he could buy $200-300 million more inU.S. imports.”RESTRICTIONS GIVE EXPORTERS A HEADACHE

Those obstacles, Jones told CubaNews, in-clude OFAC’s demand that Alimport pays forthe goods before they leave a U.S. port, aswell as the letter of credit requirement.

“The letter of credit process is very clum-sy,” said Jones, whose Washington-basedorganization has 55 member companies andassociations. “It has to go from a Cuban bankto a third-country bank, which sends it totheir corresponding bank in the U.S., and thatbank sends it to the seller’s bank. So there arefour banks involved, and that piece of papermust be perfect. If a comma is misplaced, thewhole thing has to be corrected.

“Or, let’s say the contract calls for a ship-ping date of Jan. 15, and for some reason theship is late; there’s a storm at sea, for exam-ple, and they can’t do it until the 16th or the

17th. The whole letter of credithas to be changed.”

That frustrates U.S. agribu-siness interests enormously.

“From our perspective,OFAC’s requirement of cashpayment prior to shipments is

Alimport — FROM PAGE 1 one of the major constraints we have inexporting to Cuba,” complained Jim Guinn,VP of international promotions for the USARice Federation, based in Virginia. “Cubawould seem like a natural market for us be-cause long-grain rice is produced in Louisi-ana” (see related story, page 3 of this issue).

Guinn’s organization is one of dozensacross the United States that have been lob-

exported food to Cuba under TSRA. SinceDecember 2001, total contracted tonnagecomes to 8.16 million metric tons, with totalactual deliveries amounting to just under 7.0million tons valued at $2.08 billion.

All these exports were transported by 815vessel journeys, 72% of that via U.S.-flaggedships. Alimport has made contact with over4,300 companies in 45 states, and with 132

40035030025020015010050

402.6

368.5

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185.9179.6

170.6

95.2

92.8

59.9

39.0

37.1

32.2

23.5

19.6

4.6

4.22.4

2.3

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14.2

14.2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

1920

21

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37.0

1- Wheat 2- Yellow corn 3- Chicken 4- Milled and paddy rice 5- Soybean meal 6- Soybean 7- Milk powder 8- Refined soybean oil 9- Peas, chickpeas and lentils10- Norgold (feed)11- Crude soybean meal

12- Paper13- Wood14- Beans15- Supermarket products16- Dicalcium and monocalcium phosphate17- Wheat flour18- Eggs19- Ground turkey20- Apples21- Cattle22- Pork fat

MAIN U.S. EXPORTS / CFI value in millions of dollars

1- Wheat 2- Yellow corn 3- Chicken 4- Milled and paddy rice 5- Soybean meal 6- Soybean 7- Milk powder 8- Refined soybean oil 9- Peas, chickpeas and lentils10- Norgold (feed)11- Crude soybean meal

12- Paper13- Wood14- Beans15- Supermarket products16- Dicalcium and monocalcium phosphate17- Wheat flour18- Eggs19- Ground turkey20- Apples21- Cattle22- Pork fat

MAIN U.S. EXPORTS / CFI value in millions of dollars

bying Congress to force OFAC to relax itsrules on selling farm commodities to Cubaunder TSRA.

“Obviously, we support opening up theCuban market,” said Chris Garza, director oflegislative affairs for the American Farm Bur-eau Federation. “We’ve been working with theCubans to make sure they continue to pur-chase U.S. commodities, despite the barrierswe face in selling to them. The only way wecan justify to Congress and the administrationat this point is because we continue to see oursales to Cuba increasing.”

Garza added: “What we’ve been hearingfrom Congress is that their priority is dealingwith the issue of Cuban-American travel toCuba, as well as remittances. While those donot have a direct impact on our sales, it’s partof easing restrictions towards Cuba.”

To date, 162 companies in 37 states have

farm associations and federations in 32 states.Barring any dramatic developments in

Cuba, that trade will continue into 2007.Veteran Cuba analyst Phil Peters, vice-pres-

ident of the Lexington Institute, said FidelCastro’s illness and transfer of power to hisbrother Raúl has had absolutely no effect onAlimport’s purchases of U.S. farm products.

“I don’t see any real instability there. Busi-ness decisions are being made, and the gov-ernment seems to be functioning normally,”Peters told CubaNews.

“I don’t think Fidel’s absence and theuncertainty about his health are having anyimpact on basic government decisions, cer-tainly not on something like this,” he said.“The Cubans clearly don’t like the [U.S.] re-strictions, but they’re buying a good amountfrom us, and they also don’t put all their eggsin one basket.”

January 2007 ❖ CubaNews 3

US/CUBA TRADE

BY VITO ECHEVARRÍA

In 2000, when the Clinton administrationgave U.S. agribusiness companies a loop-hole that would allow them to export food

to Cuba despite the embargo, it was a no-brainer that U.S. rice sales would take off.

Indeed, rice exports jumped from $6.2 mil-lion in 2002 to $64 million in 2004 (see chart).

Even with the U.S. Treasury Department’simposition of strict payment requirements forstate-run Alimport following George W.Bush’s re-election in 2004, Cuba didn’t lose itsappetite for U.S. rice.

In 2005 — even as Alimport reduced itsoverall purchases of U.S. food — rice exportsto the island came to $39.2 million. During thefirst 10 months of 2006, the Cubans boughtanother $39.5 million worth of American rice.

The USA Rice Federation, based in Arling-ton, Va., is striving to keep the rice flowing toCuba through lobbying efforts in Washing-ton, as well as its presence at events such asthe Havana International Trade Fair (FIHAV)last November.

“If we had a situation where more freetrade was allowed, business would boom forthe United States,” USA Rice consultant JoisAlaby told CBS News during FIHAV 2006.RICE EXPORTERS PUSH FOR END TO OBSTACLES

Another USA Rice official noted that, as itis, “because Cuban officials cannot travel tothe United States and inspect the loadingfacilities and rice warehouses, it takes a greatleap of faith on their part to buy U.S. rice sightunseen. The fact they buy U.S. rice at all is atestament to how much they value our rice.”

The group further asserts that if Washing-ton’s trade barriers against Havana were lift-ed, Cuba could be a 500,000-ton annual mar-ket for the United States. That implies annual

U.S. rice producers expect Cuba market to keep growingrice sales of $175 million, and the creation ofat least 4,700 U.S. jobs.

Pedro Alvarez, Alimport’s chairman, toldattendees at a 2005 USA Rice event at Hav-ana’s Hotel Nacional that Cuba’s overall riceimports could grow from the current level of

712,000 tons a year to between 750,000 and800,000 tons annually over the next two years.

Jim Guinn, VP of international promotionsat USA Rice, said world market prices for ricehave risen from $7 per hundredweight a yearago to around $9.50/hundredweight today,due to Hurricane Katrina-related salt intru-sion in southern Louisiana that has forcedrice production down by about 15%.

“At least seven or eight U.S. mills have thecapability to export long-grain rice to Cuba,”he said. “The quality of U.S.-milled rice issuperior to Vietnamese rice, and right now,Vietnam has halted all exports until the nextcrop is harvested. So availability is very limit-ed at least until the end of February.”GENETICALLY MODIFIED ISSUE HALTS SHIPMENTS

One of the biggest problems in 2006 was acontroversy over genetically modified rice.

“Exports [to Cuba] have since declinedprecipitiously, and it’s related to the genetical-ly modified rice issue,” Guinn told CubaNews.

“We had an accidental introduction of a her-bicide-resistant trait in long-grain rice in thesouthern U.S., and that’s pretty much haltedour exports since August, specifically toCuba. That was the reason given by Alimportas to why they would not import U.S. rice.”

But Guinn said “there have been ongoingdiscussions with Alimport for some time, andwe now believe we’re at a point where that’sno longer going to be an issue.”

Before 1962, Cuba was the single largestmarket for value-added rice from the United

Antonio Castro, one of Fidel’s sons, poses withJaber de Almeida, a Cuban chef hired by the USARice Federation during last year’s FIHAV trade fair.

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States — a situation that John King, an Arkan-sas rice grower and USA Rice’s chairman,wants to restore.

In an unexpected show of support from theCuban side, one of Fidel Castro’s sons, Anto-nio Castro, stopped by the USA Rice booth totaste a rice dish prepared by the group’schefs. The last time the orthopedic surgeonwas seen in public was March 2006, when hetraveled to San Juan, Puerto Rico, as the teamdoctor for the Cuban national baseball teamduring the World Baseball Classic.

In a flyer that USA Rice distributed last yearto members of Congress, the trade groupcomplained that a late 2006 sale of 200,000tons of Vietnamese rice to Cuba “could easilyhave been made by the U.S. rice industrywithout OFAC interference.”RICE COMPANIES LOOK TO POST-CASTRO FUTURE

The group also chastised the Bush admin-istration for striking out provisions in fiscal2006 Transportation and Treasury appropria-tions bills that would have preventedTreasury’s Office of Foreign Assets Controlfrom using those funds to enforce measuresthat require the Cuban government to pay forU.S. food purchases in advance.

Regardless of what happens with OFACinterference in U.S. rice sales, one aspect ofU.S. rice trade that faces its own challenge isthe sale of retail-packaged, supermarket-ready rice to Cuba.

While Puerto Ricans, Cubans and otherHispanics living in the United States are ac-customed to buying major brands like UncleBen’s and Carolina Rice, those brands areconspicuously absent in Cuba itself.

Antonio Benavides, a marketing executiveat Riviana Foods, explained in an e-mail toCubaNews why so far there’s no branded U.S.rice on Cuban supermarket shelves.

“To my knowledge, there are no[American] brands sold there, as everythinggoes bulk,” said Benavides, whose companymakes the popular supermarket brandCarolina, as well as Mahatma and various pri-vate-label rice brands.

“Cubans are not willing to pay a premiumfor packaged/branded rice. I think U.S. rice,which is sold by the co-ops in Arkansas, isused as a filler whenever there is noVietnamese rice or when they need to usesmaller ships. I am sure some of the betterrice ends up in the Cuban tourism trade.”

Such comments support the view by somethat American rice is of a fluffier, highergrade than the Vietnamese rice which ordi-nary Cubans ate before U.S. rice becameavailable.

Benavides predicts that — given the higherprice points sought for popular U.S. brands —his firm in particular won’t ship rice into Cubaunder current political conditions. He addedthat “we will probably sell Mahatma whenCuba opens up.”

BY DOMINGO AMUCHASTEGUI

Sharp criticism prevailed. The need for rig-orous analysis — free of inaccuracies andjustifications — was the straightforward

message coming from Raúl Castro on Dec. 22,the final day of a two-day session by Cuba’sNational Assembly.

“In this Revolution, we are tired of excuses,”he told lawmakers, hammering away, againand again, at the same theme. “The Revolu-tioncannot lie. This isn’t saying that there havebeen comrades who have lied, but the impreci-sion, inexact data, consciously or un-conscious-ly masked, can no longer continue.”

