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Volume 6 Number 4 THE MIAMI HERALD PUBLISHING COMPANY April 1998

Editor’s Note MAJOR DEVELOPMENTS Clinton Policy Changes Oil Spill, Close Call When the U.S. Department of Defense transferred military responsibility for the The Clinton Administration eased U.S. pol- The collision of two small oil tankers in Caribbean from the Atlantic Command at icy toward Cuba by allowing the resumption Matanzas Bay resulted in a 6,700-barrel oil Norfolk, Va., to the Southern Command, of chartered flights and cash remittances spill that required a small army of workers and then moved SouthCom’s headquar- from the United States. More important, to clean up. Fortunately, the damage did not ters from Panama to Miami, many won- perhaps, Administration officials signaled a extend to nearby Varadero Beach. See Environment, Page 2 dered if SouthCom would be able to willingness to work with legislators to craft a maintain its independence so near to the bill that might loosen the embargo. See Washington Report, Page 2 Fishing Comeback vortex of anti-Castro politics. The moribund fishing industry is making We now have the answer and the Japanese Debt Deal answer is that moving to Miami has not a comeback after suffering a precipitous affected the military’s view of Cuba. That Perhaps even more important than the decline. The government says the export of is important news for those who wonder policy change, Cuba scored a breakthrough seafood has become one of the principal about influences on the debate over U.S. of sorts by renegotiating its $769 million sources of export earnings. policy toward economic development. debt with private Japanese firms. Cuba has See Fisheries, Page 8 Atlantic Command had for several been trying to engineer a deal of this sort years stressed that Cuba’s greatest threat for years, hoping it can pave the way for Tourism Keeps Rising to the United States would come if there entry into Western credit markets. The number of tourists arriving in Cuba in were no improvement in the economy. See Finance, Page 6 1997 rose to 1,170,000, an increase of 16.5 The corollary was that the embargo Dialing for Dollars percent. Vice President Carlos Lage called worked against U.S. interest in a peaceful tourism “the heart of the economy.” Cuba’s accumulated take from the reopen- See Tourism, Page 9 transition, or so the military believed. ing of direct telephone lines to the United Now a new assessment from the States over the past few years will almost The Burden of Age Pentagon concludes that Cuba poses no certainly hit $200 million soon. The latest military threat to the U.S., has no chemi- figures show U.S. telephone companies—led In some recent years, Social Security pay- cal or biological weapons capability by AT&T—have given Cuba $173 million as ments have surpassed the total amount of beyond those of any nation with a phar- of the end of 1997. Cuba’s income from exports. The trend is maceutical industry, and has no ability to See Telecommunications, Page 7 improving, but it remains one of the most project armed force beyond its borders. worrisome financial problems for the gov- Those conclusions are completely con- ernment. sistent with what is known about the See Demographics, Pages 10 & 11 Cuban military after the Soviet collapse. Unfortunately, reaction to the report in INSIDE Washington was also unsurprising. The report’s release was delayed so its con- Washington Report Telecommunications clusions could be “reviewed” — The Policy Changes ...... 2 U.S. Telephone Profits...... 7 Washington Post suggested so that it Sanctions Lifted ...... 5 Fisheries could be made more consistent with cur- Visa Denials...... 5 Recovery Update...... 8 rent policy. Nevertheless, Marine Gen. Charles Wilhelm, SouthCom’s comman- GOP Staff Report...... 7 Tourism der, defended the report against tough Trade & Commerce 1997 Numbers ...... 9 questioning before a congressional panel. Cigar Production...... 3 Demographics Madeleine Albright, in announcing last Australian Nickel Contract ...... 4 Social Security Burden...... 10 month that direct flights between the Chinese Investment ...... 4 U.S. and Cuba would once again be per- Social Security Facts ...... 11 mitted, said that the Cuban people were Italian Wine Factory Opens...... 4 Labor thinking “beyond Castro” and that it was Energy Jobs PIcture Improving...... 11 time for the U.S. to do likewise. The Juragua Still Stalled ...... 5 question, of course, is whether U.S. poli- Government cymakers will have the courage to do so. Finance Provincial Assemblies...... 12 Japanese Debt Deal ...... 6 —Mark Seibel Calendar Possible Argentine Deal ...... 7 Upcoming Events...... 12 WASHINGTON REPORT Clinton Reverses Course, Loosens Cuba Policy MATANZAS OIL NODE Almost exactly two years after the harden- MATANZAS ing of U.S. policy toward Cuba caused by the YUMURI RIVER Cuban Air Force ambush of Brothers to the Rescue pilots, the Clinton administration has moved in the opposite direction. Some MATANZAS BAY restrictions have been lifted and more WIND DIRECTION actions along the same lines may be in the 3/27/98 VARADERO works. PROBABLE HAVANA (For excerpts from President Clinton’s CRASH SITE announcement, see For The Record, Page SAN JUAN RIVER CONTAMINATED AREA 12.) SHORELINE ENLARGED MATANZAS CAUSEWAY The President to take the following steps: (UNDER CONSTRUCTION) —Resume licensing direct humanitarian charter flights to Cuba. The purpose is “to make it easier for Cuban-Americans to visit loved ones on the island, and for humanitari- ENVIRONMENT an organizations to provide needed assis- tance more expeditiously and at lower cost.” Oil Spill In Matanzas —Establish new arrangements to allow Cuban families in the United States to send The deplorable maritime accident that occurred in late March in Matanzas Bay, will no cash remittances to their families in Cuba at doubt serve as a reminder surely to all Cubans of how important sources of wealth from the level of $300 per quarter, or $1,200 a the earth can place the environment in danger unless extreme care is taken. year. “This will enable Cuban-americans to It sounds hard to believe, but two small tankers, one of them carrying domestic crude provide direct support to relatives in Cuba, oil from the nearby well fields, crashed at noon on a bright, cloudless day in a wide, deep, while moving the current flow of remittances open and almost empty harbor. The immediate result was the spilling of roughly 6,700 back into legal orderly channels.” barrels (132,000 gallons) of crude that, pushed by mild north winds, drifted to die along —Streamline and expedite the issuance of 300 meters (985 feet) of the shore of Matanzas (115,000 inhabitants), washing up on a licenses for the sale of medicines and med- local beach known as Los Pinitos —which, fortunately, was already closed to the public ical supplies and equipment to Cuba. because of pollution from sewage and industrial wastes— and along part of the pic- The President said the changes would not turesque cliffs of the city sea front. alter basic U.S. policy toward Cuba, which Over the next hours, local authorities and the Army sent hundreds of conscripts and he said was “built on four main compo- construction workers with buckets, shovels and bulldozers to remove as much of the nents,” which he identified as: pressure for spilled oil as possible by hand, while a nearby torula yeast factory was ordered to produce democratic change; support for the Cuban immediately one hundred tons of a non-specified biological—bacteriological—substance people through humanitarian assistance and that could feed on and thus clean up the leftover oil. help in developing civil society; promoted of The oil fields of the area yield a dense, viscous, sticky and sulfur-rich product that is multilateral efforts to promoted democracy collected in the Matanzas Petroleum Node (see CUBANEWS, March 1994) and shipped and human rights; and cooperative arrange- aboard small coastal tankers to the main thermal electric power plants of the island and to ments to move migration “into safe, legal some other important industries. Because of the unusual heaviness of this oil, much of it and orderly channels.” sank in the shallow waters near the shore, complicating the recovery efforts. Perhaps more significant than the above The accident could have been worse, but the environmental damage was bad enough, changes is an apparent willingness to sup- even though the authorities labeled it insignificant. But what is really frightening is that port legislation in Congress that would cre- scarcely 23 northeast from the site of the accident—with no natural obstacles hampering ate significant exceptions to the economic the movement of floating objects—lies Varadero Beach, by far the most important tourist embargo, as outlined at a State Department hub on the island, a prized destination for one third of all Cuba’s foreign visitors. news conference held on March 20 by Sec. In the aftermath of the incident, authorities would do well to rethink the safety and con- of State Madeleine Albright and ranking U.S. tingency plans of the huge Matanzas Petroleum Node, particularly when the records diplomats. throughout Cuba make evident that there is a worrisome increase in transport accidents Albright said the administration was pre- due to the poor technical condition of the equipment and a lack of operational discipline pared to work with congressional leaders “to on the part of some workers and supervisors. develop bipartisan legislation to meet In such a sensitive area like this, an environmental accident could easily become an humanitarian food needs on the island.” She economic catastrophe that will not be salvaged by a few conscripts with buckets. made it clear that this did not mean support for any particular piece of legislation— —Armando H. Portela including the so-called Torres-Dodd bill that would exempt food and medicine from the work that Fidel Castro had repeatedly reject- bilities were brought into the open this past embargo—but it marked a significant ed as well. January by Pope John Paul II’s historic visit change from the department’s earlier criti- “We are taking these steps now not to Cuba. The Pope went to Cuba, in his own cism of the bill. because of anything the Castro regime has words, as a pilgrim of love, of truth and of In fact, Sec. Albright listed support for done; nor are we doing it to improve official hope. And he delivered a clear and unam- some form of legislation as the first item on relations with the Government of Cuba,” she biguous message that prisoners of con- the agenda in outlining the changes. She said. “On the contrary, we are acting science should be released; human rights also explicitly rejected the carrot-and-stick because of new possibilities that exist out- should be respected; and a climate of free- approach toward Cuba, a diplomatic frame- side the government’s control. Those possi- dom should prevail.”

