Vol. 15, No. 12 December 2007

www.cubanews.com

In the News Cuba’s foreign trade balance up by 44%

Chile weighs in as Alimport cuts purchases of U.S. food Led by Max Marambio, Chilean exports BY LARRY LUXNER ana — have helped Vietnam, China and other of food to Cuba are rising ...... Page 2 uba’s foreign trade balance will show suppliers at the expense of the United States. improvement in 2007 for the first time in “The U.S. agricultural community has done Noel’s nasty legacy Cyears, with exports up 44% through Sep- nothing, absolutely nothing, about trying to per- suade members of Congress to change these Tropical storm causes $500m in damages tember and imports 3% higher. “We have a commercial balance of goods laws,” Jones complained in an interview with across eastern Cuba while worsening is- which is better than previous years,” Foreign CubaNews. land’s housing crisis ...... Page 3 Trade Minister Raúl de la Nuez told Reuters in “The reason is that they’ve been diverted by a Nov. 6 interview. Year-end figures are expect- the farm bill. From their point of view, it’s per- New envoy in D.C. ed to be similar to those through September, haps understandable,” he told us. “The farm bill deals with billions of dollars, with a B, while Havana sends diplomat Jorge Bolaños to meaning exports would increase by more than $1 billion and imports by less than $300 million. Cuba trade is only in millions, with an M. head Cuban Interests Section ...... Page 4 This is great news for Cuba, but not for U.S. Jones said: “If they want to resurrect or ex- food exporters, which have seen their sales to pand their business in Cuba, they’ll have to step SPECIAL REPORT state-run purchasing agency Alimport plummet up to the plate and make their voices heard.” Detailed map shows how Cuba’s coastal every year since 2004, due to restrictions im- At the annual Havana International Fair held Nov. 5-10, only 100 U.S. companies showed up, ecosystems have been contaminated by posed by the Bush administration. Kirby Jones, president of the Washington- down from 150 in 2006. A total of 1,425 entities toxic runoff and agriculture ...... Page 8 based U.S.-Cuba Trade Association, said there’s — including 997 foreign firms — exhibited at no question these restrictions — which deny cre- the show, representing 53 countries. Newsmakers dit to Cuba and require up-front payment in cash All told, Cuba signed $301 million in contracts Florida sugar magnate José “Pepe” Fanjul before U.S. goods can even be shipped to Hav- See Trade, page 2 dreams of all the business possibilities in a post-Castro Cuba ...... Page 10 5 ex-chiefs of USINT-Havana offer advice Herzfeld’s hedge Closed-end fund guru plans to launch $300 on how to avoid past mistakes in Cuba million Cuba hedge fund ...... Page 11 BY LARRY LUXNER she said. “We all think this relationship we have Business briefs ne hot, humid afternoon, shortly after ar- with Cuba, if it were the right one, might be able riving in Havana to run the U.S. Interests to positively influence that outcome.” Petrobras to look for oil off Cuban shores; OSection, Vicki Huddleston decided to take Tropical breezes, friendly people and beauti- Russia to restructure debt ...... Page 12 a drive along Quinta Avenida in her official air- ful beaches aside, running USINT-Havana isn’t conditioned black Ford Crown Victoria. an assignment for the faint-hearted. A long-run- Fighting the fever “I saw a group of kids waiting for a ride, so I ning propaganda war takes place every day just stopped and six or seven teenagers jumped in,” in front of the old Swiss Embassy annex front- Singapore, Cuba launch joint program to she recalled. “They leaned back, obviously en- ing the Malecón — while U.S. access to top Cu- eradicate dengue fever ...... Page 13 joying the air-conditioning. One of the kids ban officials has become virtually impossible. asked me, ‘Where did you get this car?’ I said it And as relations between the United States Marshall gives up was the property of the U.S. government. and the Castro regime continue to deteriorate, the job will only get more and more difficult. British online entrepreneur tired of fight- “Then, another kid asked what I did. I told her I was the chief of USINT-Havana. The girl On Nov. 14, Huddleston and four of the men ing OFAC, Cuban restrictions ....Page 14 leaned forward and said: ‘Please be our mother. who preceded her as chief of USINT spoke Take us to Miami.’” about their experiences at a Washington confer- CubaNews (ISSN 1073-7715) is published monthly Huddleston, who has since retired from the ence organized by the Brookings Institution. by Luxner News Inc. © 2007. All rights reserved. Foreign Service, said that little exchange made If there was one theme that ran through the Subscriptions: $429 for one year, $800 for two years. a lasting impression on her. presentations of these former U.S. diplomats, it For editorial inquires, please call (301) 452-1105 was the constant frustration they felt with their or send an e-mail to: [email protected]. “We would like to see a future for Cuba’s young people — not in Miami, but in Havana,” See Diplomats, page 6 2 CubaNews ❖ December 2007 “Other countries, particularly those that chance of business picking up while Trade — FROM PAGE 1 have lost market share to the U.S. such as President Bush remains in the White House. during the 5-day event, not even close to the Canada, want to get that back and are able to “There is great hesitation right now as peo- $432 million in deals signed during FIHAV offer credits,” he told CubaNews. ple wait to see a change in the U.S. adminis- 2006. Contracts with U.S. companies account- “I know there were discussions [between tration,” Jay Brickman, vice-president of ed for $106 million of that $301 million total. the Cuban and Canadian governments] about Florida-based Crowley Maritime Corp., told Among other things, Cuba closed deals for Canada re-energizing its credit program. Reuters. “The Bush administration is very 150,000 tons of Canadian wheat worth $70 They have to offer something the U.S. can’t clear about its policy. People feel they won’t million for delivery next year. offer. I don’t know whether this wheat was get any trade and they have to go to other Alimport also agreed to buy 100,000 tons of markets. They have no choice.” peas and 3,500 tons of powdered milk from Sales of U.S. farm commodities to Cuba Canadian companies, deals worth a combined have totaled $1.8 billion since passage of the $75 million, not to mention 200,000 tons of Trade Sanctions Reform and Export Enhance- rice from Vietnam — the latter contract worth ment Act (TSRA) in 2000. Those sales peaked $90 million, according to Alimport Chairman at $392 million in 2004 and declined to $340.4 Pedro Alvarez. million last year (see chart at left). In addition, Cuba bought animal feed from NEBRASKA WINS WHEAT CONTRACT Mexico and the Dominican Republic, as well as supermarket products from Spain. Despite plummeting U.S. sales overall, at least one state scored big during FIHAV. CANADIANS SCORE BIG THIS YEAR Nebraska signed a deal to sell $10 million In 2007, Cuban food purchases from worth of wheat to Alimport through com- Canada will have increased 40% over 2006 fig- modities trader Louis Dreyfus. With this lat- ures due to difficulties in buying from the est contract — which was signed by visiting United States and despite the higher value of Gov. Dave Heineman — Nebraska has sold Canada’s “loonie” against the U.S. dollar (see more than $70 million in agricultural products CubaNews, November 2007, page 1). to Cuba since the Cornhusker State’s export In the 2006-07 marketing year ending Jul. relationship was established in 2005. 