Indeed, regardless of how positive some ofthe economic reports were in the course of thissession, criticism was everywhere.

Even José Luís Rodríguez, Cuba’s ministerof economy and planning — and a confidante ofRaúl — came up with an unexpected referenceabout the so-called “special period” (the eco-nomic collapse following the fall of the Sovietbloc in the early ‘90s).

Rodríguez warned delegates that it “has notbeen overcome yet” and discussed several ofthe key shortcomings and cases of sheer negli-gence still plaguing the Cuban economy.

In the course of the last 10 years, productivi-ty has been growing more slowly than av-eragesalaries, meaning that the distribution ofwealth is bigger than production output, some-thing that is not sustainable over time.

This is especially important in agricultureand livestock production, where low-cost foodproduction for the population is not enoughand where productivity and the number ofhours worked went down in 2006.

This issue is two-fold: the people gets lessfood and the tourism industry gets fewer sup-

POLITICS


plies from local markets, forcing the economy tospend more on imported food.

In 2006, Cuba spent $948 million on food im-ports, a 35% jump from the year before. Importsubstitution here is crucial. The most productivesector in agriculture is represented by individualcampesinos and cooperatives, which produce 65%of all food — proving again the low performanceoverall by state enterprises.

According to Raúl, it is totally unacceptablethat state entities don’t pay their debts on time toprivate and cooperative suppliers of food. He saidit was inconceivable to talk about increasing foodproduction while stiffing those who provide 65%of total output.HIGHLIGHTS OF NATIONAL ASSEMBLY MEETING

Because of Cuba’s existing limited financialresources, the huge investment process under-way in transportation — railroads, highways andpublic transport, all areas on the verge of totalcollapse just 10 years ago — will have to estab-lish certain priorities. Cargo transportation vehi-cles and trucking infrastructure will be the toppriority, while urban public transport will receivemuch more limited resources.

Cuba’s goal of 150,000 new houses in 2006 fellshort by 40,000 houses, mainly because of thelack of construction materials from local and for-eign suppliers.

In 2006, Cuba claimed its economy grew by12.5%. Excluding free social services, growthwould still be considerably high, around 9.5%.

Regarding energy, more than 90% of Cuba’spower outages have disappeared for good,thanks to various strategies put in place over thelast 18 months. Oil and natural gas productionreached 3.9 million tons, meeting nearly 50% ofnational fuel demand. Thirty oil wells are now inproduction — six by Cuban companies and 24

Raúl to National Assembly: ‘We’re tired of justifications’through joint ventures.

Oil production in 2007 is expected to bemuch higher, though no figures were providedby Vice President Carlos Lage, who said thegovernment has purchased seven new drillingrigs to partially meet its 2007 energy goals.

In 2006, the Castro regime distributed 29 mil-lion energy-saving electrical appliances at lowprices, with credits made available by theCentral Bank. Some 50% of the island’s refriger-ators have already been replaced.

Cuba’s fiscal deficit was 3.2% of GDP, 1% lessthan in 2005, while the estimated deficit for2007 will be 1.9 billion pesos, also equivalent to3.2% of GDP.

To back up the most important programs(public health, education, energy, housing, andhydraulic infrastructure) with new investments,the government allocated 4.5 billion pesos in2006.

Cuba’s budget will increase by 9.8% thanks tothe export of services, sales to the population andgrowing efficiency within industries and servic-es. As usual, specific numbers were hard to comeby, but the government did reveal that biotechand pharmaceutical exports jumped by 90% lastyear, with sales to more than 50 countries.

In 2007, Cuba will assign 22.6% of its GDP forpublic health and education, while 3.9 billionpesos will be allotted to pensions. Social assis-tance will benefit 588,000 people, with totalfunding of 1.2 billion pesos, and the natural dis-aster fund will rise by 300 million pesos.

No statistics regarding Cuba’s foreign debtand hard-currency sections of the budget weredisclosed. Francisco Soberón, chairman ofCuba’s Central Bank, was not among the speak-ers this time, as he was during the December2005 session.

“Fidel is irreplaceable, and I don’t intend to imitate him. Those who imitatefail.”

— Raúl Castro, speaking Dec. 20 at a conference of Cuba’s Federation ofUniversity Students in Havana.

“Sometimes people fear the word ‘disagree,’ but I say the more debate andthe more disagreement you have, the better the decisions will be.”

— Raúl Castro, during the same speech.

“He is in good condition. Within the confines of doctor-patient privilege, Ican say President Castro is not suffering from a malignant condition. It’s abenign process, during which there have been a series of complications.”

— Dr. José Luís García Sabrido, head of surgery at Madrid’s Gregorio MarañonHospital, after returning from Cuba on Dec. 28 to examine Fidel Castro.

“The bottom line: he is terminally ill.”— Ross Feinstein, spokesman for the U.S. Office of the Director of National

Intelligence, casting doubt on the doctor’s assertion that Fidel does not have cancer.

“A tradition that seemed extinct in Cuban society rises again. Although noone sees celebrating the millennial festivity of the Three Kings as heresy, thedanger could be in [the holiday] accentuating consumerist habits and socialdifferences.”

— Cuban Communist newspaper Juventud Rebelde, warning Jan. 6 against arise in consumerism associated with Three Kings Day, which is usually celebrated

in Latin America by giving toys and gifts to children.

“I think it is about time we end the embargo and open up relations betweenthe Cuban and American people. It hurts both sides.”— Anti-war activist Cindy Sheehan, who led a rally Jan. 7 outside the U.S. NavalBase at Guantánamo Bay, Cuba, to protest treatment of terrorism suspects there.

“At the same time you and your noble followers fight for the closure of theU.S. prison at the Guantánamo naval base, just a few miles away at the provin-cial Guantánamo prison in Cuban territory, peaceful and defenseless politicalprisoners suffer inhumane conditions, [living] without potable water and withpoor nutrition, deficient medical assistance, insects and rodents, limited visitsand precarious communication. We exhort you to visit the prisons of Cuba.”

— The Ladies in White, in a Jan. 8 letter to Cindy Sheehan, urging the peaceactivist to visit Cuban jails where their dissident husbands are imprisoned.

“We find it to be a very serious matter that a Norwegian hotel chain main-tains the U.S. boycott of Cuba. This was a clear breach of Norwegian law,which forbids discrimination based on nationality.”

— Norway’s main trade union, LO, reacting to the decision of a Hilton-ownedhotel in Oslo to deny lodging to a Cuban delegation in compliance with the 1996

Helms-Burton Act.

“Saddam’s execution was an illegal act in a country that has been driventoward an internal conflict in which millions of citizens have been exiled orlost their lives. Cuba has a moral duty to express its point of view about theassassination committed by the occupying power.”— Cuba’s Foreign Ministry, reacting Jan. 1 to the execution of deposed Iraqi dic-

tator Saddam Hussein.

“The outlook for the year is pretty gloomy. We are appealing for commonsense to prevail.”

— Lazaro Cuesta, a Santería priest, speaking Jan. 2 at a press conferencein Havana. The babalawos, making their annual predictions, say they see

heightened danger of epidemics, military intervention and increased espi-onage against Cuba in 2007.

In their own words …COAST GUARD: FEWER CUBAN ‘RAFTERS’ IN 2006

The number of undocumented Cuban migrantsstopped at sea by the U.S. Coast Guard, whichhad been rising steadily year by year, fell notice-ably in 2006, the Miami Herald reported Jan. 3.

While Cuban interdictions are down, the num-ber of Cuban arrivals in South Florida on smug-gling and other organized trips is up — with 546more landings in fiscal 2006 than 2005, accordingto Border Patrol figures.

There were 2,260 Cubans interdicted in 2006,compared to 2,952 in 2005 — the first decline inannual Cuban interceptions since 2001, when 777were stopped.

The Herald says these figures may simplyreflect cyclical declines, but they could also repre-sent a more complex set of factors such as weath-er and use of alternate routes by Cubans to reachthe U.S., including more efficient smuggling trips.

The drop in interdictions, however, does notreflect the change of leadership in Cuba, wherean ailing Fidel Castro temporarily turned overpower to brother Raúl in July.

Coast Guard figures can be found atwww.d7publicaffairs.com.

VENEZUELANS LIKE FIDEL, COSTA RICANS DON’T

Some 60% of Venezuelans have a positive viewof Fidel Castro, according to the 18 Latinobaró-metro, released in December by The Economist.

Less than half of all respondents in the other 17countries surveyed have positive feelings aboutCastro. Costa Ricans are at the bottom with only8% holding a good opinion of Fidel, followed by11% of Chileans and 13% of Panamanians.

Overall, 27% of Latin Americans said they likedthe Cuban leader. The survey was based on face-to-face interviews with 20,234 adults in 18 coun-tries last October. The margin of error for eachcountry is 3%.

FEWER POLITICAL PRISONERS BEHIND BARS IN 2006

The number of political prisoners held in Cubafell in the second half of 2006, but harassment ofdissidents continues, said veteran Cuban human-rights activist Elizardo Sánchez.

AP quoted Sánchez as saying that his groupcounted 283 prisoners of conscience, down from316 in early July. The commission counted 333political prisoners in Cuba a year ago.

Sánchez attributed the drop to “selective”releases of prisoners, such as Hector Palacios, anopposition leader who was recently set free onmedical parole. Palacios was one of 75 dissidentsarrested in a broad crackdown in 2003. BesidesPalacios, 15 of those arrested have since beenfreed for health reasons.

But Sanchez said that even as some prisonershave been released, the Castro regime continuesto harass dissidents with short detentions, inter-rogations and monitoring.

The rights activist also said he had no hope fora major change under Raúl Castro, who's beenrunning Cuba since late July while his brotherFidel is in the hospital.

“There is nothing pressuring Raul to makechanges,” he said. “My vision is pessimistic.”

POLITICAL BRIEFS



ing market, assuming significant economicand political changes take place after theCastro regime ends.

The most likely of these are two companiesalready present in the Caribbean: London-based Cable & Wireless Ltd. and Irish mobileoperator Digicel, both of which have regionalheadquarters in Kingston, Jamaica.CABLE & WIRELESS LOOKS TO CUBA

C&W has dominated the English-speakingCaribbean for more than a century, and is stilla key player in Jamaica, Trinidad, Barbadosand a dozen other islands, as well as Panama.

In Jamaica, where it lost its monopoly in2001 after 109 years, C&W now has 98% of thefixed-line market and 30% of the mobile busi-ness (Digicel controls the remaining 70%).

With 1.9 million mobile lines for its 2.7 mil-lion people, Jamaica has one of the Carib-bean’s highest wireless penetration rates —over 70%.

In a press statement provided to CubaNews,C&W said that as part of its ongoing businessdevelopment strategy, it continuously reviewsopportunities that would fit within its interna-tional portfolio from a commercial and geo-graphical standpoint.

