Vol. 19, No. 11 November 2011

In the News U.S. food companies that export to

Real estate opens up untainted by corruption probe — so far New lets Cubans buy, sell houses in BY VITO ECHEVARRÍA It’s at least conceivable that President Raúl most significant reform yet ...... Page 3 flurry of high-profile corruption cases in Castro — who has made the fight against cor- Cuba, along with the December 2010 ruption a priority — could give some American Adefection of Pedro Alvarez — the former businessmen who’ve dealt with Alimport the Political briefs high-profile CEO of state food purchasing same heavy-handed treatment. Interdictions of Cubans at sea up sharply; agency Alimport — has brought some uncer- The question is, which U.S. firms will fall Ortega resigns as archbishop ...... Page 5 tainty to U.S. agribusiness companies that under such scrutiny? Until the Cuban govern- signed deals with Cuba through Alvarez. ment reveals who it intends to investigate, it The probe launched against the 64-year-old could be anyone — from major agribusiness Urgent Party matters Alvarez, who later surfaced in Tampa, has not conglomerates to small-time traders. Conferencia Nacional set for Jan. 28 aims been officially closed. It may result in him being CubaNews approached several U.S. compa- nies known to export food into Cuba, but only a to tackle pressing issues ...... Page 6 tried and convicted in absentia on corruption charges, which is exactly what happened to handful of executives would comment. Chilean businessman Max Marambio. One is Marvin Lehrer, senior adviser for the A bittersweet ending In recent months, the CEOs of three compa- USA Rice Federation. Lehrer, who attended the Cuba shuts down its Sugar Ministry after nies with extensive Cuba business dealings International Trade Fair (FIHAV) earli- have been arrested and are now sitting in jail. er this month, insists all is normal for American 20 years of industry neglect ...... Page 7 Cy Tokmakjian of the Tokmakjian Group, Sar- firms shipping to Cuba. kis Yacoubian of Tri-Star Caribbean and Amado “U.S. law does not permit U.S. companies to Two wings of a bird Fahkre of Coral Capital have all been detained. be involved in the kinds of investment deals and New charter flights spark Puerto Rican The first two companies are Canadian; the third monetary transactions that other nationalities is British (see CubaNews, October 2011, page 4). Corruption, interest in Cuba opportunities .....Page 8 See page 2 Cuba’s racial mix Deflecting critics of Obama Cuba policy, Despite hype, official statistics mask the island’s racial disparities ...... Page 10 Jacobson clears a hurdle to nomination Oil-drilling worries BY ANA RADELAT resulted in a doubling of Cuba’s hard currency U.S. concerns rise with imminent arrival oberta S. Jacobson, President Barack reserves to $5.7 billion. “Hard currency is entering Cuba without lim- China’s Scarabeo 9 oil rig ...... Page 11 Obama’s choice to head America pol- Ricy at the State Department, defended the its, being exchanged for Castro’s worthless cur- administration’s current policy toward Cuba at a rency, and washed abroad by the regime. Secrets from the past recent Senate confirmation hearing dominated Meantime, repression has spiked,” he charged. For Bacardi’s Cuban founders, the secret by critics of that approach. “Political arrests have more than doubled in “Nothing in our policy is intended to help the the last year. We see a policy that results in trips of their rum is in the yeast ...... Page 12 government of Cuba,” Jacobson testified Nov. 8 featuring salsa dancing, cigar factory tours, before the Senate Foreign Relations Committee. baseball games and even visits with Castro's Business briefs Her confirmation would help Obama make regime’s neighborhood repression committees — the Committee for Defense of the Revolution, Dutch firm launches Cuba investment fund; further changes in U.S. policy toward Cuba if voters grant the president a second term. The which is pretty outrageous.” Paypal settles German tiff ...... Page 14 committee votes Nov. 15 on the nomination. Yet Jacobson said the benefits of the adminis- Sens. Robert Menendez (D-NJ) and Marco tration’s “people-to-people” policy trumps any Rubio (R-FL) — both Cuban-Americans who help it might give the Cuban government. CubaNews (ISSN 1073-7715) is published monthly by CUBANEWS LLC. © 2011. All rights reserved. favor a tough line against Cuba — conducted “Our goal in changing the regulations was to Annual subscription: $398. Nonprofit organizations: most of the grilling. Their questions centered and is to expand the ability of average Cubans to $198. Printed edition is $100 extra. For editorial in- on Obama’s current policies regarding Cuba. have contact with Americans … In doing so, we quires, please call (305) 393-8760, fax your request Menendez insisted that the recent U.S. loos- certainly recognize that there may be economic to (305) 670-2229 or email [email protected]. ening of travel and remittance regulations has See Jacobson, page 4 2 CubaNews v November 2011 Other top commodities were corn ($94.8 Alimport boss Pedro Alvarez was literally the Corruption — FROM PAGE 1 million, or 25.9%), soybeans ($41.9 million, or face of Cuba. have been involved with,” he told us. “U.S. 11.4%) and soybean oil ($27 million, or 7.4%). Back in 2001, Alvarez eagerly rose to the companies sell a product, the transaction is The top year for U.S. food exports to Cuba task assigned to him by then-president Fidel well studied by Alimport as to quality, fairness was 2008, when the total came to $710 million. Castro: to woo conservative U.S. farm-belt of price, delivery times and so forth. Despite the detention of a growing number regions and powerful agriculture interests to “So, unless the U.S. company is involved in of foreign businessmen in Havana, Lieber- do business with Havana, hoping this would anything shady, there is no reason to fear man insists that U.S. food executives can still convince Congress legal problems in Cuba.” visit Cuba to do business there. to end its embargo Larry Lieberman agrees. He’s president of against Cuba. commodities trader Boston Agrex, which has ‘NOTHING TO FEAR,’ SAYS LEGAL EXPERT And even though sold millions of dollars worth of frozen chick- “Based on our experience over the years, Washington main- en and turkey over the years to Cuba. there would be no reason for us to fear travel tainted that embar- “I can tell you that, from our point of view, to Cuba,” he said. “If there are ongoing inves- go, Alvarez, with his we always have and will continue to work with tigations, then I assume they are based on grandfatherly Alimport in the normal manner, making some legitimately questionable activity. charm and force of offers against their specific product tenders. “I am very comfortable that my company or personality, cultivat- “We win some and lose some, presumably any other U.S. company working with Alim- ed strong ties with based on our offer price versus competitive port along the appropriate and legal lines, CEOs and politi- offers they receive from other suppliers,” he according to OFAC requirements and ethical cians from Terry explained. “We simply would not entertain business practices, has nothing to fear in con- Harris of Riceland any arrangement that could be considered as tinuing to do so in Cuba.” Ex-Alimport CEO Alvarez Foods and George anything other than completely above-board Even so, Erich Ferrari, a Washington attor- Richter of Farm- and appropriate.” ney who advises U.S. companies on dealing land Foods to Nebraska Gov. Dave Heineman. with OFAC sanctions, says the current politi- That’s why it was such a surprise when U.S. FOOD EXPORTS FALL 11% SO FAR THIS YEAR cal climate in Cuba calls for caution. those executives learned that Alvarez — who During the first eight months of 2011, U.S. “Companies should make sure that activi- was never far away from Fidel — defected to companies exported $240.3 million worth of ties are fully authorized and then should the a year ago. branded food products and agricultural com- maintain more of an arm’s length approach to Tampa attorney Ralph E. Fernández told modities to Cuba under the Trade Sanctions dealings with Cuba,” Ferrari told us. CubaNews he had been in touch with Alvarez Reform and Export Enhancement Act (TSRA). “Their Cuban counterparts and/or inter- but is not aware of his current whereabouts. This represents an 11% decrease from the mediaries should manage the relationships “He was a target of my inquiries,” said Fer- $268.2 million exported during the same peri- and handle things on the Cuba side. Essen- nández. “For a variety of reasons, I deferred od last year, according to the US-Cuba Trade tially, U.S. companies should as much as pos- from further action involving Pedro.” Fernández calls the arrest of Alvarez — and Economic Council Inc. (see charts below sible keep their activities limited to carrying out the transaction from the U.S. to avoid any who was well-known to U.S. food executives and at bottom of page 4). — a case of “selective enforcement.” In 2010, the single most important product legal complications in Cuba.” For dozens of U.S. food executives and “He got word it was coming his way. While shipped from the United States to Cuba by he was under house arrest, he bolted,” said value was frozen poultry, accounting for just state agricultural officials hoping to pitch under $100 million, or 27.2% of the total. their products to a captive audience, former See Corruption, page 4 November 2011 v CubaNews 3 ECONOMIC REFORM New housing law opens real-estate market after 50 years BY LARRY LUXNER it vastly increases the value of their assets.” branded gusanos by Fidel’s government, or the first time since ’s 1959 Peters told CubaNews that “it’s also impor- Cuban-Americans are increasingly providing Revolution, ordinary Cuban citizens and tant because it’s a sign from the government a vital source of hard currency for the island.” Fforeigners who reside legally in Cuba that it’s willing to allow a very large amount of However, the new, legal market will not be will be able to buy and sell property — thanks economic activity that didn’t exist before, and unrestricted. Foreigners, apart from those who have permanently emigrated from Cuba, to the island’s new Ley de la Vivienda (Housing a market in which foreign capital from Cubans Law) which took effect Nov. 10. abroad will play a very significant role.” will not be allowed to buy property. Officially