2 CUBANEWS April 1998 TRADE & COMMERCE TOBACCO In Their Own Words Cigar Production Lags “I think people realize Cuba is on the verge of changing, and I think they want to catch The cigar manufacturing industry has fall- it before the moment.” en behind schedule in its effort to produce Sara Foley Anderson, bookings director for Harper’s Bazaar, commenting on an upcoming enough cigars to meet an export target fig- edition that features a 14-page spread of designer fashions with models Naomi Campbell and ure of 160 million cigars in 1998. The labor Kate Moss in old Havana and on Cuban beaches, in an article headlined “Cashing In on the weekly Trabajadores, said workers must Cuban Craze,” in the Wall Street Journal, March 2. (The two models met for 90 minutes redouble their efforts in order to make up with Fidel Castro and proclaimed him “inspirational.”) for a deficit of 1.5 million cigars as of the end of February. “I thought Cuba was the only country free of pressure from the United States, but now The production target figure by the end of I see that is not so.” May is 65 million cigars, according to the Hernan Montealegre, Chilean attorney for absconded St. Louis homebuilder Harold publication, which added that the industry Lieberman, who was not allowed to seek shelter in Havana from a 37-count federal indict- exported 75 million units in 1996 and 100 ment accusing him of defrauding banks and customers in the United States. Ousted from million in 1997. The production target for Chile, Lieberman sought to get on a Cubana flight to Havana Feb. 21 and apply for a resi- 2000 is 200 million cigars. dent’s permit, but a “special order” to the Cuban airline prevented him from boarding. Shortages of raw material, boxes, and The quote is from the St. Louis Post-Dispatch, Feb. 23. even electricity were cited as reasons for the failure to meet the current output goals. “Everyone regards the market in Cuba as having to open eventually, meaning in the Tobacco is the fifth leading source of foreign next five years.” exchange for Cuba after tourism, sugar, Carlos Guzman-Perry, director of the Latin American group of Boston-based Yankee Group, nickel and the fishing industry. commenting on Sherritt International’s entry into the cellular phone market in Havana, as quoted in the Toronto Globe & Mail, Feb. 28. TRANSPORTATION “The decision to release these prisoners demonstrates the benefits of a policy of con- New Domestic Routes structive engagement with Cuba on a broad range of issues, including sensitive political A small new airline called InterCuba ones.” formed by a consortium of Central American Prime Minister Jean Chretien of Canada, on the acceptance of 19 political prisoners who airlines began flying domestic routes in late were freed from jail in Cuba on the condition that they go into exile immediately, March. The flights cover six destinations in as quoted in the Toronto Globe & Mail, Feb. 27. Cuba: Havana, Varadero, Cayo Coco, Trinidad, Cayo Largo and Nueva Gerona. “It can be looked at as exchanging one type of violation for another.” The airline is a joint venture between Bob Goodfellow, acting secretary-general of the Canadian section of Amnesty Grupo Internacional de Aerolineas International, commenting on the forced exile of the 19 Cuban ex-prisoners, Centroamericana TACA—which includes air- as quoted in the same edition of the Globe & Mail. lines from Costa Rica, Nicaragua, Guatemala, El Salvador and Honduras—and “Within one dozen years, by 2010, the hottest retirement locale for the many, many mil- the Cuban state company called AeroTaxis. lions of middle-class boomers—those with decent pensions, savings and social security The airline’s fleet consists of four Cessna checks—will be the island nation of Cuba.” Caravan 200B carriers, each with a capacity Jay Lamont, director of Temple University’s Real Estate Institute, of 14 passengers. speaking to a recent meeting of the Home Builders Assn. of Bucks and Airline officials said that the Costa Rican Montgomery (Pa.) Counties, as quoted in the Philadelphia Inquirer, March 9. airline LACSA would soon begin routine pas- senger flights between Havana and San Jose. “The debate to end the embargo is no longer if, but when. The President’s recommen- Also, the Mexican regional airline dations must be followed by the far-reaching, positive results of lifting the Cuba embar- Aerocaribe announced that it would increase go.” its weekly flights between Cancun and John Howard, director of international policy, U.S. Chamber of Commerce, Havana to 15, and would initiate four flights in a written statement reacting to the administration’s latest actions on Cuba, March 19. a week connecting Cancun and Varadero. “The Pope’s visit to Cuba has not deterred the Castro regime from its ongoing and sys- REFORMS tematic repression of the Cuban people. That visit should NOT be used as a pretext to Investment Training soften sanctions on the Cuban tyranny.” U.S. Reps. Ileana Ros-Lehtinen and Lincoln Diaz-Balart, Republicans from Miami, The United Nations Development in a joint statement reacting to the administration’s moves, March 19. Program will sponsor a three-year, $1.45-mil- lion training course in modern economic “Take the embargo out, and you will find that there’ll be a surge of interest from the techniques for Cuban government officials, U.S., but the country will not have the capacity to support them. The immediate benefi- U.N. and Cuban government sources ciaries will be the cruise lines. They don’t have to suffer the wait for infrastructure.” announced. The agreement, co-signed by John Bell, executive director of the Caribbean Hotel Assn., Foreign Investment Minister Raul Taladrid, on the future of the tourism industry in Cuba, at a Caribbean tourism conference in Jamaica, will include courses and seminars offered by as quoted by Reuters, March 27. experts from Brazil, Chile and Mexico. Government officials said efforts would be “I enjoy my moments with Fidel since there’s always a lot of humor and he is a good made to improve the economic analysis interviewer. You always come away with the realization that three, four, five or six hours capabilities of Cuban bureaucrats. have passed and the time has just whizzed by, and you have been completely engaged.” Economic development planning, budget Ian Delaney, chairman of Sherritt Intl. Corp., control and management of public finances in an interview in the Toronto Globe and Mail, March 21. are other areas that will be studied.