“The company already offers integratedmobile, fixed line and broadband services to34 countries, and would certainly be interest-ed in Cuba, seeing it as a good strategic fitwithin its large, existing Caribbean opera-tions,” according to C&W spokesman PaulWood in London.

“Cable & Wireless is highly experienced indeveloping customer-centric telecom solu-tions and although no process [for expandinginto Cuba] is apparent at the moment, wouldrespond quickly and positively should theopportunity arise.”DIGICEL EXPANDS THROUGHOUT REGION

Digicel, which was launched in 2001 byIrish entrepreneur Denis O’Brien, is presentin 21 Caribbean markets as well as El Salva-dor. It started in Jamaica and has since ex-panded to Aruba, Barbados, Bonaire,Curaçao, Guyana, St. Kitts and Suriname.

Digicel now has four million subscribersthroughout the Caribbean, with one millionalone in Haiti — where it launched last May.Total investment in the region now exceeds$1.5 billion.

“Digicel’s progress in 2006 reinforced ourposition as the largest GSM provider in theCaribbean region, with sustained growth inour existing markets and unrivaled growththrough our entrance into new markets suchas Haiti, Trinidad & Tobago, Guyana and ElSalvador,” said Colm Delves, Digital GroupCEO, in a prepared statement.

While Digicel does not have a VSAT anten-na installed in Cuba, it does operate a satellitelink between its Jamaica network and Cuba’sEtecsa, which supports voice traffic for allDigicel networks and is specifically for Digi-cel traffic only.

“Digicel was the first regional company toestablish roaming with the Cuban mobile

operator back in 2003 as part of our growingnetwork of 245 worldwide partners in 130countries,” said David Hall, CEO of DigicelJamaica Ltd.

“Any Cuban who calls Jamaica goes acrossour bandwidth, so we have a relationship withCuba,” said Hall, interviewed by CubaNews inKingston. “The only reason we’re in Cuba isbecause there’s a very strong relationshipbetween Jamaica and Cuba.”

Hall said Digicel racks up “a couple of hun-dred thousand minutes a month” in callsbetween the two islands.

“If you call Cuba from here, you get fantas-

tic reception,” he said. “We’ve also broughtdown the cost of calls. Two years ago, the ratewas J$120 (US$1.81) per minute. Now, it’sJ$50/min (75c), of which the Cuban govern-ment gets J$45 (68c).”IS CUBA IN DIGICEL’S FUTURE?

Naturally, an aggressive telecom player likeDigicel would want to add Cuba to its growinglist of markets. Cuba alone could theoreticallydouble the number of Digicel’s current sub-scribers, and there’s some speculation thatCuba is indeed on Digicel’s sights.

The Digicel Caribbean Cup — now beingheld at various venues in the Caribbean —includes a Cuban soccer team.

Cuba itself played host to some of the earli-er round games at Havana’s Pedro MarreroStadium last fall; surprisingly, the Cuban soc-cer team qualified for the Digicel finals inTrinidad later this month.

Asked if Cuba’s mere participation in theDigicel Cup is evidence of the company’sinterest in potential mobile business there,company spokeswoman Maureen Rabbitt hadthis to say: “Given that this is a pan-Caribbeantournament, Cuba was invited to participatealong with 20 other Caribbean nations, just asthe Dominican Republic, Virgin Islands,Bahamas and St Martin were also invited.”

She added that “as a corporate policy we donot speculate on future plans. As part of ourgrowth strategy we are considering opera-tions throughout the pan-Caribbean region.”ATN EXPRESSES INTEREST TOO

Yet another potential player is Atlantic Tele-Network Inc., headquartered in Salem, Mass.ATN, with annual revenues of around $150million, owns 80% of Guyana Telephone &Telegraph Co. Ltd., controls just under half of

Bermuda’s largest mobile operator and owns100% of a broadband data and digital TV com-pany in the U.S. Virgin Islands.

“We’re interested in Cuba like everyoneelse,” said Michael T. Prior, ATN’s presidentand CEO. “With its population and natural re-sources, Cuba as the biggest island in theCaribbean has obvious potential.”

Prior told CubaNews he suspects Cuba’sinfrastructure in general is underbuilt.

“Look at the wireless carriers that have en-tered Haiti and the Dominican Republic rightnext door. They proved that even in an areawhere most of the population doesn’t havedisposable income, you can make a viablebusiness,” he said.

“But anybody considering investing [inCuba] will want to know that there won’t beany major political change that’ll put theirinvestment at risk.”

Manuel Cereijo, a University of Miami aca-demic who wrote a 2004 research paper onpost-Castro Cuba’s telecom sector, predictstht both U.S. and foreign wireless operatorswill make a future play for Cuba.

However, Cereijo cautions that such atransformation will be contingent upon thecountry’s economic performance.

“Cubans would be paying for cellular serv-ice in pesos,” he told CubaNews. “Investorswill have to take the risk and build a phonesystem in Cuba in the hopes that the peso willappreciate.”IS THE D.R. A MODEL TO FOLLOW?

Indeed, one of the Caribbean’s hottest tele-com markets right now is the DominicanRepublic, home to nearly nine million peopleUNCTAD says the country’s cellular penetra-tion is around 40 lines per 100 residents. Fouroperators provide wireless service there:Verizon, Orange, Tricom and Centennial.

Orange Dominicana, a subsidiary of FranceTelecom, is the No. 2 provider of cellular serv-ices in the Dominican market, having pio-neered the use of prepaid cellular service,which allows local residents to buy cheapphone cards from local Orange outlets, super-markets and even street vendors. That allowsthem to add prepaid minutes to their cell-phones when needed.

When asked about Orange’s interest in ex-panding to Cuba, spokesman Andrés Ferrei-ras told us the company “has no plans to enterthe post-Castro Cuban market at this time.”

In fact, Orange is more worried about thefuture of the Dominican market right now. Asubsidiary of América Móvil — the cellularoperator owned by Mexican billionaire CarlosSlim — bought out Verizon Dominicana fromits U.S. parent in 2006, along with Verizon’soperations in Puerto Rico and Venezuela.

“We have to fight to maintain our position inour own market, with the Mexican purchaseof Verizon Dominicana,” said Ferreiras. “TheMexicans are very aggressive players.”

Another major provider of cellular servicesin the Dominican Republic is Tricom S.A.,which pioneered cheap long-distance servicebetween the D.R. and the United States.

Cellular — FROM PAGE 2

C&W isn’t the only telco setting its sights on Cuba.

LAR

RY

LUX

NE

R

See Cellular, page 7


AGRIBUSINESS

Cuba’s new alcohol/ethanol policyBY DOMINGO AMUCHASTEGUI

When it comes to the ethanol industry,no one denies that Cuba lost someimportant opportunities in the 1980s

by refusing to follow Brazil’s example.Unlike Colombia and Costa Rica, the Cu-

ban government neglected to expand existingdistilleries and didn’t bother to improve theoverall production of refined oil.

This became even more critical when seri-ous problems with Soviet petroleum suppliesbecame apparent.

According to rumors at the time, Illinoisagribusiness giant Archer Daniels Midlandoffered to help develop Cuba’s ethanol indus-try, but Fidel Castro brushed ADM aside —making the lack of vision in this particularfield even worse.

On the other hand, some Cuban expertssay the resources and technologies were notyet available for such a huge endeavor.

The question now is whether it’s too late forCuba to cash in on the promising new inter-national ethanol market. Cuban experts andscientists are betting that it’s not.INVESTMENTS IN DISTILLERIES

Since the late 1990s, Cuba has begun toshow interest in ethanol, and not only in con-nection with rum exports. Investments andtechnologies were suddenly available after along period of decline.

The first major project was a huge distillerycomplex at the Antonio Sánchez sugar mill inAguada de Pasajeros. The joint venture, 80%owned by Spanish investors and 20% by theCuban government, was known as ALFICSA.

It produced molasses from sugar mills inand around Cienfuegos province at the rate of355 kgs per hectoliter of highly refined alco-hol (extrafino A, 96 degrees).

Other distilleries in major sugar-producingareas have been upgraded over the last sixyears. These include Antonio Guiteras, Arquí-medes Colina, Duquesne, Arlee Mañalich,

— mainly a greater demand for alternativefuels such as ethanol — are pushing up pricesfor sugar and its derivatives. For this reason,he concluded, ethanol-related projects are along-term process.

Baron predicts annual world production ofethanol will reach 80 billion liters by 2010, upfrom the current 38.7 billion liters per year.

Many experts point to Fidel’s May 1, 2006,speech urging an increase in sugar produc-tion due to favorable prices.

Yet nothing of the sort has taken place, forthe simple reason that the strategies adoptedby Cuba’s leadership — and not by Rosalesdel Toro on his own free will — aim to reduce,modernize and reshape the sugar industrynot as a net exporter of raw sugar but of deriv-atives with high aggregate value such asrefined alcohol, ethanol, raw material forbiotechnology and pharmaceuticals, and theproduction of rum together with glucose,syrup, sorbitol, and other derivatives.DEBATE OVER CUBA’S SUGAR POLICY

In recent statement, Rosales del Toro madeit clear that there was no turnabout, and thatonly a few sugar mills would be eventuallyincorporated into the next sugar harvest.

He pointed out that the extreme volatilityand instability of sugar prices from Maytrhough September, adding that any opti-mism would be ill-advised.

In sharp contrast to Fidel’s approach inMay, on Oct. 16 the sugar minister warnedthat “we should not place our trust in worldprices but look to maximize cost-efficiency todefend ourselves from any situation."

Regarding the 10% lost in the 2005 harvest,Rosales del Toro blamed it on inadequate sup-ply of sugar cane, low productivity in some ofthe working sugar mills and the late introduc-tion of energy technologies. He reiteratedthat Cuba’s full potential output will not bereached in the near future.

Planning for the 2007 harvest envisionsplanting an additional 120,000 hectares,which should produce a modest increase insugar output. Only nine sugar mills will beincorporated, for a total of 51.

Refined sugar will be the top priority, andsignificantly higher levels of alcohol andethanol are expected.

All distilleries, large and small, will contin-ue to increase their production of refinedalcohol — known as Técnico B — for export,as well as the production of rum for domesticconsumption. The new refined alcohol will bethe base factor for increased quantities ofethanol in coming years.

Cuba’s historic decision to drasticallydownsize the sugar industry will be debatedfor years, but all observers knew it wasinevitable. As to whether the current strate-gies are working, the trends and figures cited— at least in this particular dimension — tendto suggest that they are.

But Tricom is shying away from commentsabout its plans for post-Castro Cuba due tointernal changes.

CubaNews couldn’t reach Tricom ChairmanRicardo Vélez Albizú, though one of hisspokesmen phoned us back to say that“Tricom is in the middle of a financial restruc-turing process and will probably be boughtout by a giant new telephone company.

“It would be up to the new company todecide about any expansion plans, includingparticipating in a post-Castro Cuba communi-cations market,” he said. “Due to the restruc-turing process, the chairman refrains fromfurther comment.”

