BULLETIN DE L’AMBASSADE DE SUISSE A CUBA
La Havane, le 31 Octobre 2009
No. 5 - 2009
Septembre- Octobre 2009
CUBAN GOVERNMENT REDUCES PRICES ON 24 BASIC GOODS 1
NO MORE FREE LUNCH IN RAUL CASTRO’S CUBA 1
CUBA LAUNCHES “NO FREE LUNCH” TRIAL 2
CUBA DOMESTIC INVESTMENT AND MANUFACTURING DROP 3
CUBAN GOVERNMENT REOPENS OLD FACTORIES TO REDUCE IMPORTS 3
FOOD & AGRICULTURE
CUBAN COFFEE OUTPUT LESS THEN PREVIOUSLY REPORTED 4
CUBA ADMITS FAILURE TO PAY FARMERS ON TIME 4
CUBA’S AGRICULTURE SHOWS PROMISE 5
SEEDS OF CHANGE IN CUBAN FARMING 5
CUBA SLASHES TOBACCO ACREAGE AMID FLAGGING DEMAND 6
CUBA: CUT IN TOBACCO OUTPUT WON’T AFFECT EXPORT CUSTOMERS 7
CUBA AND ITS PARTNERS
CHINA, CUBA VOW TO ADVANCE CO-OP FOR MUTUAL BENEFIT 8
CUBA Y VIETNAM SUSCRIBEN ACUERDOS EN AGRICULTURA Y TRANSPORTE 8
CUBA MODERNIZES PORTS TO ADMIT LARGER SHIPS 9
AUTHORITIES RESUME ISSUING LICENSES FOR PRIVATE TRANSPORT
SERVICES IN HAVANA 9
RUSSIAN LADA GETS CHINESE RIVAL ON CUBAN ROADS 10
CUBA REEMPLAZA LOCOMOTORAS DE EEUU POR CHINAS 11
FOREIGN SUPPLIERS IN CUBA FRET OVER PAYMENTS CRISIS 11
MORE HELP EXTENDED TO CUBA 13
DESPITE OPENING, CUBA LOOKS TOUGH FOR US TELECOMS 13
BIG POTENTIAL IN MOSTLY UNTAPPED CUBA TELECOM MARKET 15
EXTIENDE CADENA HOTELERA ESPAÑOLA NEGOCIOS EN CUBA 16
LLEGADA DE TURISTAS CRECIO 3 POR CIENTO 16
CHINESE HOTEL PROJECT IN CUBA EYES U.S. MARKET 17
CUBAN GOVERNMENT REDUCES PRICES ON 24 BASIC GOODS
Source: El Nuevo Herald; September 24, 2009
The Cuban government has reduced the price of 24 basic goods sold at foreign-currency stores, and
experts say the measure is a result of the fall of money remittances from abroad.
The Cuban government is implementing a price reduction of up to 20 percent on 24 basic goods sold
at foreign-currency stores, including food products like ground meat, chicken and canned milk, as well
as soap and toothpaste. According to documents obtained by El Nuevo Herald, last Wednesday trade
officials began implementing ``centralized discounts'' from five to 27 cents per CCP (Convertible
Cuban Peso) on most items. The markdown could be as high as 2.85 CCP on some products and
brands. One CCP equals $1.24 in the official currency exchange, representing a savings of between
six and 33 cents per dollar, which in some exceptional cases could go as high as $3.50. Besides
hamburgers, sausages and hot dogs, the goods to be marked down are yogurt, detergents and
disposable diapers for babies and adults. The Ministry of Finance made the decision official on July
20. ``So far I've seen very few discounts at the stores,'' economist and independent journalist Oscar
Espinosa Chepe said from Havana. ``Though many products have been missing from the shelves for
too long now, there has been a visible shortage in the last few days and people are skeptical.'' While
the measure has been official since last week, its implementation has been gradual in state markets in
Havana and in other cities.
The price cuts come one year after Raúl Castro's government announced in May 2008 an increase in
food prices at the foreign-currency stores, blaming the global financial crisis impact on Cuban imports.
In his recent speech before the Cuban parliament, Castro announced that the country had been forced
to reduce its imports by 20 percent as a result of the increase in food prices and raw materials caused
by the global economic crisis. Since early this year, Cuba has substantially reduced its purchase of
agricultural products from the United States, the main supplier of foods to the island. Experts consider
that the new measure is inevitably linked to the scaling down of money remittances from Cubans
abroad and the need of the government to increase the circulation of foreign-currency in the internal
market. ``There is a certain logic in raising people's purchasing power to encourage family remittances
from abroad,'' said economist Jorge Sanguinetty, president of DevTech Systems, based in Miami.
``Both the person making the remittance and the one receiving it feel that they can get more for their
NO MORE FREE LUNCH IN RAUL CASTRO’S CUBA
Source: AFP; September 28, 2009
President Raul Castro is taking a bold gamble to ease communist Cuba's cash crunch by eliminating a
costly government lunch program that feeds almost a third of the nation's population every workday.
The Americas' only one-party communist government, held afloat largely by support from its key ally
Venezuela, is desperate to improve its budget outlook; the global economy is slack, and Havana is
very hard pressed to secure international financing.
Raul Castro, 76, officially took over as Cuba's president in February 2008 after his brother,
revolutionary icon Fidel Castro, stepped aside with health problems. Though some wondered if Raul
Castro would try to move Cuba's centralized economy toward more market elements, so far he has
sought to boost efficiency and cut corruption and waste without reshaping the economic system. And
so far it has been an uphill battle, something akin to treading water. But now, Raul Castro has moved
to set in motion what will likely be the biggest rollback of an entitlement since Cuba's 1959 revolution --
starting to put an end to the daily lunch program for state workers, as announced Friday in Granma,
the Cuban Communist Party newspaper.
In a country where workers earn the average of 17 dollars a month, and state subsidized monthly food
baskets are not enough for families, more than 3.5 million Cuban government employees -- out of a
total population of 11.2 million -- benefit from the nutritionally significant free meal. The pricetag is a
cool 350 million dollars a year, not counting energy costs or facilities maintenance, Granma said. But
that will come to a halt in four ministries experimentally from October 1, Granma said. As workers
stream to the 24,700 state lunchrooms, the government "is faced with extremely high state spending
due to extremely high international market prices, infinite subsidies and freebies," Granma explained.
Parallel to the cutback, workers will see their salaries boosted by 15 pesos a workday (.60 dollar US)
to cover their lunch.
It is a dramatic shift in Cuba, where the government workers' lunchroom has been among the longest-
standing subsidies, though even authorities have called it paternalistic. And more troubling, especially
for authorities, is the fact that the lunchrooms' kitchens have become a source of economic
hemorrhaging, from which workers unabashedly make off with tonnes of rice, beans, chicken and
cooking oil to make ends meet. The Castro government is keen to reduce the 2.5 billion dollars a year
it spends on food imports, which it has to buy on the international market in hard currency. "Nobody
can go on indefinitely spending more than they earn. Two and two are four, never five. In our imperfect
socialism, too often two plus two turn out to be three," Raul Castro said in an August 1 address
alluding to corruption problems. Some Cubans were aghast at the idea of losing a free lunch. "What
am I going to buy with 15 pesos," asked a bank worker, who spoke on condition of anonymity. "I
cannot even make anything, even something horrible, at home for that little." But Roberto Reyes, a
construction employee, said sometimes the state lunch is so bad, he would rather not eat it -- and
pocket the small monthly raise.The president has said health care and education were not cuts he
would willingly make. But Cubans wonder how long it will be until the legendary monthly ration books
with which Cubans receive limited basic food goods, such as rice and beans, for free, come under the
CUBA LAUNCHES “NO FREE LUNCH” TRIAL
Source: Reuters, Nelson Acosta; October 1, 2009
There may soon be no such thing as a free lunch, even in Cuba where the communist-run government
began an experiment on Thursday to close state-run lunchrooms and give workers money to buy their
own meals. Lunchrooms were closed at four government ministries in a trial that, if successful, could
be extended to the rest of the state's 24,700 lunchrooms across the country. About 3.5 million lunches
have been served daily by the state. Instead of receiving lunch, the ministry workers will get a daily
stipend of 15 pesos, the equivalent of about 70 U.S. cents.