known as Decreto Ley #288, the Under the law, Cubans will be limited to (The Cuban government is still considering new regulation promises to spark a brand-new owning a maximum of two homes each, with a separate scheme that would allow foreigners real-estate market throughout Cuba — with one being designated a “holiday home.” to buy new-build houses around proposed golf listings on a Craigslist-style website already A stamp duty of 4% will be charged to both and beach resorts. It’s not entirely clear how mushrooming and prices for single-family the buyer and the seller, with the buyer having this will work; stay tuned for details). homes ranging from the tens of thousands of to submit proof that the source of any funds is The law was first announced in August. At dollars up to $1 million. through legitimate means. that time, Cuban officials made clear that this “This affects virtually everyone,” said Cuba Given that average state income is about reform would take effect before year’s end. analyst Phil Peters of the Lexington Institute. $20 a month, some may struggle to explain “One can guess that a lot of people in Cuba “I think it’s much more important than cell- where the money to purchase property worth who have title to property that’s bigger than phones or hotel stays or computers or DVDs. several thousands of dollars comes from. their needs,” Peters said. “Many of them will This is something that creates wealth and op- As The Guardian reported, “the reality is consider selling. Others have properties in tions for hundreds of thousands of Cuban fam- that most of the money will come from abroad, extremely attractive locations, and some will ilies. They get title to their homes. Overnight, largely from Cuban relatives in the U.S. Once See Real Estate, page 11

Rodrigo Malmierca touts Cuba’s ‘special development zones’ odrigo Malmierca, Cuba’s minister of foreign trade and invest- “This is an activity in which foreign investors haven’t engaged in ment, told potential investors Oct. 24 about the importance of sufficiently,” he said. “That’s why we’re working on diversifying des- Rthe island’s so-called “special development zones” or ZEDs tinations for exportable goods and services, with preference on [zonas especiales de desarrollo]. those with the highest added value and technological content.” Speaking at the 8th International Meeting on Foreign Trade and Malmierca told potential investors that the zones are not a revival Investment at Havana’s Hotel Nacional, Malmierca noted the first of the extinct free-trade zones, but rather “special enclaves” such zone under construction is in the port of Mariel, and is being designed to boost Cuba’s economic development. He highlighted financed by . Nine such zones are planned across Cuba (see the significance of the Mariel port expansion, which will also be map below, and also CubaNews, August 2011, page 2). home to a new container terminal to be managed by Singapore’s So far, he said, Brazil has supplied $300 million of the promised PSA International Ltd. $600 million for the construction of a 700-meter dock, plus a railway In the 1990s, following the Soviet collapse and resulting econom- and highway linking Mariel with Havana, 50 km to the east. The ic crisis, the Castro regime created free-trade zones for the assem- docks, cold storage and deposits as well as the dredging of an bly and packaging industries. However, the experiment failed and access canal are being undertaken by the Brazilian corporation the factories in these zones were gradually dismantled. Odebrecht and a Cuban construction company. “This project can contribute to the promotion of exports, but Malmierca said the purpose of the zones is to convince more for- must have a legal framework for the efficient workings of these eign investors to engage in activities that will produce high value- undertakings,” said Yanet Vazquez Valdes and Belsis Llorente, added goods and service exports. Cuban foreign trade experts who attended the Oct. 24 seminar. q 4 CubaNews v November 2011 Cuba’s internal affairs and that its priority Jacobson — FROM PAGE 1 continues to be to incite internal counterrevo- Corruption — FROM PAGE 2 benefits to the regime, but we believe they lution and promote destabilizing activities,” the Tampa lawyer, an opponent of U.S. trade will be outweighed by the benefits to individ- the Cuban Foreign Ministry said in a state- with the Castro regime. “I hope everybody ual Cubans of having that greater access to ment at the time. who invests in Cuba loses their asses.” information and to Americans,” she said. Since then, the two countries have held no Could the negative publicity generated by Jacobson also said the State Department is more migration talks, although a treaty be- Cuba’s arrest of foreign investors and its helping the Treasury Department’s Office of tween the U.S. and Cuba calls for two a year. investigation of Alvarez have a chilling effect Foreign Assets Control ferret out individuals Jacobson was also criticized by embargo upon at least some U.S. executives? who may be abusing the more lenient rules. supporters, including Rubio, in the wake of reports that former New Gov. Bill FALLOUT FROM SCANDALS REMAINS UNCLEAR Richardson offered the Cuban government a “People are likely to be even more cautious series of State Department-sanctioned con- given the widespread press on this issue, and cessions in exchange for Gross. I suspect Alimport will as well,” said Lehrer. Among them: removing Cuba from the U.S. “U.S. law, even outside the usual Cuba-spe- list of state sponsors of terrorism; reducing cific , prohibits the corrupt practices in spending on USAID programs like the one overseas dealing with any country.” Gross was involved in: authorizing U.S. com- Lehrer added: “As such there really is no panies to help Cuba clean up offshore oil reason to be nervous about this, given that spills; improving postal exchanges; abolishing the type of sales the U.S. does to Cuba is not a program that makes it easier for Cuban med- the same kind that have been the subject of ical personnel to move to the United States, corruption. I am unaware of any U.S. export- and finally, allowing French drinks conglom- er who has done anything which could be erate Pernod Ricard to patent its Havana Club Roberta Jacobson speaks at a Washington hearing. rum brand in the United States. even remotely characterized as corruption.” Rubio threatened to hold up Jacobson’s The net effect of these scandals could very If confirmed, Jacobson — former DCM at nomination based on the reports. But at her well be that major players conduct their Cuba the U.S. Embassy in Lima, , and coordi- confirmation hearing, Jacobson told Rubio transactions from their home offices without nator of Cuban affairs within the Bureau of that reports of any proposed deal to free visiting Havana personally — while smaller Western Hemisphere Affairs — will replace risk-takers continue to travel there to pursue political appointee Arturo Valenzuela as the Gross are untrue. “Senator, we have never offered unilateral specific opportunities. assistant secretary of state for Western Hem- One U.S. executive who attended FIHAV isphere affairs. Valenzuela resigned in July to concessions to the Cuban government in exchange for Mr. Gross,” she said. “As badly acknowledged as much. “Now it seems that return to the academic world he came from. the [U.S. reps of] companies who go are Jacobson has served as acting director of as we would like Mr. Gross returned home, that should be unconditional.” either small one-man companies or young that bureau since Valenzuela’s resignation. sales guys who speak Spanish,” said the busi- Her confirmation by the full Senate is likely nessman, who asked not to be identified. q — but that’s by no means assured in a NOMINEE LIKELY TO BE CONFIRMED BY PANEL Congress which has become increasingly State Department spokesman Will Ostick New York-based freelance journalist Vito polarized by partisanship. Any senator can said he the list of concessions “is a Echevarría writes regularly for CubaNews on art, hold up a nominee. Menendez has vowed to Cuban wish list.” culture, business and telecommunications. support Jacobson’s nomination, while at press But Cuba isn’t likely to place help on oil spill time Rubio remained uncommitted. cleanups high on a list of priorities. It main- Chris Sabatini, senior director of policy at tains that its drilling equipment is safe and the New York-based Council of the , that it’s prepared to clean up any spill. said Jacobson is “a safe pick by an adminis- Havana is also not likely to ask for reduced tration who doesn’t want a fight.” spending on USAID programs, having made “She’s a company person. She doesn’t come clear it wants them to stop altogether. The so-called concessions seems more like in with any agenda,” Sabatini told CubaNews. Unlike Valenzuela, considered a State a list of issues proposed to Richardson during Department outsider, Jacobson has fostered a State Department briefing before his key allies during her 20-year career there. September trip that could be put on the table if Gross were freed. JACOBSON ATTRACTS BOTH PRAISE, CRICITISM Richardson did not return calls on the One such ally is Secretary of State Hillary issue, and since his return has said little about Clinton, Sabatini said, adding that Jacobson’s his trip or his failure to persuade the Cuban work on Mexican issues also won her good government to let him see Gross. relations on Capitol Hill. Ostick said he believes Rubio “has been sat- As the bureau’s coordinator for Cuban isfied” the State Department has not tendered affairs, she headed the U.S. delegation to the Cuba any concessions for Gross’ freedom. last bilateral migration talks in January. Jaime Suchlicki, director of the University At that Havana meeting, Jacobson was of Miami’s Institute for Cuban and Cuban- given access to Alan Gross, a Maryland man American Studies, predicted Jacobson’s nomi- who’s been jailed in Cuba for nearly two years nation will sail through. because of his work for a U.S. Agency for “She seems capable, and if Menendez will International Development program aimed at back her, I think Rubio will too,” Suchlicki told destabilizing the Cuban government. CubaNews. “As long as she makes a commit- Then Jacobson riled Cuba’s leaders by ment not to give unilateral concessions to meeting with a group of dissidents. Cuba, she should be confirmed.” q “This action confirms once again that Washington-based journalist Ana Radelat has there’s been no change in the United States’ been covering Cuba-related issues on Capitol Hill policy of subversion and interference in for CubaNews since the newsletter’s birth in 1993. November 2011 v CubaNews 5 POLITICAL BRIEFS DHS: INTERDICTION OF CUBANS AT SEA UP SHARPLY In their own words … Reversing a three-year trend downward, the number of undocumented Cubans intercepted at “This bill seeks accountability from responsible foreign parties in the event of sea or who reached U.S. shores in the past 12 an oil spill that affects American waters and shores, by ensuring that they pay months soared by more than 100%, El Nuevo for all cleanup and compensation costs. American taxpayers and state govern- Herald reported Oct. 10. ments should not be footing the bill for cleanup costs from a foreign oil spill.” About 1,700 Cubans were interdicted or landed — Rep. David Rivera (R-FL), co-sponsor of the Foreign Oil Spill Liability Act. Rivera in fiscal 2011, which ended Sept. 30, according to told The Hill he’s opposed to Cuban drilling in waters 90 miles off the Florida coast. figures compiled by the newspaper from agencies of the Department of Homeland Security. “This is how the empire responds to the increasing demand around the world That compares to 831 in fiscal 2010. for their freedom. If it weren’t so, the empire would cease to be an empire and U.S. Coast Guard interdictions at sea rose from [President] Obama would cease to be stupid.” 