CUBANEWS April 1998 3 TRADE & COMMERCE CANADA REPORT MINING Australian Nickel Contract Axworthy, Parent Remarks On Cuba Fuel Criticism The Australian nickel producer QNI Ltd. A recent controversy sparked by the remarks of two senior officials suggests that at announced recently that it was signed a least some Canadians are uneasy with the government’s pro-Cuba policy. contract with Cuba that would enable the First came Foreign Minister Lloyd Axworthy, who, in reply to a critical report by the company to explore the San Felipe nickel staff of U.S. Sen. Jesse Helms, an avid foe of Cuba, suggested that the Washington-led project under an agreement that would allow embargo was responsible for poverty on the island. its wholly-owned San Felipe Mining Ltd. to “If there is an increase in prostitution and other vices…it is because of the embargo,” retain a 75 percent stake in the joint venture. he said in remarks that were widely reported in the Canadian news media. He also said The other 25 percent will be held by the Cuba was “becoming more committed to democratization…and human rights develop- Cuban state mining firm Geominera. ments.” QNI will fund a drilling program and a fea- Government critics quickly ridiculed his statements, while the Globe and Mail of sibility study over the next five years, Toronto printed a blistering editorial accusing him of “overheated rhetoric” and of “sound- according to the terms of the contract as dis- ing just like Fidel Castro (when) he blamed the United States for Cuba’s problems.” closed by the company. QNI said in a state- A few days later, House of Commons Speaker Gilbert Parent created another storm of ment that field work on the project had controversy in comments he made to a visiting delegation of members of Cuba’s National already started. The statement reported Assembly. First, he referred to the Cubans as “fellow parliamentarians,” and later he that “the San Felipe site has the potential for referred to Cuba’s “so-called political prisoners” as an internal matter. a significant economic nickel laterite As Speaker, Parent is supposed to be an impartial referee and to make public remarks deposit.” only rarely, but his comments dominated the Question Period in the next session of the INTERNATIONAL House and fed a movement to have Parent ousted from his job. In the editorial on March 11, the Globe and Mail described Cuba as “a dictatorship that Malaysian Palm Oil brooks neither elections nor dissent,” and whose representatives were thus not “parlia- Malaysia, which claims to be the world’s mentarians” in the same sense as those in democratic countries. largest producer of palm oil, will offer Cuba As for Axworthy, the newspaper declared, “The Foreign Minister should take a moment a credit of 1.3 billion yen ($10 million) to to stop embarrassing Canada on the world stage, and publicly clarify his government’s purchase palm oil from that Asian country, position on Cuba.” according to a report on Radio Havana. It added, “Here’s what he might want to say: ‘Cuba is a dictatorship. Contrary to the With the loan, Cuba will be able to purchase mistaken impression left by some members of my government, Cuba has hundreds of 15,800 tons of palm oil through the Cuban political prisoners—and no democratic parliamentarians. Our country trades with Cuba, state import company. our people travel to Cuba and our delegations meet with Cuba not because we support this deplorable state of affairs—but because we want it to change.’” INVESTMENT Chinese Rice Investment AGRICULTURE shares in the venture. Vinos Fantinel’s plant has an initial output Cuba and China signed a $19 million Wine Plant Opens capability of 4,000 hectoliters (105,600 gal- agreement for investments, credits and The first wine-producing plant in Cuba, a lons) and employs 12 Cubans plus two grants in late March, most of which will joint Cuban-Italian venture, was inaugurated Italian managers. The plant is located near involve Chinese participation in a joint rice in early March, just in time to coincide with the western tip of the island in San farm, according to the Cuban news media. an Italian trade fair that attracted some 80 Cristobal, on the southern coast of Pinar del Officials did not disclose the details of Italian firms to Havana. Rio province, about 60 miles west of Havana. the $12 million rice-growing deal. They said Gianfranco Fantinel, president of the Fantinel’s first vineyards were planted the purpose of a $6 million credit that is also Italian partner in the venture, Fantinel some more than three years ago with part of the agreement would be decided International, said the birth of Vinos Chardonnay and Pinot Grigio grape vari- later. A $1 million Chinese grant is the third Fantinel, as the Cuban company will be eties. The bottled product will consist of part of the agreement announced March 27. known, was made possible thanks to the four different lines, with the top range to be Although U.S. analysts characterized the work of the Cuban agricultural cooperatives sold in Cuba’s tourist hotels and restaurants. move as a good business decision by the taking part in the effort. The inauguration ceremony was attended Chinese, it came under criticism by the U.S. An earlier report (see CUBANEWS, by Vice President Carlos Lage and Rino State Department. “Some countries will October 1997) said the Italian company Serri, Italy’s under secretary for foreign invest in Cuba, but we encourage them to would invest $8 million in the operation. affairs, as well as Italy’s ambassador in Cuba adopt best business practices: direct pay- During the inauguration ceremony, company and his Cuban counterpart. ment to Cuban employees, direct hiring of officials said an investment of $4.45 million Vinos Fantinel is at least the fourth major Cuban employees, as well as permitting had been required so far—the entire sum investment made by an Italian firm in Cuba Cuban workers to organize in unions,” an footed by the Italian firm. over the past three years. The others are unidentified diplomat told The Washington The original announcement said the gov- San Pellegrino (mineral water); Papas (two Times. ernment’s share of the investment included plants for the manufacture of mayonnaise Phil Brenner, a Cuba specialist at 400 hectares of land given to the company and snacks in Havana), owned by an Italian American University, told the newspaper for a period of 50 years. The Italian newspa- group from Milan called Bettinelli Meazza; that the move should not affect U.S. rela- per Milan Il Sole, a leading financial and eco- and Cioccolati Stella (Stella Chocolates), tions with China. “Cuba is a place where nomic daily, reported after the inauguration that has a manufacturing plant in you have technically skilled labor, good that it is a 20-year grant of land that covers Guantanamo. infrastructure and, if you want to sell to 300 hectares. The company was also grant- According to the Cuban news media, Latin America, it’s a good place to do busi- ed an exemption on the customs duty levied more than 200 Italian business executives ness. Everyone else trades with them, just on wine imported into Cuba. Coralsa, the attended the March 10-15 Italian commercial not the United States.” Cuban state-owned company that is involved trade fair in Havana. in the food industry, holds 51 percent of the

4 CUBANEWS April 1998 WASHINGTON REPORT State Lifts Sanctions Visa Denial Undermines Academic Exchange Plans On Domos Execs The denial of visas to nearly a dozen Cubans invited to attend a conference at the University of California at Berkeley shows that while American universities display an The government has lifted sanctions increasing interest in academic exchanges with Cuba, strained relations between the two against executives of a Mexican company nations continue to threaten these people-to-people contacts. who had been barred from entry into the UC Berkeley had boasted that its March “Dialogue with Cuba” was to be the largest United States under provisions of the Helms- U.S.-Cuba academic exchange since Fidel Castro assumed power in 1959. But the State Burton Act, according to a senior State Department’s denial of visas to 11 of 19 Cubans who had been invited to participate— Department official. including Olympic star Alberto Juantorena and Dr. Sergio Arce, a Presbyterian theologian Because of their company’s investment in who is wellknown in American religious circles—nearly ruined the ambitious project. Cuba, four executives of Grupo Domos were Juantorena and Arce were denied because they are members of the National Assembly. punished in the summer of 1996 by Helms- Professor L. Ling-chi Wang, chair of the Department of Ethnic Studies and a chief orga- Burton’s visa denial sanction, known as Title nizer of the conference, said that he was told by the State Department that other Cubans IV. The action came after the State were denied visas because they were tops in their fields and their academic excellence Department determined that the company would cast a favorable light on Cuba’s Marxist system. He accused the Clinton adminis- was “trafficking” in property that was once tration of “imposing censorship and inhibiting the free exchange of ideas.” owned by ITT. In a letter to Sec. of State Madeleine Albright, a bipartisan group of 21 House members The firm’s involvement in Mexico was protested the visa denials, but to no avail. “To selectively deny visas to some of the invit- brief, however. Because it could not meet ed speakers…is to impose censorship, inhibit free speech and free flow of information its financial obligations to the Cuban govern- and deter free educational exchange,” the letter said. ment, it ended its operations on the island An April 3 report by the Washington-based American Association for the Advancement last year. of Science also concluded that travel restrictions have been a major impediment to scien- “Because Grupo Domos has presented tific collaboration with Cuba. “Scientific exchanges have become victim to the pervasive evidence that it is no longer involved with political hostilities between the two countries,” the report said. U.S.-claimed property in Cuba, the compa- While the U.S. government severely restricts travel to the island for most Americans, ny’s executives are once again eligible to except journalists and Cuban-Americans, certain classes of people, including academics, enter the United States,” said Michael scientists and other involved in professional or cultural exchanges, are eligible for Ranneberger, the State Department coordi- Treasury Department licenses that lift the restrictions. nator of Cuban affairs. Nevertheless, the AAAS report cited U.S. denials of travel permission to some of those An aide said the visa ban was revoked on eligible to travel to Cuba, including the rejection of travel licenses to members of the Dec. 2, 1997. Meanwhile, 15 more execu- American Mathematical Society who hoped to attend an international symposium. tives from two other companies, Canada’s The AAAS also accused the United States of capriciously denying high-level Cuban offi- Sherritt International and the B.M. Group cials entry into the United States. Hiram Gonzalez Alonso of the National History (Israel), remain banned under the same pro- Museum in Havana; Carlos Gomez Gutierrez, a former vice president of the Cuban acade- vision. my of Science; and Jose R. Jordan, president of Cuba’s Council of Public Health Societies, Ranneberger disclosed the action during a were among those barred from entry into the United States, the report said. Moreover, March 12 hearing on Capitol Hill that gave Cuba’s finance minister, Jose Luis Rodriguez, was recently denied a visa to attend a con- Cuban-American lawmakers the opportunity ference on Cuba at Harvard University on March 3. to take the administration to task for what The AAAS also said that Havana sometimes poses problems to U.S.-Cuba scientific they consider a failure to offer strong sup- exchanges. It cited instances where Cuban individuals had been denied travel permission port for the anti-Castro law. by “their department, (Communist Party) nucleus, or the Cuban Ministry of Education In defense, Ranneberger said that few without an explanation.” Most of the examples cited in the report involved scientists who U.S. claimants have submitted evidence that had been critical of Cuban policy. foreign companies are trafficking in disput- The AAAS said Cuban restrictions on travel are a reaction to the Clinton administra- ed property. “We have publicized our tion’s “Track Two” policy—the facilitation of “unofficial” contacts between Cubans and efforts with U.S. claimants, including the Americans that has been promoted as a way to help bring down Castro’s government. Cuban-American community, through radio, —Ana Radelat newspapers, U.S. mail and the Internet and have vigorously sought information about ENERGY business involvement in U-claimed proper- ties in Cuba. However, in the past two After Six Years, Juragua Still Stalled years, we have received only one inquiry from a certified claimant.” Despite unverified reports that Russia is prepared to finance completion of the long-stalled Government sources identified the U.S. Juragua nuclear plant in Cuba, the latest talks between officials of the two governments claimant as Lone Star Industries, which once resulted in a mere agreement to keep talking. Alexander Nechayev, deputy head of the owned a cement factory in Cuba. Russian Agency for Nuclear Power Stations Construction Abroad, told the Itar-Tass News There are 5,911 certified U.S. claimants, Agency on March 30 that two rounds of talks would be held in April and June. but Helms-Burton also opened the door to “We hope the talks will lead to a positive decision this time,” Nechayev said. claims from Cuban-Americans who were not Both sides have apparently abandoned any hope of setting up an “international consor- U.S. citizens at the time of Fidel Castro’s tium” to finance the project. Instead, the plan is to create a Russo-Cuban joint venture to fin- expropriations in the early 1960s. ish the job—but not anytime soon. Ranneberger said 150 non-certified According to the agency, “negotiations have not led to specific results, and an internation- claimants had contacted the State al consortium for financing the construction, not yet quite formed, disssolved…” Department, but “when asked, only two pro- Nechayev said he believes it will take two years for Cuban and Russian officials to “con- vided adequate documentation to support duct negotiations and conclude agreements and contracts.” The official voiced the hope that their claims.” the power station would be completed two or three years after that. —Ana Radelat Completion of the Juragua plant has been stalled since 1992. The estimated cost of finish- ing the job is in the range of $750 to $850 million.