The Tricom spokesman wouldn’t identifythe telecom firm that wants buy out Tricom

Cellular — FROM PAGE 6 (which in recent times has been battling withVerizon and Orange for its share of the coun-try’s booming prepaid cellular sector).

Digicel probably won’t compete in theDominican Republic — but not because itwouldn’t like to. The reality is that the D.R.has too many wireless competitors at themoment; thus it wouldn’t be realistic forDigicel to make a play there.

In comparison, post-Castro Cuba would stillbe virgin territory, and it would be hard forDigicel — which signed up one million sub-scribers in dirt-poor Haiti in less than eightmonths — to resist the urge to similarly com-pete for business in Cuba.

“For us, the ideal opportunity is to go inagainst a monopoly,” Digicel’s Hall toldCubaNews. “If you already have five operatorsthere, you’ll be fighting your ass off.”

Héctor Molina and Santa Cruz. The improve-ments are aimed at increasing to refineexport-quality alcohol and rum.

More recently, a major distillery withupdated technology was completed in SanJosé de las Lajas (La Habana province) at acost of $63 million. At the same time, 11 olddistilleries are being modernized, and sevennew distilleries — each with the capacity toproduce 300,000 liters daily — are under con-struction.

With this level of investment, the ministerof the sugar industry, Ulises Rosales del Toro,said Cuba would soon be able to “grind sugarcane just for the sake of producing alcohol.”TAKING ADVICE FROM BRAZIL

Until recently, the production of alcoholwas based on molasses. Yet since 2004, alco-hol is made from what is known as secondaryjuices or jugos secundarios, or diluídos. As aresult, the fermentation rate has climbedfrom 87% to more than 95%, very close to thehighest international standards.

The search for the best technoligies andforeign advice — mainly from Brazil but alsofrom Spain and Canada — is another impor-tant angle in Cuba’s quest in this particularfield. Numerous Brazilian experts and busi-nesspeople have traveled to Cuba, and Cubandelegations have visited Brazil, to explorepotential projects in sugar production, alcoholand ethanol.

This process was highlighted last June byLuis Gálvez, chairman of the Cuban Instituteof Sugar Cane Derivatives (ICIDCA inSpanish), when he said Cuba would return tolarge-scale sugar production in order toexport alcohol and ethanol, as well as meetgrowing domestic demand.

At the same time, Peter Baron, chairman ofthe Sugar International Organization, recog-nized the need for Cuban authorities to ration-alize its sugar industry in 2001-02 in view ofextreme low prices. But new circumstances

BY LARRY LUXNER

If he were running for governor of neigh-boring Florida, Ron Sparks wouldn’t makeit past the primaries.

But Sparks is from the Heart of Dixie State,not the Sunshine State — and in Alabama,publicly calling for an end to the embargoagainst Cuba isn’t the kiss of death but appar-ently a way to score points with voters.

Sparks is Alabama’s commissioner of agri-culture andi n d u s t r i e s .Born andraised in FortPayne, Ala.,the 53-year-oldDemocrat waselected to thepost in 2002and re-electedlast Novemberfor anotherfour years.

Growing up,he workedalongside hisgrandmotherat a local sockmill whileattending high school. After completing hisservice in the U.S. Coast Guard, Sparks grad-uated from Northeast State CommunityCollege, and in 1978 — at the age of 24 —became one of the youngest county commis-sioners ever elected in Alabama history.

He’s also owned two successful businessesin Fort Payne and has worked in television.

Sparks — who’s been to Cuba at least threetimes since taking office —has openly ex-pressed interest in running for governor ofAlabama in 2010, when Gov. Bob Riley’s cur-rent term ends.

And he’s proud of his friendship with PedroAlvarez, chairman and CEO of Cuba’s state-run food purchasing agency Alimport.CUBA ‘EXTREMELY IMPORTANT’ TO ALABAMA

In a lengthy phone interview from Montgo-mery, Sparks told CubaNews that in 2006,Alimport spent one-third of its budget for U.S.agricultural commodities — about $140 mil-lion —on Alabama-sourced products, underthe 2000 Trade Sanctions and Reform ExportEnhancement Act (TSRA).

That includes everything from peanut but-ter, peanut paste and peanuts from Georgia-based Mazur & Hockman; peanut butter blen-ded with Alaga syrup from Whitfield Foods inMontgomery, and soybean oil, utility polesand various other products from Alabamacompanies the agency declined to identify.

“Cuba has been extremely important toAlabama,” Sparks told us. “We started threeand a half years ago, when I first came intooffice, working with Pedro. We have sincehad a number of successful trade missions

that have resulted in about $350 million ineconomic impact for the state of Alabama.”

During his most recent trip to Cuba — afour-day trade mission in December that coin-cided with a 10-member Congressional dele-gation — Sparks and his entourage treatedAlimport officials to a meal of fried Alabamacatfish, cornbread, butterbeans, green beancasserole, cole slaw, pecan pie with ice creamand sweet tea.

“We want to benefit agriculture, create jobsand help Alabama. We’ve increased our staffin international trade, and we’re looking at


food commodities to be shipped to Cuba in 40years left from the Port of Mobile.

“I’ve been up-front and honest with the peo-ple of Alabama about why we trade withCuba,” said Sparks. “My main concern is withtwo things: I hope the food we’re sending toCuba in some way gets to the Cuban people,and I hope it helps my farmers in Alabama.”

The agriculture commissioner added that“when I go to Cuba — even when I wasaround the president [Fidel Castro] — I nevertalked politics. The only thing we talk about ishelping the people of Cuba.”

“We’ve had obstacles put up in front of us. We’ve tried to state ourcase in Washington, but we’ll continue to abide by the rules no mat-ter how tough they make them ... even if we don’t agree with them.”

— RON SPARKS, ALABAMA’S COMMISSIONER OF AGRICULTURE AND INDUSTRIES

Ron Sparks: Cuba is key market for Alabama farmersNEWSMAKERS

every opportunity we can,” said Sparks. Henoted that other states which haven’t beenshipping products or sending trade missionsto Havana “will soon realize they may be miss-ing out on a great opportunity.”LONG HISTORY OF FRIENDSHIP

Whether folks in Tallahassee are listeningremains to be seen, but in Montgomery, stateofficials have wasted no time in capitalizingon their trade ties with Havana.

Sen. Lowell Barron, who was among thoseaccompanying Sparks on his most recent tripto Havana, told the Huntsville Times “we needto look at ways to lift the trade embargo. Itmakes no sense. It’s obviously not working,and we need to try a different strategy. Whenand if that government turns around,Alabama is going to be in a perfect position.”

Barron said the state is also trying to sellCuba on purchasing pond-raised catfish fromwest Alabama producers.

“One of their great problems is that theydon’t have enough money to buy the highest-quality fish,” he said. “They have to get fishthey can afford.”

Among Alabama’s biggest trading advan-tages is its proximity to Cuba. The Port of Mo-bile is only 545 nautical miles from Havana,and the two cities have a long, historic rela-tionship dating back to 1702, when Mobilebecame the capital capital of the LouisianaTerritory (see our special report on Mobile inCubaNews, September 2004, page 14).

In 1993, Mobile officials traveled to Havanaand set up the first sister-city relationshipbetween any U.S. city and Cuba since the1959 revolution. Six years later, Mobileunveiled a statue at the entrance to Havanaharbor, and in 2001, the first boatload of U.S.

FROM CHICKEN TO UTILITY POLESSo far, Alabama’s top export to Cuba has

been poultry. Arkansas-based Tyson Foods isthe top seller of poultry to Cuba, and much ofthat poultry is sourced from chicken process-ing plants in Alabama. In addition, Montgom-ery-based Calhoun Foods has shipped over60 containers of meat products and othercommodities to Cuba.

In addition, Bunge Corp., which has a soy-bean processing and milling plant in Decatur,Ala., is among companies that will sell farmproducts to Cuba in 2007, though officials atBunge headquarters in St. Louis couldn’t bereached for comment.

But perhaps Alabama’s most unusualexport to Cuba isn’t something you eat.

Wooden utility poles, as many as 100,000 ofthem, have been shipped to Cuba with TSRA’sblessing. According to John Key, internation-al trade director at the Alabama Departmentof Agriculture and Industry, 99% of thosepoles came from sawmills in southwesternAlabama, primarily Escambia andWashington counties.

“It’s actually an approved product underTSRA,” Key told us. “Keep in mind that lum-ber and utility poles — even wooden doorsand window frames — are on the list to besold to Cuba.

“The brokers that sell utility poles and lum-ber are based out of Florida, but they’re sell-ing an Alabama product,” he said, estimatingthat $40 million worth of such poles havebeen shipped to Cuba over the last four years.

In the last eight months alone, Alimporthas signed contracts for 30,000 utility poles —all of them shipped out of Mobile. But Key

Alabama ag boss Ron Sparks

See Alabama, page 9


Bailey named U.S. ‘mission manager’ for CubaNorman A. Bailey has been appointed to

head a one-stop shop for the intelligencecommunity on Cuba and Venezuela.

As “mission manager” for the two coun-tries, Bailey will oversee 3-5 staffers who willpore over information from 16 U.S. govern-ment agencies to spot information gaps, helpcraft intelligence strategies and track theimplementation of those strategies.

Bailey was named to the post by JohnNegroponte, director of national intelligence

for the Bush administration — which hasfive other mission managers specializing inNorth Korea, Iran, counterterrorism, coun-terproliferation and counterintelligence.

Most recently senior fellow at the conser-vative Potomac Foundation, Bailey speaks 5languages and is the author of a 1999 book,“The Strategic Plan That Won the Cold War.”

The 1953 Oberlin College graduate is anoted expert on regional affairs and a fre-quent participant on the conference circuit.

wouldn’t name the companies involved be-cause, he said, “this is highly competitive.”

Although Cuba is certainly an importantmarket for Alabama’s agricultural products,it’s not the only one. Sparks recently ledAlabama’s first-ever trade delegation toAfrica, and later this month will be opening atrade office in India.

Sparks will also be going to Dubai, and isinvolved in several deals with Mexico, Japanand the European Union.

But Cuba is the one market that seems toget his emotions going.

“Maybe I am uneducated, but I can tell youthis: I’ve been to Havana, I’ve walked throughthe neighborhoods, and I want to help thesepeople,” Sparks told CubaNews.

“If somebody wants to look at me wrongbecause I’d like to help them have a betterquality of life, then I’m sorry. It’s not politicsto me, it’s my heart, it’s the way I feel. I justdon’t agree with the Cuba policies we cur-rently have in effect.”SPARKS HOPES DEMOCRATS CAN BRING CHANGE

Sparks says he’s had “very little negative”feedback from his trips to Cuba, though headmits to being very frustrated with all therestrictions imposed by the Bush administra-tion on selling to Cuba — such as letters ofcredit, cash payment up front and the difficul-ties of actually traveling to Cuba to meet face-to-face with potential buyers.

