Vol. 21, No. 11 November 2013

In the News Uncertainties loom over Cuba’s plans

Soft landing for Cuba? to eliminate its dual-currency system Experts discuss Cuba’s emerging entrepre- BY DOREEN HEMLOCK its unification plan. But the transition will be neurial class at Brookings event ...Page 3 t’s tricky business to unify two currencies, gradual, likely in steps and taking various years and in attempting to do so, Cuba risks every- — in line with the timetable for broader moves Ithing from sparking high inflation to social toward a more market-oriented economy. Customers for Mariel dislocation to bigger government deficits. “If in Vietnam, where reforms were quicker Cuba focuses Mariel EPZ efforts on Brazil, Experts say the key to success will be linking and there was smaller gap between currencies, Russia, China, other markets ...... Page 4 the currency changes to broader economic unification took years, then in Cuba, it could reforms, so that the money can sustain its value take longer,” predicted Carmelo Mesa-Lago, a over time and hopefully strengthen with an respected Cuba analyst and professor emeritus Political briefs improving economy. of economics at the University of Pittsburgh. Regime suspends trial of political activists; The Cuban government declared Oct. 22 that Cuba recognizes that the current dual system Real-estate market up 2% in ‘13 ...... Page 5 it would move toward a single currency — end- has created massive distortions. ing an unwieldy dual system that includes a con- For example, many professionals now prefer vertible, dollar-like peso unit (known as the peso to work in tourism-related jobs where they can Frustrated at FIHAV convertible, or CUC) and a local peso, the CUP. get paid in higher-valued CUC, because salaries Lack of progress stymies U.S. food export Cuban state-run money exchanges now paid by the state in local pesos are low. The firms at Havana trade fair ...... Page 6 change 25 local pesos for one CUC. Many average salary for state employees works out to stores and hotels do business only in CUC, about $20 a month at current exchange rates. though most workers receive their wages in the Furthermore, government accounting is Reforming the OAS form of relatively worthless local pesos. messy, since many state entities keep their Congress aims to fix what’s wrong at Orga- The government has yet to provide details of See Currency, page 2 nization of American States ...... Page 7 Guest analysis Treasury’s OFAC uses SDN list to punish Noted economist Pavel Vidal Alejandro dis- cusses how Cuba might successfully abol- foreigners for doing business with Cuba ish its dual-currency system ...... Page 8 BY VITO ECHEVARRÍA assets/property in the United States,” warned o one disputes that the U.S. trade embar- Hal Eren, a former OFAC official whose Wash- Cuba-Panama ties go against Cuba — enforced by the U.S. ington-based Eren Law Firm advises individuals Detention of businessman Nessim Abadi NTreasury Department’s Office of Foreign and companies on how to deal with countries complicates bilateral relations ...... Page 9 Assets Control (OFAC) — bars Americans from subject to OFAC sanctions. conducting any business with Cuba, unless “Second, their reputation is hurt. As a practi- such activity falls under an exception like TSRA, cal matter, even persons not subject to OFAC’s Provinces the law that lets U.S. firms export food to Cuba. regulations do not want to deal with them. This La Habana: Undisputed heart and soul of However, OFAC wants to remind foreigners applies especially with respect to banking trans- the Cuban nation ...... Page 10 that it can make life hard for them, too — espe- actions. There is also the fear that dealing with cially if their business activities are seen as ben- an SDN could cause the other person to be des- efiting the Castro regime. ignated as an SDN.” Business briefs To apply the embargo against them, OFAC Another Washington-based attorney, Doug- Key West-Havana flights to resume Dec. 15; employs the Specially Designated Nationals las McNabb of McNabb Associates PC, says it 70% of Bancomext debt waived ....Page 14 (SDN) list. This list exists as part of OFAC’s doesn’t take much to get slapped with an SDN sanctions enforcement efforts against individu- designation by OFAC. als and companies owned or controlled by, or “There’s no formal discovery process – it CubaNews (ISSN 1073-7715) is published monthly by CUBANEWS LLC. © 2013. All rights reserved. acting for or on behalf of, any country targeted takes nothing more than hearsay for someone Annual subscription: $398. Nonprofit organizations: by U.S. sanctions. to end up on that list,” he told CubaNews. $198. Printed edition is $100 extra. For editorial in- “First, an SDN whose property is blocked Eren notes that those who are designed as an quires, please call (305) 393-8760, fax your request cuts them off from any business or transactions SDN have other legal headaches to deal with — to (305) 670-2229 or email [email protected]. with the United States and freezes their See SDN, page 13 2 CubaNews v November 2013 “Unifying the currency should be a byprod- Lasaga, who runs consulting firm StratInfo in Currency — FROM PAGE 1 uct of reforming the public sector,” not an ini- Miami. “In Venezuela, it hasn’t worked. It’s tial step in the process, said Romeu. He con- led to massive capital flight.” books under an outdated system that uses the tends the real value of the currency reflects Uncertainty over the future currency sys- local peso and dollar interchangeably. the strength of government finances and the tem could give rise to speculation, warns But analysts say untangling the currency economy, and should not be artificial. Emilio Morales, former director of marketing knots might create new problems. Yet with deficits so large, Cuba isn’t expect- for CIMEX SA, Cuba’s largest company in the For example, they warn that if the govern- ed to adopt a single, flexible exchange rate for retail and wholesale business. ment were to simply split the difference and its new unified currency, economists say. “We anticipate an immediate and sharp rise revalue the local peso to 12 per dollar, elimi- Instead, the government is more likely to in the black-market dollar; perhaps two or nating the CUC, then those people holding three times for what the dollar will officially CUC would lose half the value of their money. sell at the state-run Cadeca money-exchange That could hurt many foreign companies houses,” Morales — now president of Miami- working with the Cuban government in based Havana Consulting Group — wrote in a tourism and international trade. recent report on the unification plan. Yet if people with local pesos saw their pur- chasing power rise 12-fold overnight, they FOREIGN FIRMS LIKELY TO DELAY INVESTMENT might quickly buy more imports and leave the government facing an even greater shortage The government could curb some specula- of dollars. Eventually, that pressure could tion by cutting the exchange rate early to per- force the value of the local peso to fall and haps 18 local pesos per CUC. That would inflation to spike, say economists. raise “workers’ purchasing power, if prices set in dollars in state stores remain unchanged,” HOW UNIFICATION MIGHT WORK Morales said. The government has some The government already has given some cushion to absorb that change because of its signals how it might handle the currency shift high markups on goods sold in state stores. — at least for state enterprises. That’s accord- In announcing the unification, Cuba has ing to Pavel Vidal Alejandro, an ex-official at pledged a switch that will avert shocks and Cuba’s Central Bank who now teaches at Pon- Cuban convertible peso currency: on the way out. that ensure that “the confidence of people tificia Universidad Javeriana in Colombia. who have maintained their savings in Cuban For instance, Cuba last year let farm cooper- set multiple rates for different purposes, just banks, in CUC, in other international curren- atives sell crops to hotels and restaurants at as socialist Venezuela now does. That system cies and CUP, will remain intact.” an exchange rate of 7 local pesos per dollar. It might make it cheaper to buy dollars for milk Still, foreign companies are likely to slow or set that rate at 10 pesos per dollar this year. and other basics but more expensive to buy defer investment in Cuba until the currency Certain state enterprises also were allowed dollars for fancy cars and luxuries process shakes out, Morales predicts. He to keep their accounting at a rate of 10 local But multiple exchange rate systems are hopes the needed transition to a single means pesos per dollar, while transport coops also complex to administer and often mired in cor- of exchange can work and “does not become can buy supplies at a 10 pesos per dollar rate, ruption and influence-peddling, experts say. a huge disaster.” q Vidal said an interview published on the Cath- “I’ve never seen a country that has been Doreen Hemlock, former Havana bureau chief olic Church-affiliated website Espacio Laical. able to handle multiple exchange rates effec- and now business writer at the South Florida Sun- Any change in exchange rates will create tively,” said Cuban-born economist Manuel Sentinel, is a regular contributor to CubaNews. winners and losers. The losers likely would include those state enterprises that now keep their books in pesos interchangeable with dol- lars but owe lots more money in dollars. Brazil hires another 3,000 Cuban physicians Their local income would be worth relative- ly less and their dollar debts would become razil is adding 3,000 Cuban doctors to in individual recruitment efforts under Bra- zil’s Mais Médicos program, a press release harder to pay off. the 2,400 doctors already in the coun- Btry since September under the “Mais by Brazil’s health ministry said. “The main benefits of the devaluation would Medicos” program, said local officials. The PAHO-Brazil agreement is a major go to exporters, who would see their prof- This exceeds the previously announced breakthrough for Cuban efforts to diversify itability and competitiveness increase,” as the number by 1,400; revenues for Cuba under its for-pay medical service exports. dollars they receive no longer would be count- the expanded program are estimated at $250 While service exports a decade ago sur- ed at a 1:1 exchange rate but instead bring in million per year passed tourism as Cuba’s largest hard-cur- more in peso terms, Vidal told the website. (see “Cuba’s foreign policy: Moving beyond doctor diplomacy” on page 4 rency generator, by far most of the health- of the September 2013 issue of CubaNews). care exports are under agreements with oil- WILL SINGLE CURRENCY WORSEN DEFICITS? In May, Brazilian officials announced they rich Venezuela. One big problem with unification will be would contract 6,000 Cuban doctors, but it More than 20,000 medical personnel from how to deal with the government’s huge defi- backtracked as local physicians joined a Cuba work in Venezuela, or in third coun- cits. The scope of shortfalls is masked in part wave of street protests in summer. tries under programs funded by Venezuela. by accounting at the unrealistic 1:1 peso-dol- Then, Brazil’s Ministry of Health and the Just weeks after the Brazil accord, Ecua- lar exchange rate, said IMF economist Rafael Pan-American Health Organization (PAHO) dor said in September it would contract Romeu, ex-president of the nonprofit Associa- announced Aug. 21 to contract 4,000 Cuban 1,000 Cuban doctors for $30 million a year. tion for the Study of the Cuban Economy. doctors as a backbone for a fast-expanding Also, Cuba has been expanding more lim- If government workers who now earn 450 medical program in needy regions of Brazil. ited medical service programs in South Afri- Cuban pesos a month, or nearly $20 monthly, Brazil agreed to pay Cuba, via PAHO, ca, Saudi Arabia, Qatar, Portugal and instead were to earn the equivalent of $45 per $4,000 per doctor each month. Algeria. In addition, Norway and Brazil have month, where will that extra cash come from? The Cuban doctors are contracted collec- funded medical relief efforts involving Cu- The government will need to slash some of tively through the Cuban government for ban doctors in Haiti, where it is building four its subsidies, boost taxes and shut some three-year terms, to fill “vacancies not cho- hospitals with financing from Venezuela. money-losing enterprises to close that larger sen by Brazilian and foreign professionals” – CUBA STANDARD financial gap, Romeu told CubaNews. November 2013 v CubaNews 3 ECONOMIC REFORM Experts discuss Cuba’s emerging entrepreneurial class BY LARRY LUXNER recent rise of Cuba’s entrepreneurial class Throw in an undetermined number of inde- p to 40% of Cuba’s labor force is already and its implications for the United States. pendent artists, migrant farmworkers and working in the private sector, making “Cuba is already largely a middle-class soci- religious workers, and it comes to a grand Uthe country a largely middle-class soci- ety,” Feinberg said. “Together the private sec- total of 1.6 million to 2 million Cubans — near- ety and discrediting the notion that Fidel and tor and the middle classes form the two new ly two-fifths of the total workforce. Raúl Castro must die before real economic pillars of the Cuban economy.” change can occur on the island. He added: “An historic opportunity now CUBA’S ‘GESPI’ WORKERS So argues veteran Cuba-watcher Richard E. beckons for the United States: it can sit pas- “Wages are miserable — only $20 a month Feinberg, a professor of international politics sively on the sidelines, or it can actively seek at the official exchange rate, so many govern- at the University of California-San Diego. He to bolster reform and increase the probabili- ment employees supplement their income by said 450,000 Cubans are now officially regis- ties of a gradual economic transformation, a moonlighting in one way or another,” said tered as self-employed (known in Spanish as soft landing for Cuba.” Feinberg, explaining this GESPI category. cuentapropistas) in 201 authorized categories. Feinberg calculates that in addition to the “These include doctors who work in the “Many of these people are modern, good- 450,000 officially registered cuentapropistas, evenings attending private patients for a fee, looking hip entrepreneurs who could be at Cuba has another 353,000 people working in or construction workers who remodel homes home in Park Slope or Logan Circle,” Fein- berg said, naming upscale neighborhoods of Brooklyn, N.Y., and Washington, D.C. “It’s true that this group does not include those who show DVDs in their homes,” said