422 to 1,000, while landings on U.S. shores — Fidel Castro, on the case of accused Cuban spy René González, who’s been freed climbed from 409 to almost 700. Meanwhile, from federal prison after serving 13 years but must now spend the next three years in arrivals at U.S. border posts — almost all from Miami on so-called supervised release. Fidel called U.S. District Judge Joan Lenard’s Mexico — barely changed from 6,219 to 6,300. Sep. 16 decree blocking González’s return to Cuba “brutal, blundering and expected.” The figures reflected the first hike since fiscal 2007, when the total hit 19,710, up from 16,226 for “I’ve been an independent worker twio times, once before in the 1990s. I think fiscal 2006. The number dropped back to 16,260 this time, it’s for real.” in 2008 and fell to 8,113 the following year. — Havana clothing vendor Andrés Lambreto Díaz, 38, on the latest economic reforms. While the uptick over the past year is relatively modest, the reversal of the downward trend and “Because this resolution does not reflect present realities, my delegation will the growth of 14% in the overall figure has trig- vote against it. We strongly believe this body, instead of engaging in such mean- gered speculation on what’s driving the increase. ingless exercises, should dedicate itself to supporting the efforts of the Cuban One likely reason: Cuba’s economy is getting people to freely determine their own future. Only by this course can this body worse each day, with less money and less food, truly advance the purposes and principles of the charter of the .” says Havana dissident Elizardo Sánchez, head of — , the illegal but tolerated Cuban Commission for Ronald Godard U.S. ambassador to the United Nations, explaining why he Human Rights and National Reconciliation. opposed the UN’s Oct. 25 resolution condemning the embargo. Only Israel sided with Washington on the vote, which marked its 20th year, while 186 countries supported LADIES IN WHITE VOW TO ‘KEEP ON MARCHING’ the resolution and three — Micronesia, Palau and the Marshall Islands — abstained. Late “Ladies in White” leader Laura Pollan was “The United States has never hidden the fact that its objective is to overthrow remembered with a simple altar in her home in a the revolutionary government and destroy the constitutional order that the crumbling Havana neighborhood amid vows that Cuban people’s sovereignty defends. That is what former President George W. the group she founded would continue marching. Bush called ‘regime change,’ which currently has acquired new dimensions.” “We’re going to continue our peaceful fight for — , the liberation of all political prisoners. We’ll also Cuban Foreign Minister Bruno Rodríguez telling fellow UN delegates that the trade continue defending the human rights of the embargo has cost Cuba economic damages of nearly $1 trillion in the past 50 years. Cuban people,” vowed Berta Soler, Pollan’s long- time co-leader of the dissident group. “Would I board one of those flights? Absolutely not. I’m glad things are open- Pollan’s husband, Héctor Maseda, told Reuters ing up for my country, but how many of these dollars will go to the people of Cuba? Probably zero.” Oct. 15 that the women they must not stop. “You have to keep going as you have until now, — Marta Ines Quintana, owner of the Havana Road restaurant in Towson, Md., quot- with intelligence, not accepting provocations,” he ed by the Baltimore Sun in a Nov. 5 story direct flights between BWI and Havana. said. “You have become a dagger in the middle of the heart of the government.” “Carriers can’t be looking at this as a money maker. They have to look at this as an investment.” ORTEGA, 75, RESIGNS AS ARCHBISHOP OF HAVANA — Vivian Mannerud, president of charter operator Airline Brokers Co., who’s been Cardinal Jaime Ortega submitted his resigna- selling Miami-Havana flights since 1982, quoted Oct. 24 in the Wall Street Journal. tion as archbishop of Havana on Oct. 18, upon reaching the canonical age of retirement. “The idea that I’m a friend of the fly-to-Cuba-from-Miami crowd is absurd. No According to Canon Law, bishops must step one would criticize someone going to Cuba to see their dying mother. What down upon reaching the age of 75. The Pope has we’re opposed to is expansion of these new flights from Miami or anywhere the authority to decide whether to accept the res- else. They add more money to the [Castro] regime.” ignation or to allow a bishop to remain in office. — Sen. Marco Rubio (R-FL), defending himself Oct. 27 against accusations he tried to In recent years, Ortega has become one of the block Tampa-to-Havana charter flights in order to protect Miami travel businesses. principal mediators with the Castro regime on issues such as the release of political prisoners. In “Here, everything is reversed. There are bank accounts worth 4 or 5 million the last two years, 115 prisoners were freed, 103 Cuban pesos [$160,000 to $200,000] in the hands of farmers. Cuba’s wealth is of whom emigrated to with their families. very concentrated, and much of it belongs to the farmers.” Ortega was ordained as a priest in 1964 but two — Omar Everleny Pérez, lead economist at the University of Havana’s Center for years later was imprisoned by the Castro regime Cuban Economic Studies, telling the Associated Press Nov. 6 — in the first interview and held in a work camp until 1967. by a Cuban government or university economist to any foreign news outlet In December 1978, Ortega became bishop of since reforms were introduced in October 2009 — that 13% of Cubans hold Pinar del Río and in 1981 was appointed archbish- 90% of the money in the island’s private bank accounts. op of Havana. The cardinal also hosted John Paul II during his historic visit to Cuba in 1998. 6 CubaNews v November 2011 POLITICS Communist Party schedules conference for Jan. 28, 2012 BY DOMINGO AMUCHASTEGUI They know it won’t be enough to patch up a organization that works along such patterns? problem here and there, but rather to provide After treating the UJC and other mass he “conferencia nacional” planned by the Cuban Communist Party for Jan. 28, a sweeping set of strategies, of which the organizations as surrogate structures or mere T2012, is a type of meeting never before recently adopted Lineamientos are only a part. appendices of the Party, it’ll take another mir- held by Cuba’s leadership. It is aimed at deal- Rumors are running through the streets of acle to undo such distortions. ing with urgent matters that cannot wait until Havana, with people asking if the Jan. 28 con- the next regular Party congress. ference will offer new policies and decisions. ATTITUDES TOWARD NON-STATE SECTOR Based on information coming out of What, for example, will happen to the hun- The Party must leave behind any prejudice Havana, it appears the major topics to be dreds of state entities that are no longer eco- against Cuba’s emerging private sector. As addressed will include the following: nomically viable? What about investment from simple as it may sound, this is a crucial state- Cubans abroad? Will the state allow a sub- ment, a foundation stone for everything tak- MODIFICATION OF PARTY METHODS stantial increase of supplies to the emerging ing place now and in coming years. For the last 35 years, Party congresses, private sector? Will travel restrictions be lift- Of course, there’s a little word game going public speeches and statements have stressed ed? Will Acopio be eliminated? on here. What exactly is non-state? Why not the notion that the Party must not – and can- Nothing has been disclosed yet, but it’s market relations sector? Or private sector? not – replace the role of the state, nor the role clear that the conference tackle these issues. This isn’t semantics. Rather, it’s imperative of provinces or municipalities. Yet again and Cubans already frustrated with the slow- that the government make clear that Cuba’s again, the Party has replaced the state, motion pace of laws and regulations aimed at economy is shifting from almost completely becoming the manager of everything, includ- implementing the new Lineamientos. state-owned to a mixed economy based on ing the regulation of daily life. This shows how important broad strategies market relations. Yet it remains to be seen As a result, the Party becomes a party of and policies, and not just isolated patch-ups, how this changing perception will be translat- managers and bureaucrats. Party and state are for any significant economic redesign. ed into Party policy, laws and a much-needed new constitution redefining Cuba’s whole eco- become one and the same thing, with no clear nomic model. separation of powers, and no checks and bal- STRENGTHENING OF INTERNAL DEMOCRACY Many Party members want to put an end to Dealing with all these challenges in the ances. This opens the doors to corruption and midst of a world economic crisis, a drastic a total absence of accountability. bureaucratic attitudes, formalities, false una- nimity and