CUBANEWS April 1998 5 FINANCE Foreign Debt Per Capita 963.7 972.7 Cuba Scores Debt Breakthrough in Deal In Thousand Dollars With Japanese Private Creditors 800 825.7 806 A debt re-scheduling deal signed March 18 between Cuba’s gov- ernment and companies from Japan, the island biggest creditor, appears to be a step forward in Havana’s efforts to ease some of the burden of its more than $10 billion foreign debt and to find fresh 600 sources of investment and financing. 596.5 The agreement, signed in Tokyo by Central Bank President Francisco Soberon, covers 100 billion yen ($769 million) of debt owed by Cuba to 182 Japanese firms, including large corporations like Nissho Iwai and Hitachi. Payment on this debt had been sus- 400 pended since 1987. Soberon signed the accord with Takehiko 1985 1993 1994 1995 1996 Tsuchiya, who heads the Japan-Cuba Economic Conference, a pri- vate group of Japanese enterprises with business links to Cuba. The Total Debt/In Thousand Dollars debt accord was understood to cover most, but not all, of Cuba’s 10500 debt to the Japanese private sector. Cuba also owes around $1 bil- 10504.0 10464.5 lion in official bilateral debt to Japan’s government. Under the published terms of the re-scheduling, the debt will be 10000 split into two parts of 50 billion yen each, and repayment will be spread over a period of 20 years. Cuba will repay only the interest 9500 on the first 50 billion yen portion over the initial five years. From the sixth year onwards, it will start repaying both principal and inter- 9000 9082.8 est. 8784.7 Repayment of the second 50 billion yen segment, both principal 8500 and interest, will start after 10 years. Although full details of the deal have not been made public, some 8000 sources familiar with the negotiations said they believed it could open the way for Cuba to obtain fresh credits from Japan. But the 7500 possibility of fresh credit was not immediately confirmed by either 1993 1994 1995 1996 Cuban or Japanese officials. SOURCE J. CARRANZA, CUBA: LAS FINANZAZ EXTERNAS Y LOS LIMITES DEL CRECIMIENTO The debt deal is a breakthrough for Cuban Central Bank chief Soberon, who has been trying for the last few years to start the machinery), according to figures compiled by the U.S. Central renegotiation of Cuba’s debts with its main creditors. Cuban Central Intelligence Agency. The unusual trade surplus in Cuba’s favor is Bank figures show that at the end of 1996, Japan held 15.7 percent of usually attributed to Japan’s unwillingness to finance a trade deficit. Cuba’s total convertible currency debt of $10.46 billion. Argentina Several Japanese companies maintain registered offices in was next with 12.8 percent, followed by Spain (12.1 percent), France Havana, including Nissho Iwai Corp., Nissei Sangyo Co. Ltd. (repre- (10.8 percent), Britain (9.8 percent), Italy (4.9 percent) and Mexico senting Hitachi), Sumitomo Corp, Mitsui & Co. Ltd., Marubeni (4.4 percent). Cuba’s debt talks with major creditors had remained Corp. and others. But, because of the low level of business, many basically stalled for the last 10 years. Japanese businessmen rarely stay long in Havana, leaving their Although officials from both countries did not link the two offices in the hands of caretaker Cuban deputies. events, foreign diplomats in Havana said they believed agreement Largely (though not exclusively) as a result of the debt obstacle, might have emerged from increased contacts between Cuba and Japanese investment in Cuba has remained conspicuous by its Japan as a result of the 1996-97 hostage crisis at the Japanese ambas- absence. The Cuban government hopes this too will change. sador’s residence in Lima. Soberon said in Tokyo the agreement would help to boost the Before Peruvian commandos stormed the residence to end the Cuban economy and provide opportunities for Japanese investment. 126-day ordeal, Cuban President Fidel Castro had offered temporary But Japanese sources in Havana were more cautious. One who asylum to the Tupac Amaru Revolutionary Movement (MRTA) asked not to be named told CUBANEWS: “We hope that the activi- guerrillas involved in the siege. The Japanese government made ties of Japanese firms (in Cuba) will increase, but first we must see clear it appreciated the effort to help. whether the Cubans will honor their word or not.” He said previous Soberon has led a concerted but discreet initiative to re-open con- private sector debt re-scheduling deals attempted between Cuba and tacts with creditors, including members of the Paris Club. By all Japanese firms had fallen through because the Cuban side had not accounts, this had achieved little visible concrete results until the managed to comply with the terms. “If they comply, the view of March 18 announcement. Japanese companies will certainly be more positive,” he added. The Cuban side seems to be hoping that the deal will be a break- The Cuban view, of course, was more optimistic. through. Officials hailed the agreement as a sign from Japan that it “If they can do it with Japan, they can do it with others,” one opposed the U.S. economic embargo against Cuba and the 1996 European investment analyst in Havana said. Speaking to Cuban Helms-Burton law, which threatens penalties against foreign state radio from Japan, Soberon said the Cuban Central Bank’s cur- investors in Cuba who “traffic” in expropriated, formerly U.S.-owned rent preferred strategy was to seek bilateral debt rescheduling properties on the island. agreements with single creditor nations, rather than with multilater- Cuba’s ambassador to Japan, Ernesto Melendez, cited the debt al creditor bodies (an apparent reference to the Paris Club). deal as “an example that the international community is not taking The government is also clearly hoping that the accord will help to notice of the U.S.embargo.” But a Japanese Foreign Ministry offi- boost Japan-Cuba trade ties. Two-way trade in 1996 totaled $91 mil- cial said that, while the Japanese government welcomed the agree- lion, which makes Japan Cuba’s 10th-ranking trade partner, just ment, it involved a private business association and the Cuban gov- behind Germany’s $92 million. Cuba exported $67 million (mostly ernment, and therefore was not intended to put pressure for change sugar, molasses, honey and fish) and imported $24 million (mostly on U.S. policy toward Cuba.