Feinberg in reference to an official decree is- LARRY LUXNER sued in early November banning home-based DVD, video game and 3D movie salons. “Although that was a backwards step, we should not lose sight of the general trend. In the last few months, the Cuban government has authorized a whole series of new urban cooperatives,” he said. “They’ve announced their intention to unify exchange rates and just recently authorized the formation of wholesale agricultural markets.” University of California-San Diego economist Richard Feinberg; Ted Piccone, director of the Brookings A SOFT LANDING FOR CUBA Institute’s foreign policy program and Carlos Saladrigas, chairman of the Cuba Study Group, participate Feinberg spoke during a Nov. 8 conference in a Brookings talk Nov. 8 titled “Emerging Entrepreneurs and Middle Classes in Cuba: A Soft Landing?” at Washington’s Brookings Institution. The event — titled “Emerging Entrepreneurs and service and credit cooperatives, as well as in the evenings or weekends. That income Middle Classes in Cuba: A Soft Landing?” — 172,000 land-lease farmers, 50,000 private far- exceeds the $20 per month they get paid in attracted some 100 economists, students, exe- mers, 34,000 employees of joint ventures with the public sector, so I consider these people to cutives and government officials keenly inter- have at least one foot in the private sector.” ested in Cuba’s immediate economic future. foreign firms and 3,000 Cubans working in new urban cooperatives. Anywhere from 10% to 20% of all Cuban gov- Feinberg shared the podium with Carlos A. ernment employees are engaged in “GESPI Saladrigas, co-founder of the Cuba Study Added to that are another 180,000 full-time unregistered and 400,000 to activities,” he said, explaining how he arrived Group, and Ted Piccone, acting VP and direc- cuentapropistas, at the 400,000 to 800,000 estimate. tor of Brookings’ foreign policy program. 800,000 Cubans in a category Feinberg dubs And by 2015, Feinberg predicted, it’s quite The seminar coincided with Brookings’ re- GESPI (government employees who earn sig- possible that between 45% and 50% of Cuba’s lease of a 64-page report that documents the nificant private-sector income). labor force will be working in the private sec- tor. “That’s a potent pillar for a hybrid, mixed economy,” he said.

PLENTY TO COMPLAIN ABOUT “By all measurements, Cubans are already a middle-class society,” he said, noting the aver- age Cuban has 10.2 years of schooling, and that the island scores relatively high in gen- der equality, economic security, rate of home ownership and social-security coverage. “The old narrative that Fidel and Raúl have to pass from the scene before real change can occur has already been discredited by current trends,” he said. “These new trends hold the key to change in Cuba.” Yet Cuba’s cuentapropistas have plenty to complain about, despite their rapidly rising See Entrepreneurs, page 13 4 CubaNews v November 2013 FOREIGN INVESTMENT Cuba focuses Mariel Zone efforts on Brazil, Russia, China he Cuban government’s marketing To be sure, the names of only two compa- taxes and customs duties, and get a one-year pitch for the Mariel Special Develop- nies have come up in relation to the Mariel tax holiday on sales and service taxes, as well Tment Zone is in full swing now, both zone, both from Brazil. as a 10-year reprieve for taxes on profits. After abroad and in Cuba. The first company that has committed to that, profits will be taxed at 12%. In an effort to lure foreign companies to the operate there is São Paulo-based Fanavid SA. At the core of the Mariel zone is a $900 mil- export development zone going up around a The glassmaker will open a manufacturing lion container terminal that is currently being new container port at Mariel west of Havana, facility to supply Cuba, Brazil and the Carib- built by Brazil’s Grupo Odebrecht SA, with the foreign trade and investment ministry has bean region with architectural glass, a foreign mostly Brazilian funding. The first phase of taken the lead in highlighting the advantages ministry spokesman in Brazil said last year. the container terminal is slated to begin oper- for manufacturers and service providers. Also, Brazilian bus maker Marcopolo has ations in January 2014. The focus, so far, has been on companies expressed interest in using the zone for an The government office in charge of pro- from BRICS nations and long-term allies (for assembly operation, Cuba’s trade attaché in cessing applications and administering the more information, see our detailed report on Panama said in August. Mariel zone officially opened Nov. 1. Page 1 of the October 2013 issue of CubaNews). The Mariel zone is a 180-sq mile area Oscar Pérez, director of evaluations at the On Oct. 23, Foreign Trade Minister Rod- around the Bay of Mariel that allows foreign new office, made the announcement at a for- rigo Malmierca talked about the zone to Rus- investors reduced-tax and duty-free opera- eign investment conference in October. This sian business executives during a session of a tions as well as 100% ownership. The regula- one-stop office is expected to efficiently han- bilateral commission on trade and investment. tions also allow foreign companies to import dle applications by businesses and will report While in Moscow, he announced his next stop and re-export goods with little red tape. directly to the Council of Ministers. of the global Mariel tour would be Brazil. Companies at Mariel are exempt from labor The Brazilian government last year offered – CUBA STANDARD Cuba help with setting up the legal framework for the Mariel zone. “We have a lot of interest in cooperating in the definition of this model, in order to bring in the biggest possible number of Brazilian companies,” Foreign Trade Minister Fernan- do Pimentel said during a 2012 tour of Mariel. On Sept. 25, Malmierca and Ana Teresa Igarza, director of the new Oficina de la Zona Especial de Desarrollo Mariel, gave a presen- tation to Chinese business executives. And before that, on Sept. 20, Malmierca was in Vietnam to lead a workshop about Mariel. Mariel was also a central topic during the Havana International Fair (FIHAV 2013) held Nov. 3-9. Companies from Russia, China, Vietnam, Germany, Spain, Japan, Mexico and Brazil have expressed interest in investing, Igarza said during a presentation at the fair. The U.S. embargo, Malmierca told reporters, is not enough of a deterrent. Reconstruction halfway, one year after Hurricane Sandy ne year after Hurricane Sandy strafed tims cash subsidies, 437 million pesos ($16.1 Canto, a rising political star who’s introduced the eastern part of the island, more million, according to the consumer exchange hallmark reform measures in his province. Othan half of the storm damages in rate) in low-interest and interest-free loans, as The provincial government and party are Cuba’s second-largest city have yet to be well as a retroactive 50% rebate on already spearheading the reconstruction effort. fixed, Granma announced. subsidized building materials. The Communist Party newspaper admits The official daily estimated total damages However, materials are in short supply, par- that some of the neediest and most vulnerable at $2.7 billion, most of it in Santiago de Cuba. ticularly sand and cement. Fixing the more storm victims have not been helped yet. Of 171,000 buildings affected by Sandy — than 130,000 damaged or destroyed roofs will Granma also reported that government pro- 16,000 of them collapsed — nearly 79,000 require 7 million sq meters of fiber-cement secutors have opened 144 investigations into have been fixed. More than half of storm dam- mesh, zinc and fiber-asphalt — nearly three irregularities related to construction supplies. age cases, more than 92,000 have not been times Cuba’s annual production capacity. “The battle is hard, and it will continue to solved, the newspaper reported. Manufacturers are undergoing an expan- be hard,” Expósito said, appealing to people In comparison, an estimated one-third to sion that should double their output but are to leave behind “egotism and meanness.” half of the damage caused by the same storm overwhelmed, says Granma, forcing the reg- Only 8% of those whose homes collapsed in coastal New York, New Jersey and Mary- ime to bring in supplies from elsewhere. Be- have found a permanent solution. The gov- land hasn’t been repaired, according to press yond Santiago, the most affected cities are San ernment has built 1,244 homes in rural areas reports. No overall data is available for post- Luís, Palma Soriano and Songo La Maya. for storm victims, but losses in Santiago itself Sandy reconstruction in the United States. The reconstruction is a major challenge for require a longer-term approach, Granma said. The Cuban government granted storm vic- Santiago Party Secretary Lázaro Expósito – CUBA STANDARD November 2013 v CubaNews 5 POLITICAL BRIEFS RIGHTS GROUP: 909 DISSIDENTS ARRESTED IN OCT. In their own words … A human rights group reported on Nov. 1 a wor- “We have to be creative and we have to be thoughtful, and we have to continue rying rise in politically motivated arrests in Cuba, to update our policies. Keep in mind that when Castro came to power, I was just which it linked to worsening economic conditions. born, so the notion that the same policies that we put in place in 1961 would The Cuban Commission for Human Rights and somehow still be as effective as they are today in the age of the Internet, Google National Reconciliation said authorities made 909 and world travel doesn’t make sense.” arrests of dissidents in October, one of the highest — monthly totals in the past decade. President Barack Obama, speaking Nov. 9 at a fundraising event in Miami. Most of the arrests were for brief periods, and often targeted the Ladies in White, a group of “Our small island poses no threat to the national security of the superpower. wives and mothers of political prisoners who stage The human damages caused by the economic, commercial and financial block- weekly protest marches. ade imposed by the United States against Cuba are incalculable.” But the commission, which is officially banned — Cuban Foreign Minister Bruno Rodríguez, speaking Oct. 29 after the UN General but tolerated, also expressed concern about a Assembly voted 188-2 to condemn the U.S. embargo of Cuba. Only the United States “worrying increase” in acts of violence and harass- and Israel opposed the measure; Micronesia, Palau and the Marshall Islands abstained. ment against regime opponents by security forces. “To the extent that the economic situation wors- “We want to have a close relationship, not only a friendly one between our peo- ens, demonstrations of discontent increase, espe- ples but so we can work together in terms of economic exchanges. Therefore, it cially in the country’s east, and consequently so do was important to resolve this situation, which was an obstacle to bilateral ties.” acts of repression against demonstrators,” the — Luís Videgaray, Mexico’s finance secretary, after his country announced it would rights group’s leader, Elizardo Sánchez, told AFP. pardon 70% of Cuba’s $487 million debt with state bank and credit agency Bancomext. Criticizing the government's failure to respect civil rights, Sánchez said “it’s obvious we will con- “These measures are corrections to continue bringing order to this form of tinue to suffer high rates of political and social re- management, fight impunity and insist people live up to the law. In no way does pression in parallel with the worsening economy.” this mean a step backward. Quite the contrary, we will continue to decidedly So far this year, Cuba is averaging 454 politically advance in the updating of our economic model.” motivated arrests a month, below the 550 monthly — Nov. 3 government decree closing private theaters and computer gaming salons. average for all of 2012, the commission said.