The government has said it is spending more than $350 million a year on the free lunches, which it
can ill afford in the midst of a global recession that has hit Cuba hard. The closings are aimed at
ending one of a variety of state subsidies Cubans have received for years, but that President Raul
Castro says are draining the economy. There are subsidies that "are ineffective or, even worse, make
some feel that they don't need to work," Castro said in a speech in August to the Cuban parliament.
While some workers said it was a necessary step, others complained about the change as they joined
most of the rest of the working world in having to fend for themselves at lunchtime. "Some people
prefer the lunch, others the money. There are always people who don't go along, but it's not a big
deal," said Arlen Morales, a labor union member, as he began his lunch of vegetable salad and a hot
Ministry of Economy and Planning employee Digna Rodriguez was less enthusiastic. "I brought bread
and a soft drink. We're going to miss the lunch a lot," she said. "There are those who say yes, they
agree. Others say it's one worry more for the worker." The government hopes that in addition to cutting
costs, lunchroom closings will reduce theft of costly food imports and put a bite in Cuba's vast black
market. It believes that 20 percent of imported goods destined for lunchrooms are stolen either for
personal consumption or private sale. Workplace theft is common in Cuba, where it is viewed as a way
to supplement salaries averaging less than $20 a month. Cuba imports about 70 percent of its food,
which combined with reduced export income from the global recession, has depleted the country's
cash reserves. Raul Rodriguez, an official in the Ministry of Economy and Planning, said the decision
to end free lunches was logical. "The situation is very difficult and the country cannot continue giving
these handouts," he said.
CUBA DOMESTIC INVESTMENT AND MANUFACTURING DROP
Source: Reuters, Marc Frank; September 11, 2009
* Internal investment down 5.9 percent through June
* Manufacturing began downward slide in March
Cuba's domestic investment fell nearly 6 percent in the six months through June compared with the
same period of 2008 and manufacturing began to drop in March, government data showed. The
declines were expected after the government slashed imports 30 percent and cut economic growth
projections from 6 percent to 1.7 percent earlier this year.
Cuba, like other import-dependent Caribbean countries, has been hit hard by the global financial
crisis. Economic and market turmoil has slammed revenue from key Cuban exports and tourism, dried
up credit and reduced foreign investment. Investment through June fell 5.9 percent compared to the
same period last year. a report posted on the National Statistics Office (ONE) web page
(www.ONE.CU) reported this week.
Separately, a report on manufacturing through June said there was just a 0.4 percent decline, but in
May the sector fell 3 percent and in June 6 percent. Local economists said a 6 percent cut in state
budgets, a 12 percent drop in energy consumption, the closure of some factories and offices over the
summer and other austerity measures implemented in June meant the decline most likely has
accelerated. "My understanding is that many manufacturing companies are operating well below
capacity because of a lack of supplies and financing," a European diplomat said.
President Raul Castro named a new economic cabinet in March which has been reviewing economic
policy. "Industry suffers from an accumulated decapitalization and need to reinsert Cuba into the world
economy," the Economy and Planning Ministry said in a report delivered to accountants and
economists in June. "The lack of an industrial policy has resulted in continued activities that should
have been shut down due to obsolescence or lack of coherence with the industrial development
actually required," it said.
CUBAN GOVERNMENT REOPENS OLD FACTORIES TO REDUCE IMPORTS
Source: EFE; October 13, 2009
The Cuban government is reopening abandoned factories to increase manufacturing output and
reduce imports amid a sharp cash crunch caused by the global economic recession, state media
Among the industrial facilities reopening is a plant operated by Empresa de Pastas y Caramelos in the
eastern city of Santiago that makes crackers and had been shuttered for nearly a decade, the official
daily Granma said. “The production line was shut down nine years ago due to the technological aging
of its machinery, breakdowns and problems with raw materials,” Granma said in a front-page story,
adding that workers and state agencies made an effort in recent months to “recover that production.”
Council of Ministers vice president and Economy and Planning Minister Marino Murillo participated in a
ceremony over the weekend in Santiago at which the cracker plant was officially reopened.
A pastry plant “closed for 23 years” was also recently reopened in Santiago, Granma said. President
Raul Castro’s government has sought out foreign investors to reopen some of the abandoned
factories, which contain Soviet-era equipment, sources in the business community told Efe. Cuba is
experiencing one of its worst economic downturns in decades due to falling exports, rising import
costs, the damage caused by hurricanes in 2008, the U.S. economic and financial embargo, and the
deficiencies of the island’s communist system, among other factors.
FOOD & AGRICULTURE
CUBAN COFFEE OUTPUT LESS THEN PREVIOUSLY REPORTED
Source: Reuters, Marc Frank; September 7, 2009
*Cuba says previous coffee harvest was 6,800 tonnes, 20 percent less than initially reported
*Agriculture Minister seeks 10 percent increase as harvest begins
Cuba's agriculture minister officially opened the coffee harvest at the weekend and said he expected it
to be 10 percent higher than last season's 6,800 tonnes, a sharp drop from the nearly 8,000 tonnes
previously reported. "The decision to top the 6,800 tonnes of coffee produced during the previous
harvest was ratified by Agriculture Minister Ulises Rosales del Toro during the national act beginning
the 2009-2010 campaign," the official trade union weekly Trabajadores said on Monday.
Deputy Agriculture Minister Ramon Frometa said in January coffee output in 2008-2009, was around
8,000 tonnes. "We are talking about 7,954 tonnes, an increase of 27 percent over 2007," Frometa said
at the time. Cuba does not report coffee output in the official statistical abstract or other public
references. Local growers said in recent weeks that a financial crisis has led to the reduction of fuel
and other resources for the harvest, potentially undercutting hopes for a significant increase in the
crop as part of new President Raul Castro's effort to cut agricultural imports and increase exports.
Rosales, speaking in eastern Cuba on Sunday, said he hoped for a 10 percent increase in output as
part of Castro's plan. Coffee production has steadily declined since the 1959 revolution when the crop
was around 60,000 tonnes. Much of what is grown is exported, mainly to Japan and Europe, while
lesser quality beans are imported from Vietnam. Cuba imported 33,000 tonnes of coffee in 2008 at a
cost of $52 million, while coffee exports garnered a mere $3.8 million, according to the government's
2008 statistical abstract. Picking begins in August and ends in March, though most beans are
harvested from October into January. Communist Cuba's 38,000 growers, in exchange for low-interest
government credits and subsidized supplies, must sell all of their coffee to the state at prices below
what the beans fetch on the black market. Local analysts said that system led to low production and
the diversion of 10 percent to 20 percent of the crop.
CUBA ADMITS FAILURE TO PAY FARMERS ON TIME
Source: Associated Press Writer, Paul Haven; September 28, 2009
Cuba on Monday acknowledged a failure to pay cash-strapped farmers on time and said some local
officials lied to cover up the problem - a blunt admission from the communist government that crucial
agriculture reforms lauded by President Raul Castro have so far fallen short. The public mea culpa
came in a full page spread Monday in the state-run Granma newspaper, which acknowledged that the
issue is a main cause of discontent in the countryside. It said that after an enormous effort to repay
farmers that began in 2004, the problem has come up again. "We ought to admit that provincial
agriculture officials, local governments and the Agriculture Ministry itself have not taken responsibility,"
Agriculture Minister Ulises Rosales de Toro is quoted as saying.
The minister said that some local officials have falsified records to hide the lack of payments,
something that he described as "unconscionable." "Anybody who acts in this way calls into question
his moral authority to lead," the report quoted him as saying. Despite a warm climate and rich soil,
Cuba lacks the ability to feed itself and must import more than $2 billion worth of food a year, much of
it from the United States. Cuban markets offer a grim selection of basic products, and often run out.