6 CUBANEWS April 1998 FINANCE WASHINGTON REPORT Menem Orders Debt Talks GOP Staff Report Condemns Cuba Following the visit of Pope John Paul II to Cuba, President Carlos Menem of The revolution is “dead” and Fidel Castro maintains power “solely by force, fear and depri- Argentina, Cuba’s second most important vation,” according to GOP congressional aides who traveled briefly to Cuba during Pope foreign creditor after Japan, ordered the John Paul II’s visit. Foreign Ministry to look into the possibility “Cuba at the Crossroads,” a 57-page evaluation of contemporary Cuba, also said that the of renegotiating Cuba’s debt of $1.3 billion. Pope’s visit “has begun to undermine the culture of fear that grips Cuba.” Menem—one of the harshest critics of the The report was written by Roger Noriega and Marc Thiessen, who work for Sen. Jesse Castro government in Latin America—said Helms, the North Carolina Republican who heads the Foreign Relations Committee, and that the pontiff’s visit had stimulated a Caleb McCarry of the Republican-controlled House International Relations Committee. The change of attitude. He later told the Miami three GOP staffers visited Cuba for 10 days during and after the pontiff’s journey. Herald that he would favorably consider an Food and medicine, according to the report, are widely available, but “only in dollar invitation to visit Cuba if one were extended. stores, which are out of reach to most ordinary Cubans.” It endorsed a proposal championed Debt negotiations between Cuba and by Helms that would increase the flow of donated aid through non-governmental organiza- Argentina have been stalled since 1993. tions to “those who cannot afford to buy food and medicine in Cuba.” Most analysts believe Cuba is in no position However, the report condemned a rival proposal that would allow the sale of food and to make significant repayments, but it can medicine to Cuba, saying Castro has “placed hard-liners at choke points in the economy...so offer to exchange or “capitalize” the debt in that he can reap the benefits of any relaxation while controlling any liberalizing effects.” return for investment. The stalled debt talks Uva de Aragon, the acting director of the Cuba Research Institute at Florida International have been considered an obstacle to signifi- University, called the congressional report “very superficial” and “not very honest.” cant Argentine investment in Cuba. “There is a movement trying to get the embargo lifted because it hurts people. They are The debt—which represents 12.8 percent trying to preempt that argument,” Aragon said. of Cuba’s outstanding foreign debt, officially The report also provoked a response from Canadian Foreign Minister Lloyd Axworthy, listed at $10.464 billion as of 1996—was whose country is one of the principal sources of tourism in Cuba. The report claimed mostly compiled in the 1970s. tourists visit Cuba solely to have sex with women who “are forced to sell their bodies As of the end of 1996—the last time such because they cannot earn enough through their professions to feed their families.” figures were reported officially—Cuba’s out- At a joint press conference in Ottawa with U.S. Secretary of State Madeleine Albright, standing debt to creditors outside the for- Axworthy said Cuba is the target of “economic victimization” through the embargo. “If Mr. mer Soviet bloc consisted of 80.9 percent Helms and his (Foreign Relations Committee) or his staff are concerned about what they principal and 19.1 percent accumulated see as a sex trade, (they should) get rid of the embargo.” (See “Canada” in this issue for interest and charges. After Japan (15.7 per- more on Canadian reaction.) cent) and Argentina (12.8 percent), the debt At the State Department, spokesman Jim Foley challenged the report’s contention that structure per country was divided as follows U.S. attempts to enlist Europeans and other allies in an effort to pressure Castro toward by country of origin: Spain (12.1); France change has failed. “We believe that there has been a major turning point and a sea (10.2); United Kingdom (9.8); Italy (4.9); change...in the attitude of the European Union toward the need to actively promote decen- Mexico (4.4); Switzerland (2.6); Germany tralization and human rights in Cuba,” Foley said. 2.2); Austria (2.1) and others (23.2). —Ana Radelat TELECOMMUNICATIONS Cuban Take from U.S. telecommunications companies were Payments: July-December, 1997 licensed by the Treasury Department’s AT&T...... $11,991,715 Phones Is $173 Million Office of Foreign Assets Control to do busi- ness with Fidel Castro’s government. WilTel, Inc ...... 5,608,751 By Ana Radelat The Helms-Burton Act requires the White MCI Intl...... 4,893,699 Cuba’s gain from its agreements with U.S. House to keep Congress informed on how IDB WorldCom...... 4,128,371 much money Cuba is making from the telecommunications companies has reached Global One...... 3,180,886 $173 million. telecommunications deals. According to Beginning in October of 1992, several U.S. President Clinton’s last report to Congress, WorldCom...... 2,887,684 telecommunication companies began provid- issued March 4, the Cuban government AT&T de Puerto Rico...... 298,916 ing long distance service to Cuba, resulting received a little more than $33 million in the last half of 1997 from its share of revenues Telefonica Larga in better service and increased calls Distancia de Puerto Rico ...... 105,848 between the United States and the island. from U.S.-Cuba telephone traffic. Previous The improved communication system was a reports showed that American telecommuni- TOTAL ...... $33,095,870 result of the 1992 Cuban Democracy Act, cations companies paid Cuba a total of which tightened U.S. sanctions on Cuba but $140.6 million from 1992 until mid-1997. also included a provision for “efficient and The $33 million Cuba earned from long- traffic, the split on the long distance revenue adequate phone service” between the two distance service during the last half of 1997 has been about 54.5 percent for the U.S. car- nations. reflects a slight increase over the $31 million riers and 45.5 percent for Cuba. That means AT&T, Wiltel Inc., Global One, MCI it earned for the first six months of the year. the U.S. carriers made about $41 million in International Inc., IDB Worldcom Services, The latest revenue total also compares favor- long distance service to Cuba in the period and Telefonica Larga Distancia de Puerto ably with the $32.6 million Cuba earned for between July 1 and Dec. 31 of last year, and Rico have taken advantage of the CDA—also telephone traffic during the last six months about $200 million since they began their known at the Torricelli Act—to enter agree- of 1996. service to Cuba in late 1992. ments with Fidel Castro’s government to Because the State Department placed a provide service to Cuba and share revenue limit on how much the Cuban government Ana Radelat covers Cuban affairs from from the telephone traffic. The U.S. could make on each minute of long distance Washington.