“We’ve had obstacles put up in front of us.We’ve tried to state our case in Washington,but we will continue to abide by the rules, nomatter how tough they make them — even ifwe don’t agree with them.”

Sparks says he hopes things will changenow that the Democrats are controllingCongress. “But I don’t think this can all bedone in one swoop,” he told us. “We’ve got tostart looking at the travel sanctions. Peopleshould be allowed to travel freely. Americansought to be able to go wherever they want togo. And that’s just the beginning.”

He said: “I’m not trying to tell the Bush ad-ministration what it should or shouldn’t do,but I don’t agree with any country that won’teven have a dialogue. What’s wrong with talk-ing to them? We ought to be talking.”

Alabama — FROM PAGE 8

Cuba scholar Jaime Suchlicki is director ofthe University of Miami’s Institute for Cuban &Cuban-American Studies. His opinions do notnecessarily reflect those of CubaNews itself.

Is Raúl Castro ready to deal?OPINION

BY JAIME SUCHLICKI

The visit to Cuba of a U.S. congressionaldelegation led by Rep. Jeff Flake (R-AZ)and Rep. William Delahunt (D-MA) in

December yielded little results.There seems to be an eagerness among

some members of Congress to begin a pro-cess of normalization of relations with Cuba,especially after Fidel Castro’s recent illness.

The belief persists that economic consider-ations could influence Raúl Castro’s policydecisions and that Cuba’s difficult economicsituation will force Raúl to move toward amarket economy and closer ties to the U.S.

We seem to cling to an outdated economicdeterminism in trying to understand events inother societies and the motivations of theirleaders. Despite economic difficulties, Raúldoes not seem ready to provide meaningfuland irreversible concessions for a U.S.-Cubanormalization.

He may offer more consumer goods andfood to tranquilize the Cuban population, butnot major structural reforms that would openthe Cuban economy. In Cuba, political consid-erations dictate economic decisions.

Raúl’s legitimacy is based on his closenessto Fidel’s policies of economic centralization,control and opposition to the U.S. Raúl cannot now reject Fidel’s legacy and move closerto the U.S.

A move in this direction would be fraughtwith dangers. It would create uncertaintyamong the elites that govern Cuba andincrease instability as some advocate rapidchange while others cling to more orthodoxpolicies. The Cuban population also could seethis as an opportunity for mobilization de-manding faster reforms.

Raúl is also unwilling to renounce the sup-port and close collaboration of countries likeVenezuela, China, Iran and Russia in ex-change for an uncertain relationship with theU.S. At a time that anti-Americanism is grow-ing in Latin America and elsewhere, Raúl’spolicies are more likely to remain closer toregimes that are not particularly friendly tothe U.S. and that demand little from Cuba inreturn for generous aid.

In September, Russia provided a $350 mil-lion credit package to Cuba to modernize itsarmed forces and Venezuela’s aid to Cuba willsurpass the $2 billion mark in 2006.

Raúl is no Deng Xiaoping and no friend ofthe U.S. He has been the longest-serving min-ister of defense — in power for 47 years.

He presided over the worst periods of polit-ical repression and economic centralization inCuba and is responsible for numerous execu-tions after he and his brother assumed power,and some while in Mexico and the SierraMaestra before reaching power.

Raúl has been a loyal follower and cheer-leader of Fidel’s anti-American policies andmilitary interventions in Africa and else-

where. In 1962, he and Soviet Premier NikitaKhrushchev conspired to surreptitiouslyintroduce nuclear missiles into Cuba.

Raúl supervised the Americas Departmentin Cuba approving support for terrorist, guer-rilla and revolutionary groups throughoutLatin America. In 1996, he personally orderedthe shooting down of two Brothers to theRescue unarmed civilian planes in interna-tional waters, killing three U.S. citizens andone Cuban-American resident in Florida.

An admirer of the Soviet Armed Forces,Raúl displays pictures of Russian militaryleaders in his Havana office and late last yearsigned a $350 million Russian aid pact toupgrade Cuba’s military.

Raul’s politically motivated speech Dec. 2,in which he expressed his willingness to ne-gotiate with the United States, was precededby a vitriolic attack on U.S. foreign policy andfollowed by the qualifiers that Cuba is sover-eign and that its revolution won’t change. Forthe past four decades Fidel has been makingsimilar statements.

In a rare public statement two years ago,Raúl warned that the U.S. should negotiate itsdifferences with Cuba while Fidel was alive —since the U.S. would find it more difficult tonegotiate with him.

For the past four decades, the avenues fornegotiation and engagement between theU.S. and Cuba have never been closed. TheU.S. signed with Cuba anti-hijacking agree-ments and migration accords.

Yet, negotiations alone are not sufficient.There has to be a willingness on the part ofthe Cuban leadership to offer real conces-sions — in the area of human rights and polit-ical and economic openings.

No country gives away major policies with-out a substantial quid pro quo. Only whenRaúl is willing to deal, not only to the U.S., butmore importantly to the Cuban people, thenand only then we should sit down and play.


OPINION

who are our adversaries for one reason oranother. After more than 48 years of failedpolicies and actions with Cuba, why not beginanew and have a conversation with Cuba thathas been long overdue?

For millions of affected Cubans and Cuban-Americans, it is time for a change.

How can Cuba and the United States have ameaningful conversation with each other? Forone thing, each country can take steps to cre-ate an environment upon which a meaningfulconversation can occur.

However, before we can get there, where iseach side now in the areas of controversy anddispute? Among the most critical humanissues right now in both countries is the factthat the United States and Cuba each holdpolitical prisoners, wanted men, and fugitivesof the other.

Cuba has jailed several hundred Cubanswho are political dissidents; many of themreceived funding and support directly or indi-rectly from U.S. taxpayer resources.

We jailed five Cuban nationals for spying onus, when they were really here spying onCuban-Americans who were planning to re-sort to violence to change things in Cuba.

Cuba is haven to a number of Americanfugitives who fled from justice here. We arecurrently detaining a Cuban exile, LuísPosada Carriles, who has admitted to beinginvolved with killing and acts of terrorismagainst Cuba. We won’t release him becausehe once worked for the U.S. government.There is enough on both sides to point to.

Ask a Cuban official to release prisoners toimprove relations, and he’ll tell you it's a non-starter and an issue of national security forthem. When they have done it in the past, ithas got them nothing in return from theUnited States and our fundamental policies donot change with Cuba.

And as long as it is the policy of our gov-ernment to provide funding and resources toindividuals and groups in Cuba for the pur-pose to destabilize and overthrow their gov-ernment, what is the point?

In order to truly have a meaningful conver-sation, remove the thorny issue of prisonersfrom the table, not as a precondition to any-thing, but simply to remove an issue that isrequired in order to have a meaningful dia-logue. This is a no-brainer.

Cuba agrees to release its several hundredpolitical prisoners with the proviso that theymay be allowed to emigrate abroad or remainin Cuba with the understanding that they willnot receive funds from the U.S. governmentdirectly or indirectly.

In return, the U.S. agrees to pardon and re-lease the five convicted Cuban national spiesand return them to Cuba. We further agree,as a matter of policy, that the U.S. governmentwill no longer fund and provide taxpayerresources to any individual or group to desta-bilize and overthrow the Cuban government.

BY ANTONIO C. MARTÍNEZ II

Last month, a bipartisan delegation of 10members of Congress traveled to Cubato meet with Cubans and assess the situ-

ation on the island.In addition to the usual talks regarding the

promising U.S. food and agricultural sales toCuba (now over $2 billion since 2000), the del-egation — led by Rep. William Delahunt (D-MA) and Rep. Jeff Flake (R-AZ) — held dis-cussions about the future of relations betweenWashington and Havana.

Prior to that visit, during a Dec. 2 celebra-tion in Havana commemorating the landing ofFidel Castro’s guerilla incursion in 1957 totopple the former Batista regime, Raúl Castropublicly expressed a willingness to open a dia-logue with the United States, which the BushAdministration regretfully shot down.

Raúl Castro wants to talk with us with nopreconditions for the talks, but the adminis-tration has said it will only talk when Cubafrees all political prisoners and holds demo-cratic elections.

But we have provided public funding tothose prisoners, directly and indirectly; webroadcast TV and radio programming intoCuba which is ultimately jammed; we embar-go Cuba; we deny Americans normal traveland trade with Cuba; and we are demandingthat Cuba, a sovereign nation, summarilychange its political system at our command asa precondition in order to first have a conver-sation. These are not very promising posi-tions in order to begin a dialogue.

The definition of dialogue is a conversationbetween two or more parties. Some can arguethat tension and conflict in the world has beenincreased by our failure to engage in conver-sations with other countries, especially those

Time to open a dialogue with Cuba, at lastLet’s face it, if a foreign government pro-

vided funds and resources to you for the pur-pose of overthrowing our government, youwould be in deep trouble or behind bars too.

The Cuban government does not need ourmeddling to let the Cuban people know whatit already knows about the flaws and failuresof their system. They have to figure it out, nothave us as a nation figure it out for them

Besides, the record shows that such poli-cies are not effective. Finally, each side canagree that on the subject of fugitives andwanted persons, face-to-face discussionsshould commence on how to resolve this inorder to bring those fugitives and wanted per-sons to face justice in a courtroom.

What about a transition to democracy inCuba? The seeds of democracy are alreadythere in Cuba. The seeds are reflected in thegeneral discontent of the Cuban people andtheir living and economic conditions. WhenCastro dies, his successors will have to con-front these challenges head-on and will nolonger be able to rely upon the charismaticfigure to sustain their system.

Castro’s successors will be focused on theirpolitical survival. In the United States, theseeds of democracy are the Cuban-Americanpeople themselves. Fifty percent of the islandpopulation in Cuba has relatives living in theUnited States.

People are the seeds of ideas and the truecurrency of democracy. It is time to allow atrue flow and exchange to take place.

The task to undue 47 years of distrust, fear,anger, resentment and revenge will not beeasy. If we are ever going to play a meaningfulrole as a nation in the future of Cuba, it will beby us working to reconcile the two sides ofthe Cuban family, those two million here inthe United States with the 11 million in Cuba,who have been made all the worse by the cur-rent policies of both countries.

When each side takes a step like freeingpolitical prisoners, an environment for changewill have been created and given a great stim-ulus to talk and most importantly, much-needed relief to those prisoners and their fam-ilies who suffer this firsthand

If each country truly cares about thosepolitical prisoners, each knows what it can doright now to move forward towards resolutionof the crisis. It is time to begin lifting the fogof war that both countries are caught in. Onlya dialogue can do that.

In the peaceful resolution of great conflicts,what is required by both parties is a willing-ness and the maturity to transcend that con-flict's history. That can only begin first with aconversation. Let the dialogue begin.

Antonio C. Martinez II is a lawyer and for-mer board member of the Latin America Work-ing Group in Washington, D.C. His opinions donot necessarily reflect those of CubaNews itself.