REGIME SUSPENDS TRIAL OF 3 POLITICAL ACTIVISTS “The state has no 3D theatres, so what is their problem? Sometimes the gov- ernment seems to want to make our lives worse for the fun of it.” Cuba has suspended the trial of three democra- — cy activists arrested during Pope Benedict XVI’s Marlene, a Havana housewife whose neighbor is about to open a 3D salon. visit last year, the Miami Herald reported Nov. 1. No explanation was given why the regime called “I’m very anxious to return. This has been going on too long. I’m hoping for a off the trial of Ladies in White member Sonia just solution. I committed a crime, paid my dues and that’s it.” Garro, her husband Ramón Alejandro Muñoz, and — William Potts, 56, speaking to reporters in Havana as he boarded a plane to Miami. activist Eugenio Hernández Hernández. Potts served 13 years in a Cuban jail for hijacking a Piedmont Airlines jet in 1984. Prosecutors accused them of trying to kill police officers when they resisted a raid on Garro’s home “Imagine...while I was seeing friends and people taking doors and tables from on March 17, 2012. Police allegedly used tear gas their houses to build a raft, trying to escape, I came up with the idea of assem- and Garro was allegedly shot in her leg with a rub- bling a computer to tell somehow everything that was happening around me.” ber bullet in the raid. No new trial date was set. — Yoani Sánchez, telling an audience in Orlando, Fla., about how she built her own Government prosecutors have asked for a 14- computer 19 years ago with the goal of sharing her thoughts with her fellow Cubans. year jail sentence for Muñoz, an 11-year sentence for Hernández and a 10-year sentence for Garro. “Studying medicine was my life’s dream. But for a poor family like mine, that was impossible. Here, I am making my dream come true, and I have high hopes CUBAN REAL-ESTATE MARKET IS UP 2% THIS YEAR of being able to help my country. This school is a blessing.” The buying and selling of houses in Cuba rose — Merady Gómez, 18, of Honduras, speaking about Cuba’s Latin American School of by 2% in the first half of this year compared with Medicine (ELAM), 25 km west of Havana. Gómez is one of 13,282 students at ELAM. the same period in 2012, the government reports. Spanish news agency EFE, quoting Justice Min- “It’s increasingly becoming more and more difficult to collect from Cuba. What istry official Aniuska Puente, said the trend has has happened is that there is no law in Cuba. These international investors been “rising” for housing sales among individuals. served their useful purpose and now they are being burned by the government.” Puente said 873,314 properties have been entered into the Property Register so far this year, — Unidentified Panamanian businessman, quoted in a Miami Herald article on the of which 659,968 are individual homes and the rest jailing of Colón Free Zone executive Nessim Abadi for corruption (see story, page 8). are state properties. According to official figures, the island has 3.7 million homes and of those, 85% “This is an attempt to keep players from leaving, as simple as that.” are classed as individual properties. — Jaime Torres, a sports agent in Boca Raton, Fla., telling the Wall Street Journal The Castro government in November 2011 what he thinks of Cuba’s new law allowing its athletes play abroad as professionals. authorized the buying and selling of houses among individuals, one of the most popular meas- “‘The central objective of this agreement is to reduce repatriation time for reg- ures decreed so far as part of the reforms to ular Cuban migrants from the current situation, where migrants might remain in update the island’s socialist economic model. detention for months, to repatriation in several weeks at most.” The rule put an end to decades of bans or limits — Fred Mitchell, foreign affairs and immigration minister of the Bahamas, on that type of sale, but restrictions on such trans- announcing a new migration accord between Nassau and Havana. actions are still in place, given that Cubans may not own more than one residence in urban areas. 6 CubaNews v November 2013 FOREIGN TRADE Lack of progress frustrates U.S. food exporters at FIHAV BY VITO ECHEVARRÍA progress on key issues, has diminished the competitive footing. I want the opportunity for he all-important Havana International spirits of U.S. companies,” said food trader foreign direct investment opportunities with Trade Fair (FIHAV), being held in early Paul Johnson. Cuba. I want to use my experience in working TNovember, has attracted the usual dele- For the past four years, Johnson, president with Cuba to provide a model for moving for- gations from friendly trading partners like of Chicago Foods, has successfully sold a vari- ward — to prove that a U.S. company can China, Brazil and Venezuela. Even some ety of food exports from the Midwest into work constructively within Cuba to create a Americans managed to show up. Havana, and is still booking sales into Cuba. dynamic business,” he said. However, due to lowered expectations over But he says more must be done. “Cuba needs capital, credit and know-how future U.S. sales into Cuba, FIHAV 2013 didn’t “What we need is to reframe the debate in in order to improve its economy — all of have the same buzz it once did. Washington to allow the sale of goods to Cuba which a U.S. company can provide.” “It seems that the combination of the frus- with credit,” Johnson told . “As a Johnson said he finds it ironic that more CubaNews progress was made in U.S.-Cuba trade rela- tration from last year’s FIHAV, coupled with businessman, I want the chance to negotiate tions during the Bush years than more recent- the disappointment with the lack of U.S.-Cuba the sale and purchase of products on a more ly under President Barack Obama, who prom- ised to improve bilateral ties. In the early 2000s, then-CEO of Cuban food import buying agency Alimport, Pedro Alva- Brazil highlights participation in FIHAV 2013 rez, was actively being courted by agribusi- ne country that was hard to miss at FIHAV, through Apex-Brasil, the Brazilian ness conglomerates like ADM and Louis the Havana International Trade Fair government seeks not only an increase in Dreyfus, as well as farmers and lawmakers — O(FIHAV 2013) is Brazil, which show- international sales,” Apex-Brasil president including many from conservative farm-belt cased its Cuban investment in the Mariel Mauricio Borges recently told the Brazilian states like Texas, Louisiana and Georgia. Export Processing Zone to attendees. trade magazine Safra. The export trade promotion office Apex- “We also intend to promote economic in- USA RICE FEDERATION STAYS HOME THIS YEAR Brasil set up a colorful 1,400-sq-meter pavil- tegration and increased mutual direct in- Despite the lack of enthusiasm among U.S. ion at FIHAV — double its size from 2012 vestment, developing strong partnerships food manufacturers and exporters over Cuba — with 29 Brazilian firms represented in a and contributing to the growth of the two these days, Johnson still has strong feelings variety of industries including food and bev- countries,” Borges told the magazine. “We about reversing this trend. erages, home improvement, construction, believe that growing Brazilian-Cuban rela- “There are small and medium-sized U.S. machinery, fashion, high-technology and tions will bring numerous benefits.” enterprises that can grow with increased trade health care. Apex-Brasil also mentioned that it has opportunities with Cuba,” he said. “Cuba is a At FIHAV 2013, the Apex-Brasil team projects in coffee production, as well as a dynamic, educated country of 11 million with held several seminars related to Brazil’s ex- glass making plant to be developed with the advantage of geographic proximity. I panding trade with Cuba, such as the re- Cuba’s Ministry of Heavy Mechanic Indus- believe change is inevitable. How that change opening of Banco do Brasil’s operations in try. In biotech, Brazil is setting up commer- is channeled in the immediate future will Havana, progress on the Mariel port proj- cial ties for the importation of Cuban prod- determine the future realignment between ect, Brazilian insurance company Capemisa ucts, such as the diabetes dru) Heberprot- our two countries for the next 50 years.” Seguradora’s portfolio in Cuba, and direct P, while a technology transfer program is in Johnson’s connection to Cuba began long cargo flights between the two countries. the works between the two countries. before he started clocking sales to the island. A year before the Brazilian and Cuban While competing for a master’s degree at governments signed a 2009 agreement to BRAZILIAN GLASSMAKER COMMITS TO EPZ the University of Illinois (Chicago), he lived in develop both the Mariel EPZ and its port, The first Brazilian company that has com- Cuba and wrote a thesis on the island’s eco- Apex-Brasil had already established an mitted itself to the Mariel EPZ is glassmak- nomic development. office in Havana to increase that country’s er Fanavid SA, which is getting a $220 mil- “I learned the language while living there exports to Cuba, along with being a grow- lion credit to proceed with that venture. and formed relationships that eventually led ing presence at FIHAV since then. me to form my own company,” Johnson That Havana office organizes lists of buy- Apex-Brasil has also been involved in promoting more Brazilian involvement noted. “That experience and understanding of ers, sets up business meetings, supports Cuba's history, language, and culture played a trade missions and conducts market with Cuba’s sugar sector. In early October, representatives of vari- crucial role in my business.” research for Brazilian firms interested in With Johnson striving for more U.S.-Cuban Cuba, as well as providing a showroom for ous Brazilian sugar and derivatives firms and the Cuban state entity Azcuba met at trade at this year’s FIHAV — under increas- Brazilian goods, and storage space for pro- ingly more difficult financial circumstances in motional materials. Havana’s Hotel Nacional to learn about opportunities to participate in a $200 mil- Havana — at least one long-time American With bilateral trade jumping from $88.1 presence at that trade show hoisted the white million in 2003 to $661.6 million in 2012, lion pilot project in Cienfuegos province. “Cuba wants to revitalize its sugar indus- flag and chose to stay home this time: Marv Brazil’s Ministry of Development, Industry Lehrer, senior adviser of the Virginia-based and Foreign Trade says Brazilian exports try, and in recent years we observe that the country is undergoing changes that can USA Rice Federation. to Cuba continue apace, totaling $374.9 mil- Up until now, Lehrer regularly attended lion from January to September 2013. bring great opportunities [for Brazilian firms)],” said Flavio Castelar, executive FIHAV and was a familiar face to Cuban offi- Much of these exports to Cuba consists cials, despite Alimport’s long-standing prefer- of soybeans and byproducts (crude and director of the Brazilian bio-energy trade group APLA, adding that 15 to 20 Brazilian ence for buying cheaper Vietnamese rice. refined oil, as well as meal), corn, rice, cof- That didn’t prevent USA Rice from going fee, chicken, paper, agricultural machinery firms are interested in Cuba’s sugar sector. Already, Brazilian sugar entity Compan- through the expense of setting up a booth. It and footwear. even hired local chefs to cook white rice on- “By supporting Brazil’s participation in See Brazil, page 15 See FIHAV, page 15 November 2013 v CubaNews 7 LATIN AMERICA Washington to OAS: Shape up or face the consequences BY LARRY LUXNER to present Congress with a “multiyear strate- where democracy, human rights and freedom or years, U.S. lawmakers have griped gy” progress report outlining exactly how the of the press is not seen as at the highest level. that the Organization of American States organization will be reformed. As a consequence, they want to put more F— which is based in Washington and is “Key OAS strengths,” it says, “lie in streng- financial pressure on the organization.” largely funded by U.S. taxpayers — has thening peace and security, promoting and become increasingly bureaucratic, unman- consolidating representative democracy, re- ROS-LEHTINEN: OAS IGNORES CUBA’S ABUSES ageable, irrelevant and even anti-American. gional dispute resolution, election assistance In fact, one of the OAS’s loudest critics on This autumn, Congress finally did some- and monitoring, fostering economic growth the Hill is Rep. Ileana Ros-Lehtinen, a Cuban- thing about it. and development cooperation, facilitating born Republican whose South Florida district In early July, the Senate approved the OAS trade, combating illicit drug trafficking and is home to thousands of fellow Cuban exiles. Revitalization and Reform Act of 2013 by transnational crime, and support for the Inter- During House deliberations, Ros-Lehtinen unanimous consent. On Sept. 17, the House of American Human Rights System.” said she was “deeply disappointed that the Representatives passed the bill by a 383-24 Yet Albert Ramdin, assistant secretary-gen- OAS has failed to live up to the principles” of vote, and it was signed into law by President eral of the OAS, doesn’t see the legislation as the Inter-American Democratic Charter. Obama two weeks later — thereby becoming particularly helpful. “The OAS should be, but is not, an impor- the first piece of legislation to be signed by the president since Sen. Bob Mendendez (D- NJ) took over as chairman of the Senate “More than 30 pro-democracy advocates who were peacefully gath- Foreign Relations Committee. “The OAS is the Western Hemisphere’s ering in Cuba were detained and beaten by agents of the [Castro] premier multilateral institution, and yet its effectiveness has declined in recent years,” regime for doing nothing. But the OAS remains silent on all of these Menendez said in a prepared statement after important issues, and in doing so it fails to hold accountable the the bill’s passage. “For Western Hemisphere nations to truly thrive, urgent reforms are authoritarian regimes that oppress millions in our own hemisphere.” required to enhance the OAS’s strategic plan- ning processes, and improve administration — REP. ILEANA ROS-LEHTINEN (R-FL) ON THE ORGANIZATION OF AMERICAN STATES and financial management.” Yet the wording of this new law is relatively “In a sense, this is a disappointment tant regional body that stands up for demo- bland — and it doesn’t mention any country because it will not serve the purpose of the cratic principles, that promotes the rule of law by name other than the United States. OAS. It will make it more difficult for us to and condemns human rights violations. Not Cuba, which was suspended from the strengthen democracy and foster peace,” However, the OAS has strayed. This bill is a OAS in 1962 following Fidel Castro’s rise to Ramdin warned in a phone interview from his positive step forward to bring it back onto the power. Not Venezuela, whose late firebrand native Suriname. right path,” said Ros-Lehtinen, chastising the president, Hugo Chávez, spearheaded a wave “If they’re going to cut resources from the 65-year-old organization for letting member of anti-American sentiment throughout the OAS, there will be a budget issue. I think we states ignore their own constitutions when it region. And not Ecuador, which under Chá- comes to human rights. vez protégé Rafael Correa has become one of “Has the OAS spoken out against the illegit- the most repressive nations in Latin America imate elections in Venezuela? How about the for journalists trying to report the news. illegitimate elections in Nicaragua? Or what about the continued human rights abuses