opportunism, and instead promote downturn of nickel prices, very limited sugar exports and little growth in tourism – not to PROMOTION OF CADRES individual initiatives. Sounds good, but getting rid of this deeply entrenched culture after 50 mention the continuing hostilities between At the Third Party Congress in 1986, dele- Washington and Havana – won’t be easy. gates agrees to put emphasis on the promo- years will be a major challenge. Party leaders have long enjoyed absolute Cuba’s leadership certainly has its hands full tion of women, blacks, mestizos and young these days. q people to leadership position, based on merit power, while a bureaucratic Party structure, and personal qualifications. But this was done through its departments and “instructors,” Former Cuban intelligence officer Domingo on a very limited scale. decides every single issue, no matter how Amuchastegui has lived in Miami since 1994. He Officials appeared to be reluctant to imple- major or minor. What degree of democracy or writes regularly for CubaNews on the Communist ment such policies. And when they did, very simple autonomy can be found in a political Party and South Florida’s Cuban exile community. young leaders who got promoted soon become entangled in major corruption scan- dals and monumental blunders. The list of cadres includes Luis Orlando Domínguez, Survey: Cubans more optimistic now Victoria Velásquez, Juan Carlos Robin-son, new Freedom House poll released in stability has also allowed them the luxury Yadira García, Pedro Sáez and Carlos Lage. saying October shows a huge change to think beyond the day-to-day Only Jaime Crombet, currently vice-presi- Ain perceptions, with 41% of Cubans of feeding a family. “It’s opening people to dent of the National Assembly, has managed saying the island is making progress, com- new possibilities,” says Calingaert. “There to survive. pared to only 15% who felt optimistic about is more interest in individual freedoms.” Another important goal will be to establish the future when Freedom House last con- Indeed, one of the more surprising find- time limits for all incumbents holding leader- ings is that, when asked what reforms they ship positions in the Party. The hope is that ducted field research in December 2010. most wanted, Cubans said increased free- Party roles and positions will be viewed as In fact, today more Cubans say they temporary responsibilities based on public would prefer to work for themselves than dom of expression and the freedom to trav- accountability, success and honesty, rather for the government, the survey shows. el (28%). This is a radical change from the than as professional careers. Less than a year ago, Cubans were “very most recent study, when economic reform skeptical about change. They doubted real topped the wish list of respondents. ENCOURAGING ECONOMIC DEVELOPMENT change would happen,” says Daniel Calin- Even so, the Castro government has a Putting aside any discussion of Cuba’s gaert, deputy director of programs at Free- long way to go on the freedom front. Most social achievements over the last 52 years, it’s dom House and co-author of the study. Cubans continue to get their news from the obvious that the island has suffered many eco- Now, he says, Cubans see that “change is government. The poll showed that only 40% nomic setbacks. The reasons are many, and real.” This economic opening is the “most of Cubans surveyed knew what happened they vary from mismanagement, the wasting significant positive change to have taken to Egypt’s leaders, while only 36% knew of time and resources and corruption to mis- place in Cuba since communism was intro- how the revolution in Tunisia ignited. guided marketing and the lack of technologi- duced half a century ago.” Details: Daniel Calingaert, Dep. Director, cal and creative innovation. Yet this could also pose additional chal- Freedom House, 1301 Connecticut Ave. NW, Cuba’s current leadership is aware, as lenges. Cubans who have tasted economic 6th Floor, Washington, DC 20036. Tel: (202) never before, that these deeply rooted prob- freedom say they want more, and a bit of 296-5101. URL: www.freedomhouse.org. lems exist, and that solutions must be found. November 2011 v CubaNews 7 AGRICULTURE Sugar Ministry is closed after 20 years of industry neglect BY ARMANDO H. PORTELA when output plans failed and costs remained unbearably high — even as world market n Nov. 10, Cuba’s Gaceta Oficial made official what it had announced in late prices held strong in recent years. OSeptember: the closing of the once- With only 45 to 55 sugar mills in working powerful, unwieldy Sugar Ministry. condition and an average 400,000 hectares in Decree Law 287 shuts the ministry within production from 2005 to 2009 (compared to 30 days, while Decree Law 294 establishes 161 mills and 1.3 million hectares in the Grupo Azucarero (Azcuba), which consists of 1980s), the sector gradually stabilized. Cuba currently squeezes 3.2 tons of raw 13 provincial-level companies and which will sugar out of every hectare of harvested land. take over the offices, mills and other fixed That’s only half of yields in the 1980s, and lags capital of the Sugar Ministry. well behind the performance of many other These latest moves are the culmination of sugar-producing countries around the world the sector’s slow decline which began 20 (see chart at right). years ago — when the industry’s wasteful, Cuban yields are barely one-third of Guate- unsustainable practices collapsed along with mala’s, which began producing sugar in the the Soviet Union which had subsidized it. 1960s, and only half of ’s — which High production costs and low yields were diverts part of its sugarcane crop to the pro- unbearable for Cuba’s weakened economy duction of one million gallons of ethnol per after the lavish fuel, fertilizer and machinery year in five self-sufficient distilleries. subsidies vanished. Yet the authorities Brazil’s yields, though higher than Cuba’s, refused to steer the industry in the right are kept relatively low by its immense ethanol direction, as they did with tourism and nickel. industry, which consumes most of the sugar- Beginning in the mid-’90s, the Castro reg- cane harvested in Brazil. ime did take a few steps to stabilize sugar pro- Other leading sugar-producing countries duction and slash operation costs, including around the world are more efficient than the dismantling of the worst-performing mills Cuba by various factors: (2.0), and abandoning less-productive lands. India (1.4), Indonesia (4.5), (2.8), The inflated workforce was cut by more Peru (4.0), Philippines (1.6), United States than 100,000, while large, inefficient state (2.4) and (1.5). farms were given to state-ruled cooperatives. In addition to foreign investment, Cuba rad- Meanwhile, wages were symbolically ically needs new thinking in order to turn raised and a stimulus system was introduced things around in its sugar industry and fix a to encourage sugarcane production — the production scheme that barely offsets costs Achilles’ heel of the industry. while supplying the domestic market. The government applied several therapies Cuba can recover a prominent position in for stabilizing output, first at seven million the list of top world exporters if it learns how tons, then at four million tons, and finally at its competitors around the globe succeed in 1.5 to two million tons. the demanding world sugar market — a mar- But all these measures proved worthless ket once indisputably dominated by Cuba. q 8 CubaNews v November 2011 CARIBBEAN New charter flights spark Puerto Rican interest in Cuba BY DOREEN HEMLOCK Republic tend to be cheaper than the $400- So far, Toledo’s group has spearheaded two $600 rate from either Miami or San Juan. studies on Cuba — one an overview of oppor- uba y Puerto Rico son de un pajaro las dos Yet some wonder where there’ll be enough tunities and challenges of an open Cuba and alas. Reciben flores y balas sobre el mismo C [Cuba and Puerto Rico are the demand to fill three charter flights a week another specifically on tourism. corazón” two wings of a bird. They receive flowers and from Puerto Rico to Cuba, even on small jets. Puerto Rico’s tourist industry boomed in bullets in the same heart.]. “It may not be profitable now,” said attor- the 1960s after Cuba was closed to U.S. visi- That’s how Puerto Rican poet Lola Rodrí- ney Guillermo Toledo, a Cuban-Rican leader. tors, and many Puerto Ricans fear an open guez de Tio described Puerto Rico-Cuba ties “But when Cuba opens up to the world, that’s Cuba will devastate their island’s tourist more than a century ago in her “Ode to Cuba.” another story. You could have lots more than industry, diverting travelers from Puerto The two Spanish-speaking Caribbean is- three flights a week.” Rico’s beaches to Cuba’s instead. lands that took such divergent paths are now Today, Puerto Rico faces the same restric- “But we found Puerto Rico tourism won’t poised to strengthen their historic ties. tions on travel and trade with Cuba as any be affected,” Toledo said. That’s because the In November, charter organizer Cuba U.S. state. A U.S. commonwealth since 1952, bulk of people flying to Puerto Rico are Travel Services began the first weekly char- it’s subject to American laws, and people born friends and family of islanders or business ter flight between the U.S. commonwealth in Puerto Rico are U.S. citizens. travelers, who would come anyway. Others and the communist country, linking San Juan But once Washington lifts its embargo, ana- flying in for vacations tend to seek out upscale hotels, which are scarce in Cuba, he said. Cruise travel won’t suffer either, because ships simply would add Cuba to Caribbean routes. Islands further east might be dropped, such as St. Maarten, but not cen-

LARRY LUXNER trally located Puerto Rico, said Toledo. Opportunities abound instead, said econo- mist Gerardo González, 54, who runs the management institute at Puerto Rico’s Inter- American University and collaborated on the studies for Toledo’s group. González was raised and worked in Cuba and moved to Puerto Rico in the mid-1990s. For starters, Puerto Rican service compa- nies could set up in eastern Cuba, where they’d be closer to home and also face less international competition than in Havana. They could bring skills in real estate such as appraisals, home design and architecture; in finance from mortgages to insurance; and in other fields from marketing to accounting and Internet services, said González.