Group calls broadcasts illegalA Washington-based watchdog group

has called for an investigation into TV andRadio Martí’s use of private South Floridamedia to beam anti-Castro programminginto Cuba, reported the Miami Herald.

The Citizens for Responsibility and Eth-ics asked the Government AccountabilityOffice to probe the legality of TV and Ra-dio Martí’s deals with Radio Mambí (WAQI-AM) and Azteca América (WPMF-TV).

“Taxpayers should not be paying for theillegal transmission of government propa-ganda within U.S. borders,” said MelanieSloan, executive director of CREW, a non-profit group that gets some of its fundingfrom Democratic-leaning donors.

“These broadcasts are clearly aimed atCuban-Americans in Florida, not Cubansthemselves,” she said. “We hope that theGAO immediately investigates and forcesan end to these illegal broadcasts.”


COMMODITIES

BY PATRICIA GROGG / INTER PRESS SERVICE

Nickel retained its first place amongCuban exports in 2006, its earningsboosted by unprecedented high prices

on the international market, although outputwas lower than the government had hoped.

Over the past year, the price of nickel orehas risen by 157%. On Dec. 15, it was quotedat $34,800 a ton on the London market.

However, experts are now warning that thepredicted slow-down in the U.S. economy in2007, and a temporary oversupply of nickel onthe global market, may bring nickel pricesdown in the near future.

Nickel has been Cuba’s top traditional ex-port product since 2000, and in 2005 it wasonce again the country’s top source of foreignexchange, along with services and thebiotechnology sector.

However, Canadian firm Sherritt Interna-tional announced an estimated shortfall of3,000 tons at an ore-processing plant it oper-ates in partnership with Cuba. This meansthat the national production target of 76,700tons for this year, a modest increase over pro-duction in 2005, is unlikely to be met.

The Cuban-Canadian joint venture Moa-Níquel (formerly Pedro Soto Alba) S.A. saidin its report for the first quarter of 2006 that itwould have to readjust its planned output tar-get of 33,000 tons for 2006 downwards to30,000 tons, because of bottlenecks in the pro-duction process, apparently in the 1st quarter.

“So far, strong prices have compensated forthe decline in production,” a Cuban resear-cher who wished to remain anonymous toldIPS. Total Cuban nickel production in 2005amounted to 75,900 tons, similar to output for2004, and a very modest increment of 1.1%

was planned for 2006.Given the upward trend in international

prices — which surpassed the $20,000-per-tonmark in 2000 — the Cuban governmentdesigned an ambitious plan for a gradualincrease in production.

Last year, Cuba reached an agreement withSherritt for expanding production at the Moa-Níquel plant, and incorporating the latesttechnology at a Canadian cobalt-nickel refin-

ery, financed with more than $500 millioncontributed equally by both partners.

The expansion of the Moa-Níquel plant wasintended to increase output by 16,000 tonsyear, or about 50%, by the end of 2008.

But Sherritt itself has now announced thatthe plans to increase Moa-Níquel’s capacitywill have to be reviewed, and are now fore-casting staged production increases of 4,000

High prices make up for drop in Cuban nickel production

tons for 2008, 9,000 tons in 2009, and a further3,000 tons by 2011.

The Cuban-Canadian joint venture ownsthe processing plant at Moa, in the provinceof Holguín, a refining facility at Fort Saskat-chewan, Alberta, and a trading corporation inthe Bahamas.

Two other nickel processing plants, theRené Ramos Latour and the Ernesto CheGuevara facilities, operated at full capacity in2005, according to informed sources consult-ed by IPS. They are both owned and operatedby the Cuban entity Unión del Níquel.

Cuba has substantial nickel and cobaltreserves located in Moa and Nicaro, Holguín.

Proven nickel reserves are estimated at 800million metric tons, and probable reserves attwo billion tons. Cuba’s cobalt reserves,meanwhile, account for approximately 26% ofthe world’s total reserves. Official statisticsindicate that the island’s processing capacityis about 70,000 tons a year, including all threeprocessing plants.

Expansion plans for the industry includebuilding a ferronickel plant, a compound ofiron and nickel used almost entirely in themanufacture of stainless steel. The plant willbe built jointly with China, according to anagreement signed in 2005 during ChinesePresident Hu Jintao's state visit to Havana.

The ferronickel factory, also to be located

in Moa, is expected to produce 68,000 tons ayear of iron-nickel alloy.

Conceived as a joint venture, Cuba will own51% of the shares and the Chinese Minmetalsgroup the remaining 49%.

There are plans for China to invest in a fifthprocessing plant, to be built close to the orereserves at San Felipe in the eastern provinceof Camagüey, which would increase Cuban

nickel production to 120,000 tons a year (upfrom its current 76,000 tons) in the future.

China is to invest over $1 billion in theCuban-Chinese San Felipe project, accordingto the agreements signed by Fidel Castro andPresident Hu in Havana.

Without going into details, VenezuelanPresident Hugo Chávez said in Caracas onDec. 14 that Venezuela and Cuba are planningto manufacture stainless steel with Cubannickel and Venezuelan iron.

At present, it is estimated that Chinaabsorbs half of Cuba's total nickel output, andwould be capable of buying up the other 50%,according to experts, because China is theworld’s top producer of steel, and its industryis still expanding.

Experts concur that until the day when oilstarts gushing from the underwater reservesin the Cuban zone of the Gulf of Mexico, nick-el will be important as collateral for the loansBeijing has given Havana in recent years.

According to the U.S. Geological Survey,world nickel production stood at 1.5 milliontons in 2005. Russia, the United States,Canada, Australia, Norway and Cuba are theworld’s foremost producers of nickel.

Stainless steel manufacturing uses 60% ofthe total production of nickel, which is alsoemployed in the chemical, petrochemical,electronic, aerospace and auto industries.

Frank País Center for Nickel Research in Moa.

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CUBA REACHES 50% OIL SELF-SUFFICIENCY

Cuba’s 2006 oil output was 57,000 barrelsper day and its natural gas output 920 millioncubic meters, similar to 2005, the officialweekly Opciones reported in early January.

The magazine quoted Vice President CarlosLage, during a tour of gas-fired power plants,as saying oil and gas output was the equiva-lent of 3.9 million tons of oil.

“Of this amount, the equivalent of 920,000tons was natural gas,” Opciones reported,meaning oil output was 2.98 million tons or20.86 million barrels (57,150 bpd), assuming 7barrels per ton.

Lage said local oil and gas production repre-sented 50% of national consumption.

Information on Cuban oil and gas outputhas become increasingly hard to come by inrecent years, reported Reuters, with figuresomitted after 2004 from the government’s sta-tistical abstract and other reports.

For 2005, Cuba reported that combined out-put fell 3.7% from 2004 when output was re-ported as 22.771 million barrels of oil (62,300bpd) and 704 million cubic meters of gas.

Cuban production is concentrated along thenorthwest heavy oil belt, an 80-mile stretch ofcoast in Havana and Matanzas provinceswhich produces all of Cuba’s heavy crudewith a density rating of 8 API to 18 API andwith a high sulfur content.

Most new wells are drilled vertically fromthe shore from 2-7 kms out to sea. The poor-quality oil is burned in modified power plantsand factories. In 2006, Cuba began shippingsmall amounts of the crude to Malaysia.

Canada’s Sherritt International andPebercan Inc., in conjunction with state-runCubapetroleo SA, account for 60% of the out-put. In addition, Cuba imports up to 98,000bpd of oil and derivatives, with preferentialfinancing, from Venezuela.

COFFEE HARVEST UP 30% THIS SEASON

Cuba’s coffee harvest will be up by 30% thisyear, with output of between 180,000 and225,000 60-kg bags, Reuters reported Jan. 5,basing its estimate on local media reports.

Reuters estimated the 2005-06 crop ataround 140,000 bags — one of the lowest in50 years — due mainly to hurricane damageto eastern Santiago de Cuba, responsible forclose to a third of national production, whereoutput was halved.

Above-average rainfall has broken a 3-yeardrought in eastern and central Cuba, wherealmost all Cuban coffee is grown, and the areawas spared hurricane damage this season.

“Santiago surpassed 1,950,000 cans of coffeecollected, doubling what was collected lastyear,” said the official daily Granma, attribut-ing the improvement to “more resources, bet-ter labor organization and normal rainfall.”

The state increased by up to 100% what itpays for beans this harvest.

Cuba’s coffee production is routinely quanti-fied in cans, which Agriculture Ministry offi-cials say are equivalent to between 2 kg and

BUSINESS BRIEFS 2.5 kg of semi-processed beans, or beans withthe outside pulp removed.

Cuba’s Agriculture Ministry regularly refus-es to comment on the harvest, and the gov-ernment and state-run media rarely report thetotal crop, though provincial information ismore frequently available.

Eastern Guantánamo province reported out-put nearing its 1.5 million-can plan, andGranma province met its 800,000-can plan inlate December, according to provincial media.

Reuters estimated another 500,000 cans ineastern Holgúin province and a similaramount picked in central Cuba.

Through 2000, Cuba earned around $20 mil-lion annually from coffee exports, but inrecent years low prices and declining produc-tion have cut export revenues by around 75%,according to government export data.

Picking begins in August and ends inMarch, though all but around 100,000 cans ofbeans are harvested from October into earlyJanuary.

Cuba’s growers, in exchange for low interestgovernment credits and subsidized supplies,must sell all of their coffee to the state atprices well below what the beans fetch on theblack market.

Local analysts said the system led to lowproduction and the diversion of 10-20% of thecrop, most of which is exported.

RUSSIA LENDS CUBA MONEY TO BUY AIRCRAFT

A syndicate of Russian banks and Cuba’sAviaimport S.A. have signed a $203.4 millioncredit agreement, Russia’s state-controlled for-eign trade bank Vneshtorgbank said Dec. 22.

The credit is for 12 years and will be used tobuy Russian Il-96-300 and Tu-204 passengerplanes, said VTB, which is the credit organiz-er. Cuba will provide sovereign guarantees asloan security, while the aircrafts will be usedas collateral.

The bank said it is the largest deal on theexport of Russian airplanes in modern Russianhistory, and the second-largest long-term proj-


Cuba’s IT revolution could help Canadian firms

The IT revolution taking place in Cubais positioning the country as anattractive outsourcing option for

Canadian companies, and a gateway to theLatin American market, according to web-site OffshoringTimes.com.

Cuba has proved masterful in reinventingits economic priorities in troubled times,said the Canadian online news service.

Since 1991, Cuba’s information technolo-gy sector has been developing at warpspeed and now consists of about 45,000highly skilled workers, 38% of whom havespecialized degrees.

More than 85% of the country’s IT indus-try is concentrated in technical services andsoftware development, highlightedOffshoringTimes.