Many complain that it is hard to get by on government ration books that grant only about 15 days
worth of food for an entire month. Raul Castro, who took over from his elder brother Fidel in February
2008, has made agriculture reform one of the main goals of his administration. He has handed over
80,000 parcels of fallow government land to private farmers and exhorted his countrymen to produce
The government says the program is working, although it acknowledges progress is slow. Farmers say
they often lack the equipment and fertilizer to plow the new fields, and that inefficiency has caused
some food to rot before it can reach supermarket shelves. According to the Granma report, the
government owes farmers about $95,000 - not much by international standards, but a windfall in a
country where farmers get by on well under $100 a month and must sell most of their production back
to the state. The payment problems "constitute an immorality in that they make producers think that
the state is not willing to pay them," the newspaper said.
CUBA’S AGRICULTURE SHOWS PROMISE
Source: El Nuevo Herald, Rui Ferreira; September 30, 2009
Cuban agriculture has such a big potential that if it were to be totally developed it could surpass the
volume of production of the Free Trade Treaty, an expert said Tuesday.
William A. Messina Jr., of the University of Florida's Agriculture Science Institute, said that the
communist island ``has such good soil and it represents a challenge of such magnitude that, with the
end of the embargo, the agricultural market impact on the continent would be larger that of the Free
Trade Treaty.'' ``The Cuban climate is very good, has good resources, and an agricultural system with
potential,'' Messina said. ``But the truth is that we don't see big trends toward its development in terms
of regulation.'' The UF expert mentioned the fact that last year the hurricane season inflicted huge
harm on Cuban agriculture after the island was hit by two hurricanes and a tropical storm. Cuba's
losses amounted to $10 billion and it lost all of its crops for the year. The tragedy coincided with a
decrease in food imports, said John Kavulich, president of Cuba-U.S. Economic and Trade Council.
``Food and agricultural exports went down approximately 20 percent so far this year due to the
consistent lack of foreign currency in Cuba,'' Kavulich said. ``They have always opted to use that type
of currency to buy food.''
Messina and Kavulich came to Miami to take part in the annual conference of the Americas, hosted by
The Miami Herald and El Nuevo Herald. With them was Carlo Dade, director of the Canadian
Foundation for the Americas, who will travel to Havana next week at a time in which the trade links of
his country with the communist island have suffered a significant contraction. ``At this time we see
Cuba's future in terms of new opportunities,'' Dade said. ``We must continue to explore possibilities in
economic terms, since many of our joint projects have nearly disappeared.'' In his opinion, since the
'90s, Canadian investments in Cuba diversified in the areas of oil and mineral extractions, but now
they are decreasing due to the fall in prices in the case of minerals, and the lack of Cuban investments
in the case of oil. ``Our businesses have had a presence, but I can't say it's significant at this time,''
Dade said. According to the expert, when agricultural imports opened in Cuba, the United States had
an advantage over Canada. ``Canada is a good exporter of agricultural products, but when the United
States began to sell to Cuba, our business with Cuba changed. Our entrepreneurs turned to other
Latin American countries such as Peru and Ecuador. ''
SEEDS OF CHANGE IN CUBAN FARMING
Source: BBC NEWS, Camagüey, Michael Voss; September 30, 2009
It is a challenge to make long neglected land productive.
It could be a scene straight out of the Wild West: a homesteader struggling to tame a wilderness and
turn it into productive farmland to provide a living for himself and his family. But this struggle of man
against the land is happening in the central province of Camaguey in Cuba. Jorge Alcides has no
electricity in the simple wooden home he built for his pregnant wife and two children. He milks his
three dairy cows by hand, sitting on a handmade stool. He and his son plough the fields using oxen.
But he is not complaining. "I'm really happy, it's different when you work for yourself rather than being
paid a wage," he said. Communist Cuba is undergoing one of the largest land redistributions since
Fidel Castro's revolution in 1959; only this time it is leasing state-owned farmland to the private sector.
In a bid to boost production and reduce costly imports, President Raul Castro is offering small plots of
unproductive state land to family farmers and private co-operatives. Around 1.7 million hectares (4.2
million acres) are up for grabs. So far about 86,000 applications for land have been approved, with
tens of thousands more Cubans hoping to participate.
Last year, Mr Alcides received an extra 13 hectares of land, with a promise of more if he makes it
work. The catch was that all of it was covered in a thick, impenetrable shrub called "marabu". It is like
a bramble on steroids - a nightmare to get rid of. The weed can grow up to 4m (13 feet), has deep
roots and is so dense that once it takes hold nothing else can grow. Mr Alcides is part of a private co-
operative which gives him access to a 1960s Soviet-built tractor with a locally built rotary cutter
attached. It's still back-breaking work. After the shrub is cut, it must be burned and its roots dug out.
The fields had been part of a state-run collective farm which had been allowed to go to waste. "If you
don't work the land you should lose it and let someone else take over," Mr Alcides said. He has
managed to clear about three-quarters of the plot and so far this year he has produced some 10
tonnes of meat, fruit and vegetables.
The Renato Guitart Co-operative is a collection of individual smallholders: 187 private farmers who
have joined together for investment and to share equipment such as tractors. It has grown by almost a
third over the past year and now covers about 520 hectares (1,300 acres) in the green fertile plains of
Camagüey. Mostly this is cattle country, dominated by large state-run farms. But the co-operative
produces a wide range of fruit and vegetables, along with meat and dairy. Agustin Perez, a member of
the co-operative, is working hard to meet the demand for fresh lettuce. His grandfather first worked
this land, concentrating on salad crops such lettuce, cucumbers, radishes and onions.
In the past private farmers were tolerated; now Mr Perez believes they are being actively encouraged.
It is not just about extra land. Another key reform is that private farmers are now legally allowed to
take on hired labour. "There has been an enormous difference in the last two years. The authorities
are paying a lot more attention to us. Now we earn more money because we are selling more food,"
he said. Mr Perez is able to sell everything he grows to privately run farmers' markets. Early every
morning, stall holders arrive to collect whatever is freshly picked .Some come on horse and carts,
others on converted bicycles with trailers. Other members of the co-operative though, like pig farmer
Jorge Viera, still have to sell to the state and rely on inefficient state transport. Mr Viera recently
cleared almost 30 hectares of marabu and has planted maize and root crops to use as animal feed.
He hopes to boost meat production by 20% this year. "We sell our basic quota to the state at a not
very good price," he explained, "but for anything above the quota the state pays a much higher price."
Agricultural reform was at the heart of the Cuban revolution. Shortly after taking power in 1959, Fidel
Castro nationalised the large estates and sugar plantations, many of them US-owned. Small-scale
family farmers were allowed to keep their land but increasingly the island turned towards huge Soviet-
style state-run collective farms. It has not worked. Last year, Cuba spent $2.4bn (£1.5bn) on food
imports, much of which could have been produced on the island. The large state farms have proved
highly inefficient, and allowed as much as half of the land to become overrun with weeds like marabu.
Today, about a third of Cuba's farmland is in the hands of small-scale private farmers and co-
operatives, yet they produce about two-thirds of the food. Handing over unproductive land is only part
of the equation. Farmers still need access to tools, seeds, fertilisers and other necessities. It is starting
to happen but is often bureaucratic and unwieldy.
In Camagüey, part of what the state pays private farmers for their produce is in the form of
accumulated credits or bonus points. These can then be exchanged for goods at newly created
special farm shops. According to the local small farmers' association, average earnings have risen to
around $200 a month, roughly 10 times the national average. Some are making significantly more.
Incentives, like the profit motive and productivity-related pay, are reappearing after half a century of an
idealistic experiment in egalitarian socialism. It is too early to tell whether these reforms will be far-
reaching enough to make a dramatic impact on food shortages. But if private farmers are seen to be
successfully boosting production and earning a better living, then President Raul Castro is likely to
face increasing pressure to push through similar free-market reforms to the rest of the economy as
CUBA SLASHES TOBACCO ACREAGE AMID FLAGGING DEMAND
Source: Reuters, Marc Frank; October 5, 2009
* Tobacco acreage reduced more than 30 percent
* "Financial restrictions" and lack of resources blamed
* Global recession, smoking bans, chomp down on sales
Cash-short Cuba is slashing the amount of land devoted to growing its famous tobacco by more than
30 percent as the global recession and worldwide spread of smoking bans bite into sales of the
country's prized cigars. Demand for Cuba's cigars fell 3 percent in 2008 and earlier was reported down
15 percent in 2009 because of the recession and the smoking bans adopted in a growing number of
places as a public health measure.