DESPITE OBSTACLES, COMPANIES ARE CURIOUS “Since the Special Period, the east has become Cuba’s Cinderella,” a stepchild com- Anti-Castro exiles in front of Puerto Rico’s Capitolio protest U.S. moves to improve relations with Cuba. pared to Havana and western areas, said González. And that’s precisely where Puerto with Santiago de Cuba. C&T Charters plans a lysts see solid business opportunities in Cuba Rico could build on historic ties. second weekly charter this year between San — especially for Spanish-speaking Puerto In the early 1900s, according to Cuban im- Juan’s Luís Muñoz Marín International Air- Rico to help modernize services from real migration records, some 13,000 puertorrique- port and Havana. And next year, Cuba Travel estate to marketing. ños moved to Oriente. Many worked for the Services plans a third flight, to Havana. U.S. military and American companies there, The charters mainly serve the Cuban exile THINK TANK EXPLORES OPPORTUNITIES IN CUBA marrying and settling in Santiago de Cuba. community in Puerto Rico, now estimated to Puerto Rico’s government is so keen on op- But seizing opportunities will take educa- number 17,860, said the 2010 census. That’s portunities that in 2007, it created the Puerto tion, said González. Many Puerto Ricans don’t down from a peak of 30,410 Cubans in 1971, Rican Institute for Mutual Assistance with a know the realities of Cuba. according to U.S. immigration data. Democratic Cuba. The think tank includes Conservatives tend to demonize it and left- Many Cuban-Ricans have left to the U.S. representatives from government, business ists to glorify it, he told CubaNews. A recent mainland in recent years, as Puerto Rico groups and the local Cuban community. series of workshops on opportunities in Cuba struggles with a shrinking economy, high It’s led by Toledo, 64, who left his home- attracted hundreds of Puerto Ricans, mainly unemployment and rising crime. land to Florida in 1962 in the Pedro Pan airlift entrepreneurs and executives. But few, he Few newcomers have arrived from Cuba to and was raised in Puerto Rico. He is married said, had actually visited Cuba or knew replace them. The 2010 census shows Puerto to another Cuban emigré, and their children specifics about its market. Rico’s total population dropping 2% to 3.7 mil- and grandchildren now live in Puerto Rico, Even Puerto Rico’s food sales to Cuba — lion from a decade earlier. the U.S. mainland and Spain. permitted under the Trade Sanctions Reform Some Cuban-Ricans already visit Cuba, “I live in Puerto Rico, but I never left Cuba and Export Enhancement Act of 2000 (known traveling mainly through Miami or the Domi- spiritually,” Toledo told CubaNews during an as TSRA) — have been slim. nican Republic. Others refuse to go for politi- interview last month at his home in Cupey, a San Juan-based Pan American Grain, which cal reasons. Flights from the Dominican suburb in the hills outside San Juan. See Puerto Rico, page 9 November 2011 v CubaNews 9 FINANCE CARIBBEAN BRIEFS BAHAMAS, CUBA MARK MARITIME BOUNDARY Paris Club asks Cuba to resume talks The Bahamas and Cuba have signed a pact delimiting the two countries’ maritime bound- mitments that have been entered into.” uba’s wealthiest creditors have decided aries, the Nassau Guardian reported Oct. 4. to test President Raúl Castro’s pledge to Under the plan, the rescheduling of Cuba’s The agreement, signed in Nassau by Minis- C foreign debts must be expedited and “flexible improve the island’s financial credibility ter of Foreign Affairs Brent Symonette and by inviting his government to talks with the restructuring strategies for debt repayment” José Luís Ponce, Cuba’s ambassador to the Paris Club about settling billions of dollars of must be put in place as s oon as is practical. Bahamas, defines the national borders and outstanding debt, according to Western diplo- The Bank for International Settlements territorial framework within which Bahamian mats quoted Nov. 7 by Reuters. reported that banks in 43 countries held $5.76 sovereignty may be exercised exclusively. A letter recently sent to Cuba’s central bank billion in Cuban dep osits as of March of this “Simply put, this maritime boundary is an asked if the communist-run country would year, compared with $4.285 billion at the close invisible line that separates the Bahamas’ mar- like to explore the resumption of negotiations of 2009 and $2.849 billion at the close of 2008. itime space from Cuba,” he said. “This line is broken off a decade ago, the sources said. Cuba last reported its forei gn debt in 2007 the result of many years of dialogue, compro- “Cuba was discussed for the first time in at $17.8 billion, but analysts now say it exceeds mise and perseverance.” many years at the Club’s meeting on Oct. 9 $21 billion, or nearly 50% of GDP, and 30% Since independence in 1973, he said, “a and 10, and it was decided to see if they were more than annual foreign-excha nge revenues. major goal was concluding agreements on the interested in talking,” a European diplomat The central bank reported more tha n half delimitation of our national borders. This told Reuters correspondent Marc Frank. the debt was classifi ed as inactive, dating exercise has always been of great national “They have not formally replied, but have back to when Cuba defaulted in the late ‘80s, importance because at the core of this issue expressed some interest through the central while the remainder was active debt piled u p rests one critical concept: The very notion of bank,” he added. after the demise of the Soviet Union. where the Bahamas begins and ends.” The Paris Club reported that Cuba owed its In recent years, China has become Cuba’s The geographic coordinates that form this members $30.5 billion at the close of 2010, but largest creditor with local experts estimating line were generated by Clarisoft in conjunc- more than $20 billion of the debt was in old the amount owed at around $5 billion. tion with GIS, a base system used to store, transferable Soviet rubles that Russia now Cuba over the last year restructured its analyze and manipulate geographic locations. claims but Cuba does not recognize. debt with China and has been pursuing simi- The Paris Club is an informal group of cred- lar bilateral agreements with various other CUBA, JAMAICA AGREE TO FIGHT DRUG TRADE itor governments made up of Australia, creditors, diplomats said. Cuba and Jamaica have signed the Opera- Austria, , , Denmark, Finland, Negotiations between the Paris Club and tional Police and Maritime Agreement aimed France, Germany, Ireland, , , Cuba were put on hold in 2001 after nearly at “ensuring effective cross-border efforts in Netherlands, Norway, Russia, Spain, Sweden, two years of discussions. During the talks, the combating drug trafficking and other forms of , the United Kingdom and the United States agreed not to participate. organized crime.” United States. “Talks can only be a good thing,” said Stu- Signed Sep. 9 during a visit to Cuba by Unlike the IMF and World Bank, from art Culverhouse, chief economist of frontier Dwight Nelson, Jamaica’s minister of national which Cuba is excluded under to the long- market investment banking at the London- security, the pact will help law enforcement standing U.S. trade embargo, the Paris Club based boutique firm Exotix. officials in both countries “foresee trends in does not issue multilateral loans. “Although Cuba has pursued bilateral deals reference to drug trafficking and organized Earlier this year, Cuba’s Communist Party there have been no substantive negotiations crime; identify the leaders and the key ele- and the government approved a five-year eco- with the Paris Club for 10 years,” he said. “So ments of criminal organizations, and identify nomic plan that calls for efforts to “enhance it would signal some progress. But I’d be cau- potential weak points and informants.” Cuba’s credibility in its international econom- tious in concluding that it means some sort of Since 2006, Jamaican and Cuban authorities ic relations by strictly observing all the com- rapprochement on the debt is imminent.” q have helped each other identify, track and apprehend Jamaicans involved in the traffick- ing of illicit drugs and firearms. Puerto Rico — FROM PAGE 8 declined to comment for this article, has D.R. URGED TO TAKE CUBA’S HELP IN OIL SEARCH shipped six or seven containers of rice and A leading Dominican politician is criticizing his country’s refusal to accept Cuba’s help in beans a month in recent years. DOREEN HEMLOCK But other exporters are put off by tough exploring the nation’s hydrocarbon potential. U.S. rules under that loophole to the embar- Prominent engineer Osiris de León, one of go, such as the one that requires the Cuban the D.R.’s leading oil experts, is campaigning government to paying cash upfront for all to lead his party, Convergencia Social Domini- food imports. cana, in the 2012 presidential elections. Still, there’s a Puerto Rican kinship with He said there’s huge potential for oil discov- Cuba from their shared Spanish past that eries in Azua, from Ocoa to the Neiba bays, along the country’s southern Caribbean coast. endures — long after Rodríguez de Tio’s ode. Guillermo Toledo leads a Cuba think tank in P.R. The two wings of the bird seem to be flying Yet Dominican President Leonel Fernández best for now in music, arts and culture. with Miami Cuban Eddie K and hopes to recently declined an offer by Cuba’s state-run When Puerto Rico’s Grammy-winning make music in Cuba itself. Cupet to explore the Azua fields, the Cibao urban band Calle 13 performed in Havana in “Salsa, son, reggaetón — all our music is valley and the sea shelf of La Plata, in a deal 2010, more than 200,000 people turned out. related,” he said. “To visit would be like see- that would have cost only $83 million. Many other Puerto Rican artists yearn to per- ing a brother you’ve never met.” q In justifying that response, Fernández cited form in Havana, if only they can get visa a lack of funds. Yet de León said this same approvals from Washington. Doreen Hemlock, former Havana bureau chief government has spent $3 billion to construct “For me, it’s a dream to go to Cuba,” said and now business writer at the South Florida Sun- a dysfunctional subway system that transports Joel Cardona, 36, manager of Puerto Rico’s Sentinel, is a regular contributor to CubaNews. fewer than 15,000 people a day and depends hip-hop star Vico C, who recently recorded She filed this report from San Juan, Puerto Rico. on $92.5 million in annual taxpayer subsidies. 