U.S. TAXPAYERS FUND 59% OF OAS BUDGET LUXNER LARRY against the people of Cuba?” she demanded. Simply put, the legislation asks the OAS to “Just this past Sunday, more than 30 pro- review its core functions at least once a year, democracy advocates who were peacefully reduce the number of mandates not directly gathering in Cuba were detained and beaten related to those functions — and accept new by agents of the regime — for doing nothing. mandates only after completing an analysis of But the OAS remains silent on all of these im- the financial costs and describing how that portant topics, and in doing so it fails to hold specific mandate would advance the organiza- accountable the authoritarian regimes that tion’s core mission. Flags on display, OAS headquarters, Washington. oppress millions in our own hemisphere.” The law urges the OAS to adopt, within five years, an assessed fee structure “that assures are coming close to a very difficult situation. ENGEL: BILL’S PASSAGE ‘SIGNALS A REBOUND’ the financial sustainability of the organiza- Certain programs will have to be stopped.” Rep. Eliot Engel (D-NY), the senior Demo- tion” so that no single member state pays At present, the United States funds 59% of crat on the House Foreign Affairs Committee, more than 50% of the total. It also calls for the organization’s $83 million annual budget; said passage of this bill “signals a rebound” in “merit-based, transparent hiring, firing and Canada, Mexico, Brazil, Venezuela, Argentina the Congressional relationship with the OAS, promotion standards and processes.” and Colombia make up most of the other 41%. which reached a low point two years ago In addition, said lawmakers, the 35-member Separately, the OAS receives $70 million a when the committee voted to defund all U.S. OAS should work more closely with another year in voluntary contributions from OAS annual contributions to the organization. Washington-based body, the Inter-American member states and permanent observers for “The House wisely refused to take up the Development Bank, on economic issues. specific purposes. underlying legislation defunding the OAS at The law — co-sponsored in the Senate by “We know that the Hill was not satisfied the time, but the sheer recklessness of that Bob Corker (R-TN), Tom Udall (D-NM) and with the work of the OAS,” Ramdin said. bill did much to erode our influence and cred- Marco Rubio (R-FL) — gives Secretary of “Some members of Congress felt we should ibility at the regional body,” Engel said, prais- State John Kerry 180 days after its enactment do more in terms of responding to countries See OAS, page 15 8 CubaNews v November 2013

ANALYSIS Cuba hints at how it might end its dual-currency system BY PAVEL VIDAL ALEJANDRO get 24 CUP for US$1 in Cuban exchange greater powers in their economic and finan- cial management, as well as more autonomy he government of Raúl Castro has done houses, but the official exchange rate used to calculate macro-economic performance and in relation to government ministry control. very little, until now, to eradicate the On a currency level, all operations of these Tdistorting effects of the parallel circula- that of state companies continues to be 1:1. enterprises are effected in CUP; they will use tion of two national currencies — the Cuban Given this, the principal step the Central Peso (CUP) and Convertible Peso (CUC) — Bank of Cuba should take to eliminate the a different exchange rate, with possibilities to and to correct the multiple exchange rates. dual currency is the devaluation of the Cuban buy and sell hard currency in the Central However, from 2011 to 2013 some decisions peso (CUP) in the business sector — an issue Bank without exchange controls. were taken that may provide hints about the that has been proposed for more than 20 No precise information is available as to the kind of arrangements that could take shape in years. Once consensus was achieved about exchange rate that will be used, but it seems pursuit of a gradual elimination of the dual the need to do it gradually, the debate in Cuba it will be in the 10CUP:US$1 range. currencies and exchange rates. about the best strategy to approach monetary What’s more, according to unofficial infor- Since 1993, the Cuban peso and the U.S. reform has been moving between two lines: mation, in the second half of 2013 the sugar- dollar have officially been circulating in the 1) Complete reform, consisting in the cane industry has begun to use multiple ex- Cuban economy, side by side. implementation of gradual devaluation in the change rates in its accounting and operations In 2003 and 2004, the government took a CUP exchange rate for all companies; and 2) that are different from the official 1:1 rate. bundle of actions that brought about the sub- reform by sectors, consisting in the gradual stitution of the dollar’s functions by a third incorporation of some sectors in a particular ARE MULTIPLE EXCHANGE RATES THE ANSWER? currency: the CUC. system with a devalued official exchange rate. As of now, it is known that sugar companies This brought us to the current situation, in In other words, gradual change can be exe- use three different exchange rates — 12:1 for which the economy stopped being dollarized, cuted either over time or by sector, or with a the accounting of their export revenues, 7:1 while maintaining the parallel circulation of combination of both. Some official declara- for the accounting of imports, and 4:1 for the two currencies, both of which are issued tions, as well as specific experiments that are imports of Venezuelan oil and fuel. by the Central Bank of Cuba. already underway or taking shape, hint at a The last hint that provides information In the 1990s, together with the double cur- reform that will follow the second strategy. about future monetary policy can be found in rency, an even more distorting factor was the recently created transportation service introduced: the duplication of exchange rates. SEARCHING FOR THE RIGHT ANSWERS cooperatives, which will be allowed to buy From 1990 to 1993, the exchange rate of the Beginning Dec. 1, 2011, the government es- both domestic and imported supplies — such Cuban peso suffered an enormous deprecia- tablished a special exchange rate of 7CUP:$1 as fuel, tires, parts and components — not at tion vis-à-vis the dollar in the informal market. for direct transactions, without intermediary, the official 1:1 rate but at 10CUP:US$1. This was accepted by the Cadeca govern- between state hotels and restaurants and agri- In summary, the new exchange rates for ment network of exchange houses, created in cultural cooperatives. companies seem to hover around 10:1. Given 1995 to effect operations with Cubans and Although this decision is not officially rec- that the convertible peso is pegged to the dol- tourists. ognized as a devaluation, it is the de facto cre- lar, this translates to 10CUP:1CUC — which ation of a new exchange rate for those opera- means a 900% devaluation of the official COMPLETE REFORM VS. REFORM BY SECTORS tions. Later, in 2013, through Resolución 9 of exchange rate for the sectors that participate However, the new value of the Cuban peso the Ministry of Finance and Prices, the spe- in the exchange rate adjustment. never reached the accounting and exchange cial exchange rate was raised to 10CUP:US$1. Seemingly, the idea of a complete currency operations of the business sector. Another hint about future exchange rates is reform has been cast aside, in favor of sector- Institutions continued to operate with the the experiment that began in 2013 with a ial monetary reform that uses multiple ex- official exchange rate of the 1980s — 1 Cuban select group of state enterprises. Under this change rates. peso (CUP):US$1. Today, Cubans and tourists experiment, the government grants them PESO DEVALUATION MAY OPEN OPPORTUNITIES Obviously, the solution to the double-cur- rency problem will follow the style of all other Wholesale food markets to expand across Cuba reforms — first, limited experiments with esponding to the needs of mushroom- Most significant for the emerging group change on the margins, which are then ing private gastronomy businesses, the of private business owners, though, is the expanded to the overall economy using the Rgovernment will allow the creation of creation of wholesale markets, and that the experiences obtained from the experiments. wholesale food markets in Havana and near- new regulation authorizes private food The devaluation of the official exchange by provinces, “in an experimental manner.” wholesalers or vendedores mayoristas de pro- rate of the CUP will have effects on balance The pilot project will allow to “study other ductos agropecuarios — in addition to state sheets and inflation, correcting assets and lia- ways on a regional level” and then expand farms, farm co-ops and private farmers, to bilities and relative prices towards a more pre- them to the rest of the country, Communist sell agricultural products. cise and transparent valuation of economic facts. Likewise, devaluation will open win- Party daily Granma said. This de facto recognition of private inter- Decree 318, published Nov. 6 in the mediaries further chips away at the Acopio dows of opportunity in the tradable-goods sec- tor due to a rise of competitiveness. Gaceta Oficial, allows farmers to sell their state food distribution monopoly. The new production in excess of state quotas directly markets could become the prototype of a At the same time, it will allow the CUP to to final consumers in the provinces of La wholesale infrastructure to supply the thou- become convertible, thus promoting other benefits like integrating the economy, pro- Habana, Artemisa and Mayabeque. sands of new restaurants and other private food service providers that have sprung up moting direct foreign investment, and in gen- It also directs provinces to authorize the eral strengthening the domestic market. creation of farmers markets, other retail out- over Cuba in the past few years. q lets and vendor routes for food products to The first wholesale market will be El Pavel Vidal Alejandro is a Cuban economist be sold in non-convertible Cuban pesos. See Markets, page 9 and former Central Bank official who now teaches at the Universidad Javieriana in Cali, Colombia. November 2013 v CubaNews 9