Cuba's National Statistics Office, in a report posted on its web page (www.one.cu), said land to be
planted with tobacco for next year's crop had dropped to 49,000 acres (19,800 hectares), down from
70,000 acres (28,200 hectares), which was in turn less than 2008. It said the coming crop was
expected to be 22,500 tonnes, down from a planned 26,800 tonnes. The office blamed the drop on
"financial restrictions that made it impossible to count on the necessary resources." Cuba's prized
cigar brands, including Cohiba, Montecristo, Trinidad and Partagas, dominate the world's premium
market with 70 percent of sales. That jealously guarded market share excludes the United States,
however, where Cuba's cigars are banned under the 47-year-old U.S. trade embargo against the
A representative of the exclusive distributor of Cuban cigars, Habanos S.A., a joint venture between
Cuba and British tobacco giant Imperial Tobacco Group Plc <IMT.L>, said the company had no
comment on the statistics office report. Some 200,000 private farmers and their families depend on
growing and curing the precious leaf under contract with the government, and tens of thousands of
workers earn their living hand rolling the crop into the famous "Habanos" or "Puros" for export.
Tobacco seedlings are currently being readied for planting from November through January, with
harvesting of the quick growing leaf beginning 45 days later. After that a year-long process of drying
and curing begins. Cuba's dozens of cigar rolling factories have operated at well below capacity this
CUBA: CUT IN TOBACCO OUTPUT WON’T AFFECT EXPORT CUSTOMERS
Source: EFE; October 13, 2009
Cuba will meet its tobacco export commitments for 2009-2010 despite a 30 percent cut in production
of the leaf, the government said. That guarantee was offered by the vice president of state-owned
Grupo Tabacuba, Osvaldo Encarnacion, in comments to official weekly Trabajadores.
Cuba’s National Statistics Office, or ONE, announced last week that the amount of land planted with
tobacco was reduced from 28,200 hectares (69,629 acres) to 19,800 hectares (48,888 acres) due to
the severe global recession and an acute financial squeeze on the communist-ruled island.
Encarnacion told Trabajadores the 2009-2010 tobacco harvest is expected to come in at just below
23,000 tons, representing a 10 percent decline from the previous season. The Caribbean island
produces some of the best tobacco in the world and is famous for premium cigar brands such as
Montecristo, Cohiba, Partagas and Hoyo de Monterrey, but sales have fallen amid the global
economic slowdown. Cuba is going through one of its worst economic crises in decades thanks to a
decline in exports, the rising cost of imports, three devastating hurricanes in 2008, the 47-year-old
U.S. economic embargo and the shortcomings of the communist system.
CUBA AND ITS PARTNERS
CHINA, CUBA VOW TO ADVANCE CO-OP FOR MUTUAL BENEFIT
Source: Xinhua; September 2, 2009
China has vowed to advance bilateral, friendly cooperation in various sectors for mutual benefit with
Cuba. China's Foreign Minister Yang Jiechi met Wednesday with Cuban counterpart Bruno Rodriguez
Yang said China-Cuba friendly and cooperative relations had been further and comprehensively
developed through the two nations' joint efforts. He highlighted frequent high-level contacts, fruitful
cooperation in various fields and enhanced friendship between the two nations. China attached great
importance to bilateral ties with Cuba and was ready to work to deepen the traditional friendship
between the two and push forward the development of bilateral ties, Yang said. Rodriguez said China-
Cuba relations were at the best they had been in history, citing close contacts between the leaders of
the two countries. "Cuba pays great attention to developing friendly and cooperative ties with China
and is willing to learn from China's experience of successful development," Rodriguez said. He also
said Cuba would continue to adhere to the one-China policy. Cuba was willing to make concerted
efforts to enhance bilateral friendly cooperation and exchanges between the two countries in all
sectors, Rodriguez said.
CUBA Y VIETNAM SUSCRIBEN ACUERDOS EN AGRICULTURA Y TRANSPORTE
Source: Reuters, Nelson Acosta; September 28, 2009
Cuba y Vietnam suscribieron el lunes tres acuerdos de cooperación en las esferas de la agricultura, el
transporte y la industria ligera, en una nueva señal que refuerza los nexos comerciales y políticos
entre ambos aliados socialistas.
El presidente vietnamita, Nguyen Minh Triet, de visita en la La Habana, encabezó la firma de los
convenios, uno de los cuales incluye el desarrollo de la producción de arroz en la isla entre el 2009 y
el 2015. "Vietnam y Cuba son hermanos gemelos y avanzamos hacia el socialismo. Somos fuertes
como robles y siempre estaremos unidos", dijo Minh Triet poco antes al inaugurar el lunes un foro de
negocios entre ambos países. El mandatario vietnamita se había reunido el domingo con su
homólogo Raúl Castro.
El programa para la producción local de arroz está encaminado a disminuir gradualmente los niveles
de importación, según el documento suscrito en una ceremonia en La Habana a la que asistió
también el vicepresidente cubano Ricardo Cabrisas. Raúl Castro, quien reemplazó en febrero del
2008 en la presidencia a su hermano Fidel por razones de salud, emprende una reforma en la isla
encaminada a reducir las importaciones de alimentos, eliminar gratuidades y servicios que durante
décadas han sido fuertemente subsidiados por el Estado. Expertos vietnamitas ofrecen desde el
pasado año asistencia técnica a Cuba para el cultivo del arroz en seis provincias, las cuales han
triplicado sus rendimientos hasta 8 y 9 toneladas por hectárea, dijo la agencia oficial de noticias de
Vietnam. Según cifras oficiales, Cuba produjo 195.000 toneladas de arroz en el 2008, un producto
básico en la dieta de los cubanos, y adquirió en el exterior, principalmente de Vietnam, 567.000
Hanoi y La Habana suscribieron también sendos acuerdos para desarrollar las producciones textiles y
de calzado, en tanto arrancarán motores con un programa para mejorar la "infraestructura vial y el
transporte marítimo, portuario, ferroviario y automotor". El Gobierno cubano ha invertido en los últimos
años millones de dólares en autobuses de China y Bielorrusia para revivir el transporte público,
devastado por la crisis económica detonada con la implosión en 1992 de la Unión Soviética, su
antiguo benefactor. El comercio entre Cuba y Vietnam ascendió en el 2008 a unos 520 millones de
dólares, según cifras oficiales.
CUBA MODERNIZES PORTS TO ADMIT LARGER SHIPS
Source: EFE; October 13, 2009
Cuba is working on the dredging and technological modernization of its three major ports in
collaboration with China and Venezuela to meet the challenge that the enlargement of the Panama
Canal will bring, official media said.