10 CubaNews v November 2011 DEMOGRAPHICS Despite hype, official stats mask Cuba’s racial disparities BY ARMANDO H. PORTELA ical attention to blacks, Cuba’s Marxist auth- districts of Luyanó, Cerro, and 10 de n a country where blue-eyed blond people orities early on proclaimed that racism had Octubre, blacks and mulattos account for 60% whose families came from Spain mix freely been eliminated. Soon after, information on to 80% of people on the street. Iwith those of African descent, race often racial issues vanished from public sources. These are neighborhoods of dilapidated, seems to be invisible. overcrowded houses, jobless youngsters At least in official statistics, it’s hard to find hanging around with nothing to do — often references to skin color other than general drinking in public — wandering sick pets, and accounts, or documents filled with political raw sewage and garbage in the streets. propaganda rather than plain facts. LARRY LUXNER Elsewhere, in Nuevo , La Víbora Yet the lack of open data on races — not to and Miramar, where dwellers are predomi- mention the absence of frank social analysis nantly of European descent, hygiene and liv- on the issue — makes it difficult if not impos- ing standards are visibly higher. sible to assess the real situation of different Sooner or later, Cuban authorities will have to re-examine the issue. groups, especially of blacks and mulattos in Cuba’s southeastern provinces, or in Havana, Cubans are a mixed people for whom where such groups are on the rise. European ancestry — principally Spanish Analyses are often based on assumptions ancestry — prevails, with an extraordinarily or anecdotic references, and tend to provoke strong presence of African blood. Other eth- loud responses from every corner of the polit- nic groups such as Asians and Amerindians ical spectrum. have left their mark in Cuba’s genetic pool. What’s clearly missing are studies on the A study by Cuba’s National Center of living standards of different racial groups, Medical Genetics found that among white their income levels and unemployment rates Cubans, the genetic ratio of European ances- — as well as access to privileged positions, try ranges from 24% to 99%, while African criminal records and jail populations by race. genes make up from 1% to 73%. Over the past decade, Cuba’s top leaders For dark-skinned people, this study found have made occasional references to the racial that European genes make up 12% to 99% and issue, but beyond that there’s not much evi- African genes range from 1% to 87%. In other dence of further efforts to address them. studies the ratios vary, but the genetic share Meanwhile, some social activists and artists Mulatto children sit at the base of historic Escali- of European and African ancestry persists. — often dark-skinned — have criticized the nata de Padre Pico in Santiago de Cuba, where A few hundred Cubans living in the moun- regime on the racial question. only 28.7% of the population is considered white. tains of eastern Guantánamo province are Race was a pillar of the 1959 revolution, Despite official claims, however, differ- thought to be of aboriginal ancestry, though which vilified a past of racism, exclusion and ences in living standards stubbornly persists. surveys show that aboriginal blood might be disadvantage for colored people in society It’s enough to stroll through Havana’s vari- present in a sizable ratio of the population. and business. While widely opening educa- ous municipios to see the obvious link be- The 1981 census registered about 14,000 tion, employment, housing, leisure and med- tween poverty and skin color. In some poorer See Race, page 11 CUBA’S RACIAL DISTRIBUTION BY PROVINCE November 2011 v CubaNews 11 ENERGY U.S. concerns rise with imminent arrival of Chinese oil rig ould Cuba someday become the Kuwait from every major oil-exporting nation in the Environmental Protection Agency. of the Caribbean? Probably not, but if world are jockeying to hire the rig and search “If and when Cuba drills, it’s simply imper- Cthe U.S. Geological Survey is right, for hydrocarbons under the water’s surface. ative that we be at the ready to ensure that Cuba’s offshore economic exclusion zone has These include Spain’s Repsol-YPF, Venezu- they get it right, that they do it safely and in 4.6 billion barrels of petroleum — more than ela’s PDVSA, Malaysia’s Petronas, Angola’s an environmentally sound manner,” Whittle enough to make the island a net oil exporter. Sonangol, India’s ONGC Videsh, Norway’s told reporters. “So this isn’t about politics. It’s And if the Castro regime is right, then the Norsk Hydro, Russia’s Gazprom Neft and about protecting our beaches, our shores, our island is sitting on 20 billion barrels — China National Petroleum Corp. fisherman, our communities.” enough to turn Cuba into a major oil power. “We will drill several wells next year and Under the U.S. trade embargo, neither U.S. The speculation, which infuriates Cuban I’m sure we will have discoveries,” said Rafael firms nor the Coast Guard could come to exiles opposed to the Castro regime, has sud- Tenreiro, head of exploration for Cuba’s state- Cuba’s aid or provide equipment such as denly taken on new meaning with the immi- owned oil company Cubapetroleo, in an inter- booms, pumps, skimmers and oil dispersant nent arrival of the Scarabeo 9, a $750 million view with BBC-TV. “It is not a matter of if we systems. The Cubans would need to ask the oil rig built in China, outfitted in Singapore have oil, it is a matter of when we are going to Norwegians, British or Brazilians for help. and, in keeping with U.S. law, containing only start producing.” “In the event of a disaster we are talking a one U.S. component: a blow-out preventer. First in line is Repsol, with an exploratory response time in terms of equipment of four (That was the part that failed on BP’s Deep- well just 50 miles off Florida’s coast. to six weeks as opposed to 36 or 48 hours. water Horizon rig, sparking last year’s tragic Dan Whittle, an attorney for the Environ- This is a serious impediment,” warned Lee explosion and oil spill in the Gulf of Mexico). mental Defense Fund, recently organized a Hunt, president of the Texas-based Internatio- The Scarabeo 9 is due to arrive in Cuban meeting in Havana for U.S. experts, including nal Association of Drilling Contractors, who waters before year’s end. It seems companies William Reilly, former administrator of the accompanied Reilly and Whittle to Havana. q

Race — FROM PAGE 10 Real Estate — FROM PAGE 3 Asians on the island — mostly descendants of be tempted, for example, to sell a two-bed- Chinese laborers who arrived in the 19th and room apartment on the Malecón and use the early 20th centuries — though the 2002 sur- proceeds to buy a larger place in . vey opted not to register them separately any- The market will shake out in a number of more, classifying them as white. ways, and prices will settle not simply based It is quite difficult to differentiate neatly on local demand and purchasing power, but al- among racial groups on the island, as Cubans so based on demand driven by Cubans living tend to be far more racially integrated than in outside of Cuba and the money they send.” the United States, and interracial sex and marriage is not unusual. A RUSH TO REGISTER TITLES The dark-skinned population is predomi- Antonio Zamora, a Miami attorney, real- nant in eastern Cuba, where the ratio of estate expert and part-owner of CubaNews, blacks and mulattos in Guantánamo is 74.4%, says he expects the law to spark the develop- and in Santiago de Cuba, where it’s 75.2%. ment of a real-estate industry complete with In Granma, blacks and mulattos account for brokers, mortgages and appraisers. 57.3% of the population. These three provin- Construction will take off, Zamora predicts, ces, while accounting for only 21.2% of Cuba’s along with a proliferation of paladares (private inhabitants, are home to 40.8% of its blacks. restaurants) and bed-and-breakfasts. Throughout the rest of Cuba, light-skinned “There’s been a tremendous rush in Cuba people prevail. The whitest of all provinces is to register titles,” he said, noting that 85% of rural Sancti Spíritus, which was settled by Cubans own their own homes — the highest Spanish immigrants coming mainly from percentage in the Western Hemisphere. Catalonia and the Canary Islands. Today, the “Before, people didn’t put any value on their province is 84.7% white. real estate because they believed that nobody Curiously, the Isle of Youth and Havana was going to take it away from them. And sec- have a relatively large ratio of dark-skinned ondly, it didn’t have any value, even though a people, perhaps the result of persistent immi- law was passed in 1996 requiring people to gration from eastern Cuba, as well as emigra- register their titles. But very few people did.” tion abroad from the capital (over 50% of all Zamora added: “There is also a tremendous emigrants depart from Havana, most of them amount of money going from Miami to people of European ancestry). in Cuba to fix up their houses, expand them, Between 1981 and 2002, Havana’s popula- add a couple of rooms, do a second floor. tion climbed from 1.9 million to 2.2 million, “People are looking at the possibility of a yet the percentage of light-skinned residents second home, which has been permissible for dropped from 63% to 59%. In the Isle of Youth, a long time,” he told CubaNews. “Imagine you that percentage fell from 66.8% to 61.5% over have maybe three million houses in Cuba that the same period. q were worth next to nothing because you Havana-born Armando Portela has contributed couldn’t do anything with them. Now, they’ll be worth $40,000 to $50,000 each.” to CubaNews since the newsletter’s birth in 1993. q Portela has a Ph.D. in from the Soviet Maryland-based freelance journalist and photo- Academy of and lives in Miami, Fla. grapher Larry Luxner is the editor of CubaNews. 12 CubaNews v November 2011 US-CUBA RELATIONS For Bacardi’s Cuban founders, the secret’s in the yeast BY W. BLAKE GRAY erators at Bacardi’s rum plants in Puerto Rico mutate and evolve over time — it’s been more t 6 a.m. on Oct. 14, 1960, Cuba’s nation- and Mexico, where Bacardi had the foresight than 50 years since both Bacardi and its yeast al radio announced that the communist to send it before Castro’s takeover. left their homeland. Agovernment was nationalizing sugar Bacardi gives tours of its plant in Cataño, But Bacardi takes its yeast legacy seriously, mills and rum factories — including the Puerto Rico, along with free cocktails, though using gas chromatography to make sure each island's most famous business, Bacardi. visitors aren’t allowed into the building that new batch is identical to the last. Cuban marines quickly headed to Bacardi’s holds the master yeast strain. The Bacardis love this yeast; they need it to office in Havana with a one-page official doc- But it is possible, with company permis- create the style of rum that made them ument (riddled with misspellings) that gave sion, to get into the yeast room in the plant in wealthy. The reason they killed it in Cuba was them control. La Galarza, Mexico — if you beg. You have to to make sure the Castro regime couldn’t get However, Fidel Castro and his cabinet sign a disclaimer. But if you’re a fermentation its hands on it. made a crucial error, and the repercussions geek, it’s the chance of a lifetime. Bacardi’s president at the time, Pepín live on in the world of rum today. They went After all, how many yeast strains built an Bosch, believed that eventually Bacardi LARRY LUXNER; YEAST PHOTO BY W. YEAST BLAKE LARRY LUXNER; PHOTO BY W. GRAY