FOREIGN TRADE Cuba’s detention of Panamanian complicates bilateral ties BY VITO ECHEVARRÍA like Iran, North Korea, Sudan and Syria. released from prison in Havana may be com- essim Abadi, owner of Panama’s By the late 1990s, computers could be plicated by an incident at the Panama Canal Audiofoto chain of electronics stores, is found across Cuba, ranging from antiquated earlier this year. Nthe latest foreign businessman to be units at Radio Habana Cuba to the latest state- In July, Panamanian authorities stopped a detailed in Cuba as part of Raúl Castro’s ongo- of-the-art PCs in the offices of Cuba’s income- North Korean cargo ship carrying smuggled ing anti-corruption dragnet. generating biotech sector. Cuban arms hidden under sacks of sugar and Even though Abadi was arrested — but not At least one observer experienced with possibly bound for Pyongyang. charged — in August 2012, his relatives Cuba’s high-tech sector says Abadi is a victim The suspicious cargo included two MiG-21 reportedly opted not to publicize his plight, of changing times. fighter jets, 15 spare jet engines, and missile for fear of retaliation against him by authori- “They [Panamanian electronics dealers] and radar systems. Despite the Cuban gov- ties in Havana. ernment’s assertion that they were being sent For years, Abadi — a 73-year-old Panaman- to North Korea for “repairs” the planes ian Jew of Syrian origin — had been among a turned out to be in good condition, and the network of businessmen who sold Asian- spare engines were brand-new. Aguilar downplayed that shipment’s poten- made electronic, household and other prod- LUXNER LARRY ucts to the Cuban government from Panama’s tial impact — or for that matter, the Abadi sprawling Colón Free Zone. case — on Panamanian-Cuban relations. The only progress made so far has been the “The current Panamanian administration Oct. 7 visit of Panamanian Deputy Foreign signed in July 2013 a Partial Customs Agree- Minister Vladimir Franco to Cuba. There, he ment with Cuba, just a few days after the reportedly spoke to Cuban Foreign Minister North Korean cargo ship incident, which fol- Bruno Rodríguez about Abadi. Neither Fran- lows the 1999 Investment Promotion Agree- co nor other officials from Panama’s Foreign ment between both countries,” he said. In 2012, Cuba purchased $257 million in foreign “Since the ship incident is a matter between Ministry would respond to our request for goods through Panama’s Colón Free Zone, above. comment on that trip. North Korea and the UN, I’m not aware of any Meanwhile, members of Panama City’s have outlived their usefulness in Cuba,” said reasons for it to materially affect the efforts of legal community hope further diplomatic Robert Sajo, a Canadian businessman who Panama's government in the Abadi matter.” efforts will pay off. lived in Havana during in the late 1990s and No matter what happens, Panama-Cuba bi- “Panamanian diplomats should continue to early 2000s to run his joint-venture website lateral trade won’t fade away. “Just last year,” endeavor that a fair trial and all guarantees Cubaweb.cu. “That is over for them. They are said Aguilar, “Cuba purchased $257 million in granted by international multilateral conven- selling in the Cuban state stores PCs starting goods at the Colón Free Trade Zone.” q tions are provided to Mr. Abadi, especially at 500 CUCs, which are shipped to Cuba Vito Echevarria, a New York-based freelance because of his advanced age,” said Panaman- directly from China nowadays.” journalist, has written for CubaNews since our ian corporate attorney Álvaro Aguilar, who fol- Sajo also said that along with direct ship- establishment in 1993 about business, music, cul- lows his country’s trade relations with Cuba ments of PCs and other goods to Havana from ture and sports, and more recently e-commerce. and other Latin countries. China — a major manufacturer of such items anyway — “Cuban-Americans and Cubans liv- OUTCOME OF 2001 CASE GIVES PANAMA HOPE ing in other countries like Canada are bring- Markets — FROM PAGE 8 The reason for Aguilar’s optimism is the ing in laptop PCs through flights from fate of another Panamanian detained in Hav- Toronto and Santo Domingo that end up in Tri-gal in the Havana suburb of Boyeros, ana some years ago: Alejandro Abood, anoth- the black market.” Granma said. It’ll begin operations before er supplier of high-tech goods to Cuba. He noted that least some of these units are year’s end, with nightly opening hours from 6 “Abood was detained in 2001 while visiting currently being sold on Revolico.com, Cuba’s p.m. through sunrise. Cuba for business, and later sentenced to four answer to Craigslist. It’ll be up to provincial governments, after years imprisonment for corruption,” said Panamanian electronics dealers like Abadi consultation with municipios, to decide where Aguilar. “He was released in 2003 after politi- may indeed have outlived their usefulness to to allow the new food markets. The new outlets cians from Panama’s PRD party intervened the Castro regime. However, Panama itself are authorized to sell fresh and processed food on his behalf.” still has some use in at least spiriting away and other farm products, except for beef, milk The Abadi case unwittingly drew attention defective electronics out of the island for and other dairy products, honey, coffee, cacao to Panama’s long-standing role as one of Hav- repair elsewhere. and tobacco products. ana’s major suppliers of PCs, electronics and All products will be sold in non-convertible other high-tech items, including those found N. KOREAN INCIDENT MAY COMPLICATE THINGS Cuban pesos at unregulated prices, except for in the country’s government-controlled retail In May 2012, Ericsson de Panama SA (a unit rice, beans, potatoes, garlic, onion and toma- stores. Since at least the 1980s, Cuba has re- of the Swedish electronics giant) agreed to toes, which will be sold at fixed prices. portedly taken advantage of Panama’s status pay a civil settlement of $1.75 million to the There are no limits on amounts sold and as a major Latin American trans-shipper of U.S. Commerce Department’s Bureau of In- kind of buyers. The wholesale markets will be consumer electronics and high-tech items. dustry and Security over 262 violations of U.S. operated by non-agricultural service coopera- With politically friendly ruler Manuel Nori- export regulations. tives. In addition, self-employed Cubans will ega in power at the time, Cuban authorities That settlement stemmed from Ericsson de also be allowed to act as retailers on farmers’ routinely purchased such goods from the Panama allegedly carrying out a scheme markets and as street vendors. Colón Free Zone, including American brands between 2004 and 2007 to ship Ericsson tele- They may rent market stalls in Cuban pesos like IBM — thereby circumventing the U.S. com units from Cuba via Panama to the for a price per square meter from the market trade em-argo against the island, which United States for repair and replacement, to operators. Permanent retail food stores may barred the export of high-tech goods to Cuba be returned to Havana via Panama. only be operated by agricultural producers. and other countries hostile to Washington Meanwhile, any future efforts to get Abadi – CUBA STANDARD 10 CubaNews v November 2013 GEOGRAPHY La Habana: Undisputed heart and soul of the Cuban nation BY ARMANDO H. PORTELA This is the final installment in a series of monthly articles on Cuba’s ollowing the rearrangement of Cuba’s administrative divisions in provinces by cartographer Armando Portela, who has a Ph.D. in geogra- 1976, Havana and its immediate suburbs were detached from the phy from the Soviet Academy of Sciences. A resident of Miami, Portela F rural areas of the old province of La Habana to form the new has written for CubaNews since the newsletter’s establishment in 1993. province of Ciudad de La Habana. In 2010, with the creation of two new jurisdictions, Artemisa and GEOGRAPHY Mayabeque (see “Artemisa and Mayabeque — Cuba’s two newest provin- La Habana is comprised mostly of the developed lands of the capital ces,” CubaNews, June 2013, page 6), Ciudad de La Habana reverted and its outskirts. Nevertheless, a third of its territory is devoted to ag- back to the original name of La Habana, keeping its provincial status. riculture — mainly to grazing lands, but also to vegetable cultivation. As such, La Habana is the island’s smallest province, covering only Havana is built on top of gentle rising marine terraces carved out of 724 sq kms (280 sq miles), or barely 0.6% of Cuba’s land area. limestone along the shoreline. These terraces are more evident in the Havana is the heart of the nation. It’s not just the decision-making neighborhoods of El Vedado and Miramar to the west and Cojímar, and economic center of the island but has also been a political and cul- Alamar, and Guanabo beach to the east. A hilly landscape predomi- tural reference point in the Americas for centuries. nates inland, where the neighborhoods of El Cerro, Luyanó, La Originally founded in 1514 by Diego Velázquez, Havana was origi- Víbora, Lawton and Guanabacoa rise. Farther to the south, the city is nal-ly located along the soggy southwestern coast of the island, near the present town of Batabanó. But mosquitoes and poor access forced those early settlers to move five years later to the current location around the port of Carenas, as Havana’s bay was originally named. The city is one of the earliest settlements in the Americas and has served as Cuba’s capital since mid-16th century. LUXNER LARRY

Schoolchildren wave Cuban flags following a political rally in Habana Vieja. November 2013 v CubaNews 11 In the past few years, water quality in Havana Bay has improved noticeably, as a result of Cuba’s industrial slowdown and a govern- ment program to collect floating garbage and petroleum products from the water. LARRY LUXNER LARRY A scenic coast with 9 km (5.6 miles) of white-sand beaches to the east is a favorite resting place for Havana’s residents. However, in- tense erosion since the ‘70s has depleted the quality of the beaches. The plains south of the city hold a rich aquifer exploited since 1893, when the Acueducto de Albear was completed to supply the freshwa- ter needs of the population and its industry. But overuse and pollution have dramatically depleted its quality and reserves. Today this aqueduct still supplies 19% of Havana’s freshwater needs. The rest comes from the freshwater reservoirs east of the cap- ital (La Coca, La Zarza and Bacuranao dams) and from underground sources outside the province. Water and sewer services to Havana are a chronic nightmare, with shortages of fresh water, spillage through the aging system and improper wastewater disposal commonplace.