The works seek to increase depth to allow the operation of larger vessels in the ports of Havana,
Cienfuegos and Santiago de Cuba, through which more than 80 percent of the island’s imports enter
the country, the director of the Havana port authority, Miguel Izquierdo, told the weekly Opciones. The
official said that financing will be provided by an accord approved recently between China and Cuba,
and from another with the mixed company Puertos del ALBA (Bolivarian Alliance for the Peoples of
Our America), founded to promote the development and modernization of Venezuelan and Cuban port
Authorities and experts in the sector quoted by Opciones said that deeper water at the island’s ports
will allow ships of greater capacity to enter, and imports will consequently be less costly. For almost
three decades the sediments on the bottom have not been dredged,” Izquierdo said, adding that the
result was shallower water that impeded bigger vessels from entering, thus reducing the weight and
volume of cargoes and increasing shipping fees for imports. Izquierdo said that in the 1980s, Cuban
ports received some 12 million tons of cargo, but that volume has decreased to some 3 million for a
series of reasons, including the world economic crisis. He said that at the port of Havana, which only
receives some 600,000 to 700,000 tons of cargo a year out of a capacity of 1.2 million, the unloading
platform and other technological elements are being improved, while four of its seven cranes have
been modernized. As part of its strategy to increase maritime traffic, Cuba also plans to build the new
Port of Mariel west of Havana, in whose construction Brazil will participate with $300 million in
financing that will cover almost half of the project’s total cost. EFE
AUTHORITIES RESUME ISSUING LICENSES FOR PRIVATE TRANSPORT SERVICES IN
Source: EFE; September 9, 2009
Authorities will resume issuing licenses for private passenger-transportation services this week after a
month's hiatus to deal with the "surplus" number of requests for such documents received since the
government partially eased its restrictions in the sector, an official in the municipal transit office told
President Raul Castro's government unfroze the granting of permits last December, but in recent
months the authorities have received "too many requests," and therefore the office had to close
temporarily to deal with the backlog and attend to other organizational matters, the source said. "We
had too few personnel and computers, but we resolved the matter and we're ready to reopen," he or
she added. After a nine-year hiatus, the government resumed granting the licenses in December 2008
and, according to government figures, since then the number of individuals providing passenger
transport services on the island has almost doubled.
Just in Havana, 3,330 permits have been issued so far this year, a figure approaching the 3,486
licenses that existed nationwide before Gen. Castro put the new measure into effect. Many individuals
who took advantage of the new law were already providing such services illegally before, given that
the issuance of such documents had been halted in October 1999 despite the scarcity of transport on
the island. The first authorizations were issued in 1996, in the middle of the so-called "special period,"
a euphemism used by Cubans for the economic depression they suffered under after the collapse of
the Soviet bloc and the end of generous subsidies from Moscow. In May, capital transit authorities
announced that they were going to step up prosecution of people who transported packages or
passengers without the required permit.
RUSSIAN LADA GETS CHINESE RIVAL ON CUBAN ROADS
Source: Reuters, Esteban Israel; September 29, 2009
After three decades as the favored car of Cuban nomenklatura, the austere, Russian-built Lada has
spotted a Chinese rival in its rear-view mirror. Ministers, communist officials and police are switching
their Ladas, with its stiff manual steering, for the smooth hydraulics of the Chinese-made Geely CK, a
modern sedan that symbolizes the island's new alliance with Beijing. China, now Cuba's second-
largest trading partner behind only Venezuela, has shown an ability to quickly penetrate and dominate
markets around the world with many of its products. But Cubans say their love for Ladas, which are
probably the most visible legacy of the country's Cold War alliance with the Soviet Union, will keep the
cars on Cuban roads. "I do not think it will be easy to displace the Lada," said David Pena, a 39-year
old mechanic who recently founded Cuba's Russian Automobile Club. "For us this car is like a family
member." Cuba is well known for the vintage American cars that prowl its streets, relics of pre-
revolutionary Cuba and rolling tributes to the islanders' mechanical inventiveness. But the truth is they
are greatly outnumbered by Ladas, of which there are an estimated 100,000 in Cuba, compared to
somewhere around 60,000 of the old U.S. cars. The Geelys, based on a Daewoo design and powered
by a 1.5-liter engine licensed from Toyota Motor Corp (7203.T), have begun showing up with
increasing frequency on Havana streets. They have a sleek and stylish look and come with air
conditioning, electric windows and CD players. The Chinese cars are so far showing up in very limited
numbers, as government vehicles and rental cars, but their ranks are expected to increase in a sign of
China's growing economic relationship with Cuba and business interests on the island. Geely, China's
biggest privately owned car maker whose worldwide strategy has been founded on exporting low-cost
vehicles, shipped more than 1,500 cars to Cuba this year through June, the Miami Herald reported on
But the no-frills Lada, based on the Fiat (FIA.MI) 124 from the 1960s, has become a cult object in
Cuba for both its utility and its enduring presence. Pena and dozens of other Lada die-hards gather
every month in Lenin Park on the outskirts of Havana to talk about and show off their cars. The Soviet
Union took Cuba under its wing in 1961, two years after Fidel Castro rose to power in a 1959
revolution, and until its implosion in 1991 showered the communist-led island with billions of dollars in
subsidies and goods, including the Lada. From the time it arrived in the 1970s, the car, so spartan it
does not even have hubcaps, was a good fit for economically challenged Cuba. It was inexpensive,
and earned a reputation as a durable car that, when repairs were needed, was easy to repair. "Anyone
can fix it with just a piece of wire," said Carlos, a veteran mechanic in Havana. "If you ask a Cuban he
will tell you he does not want to exchange his Lada for anything in the world." There are those who
doubt that the new Geelys, flashier but not imbued with the Lada's image of tank-like solidity, will last
as long on Cuba's pot-holed streets. "They are changing (our Ladas for Geelys) but I don't think the
Chinese cars will be as resistant as the Lada," said a police officer leaning against his white Lada
patrol car along Havana's sea wall. "Only time will tell." Cars tend to be cherished in countries where
they are not easy to get, which is the case in Cuba. A government minister must give approval for
someone to buy a car legally, and in most cases even when it is purchased, it still belongs to the state.
Only people who bought a car before the revolution or those who afterward were granted the right to
purchase one for personal or political achievements actually own their vehicles.
For those who get permission, a new, basic Lada can be bought for the equivalent of about $5,000
U.S. A black market exists, where the purchaser buys the car for about three times the normal price,
but it remains registered in the name of the original owner. Cubans show their love for Ladas by
making them a showcase for creativity. Some have covered their dashboards with precious woods,
installed powerful engines with souped-up carburetors or even reinvented the original Soviet design by
welding together two cars to build an improbable Lada limo. "Our wives often complain because we
dedicate so much time and money to our Ladas," said Manuel Ares, who is vice president of the
Russian Automobile Club. The cars on Cuban streets reflect Cuba's political history, with the long
Soviet presence, a lingering American influence and, currently, growing ties with China. Russia and
Cuba have been warming their old friendship, which may soon show up on Cuban roads. Russia has
talked about building a Lada plant in Cuba to sell cars throughout Latin America, but the project has
been put on hold by the global recession. In the meantime, there are plans to import thousands of new
Ladas to Cuba, the Russians have said. For Carlos the mechanic, that only confirms what he already
believes. "The Lada will never die (in Cuba)," he said, "It has become a classic."
CUBA REEMPLAZA LOCOMOTORAS DE EEUU POR CHINAS
Source: AP, Andrea Rodríguez; 7de octubre, 2009
Locomotoras chinas están siendo reparadas en un taller de la capital cubana para substituir la
maquinaria norteamericana de los años 40, que no ha podido ser reparada porque debido al embargo
estadounidense la isla no puede comprar repuestos.
Cuba substituirá por maquinaría china unas locomotoras norteamericanas de la época de la II Guerra
Mundial que nunca pudo reparar debido a que el embargo estadounidense le impidió comprar los
repuestos necesarios. "Próximamente llegarán 60 locomotoras chinas para dar de baja a las
americanas" -de las cuales 32 ya no sirven-, dijo a periodistas el viceministro Antonio Puente durante
un recorrido por los Talleres José Ramírez Casamayor. Informó que Cuba fue el séptimo país en el
mundo en contar con vías férreas en 1837 y tanto la norma como la tecnología usada fue
estadounidense; sin embargo los conflictos políticos con Estados Unidos y la influencia de la Unión
Soviética y su posterior caída impactaron en la situación. "Creo que el ferroviario es uno de los
sectores más dañados por el bloqueo", expresó Camilo Chávez, director de la Empresa de
Reparación de locomotoras y quien lamentó la pérdida de las maquinas estadounidenses que en su
momento "hasta transportaron tropas que iban a combatir a la II Guerra Mundial". "Son locomotoras
(las 32 paralizadas) a las cuales no le hemos podido encontrar solución", manifestó el funcionario.
Incluso a las otras 48 se les puso repuestos fabricados en la propia Cuba o se buscaron piezas en
otros países como México, indicó.