31, Canada shipped 89,000 tons of wheat to Heineman, leading his fourth visit to Cuba Cuba, down from 177,000 tons of wheat the as governor, was accompanied by representa- previous year. The 10-year average, according tives of Nebraska’s wheat, corn, soybean, to Reuters, is 77,500 tons. bought on credit, but Alvarez was quoted as beef and pork industries. “We compete with the Americans all saying he’s going to sign contracts first with “Nebraska has been rewarded for our dili- around the world, so we are very happy about the Canadians, then the Americans. gence in maintaining a strong export relation- this signing,” said Greg Arason, president “That’s a message to American companies ship with Cuba,” he said. “Our success here is and CEO of the Canadian Wheat Board. that the current restrictions are causing prob- due in large part to the hard work and prepa- Said Alvarez: “American producers are be- lems,” Jones concluded. “U.S. firms are at a ration of our Nebraska companies and the ing hurt by the embargo. Trade with the Uni- clear disadvantage because they can’t offer Nebraska Department of Agriculture.” ted States is uncertain because Cuban pay- credit. That’s why rice sales are down.” Added Greg Ibach, the state’s agriculture ments get blocked. Canadian businesspeople According to Marvin Lehrer, Latin America director: “This latest visit has helped further are very efficient, very strong and very com- director for the USA Rice Federation, U.S. the strong relationship weve built in recent petitive, and they don’t blockade us.” rice exports to Cuba dropped to 80,000 tons years, and puts Nebraska in a good position to That sentiment was echoed by Jones, last year from 175,000 tons in 2005. take advantage of opportunities for expanded whose trade association represents 55 compa- The shipping company that handles most trade in the future. Investing in a good rela- nies and organizations. Cuba-bound freight from U.S. ports sees little See Trade, page 4 Alimport increasingly hungry for Chilean food exports t one time, Chile’s commercial relationship with Cuba was lim- canned and frozen jack mackerel fish,” said the company’s general ited to executives politically connected to Fidel Castro — in manager, Domingo Jiménez, in an email to CubaNews. “These pur- A particular the Chilean entrepreneur Max Marambio. chases are destined for distribution to the local population.” His Santiago-based holding company ING S.A., with its lucrative Another Chilean exporter trading with Cuba is Empresas Carozzi. spinoffs Alimentos Río Zaza — makers of Tropical Island fruit juices Last year, it shipped $3.4 million in spaghettis, pastas, rice, tomato — and travel company Sol y Son generate $100 million in Cuba-relat- paste, fruit purees and other food products to Cuba, making the is- ed revenues annually. land its 12th-largest export market. (As an aside, the Canadian remit- That’s inspired other Chilean companies to emulate Marambio’s tance firm Antillas Express offers Carozzi-brand spaghetti among the success. Some of these compaies are run by people with previous food items its clientele can order online for relatives in Cuba). connections with Havana, while others are controlled by more con- Meanwhile, Chilean dairy Vialat SA sold Cuba nearly $1 million servative types who want to pursue their own opportunities in Cuba. powdered and sweetened condensed milk and cheeses last year. An example of the latter is Agrosuper, Chile’s largest meat and fresh products retailer. Agrosuper is owned by Gonzalo Vial, one of Vialat is partly owned by Grupo Bethia, which is controlled by Liliana Chile’s richest businessmen and clearly not an admirer of Marxism. Solari Falabella, who also owns the Falabella department-store chain. Politics aside, in 2006 Agrosuper exported $6.6 million in pork, Leonardo Banda, an official of the government export promotion chicken and cured meats to Cuba. The island is now Agrosuper’s 8th agency ProChile, would like to see those numbers go up. leading market of the 37 countries it sells to. “We had nine Chilean firms and our own country pavilion at FIHAV,” Pesquera San José sold $4.3 million worth of fish to Cuba in 2006, Banda told CubaNews by email. “Chile-Cuba commerce has increased making Cuba the No. 5 export market for the Santiago-based compa- in recent years, especially in food products, given the market’s poten- ny, which is part of the Colosio holding entity. tial and the excellent quality-price ratio of Chilean products.” “For the past 10 years, we have been exporting to Cuba both – VITO ECHEVARRÍA December 2007 ❖ CubaNews 3 TROPICAL STORM NOEL AGRICULTURE BRIEFS Noel aggravates housing shortage Noel causes $500m in losses Tropical Storm Noel and its associated rains BY DOMINGO AMUCHASTEGUI reason for not fulfilling such a goal was “that and flooding caused $500 million in damages n the aftermath of Tropical Storm Noel, the the country was not prepared to meet such throughout eastern Cuba, according to official number of houses destroyed or heavily plans” — an argument that was overlooked sources quoted by Juventud Rebelde. Idamaged was appalling: 21,987, according when the 150,000-homes-a-year goal was The state-run newspaper said most of that to official sources. This disaster comes as announced in 2005. damage, $305 million, was in agricultural and Cuba’s housing crisis and its accumulated The debates were extremely critical. Many forestry production, including $91 million in deficits reach new heights. lawmakers stressed the sense of discontent lost crops and $78 million to replant. In September 2005, Fidel Castro announced and frustration coming from grass-roots Damage to buildings and homes is estimat- the start of a five-year program to end Cuba’s meetings with their constituents. ed at $128 million, with 1,137 houses totally housing deficit, estimated at a minimum As a result, the projections for 2007 were destroyed and 2,548 suffering partial damage. Another 7,939 houses lost their entire roofs 600,000 dwellings. Under the plan, 150,000 lowered considerably. Vice President Carlos and 10,363 