Edificio Bacardi in ; sacred yeast at Bacardi’s Mexico distillery (top); Employee checks bottles at Bacardi plant in Cataño, Puerto Rico (bottom). not only to the wrong building but also to the international company and were snatched would be its former government’s competitor wrong city. from the grasp of Fidel Castro? in the rum business. Bacardi’s headquarters and production First you enter a bare-bones lab that has That indeed happened, as the regime soon facility were in Santiago de Cuba, on the other large beauty photos on the wall of the yeast — began making rum in the old Bacardi facility, side of the island. round white cells against a purple back- with the help of a few of the Bacardis’ most The marines responsible for seizing ground, displayed the way others might deco- senior employees. At first they even called the Bacardi had to catch a commercial flight to rate with shots of movie stars. rum “Bacardi,” but the Cuban government get there, and by the time they did, Bacardi’s Laptops hooked up to cameras on micro- lost trademark battles in courts around the most valuable possession was gone from scopes show the yeast’s sluggish activity; world and soon shifted to the name it uses Cuba. And anything left behind had been when not being propagated, it appears to sub- today, “Havana Club.” killed, completely — not a cell left alive. divide almost lazily. Daniel Bacardi had known he wouldn’t be Most of the conversation about yeast is CHANGING TASTES FOR A NEW RUM MARKET able leave Cuba for several more weeks, ac- here in the lab. But you’re this close: You The products aren’t actually all that similar cording to Tom Gjelten’s book “Bacardi and want to enter the inner sanctum. You ask — and the unseized yeast is a main reason. the Long Fight for Cuba.” again. And again. And finally, you’re in.” Rum is distilled from either sugarcane juice He’d planned the mass murder, committed or molasses, a byproduct of sugar production. by his most loyal staff,ahead of time. But the PRECIOUS YEAST IN A MEXICAN REFRIGERATOR Because molasses are easy to transport, carnage was bloodless: What they killed was Amazingly, the old, noisy GE refrigerator rum can be produced anywhere, even in the company’s unique strain of yeast. that holds the precious yeast isn’t even frost- places like New England, where sugarcane “The yeast is the biggest asset the company free. The yeast sits in a round container in a could never grow. has,” said Juan Piñera, a master rum blender gel with micronutrients, waiting to be propa- Rum traveled the world for centuries with for Bacardi. gated. This is a big job: Bacardi concocts sailors who stopped in Caribbean ports of call Piñera speaks in the present tense because 20,000 liters of a solution of yeast, molasses and was, until the mid-1860s, a famously the Bacardi yeast strain, born in Cuba almost and water each time it starts to make a new rough spirit that could only be smoothed by 150 years ago in the roots of a sugarcane batch of rum. years of aging. stalk, lives on under heavy security in refrig- One might think that the yeast would See Bacardi, page 13 November 2011 v CubaNews 13 Why would anyone want to produce a rum Bacardi — FROM PAGE 12 with less flavor? Because of its light body and TOURISM BRIEFS Don Facundo Bacardi started his family’s mild character, Bacardi quickly became company in 1862. Within a few years he cre- Cuba’s, and then the world’s, rum of choice TOURISM CONTRIBUTES TO 2.9% GDP GROWTH ated a lighter style of rum that proved a for cocktails. Thanks mostly to a rise in service exports smash hit. Charcoal filtering was a big reason, Even today, when agricole rums are all the and tourism, Cuba’s GDP is expected to grow but the Bacardi yeast strain — company rage in the cocktail community, some cocktail 2.9 percent this year, Foreign Trade Minister records don’t show exactly when Facundo iso- recipes call specifically for Bacardi because it Rodrigo Malmierca said earlier this month. lated it — also played a key role. Its special doesn’t assert itself over other ingredients. The number points to a slow recovery of the characteristic is that it works fast. “It’s an advantage in certain cocktails, Cuban economy, which was hit by a cash “When you select a race horse, you select a absolutely,” said Giovanni Martínez, head bar- crunch in 2009. The economy grew 4.1% in horse that’s fast and strong,” Piñera tender at Fig & Olive in West Hollywood, 2008, 1.4% in 2009, and 1.9% in 2010. explained. “Our yeast was selected in exactly Calif. “If I’m in a hot climate, humid and trop- Foreign trade grew 27% during the first half the same way.” ical, I’m not looking for darker flavors. I’m of the year, according to Malmierca, with Ironically, what was a huge benefit 150 looking for something bright and light that I exports and imports rising at the same rate. years ago isn’t exciting to spirits aficionados can accent with tropical flavors. I want some- The number of foreign visitors is expected today. The Bacardi yeast strain converts thing tart and effervescent and fruity.” to reach 2.7 million by the end of the year, up sugar to alcohol so quickly that fewer esters Bacardi is still privately owned, and the from 2.5 million last year. and congeners are created — meaning family — scattered to Florida and elsewhere Bacardi Superior actually has fewer flavor — is still fiercely loyal to its Cuban identity. BWI TO OFFER DIRECT AIR SERVICE TO HAVANA compounds than other rums. (It may also During tours, visitors see a slide show in Direct charter service between Baltimore- have fewer hangover-inducing compounds.) which current chairman Facundo L. Bacardi Washington International Thurgood Marshall Bacardi Superior today tastes light and says, “The day is drawing near when Cuban Airport and Havana will begin Mar. 21, 2012, slightly sweet; in order to taste much charac- exiles will be able to return home.” with weekly flights to depart mid-afternoon. ter in it, you have to use a neutral mixer like If so, some of them will be traveling in a test The flights will be operated by Island Travel soda water. & Tours Ltd., along with its partner, Sky King tube with micronutrients. In comparison, a mass-market dark rum q Inc., following BWI’s approval earlier this year usually has flavors of caramel and toffee, and W. Blake Gray is formerly food editor of SF from the U.S. government to offer passenger a modern artisanal rum, particularly an agri- Weekly and wine editor of the San Francisco charter air service to and from Cuba. cole rum made directly from cane juice, will Chronicle. The U.K. publication Most Wanted “We’re extremely excited about serving the have noticeable vegetal flavors like celery or recently named his wine, food and spirits blog Baltimore and Washington community with asparagus. This is how all rums used to taste The Gray Report one of the World’s 100 Most new, historic, direct flights to Cuba,” said Will- before the Bacardis’ yeast breakthrough. Essential Blogs. Gray lives in San Francisco. iam Hauf, president of Island Travel & Tours. “These flights will greatly expand opportuni- ties for increased engagement between the Lawyer: U.S. trademarks in jeopardy two countries and facilitate legal travel to Cuba for business leaders, government offi- French-Cuban joint venture’s claim to American companies faced such a scenario in , which didn’t renew many cials, diplomats, academics, cultural groups, the Havana Club rum trademark will agricultural interests, performing arts groups, Aexpire or be cancelled unless the White trademarks while facing U.S. sanctions. Muse pointed out that after sanctions ended in the and Cuban-Americans wishing to reconnect House intervenes, warns Washington attor- with their families and their country,” he said. ney and Cuba expert Robert Muse. 1990s, Burger King, McDonald’s and other firms had to return to South Africa to try to Paul Wiedefeld, executive director of BWI, That could put at risk more than 7,500 U.S. noted “there are many organizations and insti- trademarks registered in Cuba, including reacquire their trademarks. Muse spoke at an Oct. 21 videoconference tutions in Maryland and the National Capital Calvin Klein, Ralph Lauren, Nike, Budweiser region that will benefit from this direct access and Coca-Cola. at the Cuban Interests Section, Havana’s equivalent of an embassy in Washington. to Cuba and the Cuban people.” “The Havana Club trademark as owned by Round-trip airfare is expected to cost about the government of Cuba and the French com- $800 — about the same as flying to Miami and pany Pernod Ricard is on the verge of being catching a Havana-bound flight from there. cancelled,” he said. “This is a giant pending Details: William Hauf, Island Travel & Tours, mess that could be avoided by the United 2942 W. Columbus Drive, Suite #101, Tampa, FL States doing the right thing now.” 33607. Tel: (813) 872-8313 or (619) 997-4171. The “right thing,” as Muse sees it, would be Fax: (813) 874-0852, or Jonathan Dean, BWI for the Obama administration to order the Marshall Airport, Baltimore, MD. Tel: (410) 859- Treasury Department to grant Pernod a spe- 7027. URL: www.islandtraveltours.com. cific license that would let it carry out trans- actions as part of its battle against Bacardi for KLM BACK IN CUBA FOR FIRST TIME SINCE 1943 rights to the Havana Club trademark. His comments were part of larger debate that continued this month, exploring whether After a 68-year absence, Dutch airline KLM Muse said he can’t speak for Cuban offi- resumed operations in Havana with the Nov. 1 cials, but did raise the possibility that they’ll U.S. economic sanctions promote or hinder arrival of a flight from Amsterdam. eventually retaliate. If the White House lets the development of a free, prosperous Cuba. KLM, which connects 130 cities worldwide, the Havana Club trademark expire, he said, Jorge Bolaños Suárez, chief of the Cuban will boost the number of visitors coming to all U.S. trademarks in Cuba are at risk. mission in Washington, said the 50-year-old Cuba, mainly from Scandinavia, Russia, Great “When one party is in fundamental breach embargo against Cuba must be abolished — Britain, Germany and the Netherlands, with of a treaty, it relieves the other party from its and not only because it costs U.S. business three flights a week to Havana’s José Martí obligations under that treaty. So the Obama billions of dollars in lost sales every year. International using 285-seat MD-11 jets. administration has squarely before it: Is it “It is a matter of heart,” he said. “It is so un- Harm Kreulen, a top executive at KLM, going to grant the license to allow the trade- American to keep a policy in place that has inaugurated the new service along with repre- mark to be renewed? If it doesn’t, then we not worked for a half century. The policy is sentatives of the Dutch Embassy in Havana may find ourselves with U.S. companies los- defined in many ways — one way is insanity.” and executives of the Cuban Civil Aeronautics ing their intellectual property rights in Cuba.” – TRACEY EATON Institute and the Ministry of Tourism. 