CUBANEWS April 1998 7 FISHERIES Cuban Fisheries Production/By Major Species (1000 metric tons) Cuban Fishing Industry SPECIES 1989 1990 1991 1992 1993 1994 1995 Begins To Recover Silver Carp 1.4 2.3 3.0 3.3 5.4 6.9 9.9 Blue Tilapia 13.3 18.7 16.6 17.1 11.7 11.8 10.8 By Larry Luxner Silver Hake 9.0 13.9 23.7 27.5 22.7 8.1 16.8 From tuna to tilapia, from spiny lobster to Chilean Jake Mackerel 24.5 41.2 30.8 3.2 — — — silver hake, Cuba is becoming an increasing- Cape Horse Mackerel 27.1 7.7 — — — — — ly important player in the world market for Araucanian Herring 4.4 12.9 18.9 — — — — seafood products — particularly for high-val- ued finfish and shellfish. Shark 3.8 3.2 2.0 2.8 2.8 3.4 3.1 Last year, Cuban seafood exports came to Tuna 3.0 3.0 2.8 2.6 1.6 1.8 1.3 $180 million, up from $102 million in 1994, Grouper 3.3 1.5 1.2 0.8 0.6 0.6 0.4 according to Anicia E. García Alvarez of the Snapper 4.8 4.1 3.6 3.2 2.5 3.2 3.8 University of Havana. “Our fundamental Spiny Lobster 11.2 8.0 9.9 9.3 8.5 9.7 9.4 goal is to increase exports and foreign- Pink Shrimp 4.0 2.4 2.9 2.3 2.7 2.2 1.9 exchange earnings while diversifying,” she Oysters/Clams 4.2 3.9 3.3 2.8 2.6 3.2 3.8 told CUBANEWS. The Cuban media recently quoted Squid 3.4 4.7 3.0 1.0 2.4 4.0 1.0 Fisheries Minister Orlando Rodriguez Total All Species 192.1 188.2 171.1 121.3 93.7 87.7 94.2 Romay as saying that Cuba plans to sell $100 SOURCE: FAO YEARBOOK OF FISHERY STATISTICS—CATCHES AND LANDINGS (VARIOUS YEARS) million worth of seafood in Europe this year, $30 million in Japan and another $30 million in Canada. The government says this is the Things got even worse after the breakup ment of fishing operations is reduced dra- fourth-largest foreign exchange earner for of the Soviet Union, with Cuban landings of matically. Cuba after tourism, sugar and nickel. With all forms of finfish and shellfish falling from Decree 164 also creates a Comision 135 species or species groups, the diversity 232,000 tons in 1988 to 87,700 tons in 1994. Consultiva de Pesca, which prohibits fishing of fish and shellfish in Cuban waters is According to the UN’s Food and Agricultural of endangered species and imposes sanc- exceeded only by the United States and Organization, per-capita consumption of fish tions for those who don’t practice responsi- Canada in the Western Hemisphere. and seafood in Cuba plummeted from 21.8 ble fishing. García was one of a dozen speakers at a kilograms during the 1985-87 period to 11.8 “They’re understanding now that they March 31 conference in Washington co- kilograms during the 1991-93 period. could very easily overfish things,” says sponsored by the University of Havana and Things have since improved, however, Adams. “They’re contracting a bit and pass- the University of Florida in Gainesville on with landings up slightly to 94,200 tons in ing measures that impose sustainable man- the future of Cuban agribusiness. 1995 — the latest year for which statistics agement. They have an eye on the future.” After the 1959 revolution, the Cuban fish- are available. If Washington decides to lift the embargo ing fleet underwent a sudden expansion Of this total, some of the more important against Cuba, the island nation could enjoy a made possible by cheap subsidized Soviet species include silver hake (16,800 tons); sudden increase in exports of spiny lobster, fuel, making Cuba the envy of all Latin blue tilapia (10,500); silver carp (9,900); pink shrimp and other species to the U.S. America and the Caribbean, with landings spiny lobster (9,400); snapper (3,800); oys- market—providing its prices are competitive surpassing 100,000 metric tons by 1970 and ters and clams (3,800); sharks (3,100); pink with Nicaragua, Honduras and other tradi- 200,000 tons by 1976. shrimp (1,900), tunas (1,300) and squid tional seafood exporters. The fleet was divided into four sectors that (1,000). “The U.S. shrimp market is dominated by included a distant-water operation targeting Nearly all of the 19.7 million pounds of imports, particularly farm-raised shrimp. low-valued species such as mackerel, her- spiny lobster Cuba produces annually is Additional supplies of pink shrimp would be ring and hake for the domestic market, and exported — mostly in the form of cooked easily accepted, particularly during those the Flota de Plataforma, which went after whole lobster, with lesser quantities of raw, periods when Florida pink shrimp landings high-valued, near-shore species. whole lobster and frozen tails. In terms of are low,” says Adams. Yet around 1977, things took a sudden total value, the major markets for Cuban He adds that “Cuban snapper would likely downturn. spiny lobster are Japan (28%), France (24%), be very competitive with product arriving “Virtually all coastal nations in the Spain (19%), Italy (15%) and Canada (10%). In from more distant sources within the Central Americas imposed 200-mile limits for their addition, says Adams, the United States con- American and Caribbean region. The Florida territorial waters in the late 1970s,” accord- sumes small quantities of Cuban seafood market for reef fish is very strong and would ing to Charles M. Adams, a professor with products imported via third countries such probably absorb any additional sources of UF’s Institute of Food and Agricultural as Panama and Nicaragua. product. And if the Cuban product is priced Sciences. “Cuba was left with a stable of At the moment, Cuba has 14 processing competitively, other foreign sources may be large, operational costly vessels, which were plants for lobster, shrimp, canned tuna and displaced in the short run.” then forced into the role of only being able fish. These plants—which handle the freez- Adams says UF’s Institute of Food and to operate in the even more costly open- ing, canning, smoking and salting of a vari- Agricultural Sciences in no way advocates ocean regions. The high-cost nature of the ety of products—are located in La Coloma, either lifting the U.S. embargo against Cuba, fleet, while being forced to target low-valued Isla de la Juventud, Batabaniety of prod- or keeping it in place. “We’re just trying to stocks, produced an economically inefficient ucts—are located in La ColomaCaibarién, describe the situation and provide informa- venture.” Santa Cruz del Sur, Niquero, Manzanillo, tion that would be useful for those who need Says Adams: “Overall, Cuba’s distant Santiago de Cuba, Guantánamo and it,” he says, “in order to assess the potential water fleet was fishing in the southeast Nuevitas. impact if trade is ever resumed.” Pacific, off Namibia and Angola, and in the Under Decree Law 164, passed in 1996, northern Atlantic. That global fleet was sub- Cuba’s Ministerio de la Industria Pesquera Larry Luxner, a frequent contributor to sidized by cheap Soviet fuel. Now those (MIP) is being restructured so that govern- CUBANEWS is editor-in-chief of South boats are used for freight hauling.” mental oversight in the day-to-day manage- America Report, a monthly newsletter.

8 CUBANEWS April 1998 TOURISM Number of Tourists/In Thousands Cuban Tourism in 1997 Rose by 16.5 Percent 1200 Cuba welcomed 1,170,000 tourists to the 1000 country during 1997, somewhat below the target figure of 1.2 million, but nevertheless 800 a healthy increase of 16.5 percent over the previous year, according to the government. 600 “Tourism is becoming increasingly impor- tant,” Vice President Carlos Lage said in dis- closing the new figure, “but I would say it is 400 not only the most important sector of the economy—I would say tourism is the heart 200 of the economy.” According to the official, costs account for 0 71 cents for each $1 of revenue, a slight 1949 increase over the 69 cents that President 1946 1952 1955 1958 1970 1973 1982 1985 1988 1991 1994 1998 Fidel Castro reported for 1996. (See CUBANEWS, June 1997.) Tourism Gross Income/In Million Dollars “We intend to lower that cost to 67 cents,” Lage said in a recent speech to workers in 1400 the tourism sector. “I am sure this can be done and I am sure you will be able to lower 1200 it even further later on, but that cost can also be gradually set aside for the national econo- 1000 my.” Lage gave no figure for the gross income 800 from tourism, or the gross expenditure per tourist—the figures may be disclosed at the 600 upcoming tourism convention to be held in Havana from May 11 to 15—but in the past 400 the latter number has been around $1,400. If this held true in 1997, then the total take 200 from tourism could have amounted to as much as $1.6 billion, which would yield a 0 net of $475 million after subtracting the 71 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997* cent-per-$1 cost. (The Cuban news media Sources: L. Marrero. Geografia de Cuba, Miami, 1981; Atlas de Cuba, La Habana, 1975; Atlas Nacional de Cuba, La Habana, 1989; WOT estimated that gross income “may have Yearbooks; MINTUR Reports. *CUBANEWS Estimate. reached an estimated $1.5 billion,” but offered no source for the information.) volume of tourists in Cuba has grown at an neighboring countries had been relying on Since it it not clear how much of this annual rate of 19.6 percent since 1990, while tourism as a major industry for decades and remains in the hands of the government and the same figure for the Caribbean region is thus could reasonably expect to experience how much goes to Cuba’s private partners, it 4.3 percent. only incremental growth, rather than the is difficult to calculate precisely how much In 1991, however, the number of tourists sudden expansion that characterizes a devel- profit the government earns from tourism, visiting Cuba barely reached 400,000. The oping industry, as is the case with Cuban but reports of Lage’s speech in the Cuban industry was hardly developed, whereas tourism. media said tourism “provided $200 million to the government treasury.” A follow-up report in Granma said Cuba’s 48 Airlines Fly to Cuba From 27 Countries state-owned airline industry received $160 million in income in 1997 from tourism. It is According to Cuban airline authorities, the vast majority of visitors to the island used not clear whether this figure is included in one of 48 different airlines from 27 countries that fly regularly to the island, but the gross tourism revenues; the report said national airline, Cubana de Aviacion, was far and away the principal carrier, transporting nearly one out of three passengers on 30 percent of all passengers in 1996. domestic routes (31 percent) were foreign Half of all international passengers arrived at Jose Marti International Airport in tourists. Foreigners accounted for 99 per- Havana, with the Juan Gualberto Gomez International Airport in Varadero received cent of all passengers on international approximately one-fourth of the total. Both airports are undergoing renovations and ter- routes. minal expansions to provide better service, beginning later this year. For 1998, the government objective is to Access to the capital’s airport is also being improved by the construction of a seven- host 1,430,000 tourists, which would repre- kilometer, six- and four-land highway that will connect the center of the city to the new sent an increase of roughly 22 percent and terminal. put Cuba well within striking distance of its Meanwhile, the Varadero airport, inaugurated in 1989 to accommodate 700,000 annual larger goal of entertaining two million for- passengers, has experienced a 20 percent growth in traffic in the last five years, accord- eign visitors in the year 2000. As it is, Cuba ing to Cuban transportation officials. Its expansion is designed to permit an annual tran- is closing in on Jamaica, which hosted 1.7 sit of two million visitors. million visitors in 1996. Other international airports are located in Cayo Largo, Camaguey, Holguin, Santiago According to government calculations, the de Cuba, Manzanillo, Ciego de Avila and Cienfuegos.