POPULATION As of 2012, Havana had an estimated 2,154,454 inhabitants, or 19.3% of the island’s population. That makes the city the largest in Cuba, and the second-largest in the Caribbean (after Santo Domingo, capital of the nearby Dominican Republic). The population of Havana equals that of all other provincial capitals combined. Unlike other cities or provinces in Cuba, Havana’s population has been shrinking by 0.2%, after peaking at 2.204 million dwellers in 1996. This results from the capital’s low natural growth — the lowest in the country — and a relatively high rate of emigration abroad; half of all Cubans leaving the island are habaneros. In addition, the Castro regime has imposed severe restrictions against country folk wishing to settle in the capital, with punishments including forced deportation to their original provinces. These restrictions, however, are now rarely enforced, and Havana is increasingly filled with immigrants from the eastern provinces arriving in search of better jobs and living standards. Population density averages 3,019 per sq km, but it this unevenly distributed. In the crowded Centro Habana district — where most Above: Panoramic view of Havana, taken from the roof of the Edificio Focsa, dwellings are two or three stories high — population density can the city’s tallest building, with the Hotel Nacional in the foreground. Below: reach as high as 44,000 people per sq km, while in the relatively rural Children peek out from the windows of a 1949 Mercury parked in Miramar. municipality of Guanabacoa, it drops to 837 per sq km. Havana’s critical housing shortage has plagued the capital for built over a high plain covered with red soils where the neighborhoods decades. New housing projects are at best far below the city’s needs, of El Cotorro, Fontanar and Santiago de las Vegas stand. while more than half of Havana’s approximately 556,800 housing units Through a relatively deep and narrow canyon in the coastal ter- races, the Río Almendares — the largest river in the province — splits See La Habana, page 12 the city in two distinct regions. The cus- tomary dumping of untreated wastewater to the streams has turned the Almendares and also other small creeks of the urban areas into stinky, lifeless sewage streams. Nevertheless, some recent remedial actions and the slowdown of manufactur- ing have reportedly improved river quality. Likewise, careless port activities and improper industrial and urban waste dis- posal for decades around Havana Bay have converted it into one of the most polluted ports in the world. Frequent spillage from surrounding fac- tories merges with the hundreds of tons of garbage, used oil and other waste regular- ly dumped in its waters. For decades, environmental rules were rarely enforced, but now official concern The impact of the rafter stampede of 1994 (over 40,000 left Cuba in rafts, most of them habane- for the quality of Havana Bay and its envi- ros) on Havana’s population was rapidly offset by awave of arrivals from the countryside — mainly rons is increasing — along with tourism. from the eastern provinces — that helped the city resume its customary pace of growth. Authori- The government now wants to turn Hav- ties curtailed the trend after 1996 as rules for new settlers were strictly enforced, and many new- ana Bay into a tourist hub in order to at- comers were deported to their provinces of origin. However, they began arriving from the provinces tract foreign visitors and restore Havana’s again years later, filling the void left by more habaneros departing Cuba. The net loss of 83,694 original dependence on its historic and ele- residents between 1998 and 2011, or 4% of the city’s total, is unprecedented in modern history. gant harbor. 12 CubaNews v November 2013 shoe factories and tanneries. The well-known important economic centers in Cuba. La Habana — FROM PAGE 11 pharmaceutical and biotech industries, large- The eight-lane National Expressway, the are in urgent need of repair, and one in 10 ly based in Havana, have become a leading old two-lane Central Highway and the Central dwellings is officially classified as non- source of hard currency, with some 220 mil- Railway are Havana’s main links to the rest of repairable. lion Cuban pesos per year produced from the country. Havana is also the center of the According to the official media, dozens or 2007 to 2011. national transmission network of radio-elec- The capital city also has several chemical tronic and digital communications. even hundreds of houses collapse partially or plants, paper mills, machinery shops, print Havana’s port has 25,700 feet of berthing totally every year, mainly in the oldest sectors shops and construction plants, among other capacity and supports much of Cuba’s mar- of the city during the rainy season. In 1996, industrial facilities. itime traffic, though a $900 million moderni- some 21,000 families (3-4% of the total popula- The only sugar mill within the province, zation project now underway at Mariel will re- tion) were living in government shelters. Manuel Martínez Prieto (formerly known as lieve cargo congestion at the port of Havana. Other basic urban services such as public Toledo) has been dismantled. Havana’s port facilities include the largest transport, telephones and garbage collection Havana is also the national center of com- dry docks, cranes and refrigerated warehous- are in terrible shape. merce, communications, transport, tourism es in Cuba. Likewise, Havana’s José Martí In- and culture. Furthermore, it boasts the best ternational is by far Cuba’s busiest airport. ECONOMY institutions of learning and the most compre- In August, authorities announced a $10.2 Havana accounts for over half of Cuba’s hensive medical services in Cuba, thus help- million overhaul to improve operations at Jose industrial output. The most important activi- ing to attract a constant stream of immigrants Martí International’s congested Terminal 3, ties are electric power generation, breweries, from the countryside. which was built in 1998 at a cost of $93 million dairy plants, canneries and other food indus- In addition to the University of Havana, and now handles 2.5 million passengers per try operations. The province’s two steel mills founded in 1728, Cuba’s capital city is also year (see CubaNews, August 2013, page 15). q PHOTOS PHOTOS BY LUXNER LARRY

Clockwise from upper left: Government buildings near Plaza de la Revolución; boats docked along Havana’s Río Jaimanitas; colonial buildings fronting the seaside Malecón in Old Havana; woman buys bananas from a fruit vendor in Vedado; highway sign points the way to Havana, and the famous Karl Marx Theater in Miramar. are the most important on the island. home to the Higher Polytechnic Institute, the Crude oil refining, once a major economic Higher Pedagogic Institute, the School of ICCAS is seeking donations activity in Havana, has dwindled to a fraction Medicine, the Higher School of Arts and oth- Jaime Suchlicki, director of the University of its former level as the Nico López refinery ers. The Academy of Sciences and a number of Miami’s Institute for Cuban and Cuban- — located along the bay’s southern lobe — of state-of-the-art research institutions in American Studies (ICCAS), needs money. halted most of its cracking activities as it’s biotechnology are also found in Havana. “I kindly ask for your support in allowing turned into a holding and distribution facility. As the principal site of government, most of us to continue to do what we do best — dis- The manufacturing of cigars and cigarettes the official ministries are concentrated in and seminate information about Cuba and pre- is a long-established industry in the capital, around Plaza de la Revolución. serve Cuba’s historical heritage,” Suchlicki where most of the legendary tobacco brands Havana draws nearly half of all tourists to said in a Nov. 5 email to potential donors. are made. Havana also has textile, apparel and Cuba. As of 2011, the city had 12,459 hotel “During this challenging economy, we es- rooms, or 29% of the island’s total; only Varadero Beach has more hotel rooms. Most pecially need your help to support our ongo- TO OUR READERS: From time to time, ing efforts to serve you as the world-class CubaNews receives requests for back issues tourists visit the historic core of Old Havana and the beaches of Playa del Este, to the east. academic center for the research and study of our newsletter. In our office, we keep of Cuban and Cuban-American topics. Your print copies going back to September 1993. INFRASTRUCTURE gift today, regardless of size, well help make If you would like an old issue, please email it possible for us to continue our work.” a request to or send a note Havana is Cuba’s leading commercial cen- [email protected] ter. As such, all the island’s transport and Details: ICCAS, Casa Bacardi, 1531 Bres- to Larry Luxner, Editor, CubaNews, PO Box cia Avenue, Coral Gables, FL 33146-2439. Tel: 1345, Silver Spring, MD 20915-1345 — USA. communications systems radiate from Havana to the east and west to reach all (305) 284-2822. Email: [email protected]. November 2013 v CubaNews 13 spoke at New York’s Fordham University Law “Designated persons spend many years try- SDN — FROM PAGE 1 School last month about OFAC’s powers in ing to challenge a designation by going the post-9/11 period and how it affects those through the wrong channels,” Ferrari wrote among them the fact that such people have a dealing with sanctioned countries like Cuba. on his blog. “For example, when challenging harder time getting U.S. visas. He confirmed that legal tools like the SDN an OFAC designation, we have seen individu- “In certain cases, they could be arrested if list are part of the Obama administration’s als try to challenge it through the State De- they enter the United States,” said Eren, who current strategy on dealing with nuclear pro- partment, Department of Justice, the United advises such individuals to stay out of U.S. liferators like Iran and North Korea, as well as Nations and the European Commission. jurisdiction “unless they have a commitment terrorist groups and their supporters. “Many times, designated persons try to from the U.S. government that they will not “This gives teeth to our diplomacy,” said challenge [it] everywhere except the most be arrested [upon arriving]. However, he said Zarate. “It fills very neatly with the notion of logical choice: OFAC, [which] is responsible most individuals in such circumstances “do ‘smart power’ — a third option from diploma- for administering the SDN List.” not take the risk.” cy and military power. This in many ways Eren said designated persons may petition Others assert that jail time is not OFAC’s builds leverage. It’s not the guns and badges priority toward Cuba-related SDN designees. OFAC for a review of their inclusion in the “Regarding Cuba, OFAC is more interested that make Treasury powerful, but our ability SDN list. This is especially true when SDNs in fining them for [embargo] violations than to reach globally in the financial system. It’s no longer engage in the economic activity that putting them in jail,” said McNabb. the fact that we can arrest assets in any cor- originally put them under OFAC scrutiny, or In contrast, for those who became SDN ner of the world if we have the right informa- can prove that OFAC erred in have them des- designees because of drug trafficking, terror- tion, tools and powers.” ignated as such to begin with. ism or money laundering, prison is still However, other legal advisers say OFAC is OFAC’s ultimate goal. NOW AVAILABLE: SDN ‘LIST REMOVAL’ SERVICES not required to provide a hearing. Even if an One person who landed on OFAC’s SDN list Even foreign entrepreneurs and companies individual gets an attorney who deals with is Alejandro Abood, a Panamanian business- involved with Cuban tourism can end up on OFAC issues, said McNabb, it can still take man who was arrested in Havana on corrup- the SDN list, if they happen to do business years to resolve. tion charges in 2001. Before his detention in with Cuban military-controlled entities like But since OFAC falls under the executive Cuba, the Miami Herald reported last month, tour operator Gaviota. branch, the president’s stance on Cuba could Abood had sold imported technology to As a result, attorneys like Eren, McNabb affect how many foreigners end up on the Cuban entity Servicex (headed by Rodolfo and Erich Ferrari offer “OFAC SDN list SDN list at any given time. Fernández, the personal buyer of imported removal” services, a cottage industry of sorts “Political considerations related to the des- goods for both Fidel and Raúl Castro). for those unfortunate individuals who want to ignated person’s home country are taken into Because of such transactions involving the challenge OFAC. account,” said Eren. “Designation is discre- Castro brothers, Abood — who was released Another reason why SDN designees don’t tionary and reserved for persons who are from Cuban custody and returned to Panama want to be on that list: it also contains close to the regime or who do a lot of strategic two years later — was put on the SDN list, Colombian drug traffickers, Serbian war business in Cuba. Designations are best for and is still there a decade later.” criminals and people accused of aiding rogue OFAC when there are no or very few collater- Fellow ex-Treasury official Juan Zarate regimes like Syria, Iran and North Korea. al consequences.” q