14 CubaNews v November 2011 import costs by increasing the island’s food direction. Huge state farms and cooperatives BUSINESS BRIEFS production and hopes to slash rice, bean and continue to sit on fallow land and despite con- powdered milk imports — staples of the trolling some 60% of the arable land produce PAYPAL SETTLES DISPUTE WITH GERMAN FIRM Cuban diet — 50% by 2013. just 30% of the food. PayPal’s operation has lifted Non-milled rice was up 64.5% at 290,400 Most Cuban farmers praise Castro’s meas- its block on the account of a company that tons, and beans were up 61.9% at 58,300 tons, ures and promises to allow market forces to sells rum, tobacco and other Cuban products according to the report. Milk production play a bigger role in the future, but complain in Germany, says news portal amerika21.de. declined 11% through September. that bureaucracy and vested interests are The article said that the online shopping Corn, another key import, declined 6.4%, holding back progress. portal has committed to collecting Cuban while the country does not produce wheat and products in other ways. has only now begun to produce soy on an PEPSI MAKES ITS CUBA DEBUT AT HAVANA FAIR The case against PayPal Europe — a sub- experimental basis with Brazil’s help. Successfully completing a political obstacle sidiary of U.S. consortium eBay — was sup- Cuba produced 454,400 tons of non-milled course that apparently took years to over- ported by a dozen online merchants whose rice and 80,400 tons of beans in 2010. The gov- come, PepsiCo made its first direct and public accounts were also closed for selling Cuban ernment last reported that it imported 511,600 showing in Cuba with a stand at the 29th goods. PayPal, meanwhile, argued that the 50- tons of rice in 2009 at a cost of $238.5 million, International Havana Fair (FIHAV), reported year-long U.S. blockade of Cuba was the rea- most of it from Vietnam, but also from various the newsletter Cuba Standard. son for the closures. Latin American nations and the United States. At the fair, officials representing PepsiCo’s The company maintains it is subject to the Bean imports of 113,600 tons cost around Central America and Caribbean division blockade laws, even though it is based in a $100 million, mainly from China, while 51,000 apparently negotiated with purchasing agents European country. As a result of the trial in tons of powdered milk were imported mainly of state food importer Alimport S.A. The com- the provincial court of Traunstein in Bavaria, from New Zealand at a cost of $200 million. pany did not provide any information about the firm DTS&W made PayPal decide to Cuba still produces less food than in 2005 pending sales to Cuba. reopen the account. and imports 60-70% of what it consumes at a Pepsi officials in Havana referred all repor- According to observers, the agreement cost of $1.5 to $2 billion a year — mainly bulk ter questions to the company’s public-rela- between the two sides could serve as an foods, which also include huge quantities of tions department in Purchase, N.Y. example for other similar legal conflicts. wheat, corn, soy, poultry and other meats. Pepsi told the newsletter by email that it Meanwhile, sympathizers of the Castro Castro has decentralized decision-making, used the Havana fair as “an opportunity to regime criticized the ruling of the provincial opened up more space for farmers to sell learn more about the country and interest in court in Traunstein, saying it was insufficient. directly to consumers, leased small plots of our product.” “The ruling is satisfactory for German com- fallow state lands to would-be tillers and A few years back, a Mexican export compa- panies but unfair for Cuba, because the raised prices the state pays for produce, but ny sold Guatemalan-made Pepsi products in German companies are still subject to the U.S. to date has stopped short of allowing market Cuba, but the brand has since disappeared blockade laws,” said Netzwerk Cuba, the forces to take hold. from Cuban supermarket shelves. German Network of Solidarity with Cuba. Export crops, from sugar and coffee to Then, in 2008, officials at the Cuban Inter- tobacco, citrus and cacao remain at historic ests Section in Washington vowed PepsiCo IRAN LENDS CUBA 500m EURO FOR ENERGY lows. Communist authorities still assign farm- would have a presence at that year’s fair, said Iran has given Cuba a €500 million ($684 ers crops, monopolizes food distribution and the newsletter. However, the company did not million) credit line for reconstruction of its the supply of critical farm inputs, despite have a stand, nor has it apparently sold any energy system, the Tehran Times reported, cit- promises to move in a more market-oriented U.S.-made product to Cuba since then. ing Abel Salas, vice president of Cuba’s Natio- nal Institute of Water Resources. Salas spoke in Tehran after meeting Iran’s deputy energy minister, the paper said without giving details. Dutch firm launches Cuba investment fund which imports new and used vehicles and ETECSA LAUNCHES MOBILE RECHARGE PROGRAM oping to raise up to €13 million ($17.9 million) in a first round, Am- machinery in Cuba. Etecsa, Cuba’s state telecom monopoly, has Hsterdam-based conglomerate Romar The company also operates a logistics introduced a plan that lets users recharge Finance BV is launching a private invest- branch and a finance arm that offers leas- phone cards for land lines with Cuban pesos ment fund for its Cuban undertakings, ing programs. Principal Ronald Buijk said in the cities of Havana and Holguín. reported the newsletter This promotion — in the testing stage until Cuba Standard. the fund is aiming at high net-worth indi- Romar’s proposed Cuba Financial Fund viduals as investors. the end of January — is an attempt to comes only weeks after Cuban authorities increase the user base of the personalized Romar’s development arm, Q Hospitality, arrested the principal of another foreign is negotiating construction of four hotels, rechargeable phone card (tarjeta propia). conglomerate in Cuba, London-based Coral Previously, these phone cards could only be one each in Havana, Viñales, Trinidad and Capital Ltd., apparently over allegations of Santa Lucía. Plans also include construction purchased with convertible pesos (CUC), corruption, and closed its offices which are often inaccessible to many Cubans (see of a 80MW wind farm in Cuba. because they lack access to hard currency. CubaNews, October 2011, page 4). However, its most ambitious project is a Coral had been in the initial stages of marina and real estate development at raising funds for an ambitious golf real CUBA REPORTS SURGE IN RICE, BEAN OUTPUT estate project at Bellomonte, east of Tarará, east of Havana. Cuba registered big increases in rice and Havana, and operated a trading business. Romar began planning on Tarará in 2009. bean production through September as non- Romar, on the other hand, has kept a low The company expects to expand a 270- sugar agricultural production increased 7.2%, key during the 15 years it’s been active in yacht marina and renovate hotels at the compared with the same period in 2010, Cuba, but the family-owned company is gated luxury community in East Havana reported Reuters, citing figures released Nov. now edging into the spotlight. that was mainly built in the 1940s by 2 by Cuba’s Oficina Nacional de Estadísticas. The money raised through the Cuba American Royal S. Webster. Produce output was up 10.1% and livestock Financial Fund would initially be used to Details: Romar Finance, Holland Financial and related products 4.2%. The upturn fol- start the company’s development projects Plaza, Gustav Mahlerplein 109-111, PO Box lowed a 2.5% decline in 2010. and support the operations of its trading 75926, 1070-AX Amsterdam. Tel: +31 20 President Raul Castro's cash-strapped gov- business, WOMY Equipment Supply BV, 794-6096. URL: www.romar-finance.com. ernment has embarked on a program to cut November 2011 v CubaNews 15 GEOGRAPHY Cuba fights to save its majestic, endangered palm trees BY ARMANDO H. PORTELA 16 CubaNews v November 2011

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Nov. 3 0-Dec. 2: 35th Annual Conference on the Caribbean & Central America. Co-hosted Washington correspondent by World Trade Center/New Orleans. Cost: $500 ($425 if paid by Nov. 23). Details: Gwendolyn n ANA RADELAT n Rodríguez, Program Dir., Caribbean Central American Action, 1300 Pennsylvania Ave. NW, #700, Political analyst Washington, DC 20004. Tel: (202) 204-3050. Fax: (202) 789-7349. Email: [email protected]. n DOMINGO AMUCHASTEGUI n

Dec. 3 : “Will The Real Terrorist Please Stand Up.” Documentary tells story of the ‘Cuban 5,’ Feature writers Kellen Auditorium, New School for Social Research, 66 Fifth Ave., New York, NY 10011. Saul n TRACEY EATON n Landau to host film and Q&A. Cost: $20. n VITO ECHEVARRÍA n Details: Center for Cuban Studies, 231 West 29th Street, n DOREEN HEMLOCK n #401, New York, NY 10001-5510. Email: [email protected]. URL: www.cubaupdate.org. Cartographer n ARMANDO H. PORTELA n

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