had partial roof damage. homes were to be constructed annually. Later, Lage stated in December 2006 that the goal for this year would be 70,000 houses. In light Road infrastructure was also badly hurt, the goal was brought down to 110,000 a year. with 13,169 kms of roads and highways dam- But in the first year, only 79,410 houses of all the previous setbacks and current ten- sions following Noel’s devastation, it seems aged one way or another. A total of $33 million were actually built and maintenance projects unlikely this can really be accomplished. in damage was reported to railways, sewer were more than 30% behind schedule. pipes, bridges and power lines. For example, in Pinar del Río province only FROM PRIORITY TO NEGLECT Losses in the production of goods and serv- 50% of what was supposed to be built actually ices are estimated at $20 million. Another $9.9 got built. Many such homes are supposed to How did things come to this? In the revolution’s early years, housing was million has so far been used for protecting the go to victims of Hurricanes Isidore and Lili, in population and $1.2 million in fuel costs. 2002, which destroyed 73,169 houses and se- considered a top priority and enormous res- ources were allocated to meet the demands of Cuba evacuated over 80,000 people from verely damaged 579,547 houses nationwide. flooded areas, yet amazingly, only one person In municipalities like San Cristóbal, San average Cubans by the Instituto Nacional de Ahorro y Vivienda (INAV), the Departamento died — a man drowned while crossing a river Juan y Martínez and Bahía Honda — where in Granma province — as a result of Noel, 219 homes should have been completed by de Viviendas Campesinas del Instituto Nacio- nal de Reforma Agraria (INRA), and later by which killed at least 142 people in the Domini- February 2006 — only 14 houses had been can Republic and Haiti. built. True, the numbers were much better the Movimiento de Micro-Brigadas and the urbanization of cooperatives in the early ‘70s. Cuba lost 10% of its coffee crop due to Noel, than 2004, when only 15,352 dwellings were which drenched eastern provinces already built, but, at the same time, they were way But after 1975, neglect and decay prevailed. Resource allocation became minimal, and saturated by two weeks of persistant rainfall. behind official plans. mega-projects in other areas absorbed all Officials said 50,000 hectares (about 123,000 By late 2006, Leonardo Martínez, chief of available resources. acres) of sugarcane fields were flooded or the National Assembly’s committee in charge Over the years, the notion of maintenance damaged by the storm in the eastern half of of productive activities, admitted that “of the had disappeared completely. Cement, bricks, Cuba, which accounts for half of Cuban sugar 150,000 homes promised, only 110,000 had nails, paint, wood and tiles were accessible output. The floods could delay the start of the been finished at a cost of almost $300 million.” only through the underground economy and sugar harvest, they said. Salvador Gomila, chief advisor to the The local agriculture sector reported dam- National Housing Institute, explained that the See Housing, page 4 age estimated at 5,000 tons of root vegetables, beans, fresh vegetables, fruits, bee honey and TROPICAL STORM NOEL OVER CUBA other crops. The rains also destroyed thou- sands of seedbeds that were to be used in the current planting season. Cubans said the flooding caused by Noel was the worst they’d seen since Hurricane Flora hovered over eastern Cuba for several days in 1963, killing 1,200 people. But Noel did bring a silver lining to Cuba. The National Hydraulic Resources Institute reports that as of Nov. 8, Cuba’s reservoirs are 92.2% full, with more than 8 billion cubic meters of water; 137 of the country’s 235 reservoirs are releasing excess water. This year’s October was the second wettest since 1901 for Cuba’s eastern provinces, sur- passed only by 1963. Nationwide it was the third wettest October in 106 years. Besides Flora, nearly the entire country was affected by Hurricanes Stan and Wilma in 2005. Before the rains associated with Noel, aver- age rainfall was already high at 297 mm (11.7 inches), 193% of the national average for October. Then, from Oct. 29 to Nov. 5, the rains associated with Noel boosted the vol- ume of water in reservoirs from Camagüey to Guantánamo by 289 million cubic meters, forcing 89 reservoirs to release water. 4 CubaNews ❖ December 2007 POLITICS Cuba sends veteran diplomat Bolaños to Washington BY DOMINGO AMUCHASTEGUI ground struggle against the Batista regime in at the UN Commission on Human Rights. agoberto Rodríguez, longtime head of the late 1950s. He was also well-connected The two allies nearly broke diplomatic rela- the Cuban Interests Section in Wash- with many revolutionary figures from that tions in 2004, and Bolaños was recalled for Dington, will be replaced in December city, including Vilma Espín, Colomé Ibarra three months following accusations of unauth- by seasoned diplomat Jorge Bolaños. and José Ramón Balaguer. orized Communist Party meetings in Mexico. The Castro regime didn’t give any reason In 1963, Bolaños began his diplomatic But according to a Nov. 7 article in the for rotating the easygoing, straight-talking career at the Ministry of Foreign Affairs Miami Herald, “by the end of his posting, Dagoberto out of Washington after seven (MINREX), working as an analyst in Western Bolaños was widely respected by conserva- years on the job (his going-away party was European affairs. At the same time, he also tive and left-wing politicians alike. More than set for Nov. 27). studied political science at the University of 100 attended his July 10 send-off at the Cuban Nor did it say why it was sending Bolaños, Havana, graduating a few years later. Embassy in Mexico City.” who at 71 is one of Cuba’s most experienced Bolaños worked his way to the top over a The Herald quoted Inter-American Dia- diplomats, to preside over the mission, offi- 25-year period through serious dedication and logue analyst Daniel Erikson as saying Bola- cially an annex of the Swiss Embassy fronting extreme personal and political discretion. ños is a diplomat with “serious clout” in Cuba. 16th Street, not far from the White House. With acceptable fluency in English and “I think this is a sign that the Cubans see But one thing is clear: Bolaños’ appoint- French, Bolaños eventually was appointed this as a very delicate moment in U.S.