CUBANEWS April 1998 9 DEMOGRAPHICS eign investment and financing, it is unrealis- could fall again this year if the sugar harvest The Social Security tic to expect an economic recovery that turns out to be as poor as it now promises. Burden would raise GDP to the level of the past Surprisingly, monthly allowances have decade. remained stable for decades, reaching a One of the most worrisome trends in The current process becomes even more level which can be termed truly miserable. Cuba’s current financial situation is the worrisome when compared to the perfor- The most important increases in recent rapid and disproportionate growth of Social mance of the export side of the economy, years occurred in the area of early retire- Security expenses, especially when com- which forms the basis for what little “social ments by disability (see CUBANEWS, May pared to the erratic and falter- 1996) and in short-term subsi- ing pace of growth of the Social Security Expenses 1722 dies (see CUBANEWS, March Gross Domestic Product. 1679 1997). 1630.2 As a percent of the GDP, 1594 The number of early retire- Social Security expenses dou- 1532.4 ments by disability soared dur- bled during the years when In Million Pesos ing the darkest part of the spe- the economy collapsed earlier 1500 1452.3 cial period to reach 38.4 per- in the present decade. As if cent of all retirements during that were not troubling 1348 1993. Between 1990 and 1996, enough, it soon became evi- one of every three retirements dent that the problem could 1250 1225.7 was issued before the manda- not be attributed simply to 1164.1 tory age for reasons of “health demographics, since the 1093.9 impairment.” This represents growth in the elderly popula- an avalanche of roughly tion —the main beneficiary— 200,000 new early retirements 1000 remained moderate during 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 in this period, or 15 percent of this period. the entire retired population. Further scrutiny discloses As Percent of GDP 11.9 12.1 Only in the last year, when the that—as contradictory as it 12 11.4 11.5 11.5 11.5 level fell back to an acceptable may seem—unbalanced 16.3 percent, did it appear that growth in Social Security 10 9.0 the government had managed expenditures results primarily to take control of the situation. from the current economic 8 7.2 It was obvious to government 6.1 slump, an example of the old 5.6 inspectors well before then, axiom that negative economic 6 however, that phony retire- developments have a domino 4 ment permits were being effect throughout the econo- issued in wholesale numbers my. 2 by local and provincial medical Not only is the government authorities. The government reluctant to assume the politi- 0 has ordered a nationwide revi- cal costs of cutting benefits, 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 sion of all these cases. but rather it also has failed to The natural aging of the prevent the large number of As Percent of 128.0 population makes the future of rule violations and corruption Export Income Social Security—or at least the 120 115.1 that caused the dramatic 107.8 present policies— more increase of expenditures over unpredictable. The current the past eight years. 100 trend of demographic stagna- 83.5 tion caused by the sharp According to figures recent- 76.8 ly disclosed in the National 80 75.6 decline in birth and fertility Budget Plan, Social Security rates, along with the simulta- outlays this year will reach 60 neous extension of life $1.722 billion (from $1.679 bil- 41.4 expectancy rates and emigra- lion in 1997), an amount equal 40 tion, has produced an increase to 11.5 percent of the expect- 20.3 21.5 in the ratio of elderly people ed GDP, assuming a projected 20 among Cubans (see GDP rate of growth of 2.5 to CUBANEWS, May 1996, 3.5 percent. 0 March 1998). Since 1989 —on the eve of 1989 1990 1991 1992 1993 1994 1995 1996 1997 According to National the economic collapse—Social SOURCE: OFICINA NACIONAL DE ESTADISTICAS Statistics Office estimates, by Security payments have the year 2015 people 60 years grown 57 percent, while the benefit-receiv- wealth” Cuba can claim in its present, weak- and older will make up 18.4 percent of the ing population (mostly retirees) has ened circumstances. Thus, in 1989 Social total population. A few years later, the baby- increased only by roughly 12 percent in the Security expenditures were equal to the boomers born during the 1960s (3.28 million same period. value of one fifth of the island’s entire births during 1960-1973) will arrive at that But while payments have grown, the exports, whereas current outlays represent age. national treasury has shrunken. GDP today more than three-quarters of the island’s Facing these statistics and the continued represents only 74.4 percent of what was export earnings. And as bad as those fig- failure to create an economy competent attained eight years ago. Unless a radical ures seem, they were even worse in 1993, enough to sustain present Social Security internal economic reform occurs simultane- when Social Security payments surpassed policies, the concerns and insinuations ously with massive and comprehensive for- export income by 28 percent! The ratio expressed by Cuban officials suggest that