Según el viceministro, durante 20 años cubanos no recibieron ni una locomotora y la infraestructura
se deterioró de manera notable. A partir de 2005 el gobierno comenzó un plan inversionista para
levantar el sector del transporte, no sólo ferroviario. La Oficina Nacional de Estadísticas indicó en un
informe de 2008 sobre transporte ferroviario que se cuenta con 8.193 kilómetros de vías, de los
cuales 5.076 eran de uso público y el resto corresponden a industrias como el acero o el níquel.
Además se contabilizaron 283 locomotoras destinadas al sistema ferroviario público, 400 coches de
pasajeros y unos 5.800 vagones de carga. A las normas americana y europea de la infraestructura se
sumó tecnología estadounidense, rusa, canadiense y ahora china. Paralelamente se adquirieron unos
550 vagones en Irán que ya llegaron y se espera el arribo de unos 60 más en los meses próximos,
dijo Puente. Puente espera que este año el ferrocarril transporte unos 5 millones de toneladas de
carga y transporte 9,6 millones de pasajeros. Agregó que las sanciones estadounidenses golpearon
al ferrocarril en unos 12 millones de dólares en el periodo que va de abril del 2008 a la misma fecha
del 2009. Washington impuso un embargo comercial y financiero a Cuba buscando cambiar su
sistema comunista de gobierno en la década de los 60, tras el triunfo de la revolución.
FOREIGN SUPPLIERS IN CUBA FRET OVER PAYMENTS CRISIS
Source: Reuters, Marc Frank; September 29, 2009
* Many foreign business accounts remain blocked in Cuba
* Businessmen complain government offers no explanations
* Cash squeeze after global downturn, hurricane cleanup
Many foreign suppliers and investors in Cuba are still unable to repatriate hundreds of millions of
dollars from local accounts almost a year after Cuban authorities blocked them because of the
financial crisis, foreign diplomats and businessmen said.
The businessmen, who asked not to be identified, said they were increasingly frustrated because the
Communist authorities refused to offer explanations or solutions for the situation, which stems from a
cash crunch in the Cuban economy triggered by the global downturn and heavy hurricane damage last
year. "I have repeatedly e-mailed, visited the offices and sent my representative to the offices of a
company I did business with for years and which owes me money, and they simply refuse to talk to
me," a Canadian businessman told Reuters.
Delegations from foreign banks and investor funds holding commercial paper from Cuban state banks
have repeatedly traveled to Cuba this year seeking answers from the central bank or other authorities
-- without success -- the sources said. Representatives of some companies with investments or joint
ventures on the island said they were bracing for the possibility of not being able to repatriate year-end
dividends paid to their accounts in Cuba. The sources said the lack of official information had resulted
in many rumors, including one that the government may seek to close accounts at a discount or is
preparing a three-year payment plan.
The Cuban government, after running up a huge trade deficit in 2008, has cut imports by at least 30
percent this year, but was still expected to purchase more than $10 billion in goods and services
abroad. Most of the business is reportedly taking place offshore as Cuba's partners seek to avoid local
banks. Some 90 percent of the country's economic activity is in state hands. Cuba has a dual
monetary system under which a foreign exchange equivalent called the convertible peso (CUC)
circulates along with the domestic Cuban peso.
Foreign businesses must operate within the country using the CUC, pegged at 1.08 to the U.S. dollar
and 24 times the domestic peso's value, depositing them in state banks, where they are available as
foreign exchange for transfer or withdrawal. Since last year, the country has been faced with scarcer
credit as the global crisis increasingly hit home and has been burdened with the cost of cleaning up
after three hurricanes last year. As a result, the state banks began informing foreign businesses their
funds were simply not available for the time being.
SUPPLY PROBLEMS GROWING
Foreign economic attaches and commercial representatives in Cuba said most of their nationals doing
business with the Caribbean island still faced payment problems. "Suppliers to the military and its
companies, public health and a few other areas are having the fewest problems being paid," one
Western diplomat said. "Those involved with tourism, foreign exchange stores and spare parts and
machinery for industry are negotiating partial payments in exchange for more supplies, but the little
guy, for example with supplies on consignment, has simply been abandoned," he said.
In July, the central bank issued what it called instruction No. 3, which allowed the transfer or payment
of foreign exchange from the frozen accounts with the approval of a government ministry, effectively
removing the responsibility of the state banks. While renewed access to accounts was welcomed by
businessmen in Cuba, even if it was only partial, the sources said it was offered with the proviso that
they continue to do business and with the payment due date for new goods and services provided
extended from 360 days to up to 720 days.
They said the government and state-owned firms appeared to be reaching out because of mounting
supply problems in the country as foreign traders and companies balked at doing new business unless
accounts were unblocked. "Despite our firm desire to honor every obligation, we have been forced to
renegotiate debts, payments and other commitments with foreign entities, something quite common
these days all over the world," President Raul Castro told the National Assembly last month. "As a
rule, we have found understanding and confidence in our partners, to whom we now reaffirm our
recognition and the security that we will meet the agreements reached," he said. Raul Castro, who
took over the Cuban presidency from his older brother Fidel Castro last year on health grounds, has
announced a series of austerity measures in recent months and said the country must learn to live
within its means.
MORE HELP EXTENDED TO CUBA
Source: The Chronicle Journal, Jim Kelly; September 2, 2009
For hospitals in Canada, it‘s a worthless piece of junk. For hospitals in Cuba, it‘s priceless.
The 1995 Shimatzu fluoroscopic X-ray machine that St. Joseph‘s Care Group is donating to Cuba
uses technology that is no longer state-of-the-art in Canada. Medical Equipment Modernization
Opportunity (MEMO) president Dr. Jerome Harvey said Tuesday that if the X-ray machine wasn‘t sent
to Cuba, it would be relegated to the scrap yard. MEMO is a group of volunteers who acquire, remove,
pack, ship, reinstall equipment to support two hospitals in the Villa Clara province of Cuba. The
hospitals are in desperate need of modernization, said Harvey. The equipment comes from hospitals,
homes for aged and other health care agencies. Technicians were busily dismantling the machine
Tuesday at St. Joseph‘s Hospital while reporters and photographers looked on.
Once in Cuba the parts will be put back together and the machine will be used at the Villa Clara
Provincial Cancer Centre to diagnose stomach and bowel cancer. “If you can believe it, they have a
cancer centre without the ability to diagnose bowel cancer,” Harvey said. “So this will be a real life-
saving machine.” He said his group has sent 34 ocean containers of hospital equipment and supplies
worth $25 million to Cuba since August 2004. Included in those shipments were three similar
machines to the one being sent now. Two came from the former Port Arthur General Hospital while a
third, to be used for parts, came from Rankin Inlet. While Cuba will benefit, so will Thunder Bay, he
said. “All that stuff (previously shipped to Cuba) would have ended up in the landfill or the scrap yard,
so it‘s a very environmentally friendly thing that St. Joseph‘s is doing,” he said.
St. Joseph‘s Care Group president and chief executive officer Tracy Buckler agreed. “It‘s also a nice
environmentally friendly way to get rid of some of our old surplus equipment that we‘re not using
anymore,” she said. Buckler said all diagnostic equipment used by St. Joseph‘s Hospital is digital and
computerized. She said the Cubans have done a good job of upgrading health care equipment, with
help from Canada. While the cost of shipping one container is about $7,000, it has cost about
$245,000 to ship 35, and Harvey said the money comes from generous Canadians “just like you.” He
said MEMO gets no government funding.
DESPITE OPENING, CUBA LOOKS TOUGH FOR US TELECOMS
Source: Reuters, Jeff Franks; September 10, 2009
* U.S. telecoms face big obstacles to Cuba business
* Cell phone roaming agreements with U.S. firms possible
* Cuba says will talk with all U.S. businesses
Americans may soon be able to use their cell phones in Cuba, but U.S. telecommunications
companies will find it tough to break into Cuba's largely untapped market under a new relaxation of the
U.S. embargo against the island, industry experts say. They will face a tangle of political, legal and
technical issues that reflect 50 years of bitterness between two countries that were closely allied
before the 1959 Cuban revolution put Fidel Castro in power. Chief among the hurdles is likely to be a
cool reception from the Cuban government, which views American cell phones, satellite dishes and
Internet service as a threat to its control over the flow of information to the island just 90 miles (145
km) from Florida. Potentially big obstacles loom on the U.S. side as well, despite enactment last week
of regulations by President Barack Obama effectively granting U.S. telecoms companies a loophole in
the 47-year-old U.S. trade embargo against communist-ruled Cuba.