-Cuba ment should be interpreted as sound evi- ambassador to Poland in 1971. He also served relations, and they want someone that is not dence that Cuba hopes to play a more con- as envoy to Czechoslovakia, Great Britain and going to make mistakes,” said Erikson. structive role in the event a new administra- Brazil before returning in 1994 to Cuba, where Vicki Huddleston, who headed the U.S. In- tion in Washington is willing and read to he was given the No. 2 position at MINREX. terests Section in Havana from 1999 to 2002, engage Havana seriously. By 2000, Bolaños was considered one of told the Herald that Cuba’s appointment of This is especially obvious following Raúl Cuba’s most distinguished diplomats — and such a senior diplomat is “respectful,” but that Castro’s recent speeches declaring his readi- one of the very few from the early days of the ultimately Bolaños represents someone Raúl ness to work out a settlement with whoever revolution, second only to Abelardo Moreno, Castro can trust. takes over from President Bush in 2009 — another top vice-minister at MINREX. “Given his age, we can assume that this is a which some may have interpreted at the time His most difficult assignment — and his man who is not going to shake the palm tree,” as rhetoric meant only to appease Washington. consecration as a first-class troubleshooter — she quipped. Most recently Cuba’s ambassador to Mex- came when he was named Cuba’s envoy to It’s unclear where 52-year-old Rodríguez is ico at a time of strained relations between Mexico. Less than a year after his arrival in now headed, but if history is any guide, he those two countries, Bolaños was born and Mexico City, President Vicente Fox of the may get a nice promotion. Dagoberto’s prede- raised in Santiago de Cuba. right-wing Partido de Acción Nacional decid- cessor, Fernando Remírez de Estenóz, is now He and his family were active in the under- ed to support resolutions condemning Cuba Cuba’s vice-minister of foreign affairs. ❑

Cuba’s current account balance of pay- Housing — FROM PAGE 3 Trade — FROM PAGE 4 ments was $240 million in deficit last year, dealings that eroded various state institutions. tionship now is important to securing Nebra- compared with a surplus of $140 million in The economic collapse known as the “spe- ska a seat at the table in the years to come.” 2005, and foreign debt rose by $2 billion to cial period” not only resulted in the disappear- around $16 billion, the government said. Florida would like a seat at that table too, ance of construction materials, but forced “Nickel is the most important reason upon Cuba new priorities that did not include though not officially. our exports are up, followed by pharma- “The biggest companies in America are resolving the island’s crippling housing crisis. ceuticals and medical equipment and When the various social programs that are here: Cargill, Archer Daniels Midland and tobacco,” de la Nuez told Reuters. Perdue,” John Parke Wright IV, a livestock a key component of the so-called “Batalla de Regarding the drop in imports, he said Ideas” were put into place in the last decade, dealer from Naples, told the South Florida “we have been importing a great deal of Sun-Sentinel. “All that Cuba needs is here.” none of them included housing needs nor equipment and products that did not have maintenance of existing houses and buildings. Other Florida exporters, however, aren’t to be repeated this year and we are pursu- Neglect and decay had become overwhelm- quite so optimistic. ing a policy of substituting imports.” ing, and any home improvement project was “Many firms don’t have the patience and Accordings to Reuters, Cuban imports either a result of having access to dollars or the staying power that is needed because of have doubled since 2003 as foreign ex- various underground economy schemes, or a all the restrictions and licenses,” said Mar- change earnings jumped, due mainly to in- combination of the two. cela Jiménez of Gulf South Forest Products, creased revenues from nickel and tourism, According to government figures disclosed a Ft. Lauderdale firm that’s already export- payment for medical services exported to in September 2005, an appalling 52.5% of all ed $3 million in utility poles and lumber to Venezuela and soft credits from China. construction in Cuba is considered be in bad Cuba under TSRA. “A lot of time is wasted.” In 2006, Cuban nickel and cobalt shape — “en mal estado” — so it’s not only a Cuba’s top trading partners are now Vene- exports came to $1.3 billion, based on out- question of 600,000 houses. zuela, China, Spain, Canada, Italy and Bra- put of 74,000 tons of unrefined product. Perhaps the best remark was made by Raúl zil, which account for a combined 70% of the The import boom sparked a sharp jump Castro himself last May: “Las construcciones commerce Cuba conducts with the rest of in economic growth during the same peri- han sido caóticas a lo largo de la historia de la the world. od, exceeding 12% in 2006 using a Cuban revolución y hay que superarlo, porque no nos In 2006, foreign trade came to $12.18 bil- formula that includes free health and edu- queda más remedio.” lion, with exports of $2.76 billion and im- cation services. Using the customary for- Translation: “Construction has been chaot- ports of $9.42 billion. The deficit was offset mula to calculate GDP, the economy grew ic throughout the history of the revolution, by over $6 billion in revenue from services. by a more modest 8%. ❑ and we have to overcome this because we have no other choice.” ❑ December 2007 ❖ CubaNews 5 POLITICAL BRIEFS

LAWYERS APPEAL U.S. DISMISSAL OF POSADA CASE In their own words … Prosecutors have appealed a federal judge’s “Cuba faces an economic war and incessant hostile propaganda from the decision to dismiss an immigration fraud case United States, but our people must be alert and strengthen fraternity and soli- against suspected terrorist Luís Posada Carriles. darity among the population while tirelessly battling any sign of corruption. On Nov. 5, prosecutors filed a 73-page appeal The destiny and existence of our nation are at stake in these battles.” with the 5th U.S. Circuit Court of Appeals in New Ricardo Alarcón Orleans, the Miami Herald reported. — , president of Cuba’s National Assembly, lecturing Nov. 10 to a The aging Posada is wanted in Venezuela, Havana gathering whose name was almost as long as Alarcón’s speech: Fourth International Meeting on Society and the Challenges Posed by Corruption. where he’s a naturalized citizen, on charges that he plotted the deadly 1976 bombing of a Cuban jetliner from Caracas. “The U.S. government should lift harsh restrictions on travel and remittan- The case against Posada was dismissed in May ces to [Cuba] to encourage more people-to-people contacts and support for after U.S. District Judge Kathleen Cardone in El Cubans pushing for democracy. More family travel and cultural and academic Paso concluded that federal authorities used trick- exchanges would open a world of information and supportive contacts for ery, fraud and deceit in trying to pursue a crimi- Cubans on the island. More remittances would help sustain political prisoners nal case against him. Posada was accused of lying as well as Cuban democrats stripped of jobs.” on an application