“We’ve been investing in this sector forthe last 14 years and we now have highlyskilled IT workers at every level,” says LuísMarín, general manager of Avante, the mar-keting arm of Cuba’s Ministry of Informa-tion Technology and Communications. “ITdoesn’t require a lot of investment, exceptin human resources.”

Canada is Cuba’s No. 3 trading partnerand fourth-largest foreign investor, withmore than $750 million tied up in the islandnation, according to Canadian sources.

Cuba is particularly interested in jointventures that will enhance the local infra-structure, while transferring skills to citi-zens. It wants to attract Western partnerswho can teach more about the standardsand demands of the international market.

Cuba’s Centresoft Corp. and CimexCorp., for example, have partnered withSentai Software Corp. of Edmonton andIndcom Trading Co. of Orleans, Ont., tocreate an international software consortiumcalled CubaSoft Solutions Inc.

CubaSoft is recruiting Cuban IT talent to

work on projects for the Canadian compa-nies and is also developing domestic ITprojects.

“IT is among the main investment oppor-tunities in Cuba for Canadian companiesright now,” says Raciel Proenza, economiccounsellor at the Cuban Embassy inOttawa. “It’s a high-priority sector becauseit contributes to the development of ourcountry.”

Cuba is also poised to become a gatewayto the lucrative Latin American market byproviding software adaptation and localiza-tion services, offering the added benefit ofregional economic associations within theCaribbean and Latin American economies.

“Latin America is starting to roll and theywon’t be far behind in technology down theroad,” the Canadian insider says. “Cubaoffers a front row seat to one of the worldsfastest emerging markets, just a three-hourflight from Canada.”

As the fifth-largest buyer of Canadiangoods in Latin America, Cuba’s IT revolu-tion is two-way. The country is also movingat a rapid pace to develop its own infrastruc-ture, concentrating on networking all of itsscience and technology institutions the waythe University of Havana has been.

The project eventually will link more than6,000 primary and middle school libraries,300 university libraries and more than 200scientific institutions. Those numbers repre-sent a significant opportunity for Canadiancompanies, based on Cubas inability to buyU.S. goods and services.

“It’s a huge undertaking that will requirehardware, software and everything inbetween,” says Eduardo Orozco, director-general of the Institute for Scientific andTechnological Information. “Canadian com-panies with good products at attractive pricepoints have an excellent opportunity.”

January 2007 ❖ CubaNews 13to the whole world. In addition, we stronglyoppose the U.S. boycott of Cuba.”

Christina Karlegran, regional spokeswomanfor Hilton and Scandic, said Hilton is a U.S.company and is bound by the Cuba embargo.

“We have to follow American law,” she saidby telephone from Stockholm. “We can’t seethat we have broken any Swedish or Norweg-ian law. If it turns out to be illegal, we willaddress that.”

In a news release, Norway’s most powerfullabor union, the 830,000-member NorwegianConfederation of Trade Unions, demandedthat “the government take steps so that com-panies like Scandic, which clearly abide bythe U.S. illegal boycott and blockade and notNorwegian law, are barred from doing busi-ness in Norway.”

The state Equality and Anti-DiscriminationOmbud said it would demand an explanationfrom Scandic and then decide whether toopen a case against the company.

In a similar case in Mexico, the governmentin March ordered the Sheraton Maria IsabelHotel in Mexico City to pay a $112,000 fine forexpelling 16 Cuban guests a month earlierdue to the boycott.

LAGE INAURUGATES HAVANA PIPE FACTORY

Cuban Vice President Carlos Lage officiallyopened Cuba’s second high-density hydraulicpipe factory on Jan. 4, reported theCommunist Party daily Granma.

Lage explained that the facility, known asHidroplast, will contribute to the country’swaterworks infrastructure, especially in waterconservation by replacing old pipes.

The new plant is located in the Havanamunicipality of Boyeros, while the other exist-ing factory is in the central province of Ciegode Avila. A third similar facility is scheduledto open in the first semester of 2007 in theeastern province of Holguín to complete thenation’s requirements.

Speaking to factory and construction work-ers, Lage said the three pipe factories willlower costs by 30% over imported pipes andaccessories. He noted that while the threefacilities will all produce large-diameter pipes—up to 1 meter — each will have its own lineof products.

Lage said Hidroplast will contributeresources needed to revamp Cuba’s water dis-tribution systems.

TOBACCO COMPANY LAUNCHES MINUTO CIGAR

Cuba’s tobacco industry has launched a newversion of its famous cigars, called Minuto —designed for smokers “with limited time.”

The new Cuban cigar is 194 millimeterslong and weighs 7.1 grams. It’s sold in packsof three and boxes of 25, according to theweekly Negocios en Cuba.

International Cuban Tobacco Co., whichmakes Minuto cigars under the brand nameGuantanamera, says it’s targeting consumerswho are just starting to smoke — young menand women who can’t yet handle longer-last-ing cigars — or veteran smokers with littletime or who are trying to kick the habit.

ect under the state program of financial sup-port for industrial exports.

In addition to VTB, the syndicate comprisesRussia’s state-run Vnesheconombank andRoseximbank, which supports governmentexport operations.

CUBA RACES TO COMPLETE HOUSING QUOTA

Cuba was expected to conclude construc-tion and renovation of 110,000 homes by theend of 2006, reported Prensa Latina.

The National Assembly session, presidedover by Cuban Vice President Carlos Lage,heard a detailed report on the issue fromLeonardo Martínez, chairman of thePermanent Productive Activity Committee.

Martínez stated that as of November,102,353 houses had been constructed and thatthe plan was to conclude the year with110,000. Of the total, 31% were begun or werein the first phase of construction in 2006.

The program’s expense in convertible cur-rency until November was $292 million forconstruction materials, fuel and transporta-tion, said Martínez.

CUPET OWES CANADIAN FIRMS BIG BUCKS

Cuba’s state-run oil company is behind in$69 million of payments to its Canadian part-ners in a heavy-oil-producing block on thenorth side of the island, the Toronto Starreported Dec. 27.

Pebercan Inc. said Cubapetroleo SA, knownas Cupet, owes it 55%, or $37 million, of thatamount as spelled out in its production shar-ing and sales agreements for the concession,Block 7.

Cupet owes the remainder to the other part-ner, Sherritt International Corp., Pebercansaid, noting that it has intensified talks withCuban authorities in its efforts to resolve thematter.

In the meantime, operations on Block 7,located on the coast between Matanzas andHavana, are proceeding normally with produc-tion of about 22,000 barrels a day, saidMontreal-based Pebercan, which is currentlydrilling three wells there.

The company also said it plans to spend $65million on its share of development in 2007and hopes to reach an agreement on that withCupet in the third week of January.

PALM BEACH COUNTY PLANS MISSION TO CUBA

The World Trade Center-Palm Beach plansa humanitarian, educational and informationexchange mission to Cuba in June.

“We hope to exchange information aboutseveral key resources found in Palm BeachCounty: agriculture, ranching and food pro-cessing; water purification, irrigation andrelated technologies; transportation; and med-icine and life sciences,” Lou Haddad, presi-dent of the group, said in a statement pickedup by the South Florida Sun-Sentinel.

Haddad said the group is working with itscounterpart in Cuba, the World Trade Center-Havana, to organize the visit. About 30 profes-sionals from South Florida are expected tomake the trip, pending government approvals.

“There once existed a pre-Castro relation-

ship between the Port of Palm Beach andCuba,” Haddad said. “We believe that PalmBeach County can re-establish former ties andassist the island to develop its economy.”

The delegation doesn’t plan on meeting withany Cuban government agencies or officials,“just everyday people like us exchanginginformation and getting to know each other’scultures better,” he said.

The Port of Palm Beach, known as a gate-way to the Caribbean, could gain from closerU.S.-Cuba ties.

“Those of us engaged in maritime com-merce look forward to the day when normal-ized trade relations with Cuba can resume,”Lori A. Baer, executive director of the Port ofPalm Beach, said in announcing the trip.

Brent Schillinger, a board member of thePalm Beach trade group and a past presidentof the Palm Beach County Medical Society,said he hopes the trip can forge a dialoguewith medical counterparts in Cuba. In addi-tion, the Palm Beach Film and TelevisionInstitute plans to co-sponsor the Cuba missionand produce a documentary on the visit.

CHARTER AIRLINE BEGINS JFK-HAVANA FLIGHTS

C&T Charters Inc. has begun offeringdirect flights between New York’s JFKInternational Airport and Havana.

“We’re very happy to provide this service sopassengers can fly directly,” said Rick Reposa,of C&T Charters. “They don't have to gothrough Miami.”

Reposa is chief financial officer at C&T. Hetold New York’s Channel 7 Eyewitness Newsthat such flights have been leaving Miamisince 1991. But New Jersey is home to thesecond-largest Cuban-American community inthe country — so JFK was an obvious choice.

The flights are scheduled once every twoweeks, though the company says it willincrease frequency if demand warrants.

In related news, El Salvador-based TACAInternational announced it would begin oper-ating direct flights to Havana from San José,Costa Rica — replacing its existing SanSalvador-Havana route.

NORWAY PROTESTS HOTEL’S ANTI-CUBA POLICY

An Oslo hotel owned by U.S.-based HiltonHotel Corp. faced protests, a boycott and apolice complaint after refusing to book roomsfor a Cuban delegation because of the U.S.embargo against Cuba, AP reported Jan. 5.

The Cuban delegation, set to attend a travelfair in Oslo this month, planned to stay at theScandic Edderkoppen Hotel in the city center,as they had on five previous visits.

However, the 140-hotel Scandic chain wasbought by Hilton in March, and the Cubanswere informed in December that they’d haveto find another hotel due to the embargo.

Following the incident, the 300,000-memberNorwegian Union of Municipal and GeneralEmployees announced that it was boycottingall Scandic hotels in Norway.

“We are already looking for other hotels forplanned conferences,” said the union’s deputyleader Anne Grethe Skaardal. “For us, it isunacceptable for the United States to dictate


PROVINCES

Ciego de Avila hopes tourism will replace sugar economyBY ARMANDO H. PORTELA

T he province of Ciego de Avila was bornin 1976, when the governmentreplaced Cuba’s original six provinces

with 14 new administrative divisions.Ciego de Avila covers 6,910 sq kms (2,668

sq miles), including 589 sq kms (227 sqmiles) of adjacent keys — or 6.2% of Cuba’stotal land area.

The province is made up almost entirely offlatlands less than 50 meters (164 feet) high,with the exception of scattered step hills tothe north, rising to an altitude of 443 meters(1,453 feet) near Florencia to the west, and332 meters (1,089 feet) at Cunagua.

Most of the land is composed of Miocenelimestone and Quaternary marine and allu-vial deposits gently sloping toward the sea.Some singular geological features havedrawn specialist to the area in search ofhydrocarbons but with limited success.