Lawsuit judgments against Cuba have been stacking up for years in U.S. courts, creating hundreds of
millions of dollars in financial liability for the cash-strapped island in the midst of its worst economic
crisis since the 1990s. U.S. companies also could face stiff competition from Latin American and
European rivals said to be eyeing the Cuban market. All potential entrants will have to market to a
Cuban population that makes on average $20 a month and so for whom modern communications are
often a luxury. On the plus side, Cuba is a close and potentially lucrative market where there are only
12.6 phones per 100 people, the lowest ratio in the region, and only 13 percent of the population has
access to the Internet, or in most cases a local intranet restricted to Cuban sites.
Cuba has been mostly silent so far on the telecoms changes, which Obama originally announced in
April along with the lifting of restrictions on family travel and remittances of money to Cuba by Cuban
Americans. But a high-ranking Cuban official, well placed to know the government's telecoms policy,
told Reuters last week Cuba was willing to meet with all U.S. companies.
HAPPY TO TALK
"We'd be happy to talk with them," he said when asked if Cuba would consider doing business with
U.S. telecommunications companies. "We're prepared to talk about everything." John Kavulich, senior
policy adviser at the U.S.-Cuba Trade and Economic Council in New York, said Cuba's assurances
should be taken with a grain of salt. "The government of Cuba generally responds to overtures from
the United States with a 'willingness to discuss anything.' When the 'anything' is defined as
accountability and lessening of control, the willingness is likely to be minimal," he said.
Most experts think Cuba will seriously consider any telecom proposal that holds the promise of rich
revenues. But security concerns will take precedence, and so they doubt the Cuban government will
want anything to do with U.S. satellite television or Internet services. Many households in Havana
already tune in to private anti-Castro Miami TV stations using clandestine antennas, despite periodic
government crackdowns, and Cuba has for years asked Washington to halt broadcasts by U.S.
government-funded TV and Radio Marti, which are critical of communist rule.
Deals involving U.S. telecoms companies "are very unlikely considering the Castro government's tight
control on the flow of information through those sources," said post-doctoral fellow Paolo Spadoni at
Tulane University's Center for Inter-American Policy and Research. What is more likely, he said, are
roaming agreements with U.S. cell phone providers that would finally allow most people with U.S.-
based mobile phones to use them in Cuba, as many with phones from other countries already do.
Spadoni points out Cuba and U.S. phone companies already mutually handle land-line calls between
their countries, which resulted in the U.S. firms paying Cuba $150 million for services in 2007, the last
year for which data is available. With a rising number of Cuban Americans coming to visit and the
possibility, under pending legislation in Washington, that all Americans will soon be able to travel to
Cuba, cell phone roaming charges could generate serious cash, Spadoni said. But the numerous
lawsuit awards against Cuba in U.S. courts is a worrisome problem because any money to be paid to
Cuba could be diverted by judicial order to someone who has won a judgment against the island,
In the past two weeks alone, judges in Maine and Miami have awarded a combined total of $48 million
in damages against Cuba in lawsuits charging that family members had been killed or wrongly
imprisoned in Cuba. To avoid payment, any U.S.-Cuba agreements likely will include a stipulation that
funds owed the island are kept outside the United States, but that will not prevent court judgments
from coming down, said Kavulich. "The only means of protecting any funds is through legislation,
which is unlikely," he said. The high-ranking Cuban official said the government had had no contact
with U.S. telecom executives. A spokesman for Empresa de Telecomunicaciones de Cuba SA
(ETECSA), the mostly state-owned phone company, said "we have not received any expression of
interest from any telecommunications company in the United States." "These new measures allowing
U.S. companies to do business in Cuba, lifting a lot of restrictions ... have been perceived in the
market as huge opportunity for U.S. companies, (but) right now it's just empty talk," said Jose Otero,
president of Signals Telecom Consulting.
BIG POTENTIAL IN MOSTLY UNTAPPED CUBA TELECOM MARKET
Source: Reuters; September 10, 2009
In measures originally announced in April and implemented last week, U.S. President Barack Obama
has relaxed aspects of the U.S. trade embargo against Cuba to allow U.S. telecommunications
companies to provide services to the communist-ruled island. But the U.S. companies face major
hurdles, from legal obstacles to tough foreign competition and the key question of whether wary
Cuban authorities will be willing to open up this strategic area to operators from the country Havana
has viewed as its ideological enemy for almost half a century. Here are some facts about the Cuban
LOW PENETRATION, BIG POTENTIAL
Most analysts agree that the Cuban telecommunications market represents a major untapped
potential because of the low penetration of fixed and mobile telephone and Internet services. Cuban
data shows the island lagging far behind in the hemisphere in these services. Telecommunications
data for 2008 released by Cuba's National Statistics Office in June showed there were only 1.4 million
telephones, fixed and mobile, in the country of 11.2 million inhabitants. This gave a total density of
12.6 telephones per 100 inhabitants, the lowest in the region, according to the United Nations
International Telecommunications Union.
Computers were also very scarce at just 630,000 and most were believed to be in government offices,
health facilities and schools. The Cuban statistics report said 13 percent of Cuba's population had
Internet access, but in most cases this was to a government Intranet. No data was available for
access to the World Wide Web, but diplomats and residents say it is severely restricted by the
communist authorities. President Raul Castro, who took over the Cuban presidency from his ailing
older brother Fidel last year, introduced a reform allowing Cubans permission to freely buy and use
cell phones -- use had been previously tightly restricted. But they can only pay for them in hard
currency equivalent convertible pesos, which are not available to all Cubans.
CUBAN TELECOMS COMPANIES DOMINATE
Empresa de Telecomunicaciones de Cuba SA (ETECSA) is the state-owned telecommunications
provider of telephone, Internet and wireless services. Telecom Italia <TLIT.MI> has a 27 percent stake
in ETECSA, and the rest is owned by the Cuban government. Cubacel (Teléfonos Celulares de Cuba
SA) is a unit of ETECSA providing mobile phone services on the island.
In the 1990s, in what was billed at the time as the first large-scale privatization in Cuba since the 1959
Revolution, foreign companies had obtained and held major stakes in the Cuban telecommunications
sector. In 1994, Mexico's Monterey-based Domos Group agreed to purchase a 49 percent stake in the
Cuban national phone system, but then sold 25 percent of its interest to STET International
Netherlands, a subsidiary of Italy's state telecoms company. Domos relinquished its equity stake in
2005 because of the economic crisis in Mexico. Established in 1991, Cubacel started as a joint
venture between Mexico-based TIMSA and the Cuban government. In 1998, Canadian resources
company Sherritt International Corp, the largest foreign investor in Cuba at the time, bought a 37.5
percent in Cubacel. In 2003, the Cuban government bought back Sherritt's stake and that of a
Mexican investor, taking 100 percent control of Cubacel.
Eight U.S. companies, including Verizon <VZ.N>, AT&T <T.N> and Sprint Nextel <S.N>, are licensed
by U.S. authorities to provide long-distance phone services to Cuba through satellite or cable. But in
the last few years, the hundreds of millions of dollars of revenue that these U.S. companies share in
phone revenues with Cuba have become the target of damages lawsuits filed by U.S. citizens, most of
them Cuban Americans, in U.S. courts against the Cuban government for alleged wrongful deaths and
other issues. Analysts say these kind of cases, and other claims by U.S. citizens targeting Cuban
assets and properties, could pose a potential legal threat to future foreign investments in the Cuban
UNDERSEA CABLES AND FIBER-OPTIC PLANS
A submarine telecommunications cable is mostly in place between Key West and Havana but has not
been connected, because of restrictions under the existing U.S. embargo. Cuba's left-wing ally
Venezuela has formed a joint venture, Gran Caribe Telecommunications Company, to create a 1,000-
mile (1,600-km) highway of underwater fiber-optics cable linking the two allies. Cuban officials say this
will boost Internet capacity on the island and make it cheaper. Gran Caribe executives say the link
could be up and running by the middle of 2010.