and during an interview to — The Miami Herald, in a Nov. 7 editorial titled “More remittances, travel for a become a naturalized citizen. free Cuba.” Until now, the paper has been reluctant to criticize U.S. restrictions. Lawyers for the government argued in their appeal that Posada didn’t meet his burden to “He has a problem with bleeding in the digestive system that got complicat- prove that the government engaged trickery or ed and slowed down his recovery, but I find him in very good shape.” deceit. They also contended that the govern- — Rodrigo Alvarez, Cuba’s top orthopedic surgeon, discussing Fidel Castro’s health ment’s “deception or outrageous conduct” doesn’t with Nicaragua’s El Nuevo Diario. Alvarez denied reports that Fidel had cancer. excuse Posada’s alleged lies. UN FOOD OFFICIAL: CUBA IS AN EXAMPLE TO FOLLOW “I don’t touch that issue. I can’t get into that because I just can’t. I stick to my job.” A top UN food expert has lavished praise on — Ramón Castro, Fidel Castro’s older brother, asked by journalists to comment on Cuba as a world model in feeding its population. Fidel’s plans for the future. AP reported that Jean Ziegler, who has been the United Nations’ independent investigator on “the right to food” since 2000, spent 11 days in Cuba “In some cases, the dissidents have enormous dislike and distrust for one on a controversial fact-finding mission in Novem- another. When I hear people outside Cuba talking about dissidents or pro- ber, meeting with top officials and chatting up democracy activists or agents of change, I don't see that as being the reality farmers, state managers and ordinary Cubans on the ground in Cuba.” waiting in line for food allotted by ration cards. — Cuba expert Frank Mora of Washington’s National War College, quoted Nov. 4 “We haven’t seen even one malnourished per- in a South Florida Sun-Sentinel article about Cuba’s dissident movement. son” — a rare feat in much of poverty-stricken Latin America, Ziegler said. “The right to being “Their unjustified detainment is exactly why Cuba needs change now. The fed is the priority [in Cuba], without a doubt.” Cuban people deserve an end to these tragedies.” Cuba is one of 32 nations around the world that — U.S. Commerce Secretary Carlos Gutiérrez, co-chair of the White House Commis- include the “right to food” in their constitutions. sion for Assistance to a Free Cuba, following the Castro regime’s brief detention Ziegler, who visited two prisons in Havana to of 70 youths wearing white rubber wristbands stenciled with the word “cambio” ask inmates about their daily diets, didn’t address (change). Gutiérrez himself wears the wristband to support democracy in Cuba. human-rights concerns over the arbitrary impris- onment and alleged abuse of political prisoners. “Standing with those that are oppressed is our highest moment and our best CUBA TIGHT-LIPPED ON BASEBALL PLANS calling. It is unthinkable that a regime would be so weak to be so threatened by something as simple as these wristbands we are wearing.” Cuba has received an invitation to play in the — Sen. Mel Martínez (R-FL), displaying his “cambio” wristband to fellow lawmakers 2009 World Baseball Classic, but wouldn’t say next to Cuban-American colleague Sen. Bob Menendez (D-NJ), who also had one on. whether it plans to participate. José Ramón Fernández, a Cuban vice-president “Once again, and at such a moment, they left Cuba, its people, its citizens to and head of the island’s Olympic Committee, told their own devices and wallowed in an imitation of democratic harmony that is AP that officials received an invitation from Major now so full of falsehood that the fake harmony has become a dissonant noise.” League Baseball to compete in the second install- Oswaldo Payá, founder of the Varela Project and Cuba’s leading dissident, in a ment of the international tournament. — Nov. 12 statement accusing the Ibero-American Summit held in Chile of ignoring MLB and its players’ association jointly ran the the plight of Cuba’s people and “losing the chance to vindicate itself before history.” first edition of the WBC last year, when Japan beat Cuba 10-6 in the final at San Diego. While a formal decision hasn’t been made, it appears the second “For obvious reasons ... I cannot provide information to those who have WBC will be played in March 2009. organized and executed more than 600 assassinations plots against him.” Details are likely to be announced at the winter — Cuban Foreign Minister Felipe Pérez Roque, asked by CNN in an Oct. 30 inter- meetings Dec. 3-6 in Nashville. The tournament view whether ailing Fidel Castro was recovering at home or in a hospital. field is expected to remain at 16 teams. The issue is a sore spot with political undertones “The speech made by the president of El Salvador provoked nausea.” for Cuba. In late 2005, the Treasury Department — Fidel Castro, criticizing Salvadoran President Tony Saca, who on Nov. denied Cuba a permit to participate after Fidel 11 defended his country’s free-trade agreement with the United States. Castro had personally confirmed his country’s team would accept American invitations to play. 6 CubaNews ❖ December 2007 the White House would freeze relations with tional Policy, a Washington think tank. “Our Diplomats — FROM PAGE 1 Cuba because of a buildup of Soviet troop policy has been a failure, and if our objective superiors at the State Department, which strength on the island. is to bring about positive change, we have not. often didn’t take their cables seriously and But Smith said the move by Zbigniew Brze- In the last few years, we’ve pushed in the sometimes ignored them altogether. zinski — then Carter’s national security advi- other direction.” James Cason, appointed by President Bush sor — was wrong “because he gave the state- Asked about the man who now occupies his to head USINT-Havana from 2002 to 2005, ment on his own, without clearing it with any- old job in Havana, Smith had this to say: was perhaps the most controversial diplomat one, on the basis of a two-page CIA estimate.” “Michael Parmly is a fine guy and he’d be ever to hold the post. His tough-talking style Immigration talks were also a major issue. the perfect one to carry on the dialogue. But and determination to enforce the Bush admin- “There were growing pressures because of given our policy — and that bloody sign on istration’s policies following Castro’s 2003 all these Cuban-Americans returning to the front of the U.S. Interests Section broad- crackdown on dissent earned him many ene- Cuba,” he said. “Cuban officials came to us casting all sorts of propaganda messages like mies in Havana. several times to suggest we had to negotiate Times Square — there’s no chance at all. The LARRY LUXNER

Ex-chiefs of USINT-Havana: Wayne Smith (1979-82); John Ferch (1982-85); Jay Taylor (1987-90); Alan Flanigan (1990-93) and Vicki Huddleston (1999-2002).