To the southwest, along the border withSancti Spíritus province, a Tertiary tectonicbasin filled with more than 6,500 feet of sedi-ment holds some deposits of light oil, some ofwhich have been producing for 40 years.Although the reserves are depleted and itsproduction represents only a fraction of thenational output, this oil is sent to a refinery inSancti Spíritus, where industrial oils, pesti-cide components and other derivatives areproduced. An oilfield near Pina, exploitedsince 1990, is the province’s main producer.

To the inland, the plains are covered withdeep red ferralitic soils, ranking among themost productive in Cuba, though the lowcoastal plains have poorly drained soils, usu-ally heavy and partially saline, needing mel-ioration to make them fit for agricultural use.Brown argillaceous soils are restricted to thefoothills and valleys.

Consistent with the abundance of karstic

limestone in the plains, Ciego de Avila has anadequate supply of groundwater, but con-cerns about saltwater intrusions limit the useof aquifers. Over 77,000 hectares (190,271acres) of lowlands, or 11% of the territory,suffer some degree of saline intrusion intothe groundwater and soils. Groundwater ismostly used to irrigate sugarcane, citrus andother crops. Water for irrigation is broughtfrom the Zaza reservoir at Sancti Spíritusprovince and from Camagüey throughcanals.POPULATION

Ciego de Avila is one of the least denselypopulated provinces in Cuba, with only 59.4inhabitants per sq km. In 2005, estimatedpopulation was 418,573, with 38.5% of thatconcentrated in two cities: Ciego de Avila, thecapital (106,000) and Morón (52,000). Pinahas 14,000 people; other settlements have11,000 inhabitants or less, and are associatedwith sugar mills.

Population growth in Ciego de Avila aver-aged 1.7% annually in the 1980s, but fell to0.8% in 1993 as a result of Cuba’s economiccrisis. Nevertheless, it remains above thenational average.AGRICULTURE

Ciego de Avila accounts for 9-10% of Cuba’stotal sugar production, but that could rise asother provinces shut down their mills as aresult of the recently announced downsizingof Cuba’s unprofitable sugar industry.

In 2002, Ciego de Avila’s nine sugar millsproduced 335,567 tons of raw sugar, worth$50 million at prevailing prices. That was up

from 320,000 tons a year earlier, but still a farcry from the 800,000 tons or more being pro-duced annually in the 1980s, when the cropwas worth $350 million thanks to preferentialprices paid by the Soviet bloc.

Three of the province’s nine mills were tobe dismantled as a result of the downsizing,after which Ciego de Avila’s nominal dailygrinding capacity will be 40,000 to 45,000tons, representing 13-15% of the industry’stotal.

The three are Patria o Muerte and MáximoGómez, which both date to 1915, and Bolivia,which was founded in 1917. All are located inlowlands where soaked soils pose an insur-mountable obstacle to profitable operations.This means at least 29,000 hectares (71,700acres) of sugar cane will be abandoned, and11,000 workers — 10% of the provincial laborforce — will have to find other jobs.

The Patria o Muerte mill near Morón hasbeen a museum for foreign tourists since2001, and reportedly raked in $230,000 from4,200 visitors in its first year of operation. TheVenezuela mill, dating from 1906, will alsostop producing raw sugar but continue pro-ducing molasses.

Some of the five mills scheduled to remainactive as sugar producers rank among Cuba’slargest. This includes the Ecuador mill,which has a daily grinding capacity of 10,200tons. This particular mill has the only sugarrefinery in Ciego de Avila, with a capacity of95,000 tons a year.

Roughly 170,000 hectares (420,000 acres)would remain planted with sugar cane, abouta quarter of the province’s total area.

Citrus fruits are grown on 9,900 hectares(24,500 acres) at farms in Ceballos andMorón. In 1997, the province produced arecord harvest of 117,000 tons, or 14% of theisland’s total for that year.

Oranges make up 70% of the citrusorchards in Ciego de Avila. Although low byinternational standards, citrus yields havetraditionally been among the highest in Cuba,reaching 12 tons per hectare in the late1980s. A large citrus processing plant wasbuilt in 1985 at Ceballos, with the capacity toprocess over 40 tons of fruit per hour.

Pineapple cultivation has declined dramati-cally as costs have skyrocketed, making thecrop unprofitable. In 1990, nearly 32,000 tonswere harvested, dropping six years later toonly 1,400 tons.

But thanks to the influx of tourists, thepine-apple industry is recovering. In 2001,Ciego de Avila harvested 4,200 tons ofpineapples, rising to 4,800 tons in 2002.

Ciego de Avila also produces 15-20% ofCuba’s potato crop, harvesting around 55,000tons a year. Farmers are also engaged in cat-tle ranching and dairy production.TOURISM

As the sugar industry crumbles, Ciego de

This is the fourth in a series of monthlyarticles on Cuba’s 14 provinces by geographerArmando H. Portela, who has a Ph.D. in geo-graphy from the Soviet Academy of Sciences.

Vintage Buick rolls down a rain-slicked street in Ciego de Avila, capital of the province of the same name.

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Avila has turned to tourism in hopes of saving its economy.Dismantled sugar mills are being converted into museums fortourists; neglected railroads and century-old engines offer tripsthrough the sugar cane plantations; abandoned pineapple fields arebeing revived to feed hungry hotel guests, and new roads, hotels andother infrastructure, including a factory making high-density PVCpipes, are rising across the province.

The Jardines del Rey tourist hub, centering on Cayo Coco and CayoGuillermo, now ranks third in Cuba after Havana and Varadero. It hasover 3,300 rooms — or about 9.7% of Cuba’s entire hotel capacity —and hosted 160,000 visitors in 2001, up from 150,000 in 2000 and142,000 in 1999.

And although 6,000 people, or 5.4% of the province’s work force, areemployed in the tourism sector, the industry has brought with it seri-ous problems. At $500 to $600, average revenue per tourist is not par-ticularly high. And construction of an 11-mile causeway linking CayoCoco and Cayo Guillermo to the mainland has led to serious environ-mental problems. By interrupting natural tidal and marine currentswithin Los Perros Bay, this causeway has annihilated marine life andall but eliminated commercial fishing.INFRASTRUCTURE

The Central Railroad and the old two-lane Central Highway linkCiego de Avila with the rest of the island, and a network of secondarypaved roads and railroad branches reaches all settlements and eco-nomic hubs. Highways and railroads other than those serving touristsare said to be in very poor shape.

The province’s only port is located at Júcaro, on the southern coast,and handles a limited volume of sugar and refined products. Mostsugar production is shipped through the bigger ports of Cienfuegos,Nuevitas and Guayabal. A small port was recently opened at Casasa

on Cayo Coco to handle supplies for the resort, and has managed tocut transportation costs from $65 to $27 per ton; Casasa may handlesmall passenger cruise ships in the future.

Two international airports serve tourists. The first is MáximoGómez Airport, 12 miles north of Ciego de Avila and 45 miles fromCayo Coco. In 2001, authorities opened Jardines del Rey InternationalAirport in a densely forested area of Cayo Coco — cutting travel timeto the keys but severely affecting the island’s limited natural reserves.

The Cuban government invested $30 million and 45 million pesos tobuild the airport, which boasts a 10,000-foot runway and a terminalcapable of handling 20 flights a week and 1.2 million passengers ayear. At the moment, the two airports together serve 12 to 14 inter-national flights weekly.

Billboard welcomes visitors to Ciego de Avila.

LAR

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INDEX OF NEWSMAKER PROFILES: 2002 TO DATE

Alarcón, Ricardo, president of Cuba’s National Assembly (May 2004)Alvarez, Pedro, chairman of Cuba’s state-run food purchasing agency Alimport (April 2004)Blanco, Kathleen, governor of the State of Louisiana (May 2005)Calzón, Frank, director of Washington-based Center for a Free Cuba (November 2004)Cason, James, former chief of the U.S. Interests Section in Havana (February 2004)Colás, Ramón Humberto, founder of Cuba’s independent library movement (September 2003)Cowal, Sally Grooms, president of the Cuba Policy Foundation (September 2002)Delahunt, Rep. Bill A. (D-MA), co-chairman of the House Cuba Working Group (April 2003)Flake, Jeff (R-AZ), co-chairman of the House Cuba Working Group (December 2003)Fox, Albert J., president of the Alliance for Responsible Cuba Policy (March 2003)García, Joe, executive director of the Cuban American National Foundation (October 2003)Gibadlo, Brent, director of Association of Travel Related Industry Professionals (August 2003)Hays, Dennis, executive vice-president of the Cuban American National Foundation (July 2002)Huddleston, Vicki, former chief of the U.S. Interests Section in Havana (July 2005)Jones, Kirby, Washington consultant, founder of the US-Cuba Trade Association (December 2004)Kühn von Burgsdorff, Sven, European Union representative in Havana (January 2004)Leal, Eusebio, chairman of Habaguanex S.A. and Havana’s official historian (August 2004)Marshall, Steve, Havana-based real-estate and Internet entrepreneur (March 2004)McCarry, Caleb, Cuba transition coordinator, U.S. State Department (October 2005)Mesa, Alfredo, executive director of the Cuban American National Foundation (August 2005)Montenegro, Marcelo, Cuba representative of Leisure Canada Inc. (January 2003)Muse, Robert, Washington attorney and Cuba claims expert (December 2005)Oltuski, Enrique, Cuban revolutionary and deputy minister of fisheries (November 2002)Payá, Oswaldo, leading Cuban dissident and founder of the Varela Project (May 2003)Peters, Phil, vice-president of the Virginia-based Lexington Institute (November 2006)Reinsch, Bill, president of the National Foreign Trade Council (September 2004)Roca, Vladimiro, veteran Cuban dissident (April 2005)Rodríguez, Dagoberto, chief of Cuban Interests Section in Washington (August 2002, June 2003)Sánchez, Elizardo, human-rights activist and dean of Cuba’s dissident movement (July 2003)Schwag, Rick, founder of Vermont-based Caribbean Medical Transport (June 2006)Smith, Wayne, senior fellow at Washington’s Center for International Policy (June 2002)Sparks, Ron, Alabama commissioner of agriculture and industries (January 2007)Suchlicki, Jaime, director of the University of Miami’s Cuba Transition Project (February 2003)Tamargo, Mauricio, chief of the U.S. Foreign Claims Settlement Commission (February 2005)Tokmakjian, Cy, Canadian investor and Cuba’s biggest new-car importer (December 2002)Villand, Michel, French businessman, founder of Cuban pastry chain Pain de Paris (October 2002)Werner, Robert W., director of Treasury’s Office of Foreign Assets Control (January 2005)Whitaker, Kevin, coordinator of State Department’s Office of Cuban Affairs (November 2003)Wright, John Parke, Florida cattle rancher and owner of J.P. Wright & Co. (July 2004)

Here’s a complete listing of the 40 newsmaker profiles that have appeared in CubaNews sinceJune 2002, when we began running this feature. All profiles start on Page 8 of the issue indicated.

in the news despite the obstacles, cuba’s alimport is ... · exporting to cuba,” complained jim...

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