LIKELY COMPETITION FROM OTHER INVESTORS
Analysts say future U.S. telecoms investors in Cuba could face tough competition from companies in
Asia and Europe, a number of whom are already operating on the island. Spain's Telefonica
<TEC.MC> has shown interest in Cuba as a potential market, triggering rumors that it might buy
Telecom Italia's stake in ETECSA. Other companies with significant presence in the Caribbean and
Latin America, such as America Movil <AMXL.MX> and Digicel, are also likely eyeing Cuba as a
potential market. Earlier this month, an agreement signed during a visit to Cuba by China's
parliamentary head Wu Bagguo provided a $300 million loan to help improve Cuba's
telecommunications network, according to media reports. Another telecoms joint venture, Gran
Caiman, involving a company called China Grand Dragon, has been producing switching equipment
and other inputs. Other foreign companies from China, Europe and elsewhere, including Alcatel-
Lucent Shanghai Bell <ALUA.PA>, Ericsson <ERICb.ST> and ZTE Corp <0763.HK> are already
involved in supplying equipment and technology to Cuba.
EXTIENDE CADENA HOTELERA ESPAÑOLA NEGOCIOS EN CUBA
Source: Notimex; September 9, 2009
La cadena hotelera española Iberostar Hotels and Resorts anunció la apertura de un nuevo hotel en
la playa de Varadero, en momentos en que Cuba reporta un crecimiento turístico del 2.7 por ciento
respecto al año anterior. El hotel Iberostar Laguna Azul, de cinco estrellas y ubicado en Varadero, 140
kilómetros al este de La Habana, será el sexto establecimiento de ese consorcio en la nación
caribeña, indicó la empresa en un comunicado divulgado este miércoles. Con 814 habitaciones, entre
ellas 24 suites, 82 pares de habitaciones comunicantes y ocho especialmente diseñadas para
minusválidos, el hotel dispondrá de seis piscinas y múltiples instalaciones deportivas, agregó la
El ministro cubano de Turismo, Manuel Marrero, informó el pasado fin de semana que el sector
turismo muestra un crecimiento del 2.7 por ciento en los ocho primeros meses de 2009 respecto al
mismo lapso del año anterior, a pesar de la crisis económica mundial. Marrero inauguró en la sureña
ciudad de Cienfuegos el hotel-hostal Casa Verde, uno de los 50 que aspira a tener la isla en la
llamada cadena Encanto, que ofrece alojamiento en edificios de alto valor patrimonial, los cuales han
sido sometidos a restauración. Según el funcionario, la situación del turismo a nivel mundial cerró el
primer semestre del año con una caída de 8.0 por ciento, cantidad que podría bajar a 6.0 por ciento
para finales de 2009. Ahora vienen (en Cuba) los meses de la temporada baja turística, pero los
resultados de la gestión deben ser superiores a los del año anterior, cuando la isla se vio afectada por
tres huracanes, precisó. De acuerdo con estadísticas oficiales, en 2008 la industria cubana del
turismo atendió a dos millones 300 mil visitantes. Este año, el Ministerio de Turismo ha ofrecido
planes de renta en hoteles de Varadero -antes reservados a extranjeros-, pagaderos en pesos
convertibles (divisa local con valor oficial de 1.25 dólar), lo que atrajo a miles de cubanos con
LLEGADA DE TURISTAS CRECIO 3 POR CIENTO
Source: EFE; 28 de septiembre, 2009
Canadá se ha consolidado como el primer país emisor de turistas hacia la isla.
El ministro cubano del Turismo, Manuel Marrero, dijo el domingo que el número de visitantes a la isla
ha crecido el tres por ciento en lo que va de año respecto al mismo período del 2008, aunque han
disminuido los ingresos debido a la crisis económica internacional. Hay una tendencia al crecimiento
en las llegadas de turistas que se mantuvo los últimos meses de julio, agosto y septiembre, explicó el
ministro a la televisión estatal cubana al celebrarse este domingo el Día Mundial del Turismo. Las
fuentes recordaron que Cuba logró en el primer semestre de este año un 2.7 por ciento de
crecimiento en llegadas, lo que significó que más de 1.4 millones de turistas fueron recibidos en la isla
en ese período. Marrero ratificó que Canadá se ha consolidado como el primer país emisor de turistas
hacia la isla ``con tendencia al crecimiento''. Indicó que en el 2008 viajaron unos 820,000
canadienses y de acuerdo a las previsiones se espera que superen los 900,000 a finales de este año.
Las autoridades del sector prevén que al cierre del 2009 habrán visitado la isla 2.35 millones de
turistas. El año pasado fueron 2.3 millones los visitantes, 9.3 por ciento más que en el 2007, y dejaron
ingresos de 2,538 millones de pesos convertibles ($2.74 millones), de acuerdo con cifras oficiales.
Los principales países emisores del turismo en Cuba son Canadá, Alemania, Reino Unido, Italia,
España, Francia y México.
CHINESE HOTEL PROJECT IN CUBA EYES U.S. MARKET
Source: Reuters, Marc Frank; September 28, 2009
China, Cuba to build luxury hotel just west of Havana
* Hemingway Hotel eyes US tourists, despite travel restrictions
The Hemingway Hotel may have an American ring to it, but it is the name of a Chinese-Cuban venture
scheduled for groundbreaking this year with an apparent eye on the U.S. market, tourism industry
sources said. State-run Suntine International-Economic Trading Company of China and Cuba's
Cubanacan hotel group are partners in the project, which will be a 600-room luxury hotel, the sources,
who asked not to be identified, said over the weekend. Future U.S., not Chinese, tourists appear to be
the target market for the hotel that will be built on the grounds of the sprawling Hemingway Marina just
west of Havana. Renovations are already underway at the marina, named after famed U.S. author
Ernest Hemingway who resided in Cuba for many years, with the expectation that U.S. boats will soon
be coming to the island just 90 miles (145 km) south of Key West, Florida.
The United States has long banned most of its citizens from visiting Communist-led Cuba, under a 47-
year-old U.S. trade embargo against the island, but U.S. President Barack Obama has said he wants
improved ties between the two countries. Obama has lifted restrictions on Cuban American travel to
Cuba and bills are pending in the U.S. Congress that would eliminate the ban on travel to Cuba, a
popular U.S. tourist destination before the island's 1959 revolution. The passage of the travel bills is
not assured because of opposition, particularly among Cuban Americans, to renewing ties with the
current Cuban government. Citic Construction, the main contractor for the Beijing Olympic Games,
and the Cuban Construction Ministry will build the proposed Hemingway hotel. At a Havana meeting
this month, the Chinese and Cuban partners set a November start date for construction, diplomatic
sources said, although such plans are often delayed for logistical reasons. Neither Suntine
International nor Cubanacan were immediately available for comment on the project. With the
prospect of better relations between Havana and Washington, and President Raul Castro widely seen
as more pragmatic than his ailing brother Fidel Castro, other foreign investors are positioning
themselves for a new era as well. Raul Castro, 78, took over the Cuban presidency from Fidel Castro,
83, last year.
Tourism industry sources said they had noticed an increased interest in hotel construction and that
representatives from some major U.S. hotel companies had quietly visited this year. Qatar and Cuba
signed an agreement in May to build a $75 million luxury hotel on Cuba's Cayo Largo. China's
Suntine, with a 49 percent stake, is providing $150 million for the Hemingway Hotel project.
Cubanacan, with 51 percent ownership, is providing the land and other resources, the sources said.
Suntine and Cubanacan also are joint venture partners in a 700-room luxury hotel in Shanghai's
Pudong business district, managed by Spain's Sol Melia. China is Cuba's second-largest economic
partner after Venezuela. There have been a number of Chinese-Cuban ventures in other sectors like
oil, pharmaceuticals, health care and telecommunications.