Unfortunately, Cason (profiled in the Febru- this and find some normal channel for people Bush administration is not interested in any ary 2004 issue of CubaNews, page 8) is now to leave under acceptable circumstances. I kind of dialogue with the Cubans.” the U.S. ambassador to Paraguay and as such sent a cable up to Washington suggesting that was unable to participate in the Nov. 14 event. we do this. I never got an answer to any of JOHN A. FERCH (1982-85) Nor was the current head of USINT- these cables.” Over the course of his lengthy Foreign Ser- Havana, Michael Parmly. As a result, he said, the United States was vice career, John Ferch specialized in Latin Nearly 200 people attended the reunion of totally unprepared for what happened next: America and economics. He served in eight the five now-retired diplomats. Here’s a sum- the Peruvian Embassy crisis and Castro’s countries; in addition to being chief of USINT- mary of what each of the speakers had to say: subsequent announcement that anyone who Havana, he was also U.S. ambassador to Hon- wanted to leave Cuba was free to do so. duras and deputy chief of mission in Mexico. WAYNE SMITH (1979-82) Between Apr. 15 and Oct. 31, 1980, an esti- But nothing in Ferch’s experience had pre- A veteran diplomat who’s since made a sec- mated 125,000 Cuban refugees crowded onto pared him for the realities awaiting him in ond career out of his Cuba experience, Wayne boats sent by Cuban-American exiles and Havana, where he served during the height of Smith first came to Havana in 1958 as third sailed from Mariel to South Florida. the Cold War. secretary at the U.S. Embassy. He stayed un- Relations worsened as soon as Ronald Rea- At that time, the Reagan administration was til 1961, when President Kennedy broke dip- gan moved into the White House. Smith helping the right-wing contras in their war lomatic relations with Cuba. Smith was trans- called the policies of the Reagan administra- against the Sandinistas in Nicaragua, and giv- ferred to Brazil, and later was posted to the tion “outright lies” and later quit in disgust. ing massive economic and military assistance Soviet Union and Argentina. What brought things to a head was Cuba’s to the government of El Salvador, which was He eventually returned to Washington, announcement in December 1981 that it had also engulfed in civil war. where he became director of Cuban affairs at halted all weapons shipments to Central Amer- “Frankly, I got very few instructions,” the State Department. ica. The regime hoped this would improve the Ferch said. “I was given one briefing which In 1979, President Jimmy Carter — who atmosphere for bilateral negotiations, and was quite revealing. I was advised that if the two years earlier had lifted travel controls as Smith relayed this information to the State Cubans put MiGs into Central America, there an initial step towards improving relations Department. Six weeks later, Smith received would be bad consequences. So I went down with Cuba — appointed Smith to head the his answer: no negotiations of any kind. there, and within days made an appointment new U.S. Interests Section in Havana. Shortly thereafter, the Reagan administra- with Alarcón, and I gave him this message.” “Ramón Sánchez Parodi was chief of the tion reimposed travel controls, it said, From the U.S. perspective, it was Cuba’s Cuban Interests Section in Washington, and because of Cuba’s increasing arms shipments support of rebel troops in Angola which ex- the two of us discussed how we would handle to Central America, even though no evidence plained why USINT-Havana didn’t mature the two issues that had to be solved first: com- of this existed. into a full-fledged embassy. pensation for nationalized U.S. properties, “In the spring of 1982, I asked to be re- “There was also evidence of drug-traffick- and No. 2, a lifting of the U.S. embargo,” moved from the post and given a job unrelat- ing in Cuba. This is how we saw it. And the Smith said. “We agreed we weren’t going to ed to policy until I could take early retire- Cubans saw a Reagan administration whose lift the embargo until they compensated our ment,” said Smith. rhetoric had escalated tremendously. The properties, and that we’d have to negotiate As bad as things were under Reagan, U.S.- U.S. was more unpredictable than before, and the two things simultaneously.” Cuba relations are even more chilly now. more threatening from their perspective.” Things were going smoothly until Nov. 16, “This administration has the worst policy Ferch maintained regular communications when Smith heard on his car radio that a top towards Cuba imaginable,” said Smith, who’s with many of the contacts established by his U.S. government official had announced that now a senior fellow at the Center for Interna- predecessor, Wayne Smith. Besides Ricardo December 2007 ❖ CubaNews 7 Alarcón, president of Cuba’s National Assem- ly allowed to see the minister of economy. I in diplomatic accords with the United States, bly, these included Carlos Aldana, then-head did some good reporting on Soviet involve- and we recognized him as such. These talks of the Cuban Communist Party’s depart- ment in the Cuban economy, but to my knowl- went on for a year, and finally an agreement ments of ideology and international relations; edge, no one in Washington ever cared about was signed in December 1988. Secretary of José Luís Padrón, a minister of tourism who those reports.” State [George] Shultz thanked the Cubans for had close ties to the Cuban state security playing a cooperative and supportive role.” apparatus, and Carlos Salsamendi, an assis- JAY TAYLOR (1987-90) To everyone’s surprise, Taylor said, “Cuba tant to Vice-President Carlos Rafael Rodríguez A career foreign service officer, Jay Taylor withdrew all its forces ahead of schedule. who is now Cuba’s ambassador to The Gambia. served as deputy assistant secretary of state This led to South Africa’s withdrawal from “I thought that in addition to those people, for intelligence and research. Among other Angola as well as elections in Namibia and I could meet some Cuban economic types. So things, he was director of analysis for Asian eventual independence. All the objectives the I asked for an appointment with the minister and Pacific affairs, and political counselor at United States wanted were achieved.” of economics, but I didn’t get that appoint- the U.S. Embassy in Beijing. But, Taylor said, there was a glitch. ment for at least 18 months,” he said. By the time Taylor arrived in Havana, the “During our early talks, I had been author- “But these four people I met at least once a Soviet Union was no longer officially an “evil ized to tell the Cubans that if this happened, it month. Even if we had nothing to say, we kept empire” in the eyes of President Reagan. would result in improved relations. By 1989, up the contacts. It took awhile for me to real- “Glasnost and perestroika were already at the Cubans were out of Angola, and