nario as unlikely and dangerous. Rather, the U.S. should embrace Entrepreneurs — FROM PAGE 3 the soft-landing scenario as harboring the best chance for political numbers. These gripes include a lack of bank credit, scarcity of sup- liberalization. And the president should authorize U.S. firms to plies, limited retail space, petty harassment, tax disincentives to engage with independent entrepreneurs in Cuba.” growth and the fact that many occupations are excluded from the Saladrigas agrees with Feinberg when it comes to the embargo. list of 201 permitted self-employment activities — a list that was “The sanctions regime has been in place for many years, with the only recently expanded from 181 categories. objective of causing Cuba to change,” he said. “Ironically, those very Feinberg has a few suggestions for the Castro regime. same sanctions have had the opposite effect. They are delaying and “They could articulate the clear mission laid out by making it more difficult for Cuba to change.” the soft landing: to pursue a hybrid market socialism Saladrigas, a successful Miami banker who has long open to the international economy. This inclusive challenged U.S. policy on Cuba, noted that 70-80% of model will seek to advance the legitimate interests of the capital fueling the island’s private sector is coming private entrepreneurs and middle classes, and remove from the Cuban diaspora — mainly South Florida. disincentives to business expansion. They could also “The biggest miracle in China’s economic develop- expand access to training programs, including inter- ment is the unleashing of the individual to take eco- national partners that build business capacity.” nomic risk and seek gain through innovation and the As for Washington, Feinberg is urging the Obama creation of enterprises,” he said. “That is what needs to administration to help Cuba’s emerging entrepreneur- happen in Cuba.” ial class — not hurt it by continuing the 50-year-old In fact, Saladrigas told the audience at Brookings, it embargo and excluding the island from international isn’t enough to think in terms of economic reforms. financial institutions like the World Bank and the IMF. “It’s to create in the United States and the Cuban “Cuba will of course determine its own future, but as diaspora the political room to make a soft landing pos- external actors we can strengthen the forces of sible. Our work at the Cuba Study Group has been progress and reduce the dangers of political violence Brookings latest Cuba report geared to move the diaspora from a transitional obsta- — or we can stand in the way of progress and deny cle to a transitional asset. And that is happening in in- Cuba access to international markets,” he said. credibly significant ways, almost all of it below the radar screen.” “Sudden regime collapse is the apparent goal of U.S. legislation, Yet he also warned of the consequences of inaction. but I can tell you from my own experience that the U.S. executive “Essential to a soft landing is that there must be a landing. What branch fears this outcome and its risks, such as unpredictable vio- Cuba cannot afford to do is become a hovercraft that hovers above lence and possibly another massive exodus of refugees. without moving. Eventually, you run out of fuel and you crash.” q “I suggest the United States abandon this regime breakdown sce- For a copy of Feinberg’s Cuba report, please go to www.brookings.edu. 14 CubaNews v November 2013 lbs, up from 0.95 million lbs last year. The to the entire island. It allows the rental of BUSINESS BRIEFS average realized price of nickel was C$642/lb, state-owned bathrooms to private persons who down from C$7.20/lb last year. hold government licenses as “public bathroom MEXICO FORGIVES 70% OF BANCOMEXT DEBT Nickel production at Moa rose 564 tons attendants” — one of 182 categories of self- The Mexican government is ready to waive from 3rd quarter 2012 to 4,573 tons this year. employment permitted by the government. 70% of a debt worth nearly $500 million Cuba Cobalt production rose 10 tons to 446 tons. Details of the change were contained in a owes it, Finance Minister Luis Videgaray said Sherritt sold 1 million barrels of oil (most of it seven-page resolution signed by Planning and Nov. 1, as Mexico seeks to improve ties with produced in Cuba), level with last year. Economy Minister Adel Yzquierdo Rodriguez the communist island. The company sold 130 GWh of electricity in and published in the latest Gaceta Oficial. Speaking on Mexican radio, Videgaray said a Cuba during the 2rd quarter, down from 154 The number of public bathrooms in Cuba is loan issued by Mexico’s trade development GWh. Similar to nickel operations, Sherritt’s unknown. Most are in cities and towns, and bank Bancomext to Cuba 15 years ago had Energas SA joint operating agreement regis- many are known to be in dire condition. become a debt worth $487 million. The remain- tered a small operating profit of C$800,000 The price for using a toilet, urinal or wash- ing 30% will be paid 10 years later, he said. through Sept. 30 this year. Third-quarter rev- basin will be one Cuban peso, or about 4¢. Bilateral ties reached a low point in 2002 enues from operations in Cuba were C$85.5 Prices for other services such as “perfumes, when Cuba’s Fidel Castro revealed how then- million, down from C$88.6 million in 2012. talcum powders, cosmetics, soap, showers, Mexican President Vicente Fox had told him to among others, are set by supply and demand,” leave an international summit early after eating GOVERNMENT LEGALIZES RENTING BATHROOMS although the renters must notify the munici- his lunch so he would avoid an overlap with palities of the services they offer. then-President George W. Bush. The Cuban government has legalized the Videgaray said it was important to resolve business of renting out public bathrooms, pro- Renters must pay for the water and electrici- the debt issue so that “things would flow well” viding fixed prices for five categories of facili- ty used at residential rates and guarantee between Cuba and Mexico. ties, the Miami Herald reported Nov. 1. “quality, hygiene and good customer service,” A pilot rent-a-toilet program, begun in 2011 the regulations added. Toilet facilities cannot REGIME SHUTTERS PRIVATE 3D MOVIE SALONS in Havana province, now has been expanded be subleased or used for any other activity. Cuba closed dozens of home-based movie theaters in early November and reaffirmed its plans to end the private sale of imported goods as communist authorities pressed for “order, discipline and obedience” in the grow- ing small business sector, Reuters reported. A government statement said home-based theaters and video games will “stop immedi- ately in any type of self employment,” a local euphemism for small business. It added: “The showing of movies, including in 3D salons, and likewise the organization of computer games, has never been authorized.” In October, the government banned the pri- vate sale of imported goods — a measure that potentially affects 20,000 small businesses and their employees who sell clothing, hardware and other goods brought in informally by trav- elers, some of whom visit Cuba regularly car- rying merchandise from the United States, Spain and Latin American countries. KEY WEST-HAVANA FLIGHTS TO RESUME DEC. 15 The import ban has created a fury among or the first time since 1962, regularly dustry operators to begin offering service. entrepreneurs and the public who have tired scheduled air travel between Key West That role is being filled by Mambi and Air of buying high priced and low quality clothing Fand Havana is returning. MarBrisa, which already offers flights to from state-run establishments. Beginning Dec. 15, Miami-based charter Cuba from Miami, Tampa and New York. company Air MarBrisa will offer charter Horton said before flights can begin, SHERRITT, CUBANIQUEL PLAN MOA ACID PLANT flights from Key West International Airport Mambi has to finalize a deal with Air Amid stagnation caused by low nickel pri- to Havana’s José Martí International Air- MarBrisa, with the fixed base operator in ces, Sherritt International Co. and Cuban port for small groups of qualifying travelers. Key West and get a final sign-off from CBP. state company Cubaníquel agreed to build a The flights were to have begun Nov. 15, Flights will leave Mondays, Wednesdays third acid treatment plant at the Moa nickel but have been delayed due to the lack of a and Fridays at 3:30 p.m., returning the fol- mining and processing joint venture. “380 certificate” by Marbrisa’s partner, lowing morning. Cost aboard a Metro II As the Moa facility is barely breaking even Mambi International, Air Marbrisa’s Bob turboprop is $449 round-trip. Each flight this year, the $65 million, 2,000-ton/day acid Curtis told Monroe County Airports will be able to accommodate 10 passengers. plant will eliminate the need to buy sulfuric Director Peter Horton in a Nov. 9 email. Mambi International spokesman Isaac acid, reducing nickel production cost by 20%, The process began in 2009 with a request Valdes said regarding approval of the Cus- the Toronto-based company predicted in its to U.S. Customs and Border Protection to toms and Border Protection timeline, “We third-quarter report. designate Key West International Airport as don’t foresee any problems there,” adding Sherritt said the Moa joint venture had ob- an official point of entry. Following that was that “it’s going to be a historical day.” tained project financing of $65 million from a a three-phase, two-year, $2.25 million proj- Flights, to take 30-45 minutes each way, “Cuban financial institution.” Construction is ect to have the airport reclassified as a fed- will originate from the fixed-base operator to begin in the 2nd quarter of 2014, with oper- eral inspection station instead of the cur- portion of the Key West airport where char- ations expected to start in 3rd-quarter 2015. rent label of a general aviation facility. ters and private aircraft are maintained. Finished-nickel sales in the 3rd quarter was Horton said with the upgrades the feds Tte last time planes regularly flew 10.1 million lbs, up from 8.6 million lbs last signed off in October 2011, it left it up to in- between Key West and Havana was in 1962. year. Finished-cobalt sales came to 1 million November 2013 v CubaNews 15