10 CUBANEWS April 1998 LABOR Social Security Facts Jobs Picture Improving, but Recovery Remains Slow Retirement Age Men...... 60 years Any official reference to unemployment in Cuba begins with the proclamation that nowhere else in the world does the government pay as much attention to the protection Women...... 55 years and maintenance of a strong workforce. The effort is undoubtedly one of the fundamen- Average Age at Retirement tal reasons for the existence—and permanence—of the Revolution. 1985...... 63.5 years The Revolution, it is customarily argued, was created precisely in order to eliminate the 1995...... 55 years unemployment that chronically affected nearly 500,000 workers in the country. Life Expectancy (in 1992) According to a poll conducted in 1957 by the National Council on the Economy, the Cuban labor force of 2.2 million suffered a chronic unemployment rate of 16.4 percent Men...... 74.3 years (360,800 people), while an additional 6.1 percent (134,200) were under-employed. Women...... 78.4 years Full employment became a priority for the government soon after it seized power 39 Population 60 Years and Older years ago. Within a short time, the economy had been converted into a huge patronage 1981 ...... 1,055,000 system in which everyone was guaranteed a job in return for loyalty to the government. 1997 ...... 1,440,000 In such a system, the very notion of “economic efficiency” was considered a heresy, but 2015 (Projected) ...... 2,100,000 the government itself paid a price by being forced to rely on external support to pay for the huge costs required to sustain the economy. The subsequent fall of the Soviet bloc Retired Population brought a sudden end to the massive subsidies the Cuban economic system required. It 1993 ...... 1,272,000 also meant that Cuba would no longer be able to boast of the nearly negligible unemploy- 1997 ...... 1,355,900 ment rates (1.3 percent in 1970; 3.4 percent in 1981) it had enjoyed for decades. 2010 (Projected) ...... 1,800,000 The critical shortfall of energy, machinery, parts and raw materials; the collapse of for- Average Monthly Stipend eign trade; the failure of public services and farming; and the scarcity of nearly all neces- 1993 ...... 92.0 pesos sary supplies for living in the 1990s forced the government to shut down—at best, to slow down—most industries. It was also obliged to suspend some transport services, to aban- 1996 ...... 94.6 pesos don farming and to halt most construction activity. 1998 ...... 99.3 pesos It’s hard to say how many workers remained idle during the darkest years of the “spe- Contribution to Social Security Funds cial period,” which saw the Gross Domestic Product plunge by more than one third, but From state enterprises...... 60.7 percent considering that the paralysis left half of the industrial and the construction sectors inac- From the government budget..39.3 per- tive (which provided jobs for 1.1 million employees in 1989), it seems safe to estimate that some 560,000 workers were left idle--but not unpaid--in these two important sectors from cent 1992 to 1994. From workers ...... 0 Massive dismissals did not take place as long as the government had other options, but eventually many jobs were lost. Those who lost their jobs received 60 percent of their SOURCES: CUBAN MEDIA REPORTS; CUBAN CENSUS salaries for up to 6 months afterward, thanks to the welfare system. Under the present circumstances, it is likely that not even the government can say exactly how much is being paid in excess as result of the lack of real jobs in the economy. the government could be rethinking some of However, using again the industrial and construction sectors and their average wages, it the rules. The most likely changes are a can be calculated that the government payroll is forced to make annual disbursements of reform in the formation of funds and an 1.3 billion pesos (10 percent of the 1993 GDP) for workers who are not producing. extension of the retirement age. As with other problems that embarrass the government, accurate and verifiable figures But any delay in reaching the age of are hard to come by. But occasionally, when improvement reaches a noticeable level, a retirement will pose a challenge to the con- few numbers trickle out. This is the case with “the modest but significant recovery in trol of the jobless rate. Recent official employment connected with the reemergence of the economy,” as the official labor week- reports place unemployment at 6.9 percent ly Trabajadores recently noted in reporting the creation of 67,300 new positions during (314,000 jobless) in 1997, but this figure 1997 and the consequent reduction in the unemployment rate from 7.6 percent in 1996 to undoubtedly hides the bitter problem of the 6.9 percent last year. lack of real jobs for the existing workforce— The rate is equivalent to 314,000 jobless workers on the island the past year. Even so, the practice of featherbedding. As a matter officials argue that there are 184,700 positions available, mainly in state farms and coop- of fact, the Director of the official National eratives, but the mostly urban unemployed don’t want those jobs. Association of Cuban Economists declared It is not difficult to understand the lack of enthusiasm. After all, three out of every four two years ago that between 0.5 to 0.7 million Cubans live in urban centers. Moreover, most of the workforce is both well educated and jobs (11 to 15 percent of the workforce) skilled (11 percent have a college degree), and the average monthly wage in agriculture needed to be eliminated in state-run enter- comes to about $10 at the current market exchange rate—an amount that can be prises if the economy was to run efficiently. matched easily by a tourism sector employee in a few hours of work. Also, the return to work of some retirees on Eastern provinces are the most seriously affected by unemployment. That is the big a part-time or contract basis has been criti- reason that thousands of orientales migrated to Havana over the last few years, hoping to cized for obstructing access to jobs by find a job in Cuba’s big city on the reasonable assumption that even the chances for self- younger Cubans. employment were better there. In Guantanamo, the official unemployment rate of more For the moment, the government appears than 12 percent in 1996 fell to 9.9 percent in 1997. to have ruled out any effort to make workers Self-employment, a practice virtually unknown five years ago and now tolerated for contribute directly to Social Security; under craftsmen, family-run restaurant operators, and a handful of other workers, could be a the current system., enterprises contribute welcome alternative—it now accounts for 161,350 jobs—but the official attitude toward 12 percent of the payroll, while the govern- these embryonic entrepreneurs is little short of contempt. Self-employed workers ment grants the rest. Instead, the govern- remain the targets of petty bureaucratic harassment and heavy taxation, which has not ment will apparently try to strengthen exist- only prevented the private labor sector from growing, but has actually reduced it by one- ing rules in order to cut expenses, at least fifth over the past two years. until better times come for the economy. —Armando H. Portela

CUBANEWS April 1998 11 GOVERNMENT

City of Havana Matanzas Villa Clara Conrado Martínez Corona Víctor Ramírez Ruiz Alexis Mergarego Falero Rogelio Milián Suárez Juan Pons Vásquez Alexander Rodríguez Lozada

Havana Sancti Spíritus Ciego de Avila Angel Gárate Jesús Ortiz Barón Pedro Jiménez Castañeda Evelio Saura Pedrel Fidel Pérez Lusber Agustín Arza Pascual

Holguín Ramón Díaz Alcántara Norberto Santiesteban

Guantánamo Rolando Calzada Rolando Rodríguez Romero Pinar del Río Cienfuegos Camaguey Vidal Pérez Baños José Hernández Bernárdez René González Miguel Herrera Contreras Emerio García Lugo Mercedes Escuredo

Las Tunas Rafael Peña de la Rosa Víctor Rodríguez Carballosa

The presidents and vice presidents Granma Santiago de Cuba of the Provincial Assemblies of Cuba José Antonio Leyva García Luis Estruch Rancaño elected this year. Jesús Antonio Infante López Juan Antonio Bandera Lamarque

FOR THE RECORD Excerpts of Clinton Statement The following are excerpts from a “Statement by the President” released March 20 by the Office of the Press Secretary at the White House outlining changes in U.S. policy toward Cuba. THE MIAMI HERALD PUBLISHING COMPANY

“Prior to the Pope’s visit, we authorized direct charter flights for pilgrims to attend Papal Editor Mark Seibel services. We also authorized direct humanitarian cargo flights to Cuba in order to reduce Managing Editor Juan Vasquez the cost of getting these needed supplies to the Cuban people. The deliveries were carefully monitored to ensure that they reached the people for whom they were intended…” Business Manager Isabel Entenza Contributing Editor Armando Portela “The people of Cuba continue to live under a regime which deprives them of their free- Art Director Ed Fiol dom, and denies them economic opportunity. The overarching goal of American policy must be to promote a peaceful transition to democracy on the island. Such a transition will CUBANEWS is a monthly publication of the depend upon the efforts of Cubans who seek to build a vibrant civil society and to secure Miami Herald Publishing Co. that reports on economic, political and commercial trends in respect for basic human rights. The presence of His Holiness John Paul II in Cuba inspired Cuba. © Copyright 1998 by The Miami Herald the Cuban people, providing an important psychological boost to the Cuban Catholic Publishing Company. All rights reserved. Church, to Cuba’s nascent civil society, and to the Cuban people. The measures I have Reproduction or transmission without the express announced today are designed to build upon that visit, to support the Cuban people through written consent of CUBANEWS is strictly prohibit- the hardships and difficulties ahead, to contribute to the growth of a civil society and to help ed. CUBANEWS, One Herald Plaza, Miami, prepare for a peaceful transition to democracy.” Florida 33132. Toll-free telephone in Canada, the United States, Puerto Rico & the U.S. Virgin Islands: 1-800-376-3324; outside these areas call CALENDAR OF EVENTS (305) 376-3324. Fax: (305) 995-8026. Annual sub- May 11 – 15 HABANA 98, XIX International Convention on Tourism in Cuba, sponsored scription rate for 12 issues is US $350. CUBANEWS is also available -line as part of by the Ministry of Tourism. Havana. PabExpo (Commercial exposition) and Palacio de Knight Ridder Inc.’s PressLink worldwide elec- Convenciones. 33-4325. 22-6011. tronic network. August 6 – 8 Eighth annual meeting of the Association for the Study of the Cuban Economy. Miami. Information: (703) 379-8812 or E-Mail [email protected]. May 31 – June 6 “Ethics and the Culture of Development: Building a Sustainable THE MIAMI HERALD PUBLISHING COMPANY Economy,” an international conference sponsored in part by UNESCO designed to develop Publisher & Chairman David Lawrence, Jr. comprehensive guidelines for building a sustainable economy. Havana. Information: (215) President Joe Natoli 241-7296. Fax: (215) 241-7026. 12 CUBANEWS April 1998