they had ize that the Cubans had made it possible for work in the Soviet Union. This openness and also withdrawn from Ethiopia. So I sent a me to see the right people immediately.” readiness to accept more dissent suggested cable to the State Department suggesting that Ferch recalled a few specific instances of the world was changing,” he said. “Castro and we think about our options. We could do noth- the Castro regime trying ing, or make some gesture, or begin a pro- to get him to send mes- cess or take a step in relaxing the embargo. sages to Washington. “I got another zinger back from State say- “We indicted some Cu- ing we had never made that commitment. So ban officials for drug-run- I sent them back the [index] numbers of the ning in Florida. Fidel sent LARRY LUXNER cables authorizing me to say that. I never Padrón over to tell me that heard anything about it again.” Washington was barking During the time Taylor served in Havana, up the wrong tree. An- human rights became an increasingly impor- other time, they called me tant issue. Taylor said that for the first time, in to persuade me to be the Castro regime allowed the International forceful with Washington Red Cross to interview political prisoners. about not opposing “Before, if you were a Cuban dissident, Cuba’s bid to host the either you were in Miami, or you were in jail,” Pan-American Games.” Taylor quipped. “But Castro began to accept Ferch’s tenure at that there could be dissent, and we began vis- USINT-Havana coincided iting dissidents at home for the first time.” with the U.S. invasion of Nevertheless, relations continued to deteri- Grenada in 1983. orate, and in March 1990 — as the Soviet A bloody coup on that Union was quickly disintegrating — the deci- tiny Caribbean island pro- sion was made to put TV Martí on the air. vided the Reagan adminis- “By that time, Castro had realized what was tration with the perfect ex- happening with glasnost,” said Taylor, now an cuse to get rid of a Marx- Recently refurbished USINT is an annex of the Swiss Embassy in Havana. associate at Harvard University’s Fairbank ist regime that had allied Center for East Asian Research. “Instead of itself closely with Castro. the Cuban hierarchy recognized that this was putting a human face on communism, it was a “I wasn’t told in advance about it, but on the a totally new situation.” death mask for communism.” morning of the invasion, I received a cable Taylor said he spent his first few months in from Washington that was right out of the Havana getting his feet wet, meeting with 200 ALAN FLANIGAN (1990-93) 19th century, saying I should tell the Cubans government officials, students, intellectuals During his 31-year career in the Foreign something like ‘we’re not fighting with you, and others. The big topic at the time was An- Service, Alan Flanigan served in Lima, Izmir, you can leave with honor, with flags flying.’ I gola, and how to disengage from that mess. Ankara, Lisbon and Havana, finishing up as gave it to Alarcón, and he was pissed off.” “I told Washington that they needed to U.S. ambassador to El Salvador. After retiring, Cuban troops eventually left Grenada, but cooperate with Cuba. I got a zinger back that Flanigan served for three years as co-chair- Cuba’s continued military presence in Angola said I didn’t know what I was talking about, man of the Foreign Service Institute’s was a major sticking point in bilateral rela- that Castro would not get out of Angola until Ambassadorial Seminar. tions. So it came as a surprise when, one day, South Africa became communist,” he said. The three years Flanigan spent as head of Ferch was reading Granma and came across Taylor was finally able to convince his supe- USINT-Havana were undoubtedly the most a “very favorable” article about U.S. negotia- desperate times in post-revolutionary Cuba. tions over that war-torn African country. riors — through back-and-forth cables — that if Washington wanted Castro to move on “I arrived in September 1990, not long after “I sent a cable up to Washington. They told Iraq invaded Kuwait,” he said. “The United me to begin talking about Angola [with Cuban other issues like human rights, he had to understand there would be some payoff for States was concerned with the Middle East, officials], but nothing came of it,” he said. not with what was going on in Havana.” At one point, Ferch said he was “called into removing his troops from Angola, where the situation had been heating up for some time. Flanigan realized Cuba was in a tailspin. Fidel’s inner sanctum” to discuss the Decem- “Economically, it was imploding. Its econo- ber 1984 bilateral migration accord. “The Angolan government had launched an offensive against UNITA, [but] we didn’t my had shrunk by 40%, and they weren’t sure “During the time I was there, a great deal of they could survive,” he said. “By the time I reality was displayed by both sides. Our ob- make a huge issue of the fact that Cuba had left, they were beginning to pull out of the tail- jective was not regime change; I never heard sent reinforcements to Angola,” he recalled. spin, but it was a different country.” that phrase. And it wasn’t normal relations “We had talks in Luanda and Havana, and In 1987 — the year Flanigan began his Hav- either. I’d call it ‘cultivate your own garden.’” Castro was totally committed, totally enthusi- Ferch added: “After 18 months, I was final- astic. He saw himself now as actively involved See Diplomats, page 15 8 CubaNews ❖ December 2007 ENVIRONMENT

Toxic runoff contaminates Cuba’s coastal ecosystems s is the case with many other tropical through inland streams. In some cases, indus- Havana Bay and the capital’s seafront suf- countries, Cuba’s coastlines are in bad trial waste and sewage is directly disposed to fer the most alarming incidence of environ- Ashape. the groundwater through caves or sinkholes, mental degradation in Cuba. Since the Castro regime rarely releases any as is the case in south of Matanzas. Even today, the bay ranks among the most detailed, comprehensive information on the The consequence: a loss of the natural pro- polluted in the world, despite recent cleanup subject, it is extremely hard — if not impossi- ductivity of the ecosystems, which is some- programs headed by Cuba’s Centro de Ingen- ble — to determine how deep and extensive times catastrophic when combined with over- iería y Manejo Ambiental de las Costas. the damage to Cuba’s caostal ecosystem is. fishing or the use of destructive fishing tech- Basic measures conducted for the first time But it can be safely assumed that the harm niques like trawling. include the collection of garbage and free- is widespread, based on the few general pub- In extreme cases, the poisoning of the floating oils, construction of a containment lic reports available, the environmental de- marine environment is so severe that it leaves wall around the oil refinery to avoid the spill- struction in formerly communist countries of