FIHAV — FROM PAGE 6 Brazil — FROM PAGE 6 OAS — FROM PAGE 7 site. Attendees happily gobbled up American hia de Obras e Infraestrutura (COI), a spinoff ing passage of the 2013 Act. “While the OAS rice. During a previous FIHAV show, even of Grupo Odebrecht, passed a milestone last can certainly improve, it has clearly demon- Fidel Castro showed up to sample a dish. year, when it agreed to manage the 5 de strated its importance and utility as a multilat- This time around, things are different. Septiembre mill in Cienfuegos — thereby eral body charged with promoting human “The Cubans told me in no uncertain terms becoming the first foreign investor in Cuba’s rights and democratic governance.” they have no interest in buying American rice,” sugar sector. Lehrer said. “What’s the point of going when Brazilians interested in Cuban sugar took INSULZA CRITICIZED FOR LACK OF LEADERSHIP there are bigger markets to compete for?” note of comments by Peter Baron, executive A big part of the problem is the “challenge Along with USA Rice, conspicuously absent director of the International Sugar Organiza- of leadership at the OAS,” said a senior staff from FIHAV has been major U.S. processed tion, at the 13th International Datagro Confer- member of the Senate Foreign Relations and packaged food brands that would theoret- ence on Sugar and Ethanol in São Paulo. Committee who asked not to be identified. ically want to build consumer awareness on During that event, Baron said Cuba has the This “challenge of leadership” is an oblique the island. These include Kraft Foods, Gene- potential to become a major producer of etha- reference to former Chilean foreign minister ral Mills, Goya Foods, Heinz and Coca-Cola. nol, right behind the United States and Brazil. José Miguel Insulza, who’s been secretary- Some say that concerns over damaging general of the OAS since 2005. public relations with the Miami Cuban market COULD CUBA BECOME TOP ETHANOL EXPORTER? “But there’s also a technical side of this, in have caused these and other ubiquitous Ame- “Expectations are that within 10 years, Cuba which the OAS has become a bloated, multilat- rican food brands to shy away from Cuba. could produce 10 million tons of sugarcane,” eral bureaucracy. It has accepted far too many “[They] have bigger ponds to fish rather Baron told the Datagro group. “Investments missions, down to the point where the OAS is than selling a container to the Castro regime would be needed not only to improve the pro- officially responsible for managing the art every now and then,” quipped pro-embargo ductivity of sugarcane, but also to fund museum right behind its headquarters,” said advocate Mauricio Claver-Carone of Washing- research and plant construction. the staffer. ton-based Cuba Democracy Advocates. “However,” he said, “the [Cuban] govern- “There’s a firm belief that the OAS needs to “Those companies are looking for long- ment is reluctant to allow foreign companies to get back to the priorities on which it was term investments, not one-time or short-term manage the sugar fields, a pre-condition for founded: promoting representative democra- sales. The Cuban government has nothing investors interested in getting involved with cy, managing security and promoting strong but headaches to offer them at this time.” Cuban agriculture.” economic growth.” Baron asserts that the current lack of major He added: “A number of new challenges VIRGINIA OFFICIALS DON’T GIVE UP foreign investment in Cuban sugar prevents have arisen. Divisive political leaders have Coca-Cola, one of the world’s most recogni- real productivity in that sector. sought to block productive debate at the OAS, zable brands, has quietly let its Mexican sub- “No plant has been built in Cuba since 1960, knowing the lack of a unified response would sidiary supply Cuba and its nearly 3 million and sugarcane varieties are of low quality,” he make it easier to undermine governance at tourists, while pursuing China and its 1.4 bil- said. Despite Baron’s criticism of the Cuban home. In addition, the threat posed by trans- lion consumers. Last month, Coke opened its sugar sector, Brazilians are still encouraged by national crime and narcotics networks has 43rd plant there, a $106 million investment. COI’s deal with the Cubans, showing there’s evolved faster than the OAS can respond. We Claver-Carone noted that the Cuban gov- potential for more such deals down the road. are calling on Secretary Kerry to put in place ernment is unlikely to give American compa- Another area of growth between the two a series of bold reforms. Sen. Menendez is nies and delegations the level of attention it countries is Cuban tourism. personally invested in making this a success.” once did at FIHAV this year. Apex-Brasil official Maurizio Coria said that “They don’t find U.S. farm bureaus, agri- in 2011, some 14,000 Brazilians visited the KEEPING THE OAS RELEVANT business and food companies useful anymore, island. That number should be at least double, Michael Shifter, president of Inter-Ameri- as they’ve been unsuccessful at lobbying to he said, with direct flights between the two can Dialogue, agrees that the OAS is beset change U.S. policy toward Cuba, which had countries needed to make that happen. with problems — but he also sympathizes been the ‘quid pro quo’ behind these purchas- “In Brazil, people are unaware of Cuba,” said with Insulza to an extent. es for the last decade,” he told CubaNews. Coria. “That needs to change.” “The OAS has long been criticized for lack- While some U.S. trade groups and delega- – VITO ECHEVARRÍA ing relevance. But in the last couple of years, tions like USA Rice stayed home, others that the region has become more fragmented than command a more successful track record Details: Apex-Brasil, 5ta Avenida, No. 2004, ever. The U.S. is distracted, and Chávez was a with Cuba did attend the trade show this year. e/20 y 22, Miramar, Playa, Ciudad de La very polarizing force. This makes it hard for “Virginia will continue to have a strong pre- Habana, Cuba. Tel: +53 7 204-1878 or 204- any organization to come up with a coherent sence at FIHAV,” said Charles Green, market- 1879. Email: [email protected]. strategy,” said Shifter, adding that Insulza — ing and development chief at Virginia Depart- who has three more years as secretary-gener- ment of Agriculture & Consumer Services. al— is serving under difficult circumstances. “Cuba remains a very important market for HAITI-CUBA FLIGHTS TAKE OFF “There has been backsliding on democracy soy, soymeal and apple shipments from Sunrise Airways says it has received per- and a decline in the will to re-spond to demo- Virginia, and Virginia is proud to be one of the cratic crises. Insulza’s response is that there’s top three states shipping agricultural goods to mission to operate flights between Cuba a limit to what he can do.” Cuba,” Green told us before the show. and Haiti. The twice-weekly private service As for the OAS Reform Act itself, Shifter Meanwhile, Chicago Foods’ Johnson didn’t will operate from Port-au-Prince to Holguin. called it a positive step. return to FIHAV alone this time. He brought Sunrise will use 19-seat Jetstream 32 air- “It’s hard to disagree with anything that along the Illinois Cuba Working Group to craft for the route, said airline president Phi- brings together such a broad spectrum. It was push for more of his state’s exports to Cuba. lippe Bayard, who also named Rodolfo Cue- not terribly detailed or focused,” he said. ““We believe that a collaborative effort at to Guerra director of ground operations. “Now comes the hard part. We all know the the state level has the potential to make real “This initial entry into the Cuban market OAS needs to reform. What does that mean? change on a national level,” said Johnson. is another important step toward our devel- And to what extent will the United States real- “As a state, we have proved that U.S.-Cuba opment plans,” Bayard told reporters. “As ly be engaged in that process?” q relations are an issue where both [political] we move forward, we hope to expand to parties can find an accord. We want to join other areas around Cuba.” Washington-based journalist and photographer efforts with these existing groups.” q Larry Luxner has edited CubaNews since 2002. 16 CubaNews v November 2013

CALENDAR OF EVENTS CARIBBEAN UPDATE If your organization is sponsoring an upcoming event, please let our readers know! You already know what’s going in Cuba, Fax details to CubaNews at (301) 949-0065 or send e-mail to [email protected]. thanks to CubaNews. Now find out what’s happening in the rest of this diverse and Nov. 13: “Cubans in the New Economy,” Elliott School of International Affairs, George Wash- fast-growing region. ington University, Washington. Cuban guests: Nidialys Acosta and Julio Alvarez, Nostalgicar; Subscribe to Caribbean UPDATE, a Emilia Fernández, human resources specialist; Niuris Higueras Martínez, Atelier, and Yamina monthly newsletter founded in 1985. Cor- porate and government executives, as well Vicente, Decorazón. U.S. speakers: Margaret Crahan, Columbia University; Eric Leenson, Sol as scholars and journalists, depend on this Economics; Phil Peters, Cuba Research Center, and Carlos Saladrigas, Cuba Study Group. Co- publication for its insightful, timely cover- hosted by GWU, Cuba Educational Travel and USA*Engage. Light breakfast and afternoon re- age of the 30-plus nations and territories of freshments; simultaneous translation offered. Details: Center for Democracy in the Americas, PO the Caribbean and Central America. When you receive your first issue, you Box 53106, Washington, DC 20009. Tel: (202) 234-5506. Email: [email protected]. have two options: (a) pay the accompany- Nov. 18: “El Vedado: History of a Havana Neighborhood,” Cuban Research Institute, Florida ing invoice and your subscription will be processed; (b) if you’re not satisfied, just International University, Miami. Event focuses on the district of Vedado, which was founded in write “cancel” on the invoice and return it. 1859 and ultimately became not only the center of Havana but of Cuba itself. Book presenta- There is no further obligation on your part. tion by Concepción Otero, followed by a panel discussion with architects Jaime Canavés, Raul The cost of a subscription to Caribbean L. Rodríguez and Marilys R. Nepomechie. Event will be in English and Spanish. Details: Cuban UPDATE is $281 per year. A special rate of $142 is available to academics, non-profit Research Institute, FIU, 11200 SW 8th St., Miami, FL 33199. Tel: (305) 348-2254. Email: [email protected]. organizations and additional subscriptions Nov. 22: “Cuba in the Americas,” breakfast meeting to take place on last day of three-day 7th mailed to the same address. To order, contact Caribbean UPDATE at Annual Conference on the Caribbean & Central America, U.S. Chamber of Commerce, Wash- 116 Myrtle Ave., Millburn, NJ 07041, call us ington. Details: Sally Yearwood, Caribbean-Central American Action, 1300 Pennsylvania Ave. NW, at (973) 376-2314, visit our new website at #700, Washington, DC 20004. Tel: (202) 204-3050. Fax: (202) 789-7349. Email:[email protected]. www.caribbeanupdate.org or send an email to [email protected]. We accept Dec. 3: “Guantánamo and Cuban Nationalism,” Florida International University, Miami. Lec- Visa, MasterCard and American Express. ture by Michael E. Parmly, former chief of the U.S. Interest Section in Havana. Details: Cuban Research Institute, FIU, 11200 SW 8th St., Miami, FL 33199. Tel: (305) 348-2254. Email: [email protected]. Dec. 5: “Cubans in Paris, Cubans at Home,” Kaufman Music Center, 129 West 67th St., New York. Songs by Caturla, Lecuona, Mauri and Grenet, plus excerpts from Moisés Simons’ mas- terful 1934 operetta Toi C’est Moi, featuring Corinne Winters, soprano; Jeffrey Picón, tenor; Ricardo Herrera, baritone; Leonardo Granados, percussion, and Steven Blier and Michael Bar- rett, piano. Tickets: $40-55. Details: New York Festival of Song, 307 Seventh Avenue, Suite #1206, Editor New York, NY 10001-6051. Tel: (212) 501-3330. Email: [email protected]. URL: www.nyfos.org. n LARRY LUXNER n

Dec. 8: Classically Cuban Concert: Remembering Lecuona, Wertheim Performing Arts Cen- Washington correspondent ter, 10910 SW 17th St., Miami, FL 33199. “This year, the concert will honor the prolific Cuban n ANA RADELAT n composer Ernesto Lecuona.” Tickets: $35. FIU students/faculty, $15. Details: Cuban Research Political analyst Institute, Florida International University, Miami, FL 33199. Tel: (305) 348-2254. Email: [email protected]. n DOMINGO AMUCHASTEGUI n Feb. 10-17, 2014: Cuba cultural exchange led by TunisUSA founder Jerry Sorkin, with partic- Feature writers n VITO ECHEVARRÍA n ipation of renowned cellist Udi Bar-David. Details: Jerry Sorkin, TunisUSA, 175 Stafford Ave, Suite n DOREEN HEMLOCK n #500, Wayne, PA 19087. Tel: (888) 474-5502. Fax: (484) 754-0088. Email: [email protected]. Cartographer n ARMANDO H. PORTELA n

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