little hope for a full recovery. It also puts at age of petroleum products into the bay, and Eastern Europe and the opinion of Cuban risk the health of people living by the shores construction of a water treatment plant along scholars living on the island and abroad. (see CubaNews, September 2002, for a com- the Río Luyanó with help from Italy. An undesirable byproduct of progress, plete account of the deadly spillage of 3,700 tons Other critical sites along the city’s ocean- coastal contamination likely began with the of arsenic into Cienfuegos Bay). front include the mouth of the polluted Río expansion of Cuba’s sugar industry and Ten years ago, Cuba went through a fever- Quibú and Río Almendares, whose smelly explosive growth of coastal settlements and ish campaign to make the virgin beaches of effluent can be detected miles away, and the transport in the early 20th century. its outer keys accessible for tourism. raw sewage discharge along the Malecón and But with the development of a Soviet-in- These include Cayo Coco, Cayo Guillermo Playa del Chivo. spired industrial growth strategy in the 1970s and Santa María. Several causeways were Also critical are the environmental degra- and 1980s, stress on Cuba’s coastal ecosys- switfly laid on the shallow shelf waters, cut- dation along the south shore of La Habana tems reached a peak. ting off natural tidal flow with the open seas. province and the Gulf of Guacanayabo Gulf in The main impact on the coastal environ- The result was a severe and extensive blow southeastern Cuba. ment comes from dumping untreated, or at to the Los Perros and Buenavista Bays, which Both areas, in the shallows of the island best, barely treated sewage and industrial have since become lifeless bottoms with shelf, with imited capacity for rapid self-clean- wastes directly into the sea — or indirectly, dying mangrove shores. ing, report a dramatic loss of marine produc- December 2007 ❖ CubaNews 9

Nickel plants back online the nearby fishing port. tivity, especially shrimp catches. This is a con- Nickel production has begun to stabilize sequence of overfishing and the destruction Varadero Beach, Cuba’s main tourism hub, as well as the beaches east of Havana from after weeks of torrential rains in eastern Hol- of mangrove swamps — a natural shelter for guín province spawned by Tropical Storm many species in hatchling stage development. Santa María del Mar to Guanabo have lost huge amounts of sand — a fairly common Noel (see page 3) in early November shut Mangroves are also doomed by the dump- down open-pit mines and slowed output. ing of raw industrial and agricultural waste- phenomenon for beaches around the world. But in this case, the problem was accentu- The René Ramos Latour processing plant water, and by the decline of freshwater runoff in Nicaro, which was shut when floodwaters now diverted inland for agriculture. ated by sand dredging directly from the seafront or the underwater sandbars. reached its drying ovens, has reopened. Along the Havana-Matanzas coastline, The two other plants in the area — Che destruction tends to be associated with the The landlocked bays at Nuevitas (see Cuba- News, October 1998 and April 2003), Cienfue- Guevara (owned and operated by state-run dumping of raw sewage and industrial wastes. Cubaniquel) and Pedro Soto Alba, a joint The onshore oil wells in the area, mainly gos, Mariel, Santiago de Cuba, Nipe and Puerto Padre are also badly contaminated — venture with Canada’s Sherritt Internatio- those developed before 1990, suffered fre- nal, operated with skeleton staffs over the quent spills — especially before drilling mainly from raw sewage, industrial wastes and polluting port activities. last two weeks, an industry source told norms required the construction of retaining Reuters, with little if any material moving in walls and other cautionary measures. Ironically, Cuba’s economic difficulties over the past 15 years have helped the envi- or out of the plants. One little-known episode occurred in the “Damage from the torrential rains have early 1970s, when the now-dismantled Camilo ronment. Coastal ecosystems have only bene- fitted from the dramatic downturn in industri- affected collection and distribution of food, Cienfuegos sugar mill (formerly Hershey) passenger transportation and the moving of diverted its wastewater to the nearby Río Jar- al activity, chiefly the sugar industry, along uco. The estuarine ecosystem at Boca de with a decline in port movement and use of materials for the processing of nickel Jaruco was immediately destroyed, affecting chemicals, fertilizers and irrigation. ❑ plants,” government radio reported. 10 CubaNews ❖ December 2007 NEWSMAKERS Fla. sugar king Pepe Fanjul dreams of post-Castro Cuba BY VITO ECHEVARRÍA and three alcohol distilleries. But after their liberated, as long as we are allowed to do so n 1994, investigative reporter Carl Hiaasen holdings (estimated by Forbes magazine to be under U.S. law. We do think the rights of pri- used the Cuban-born Fanjul brothers as worth $50 million at the time) were national- vate property are fundamental, and transition Ithe inspiration for the murderous sugar- ized by Castro in 1959, they resettled in Palm countries that have successfully developed baron Rojo brothers Wilbur and Joaquín in Beach, Fla. Family patriarch Alfonso Fanjul have recognized this and engaged in serious the novel Strip Tease (later turned into a Sr. and fellow exiles paid $640,000 for a 4,000- restitution. How that takes place is subject to movie starring Demi Moore). acre piece of farmland in the Florida Ever- a negotiable environment.” Alfonso “Alfy” and José “Pépe” Fanjul were glades, creating Flo-Sun Inc. 10 years later. As has widely been reported in CubaNews and elsewhere, Cuba is now in the process of furious with the implied similarities. FAMILY CONTRIBUTES TO BOTH PARTIES No surprise that 17 years later, the two revamping its troubled sugar industry to pro- men, who along with brothers Alexander and Today, the Fanjul empire controls 400,000 duce ethanol as a viable alternative to fossil Andrés run Florida Crystals Inc., one of the acres of sugarcane in the Everglades and the fuels. Indeed, the Fanjuls’ experience running nation’s largest sugar growers, would be ini- Dominican Republic, producing about one a biomass plant in Florida may prove useful as tially incensed with CBS-TV’s current night- million tons of raw sugar annually with help of Cuba aims to establish similar facilities. The Fanjuls’ plant in Okeelanta, Fla., now generates enough electricity to power 60,000 FLO-SUN HOLDINGS INC.* homes while cutting carbon-dioxide emis- ■ sions by 260,000 tons a year — a track record $2.5 billion in 2006 revenues that can’t be ignored by any future govern- ■ 400,000 acres ment in Havana. ■ 10 million tons of sugar cane ■ 3.5 million tons of refined sugar GRANT TO HELP FINANCE ETHANOL FACILITY ■ Domino, C&H, Florida Crystals This past February, Florida Crystals Corp. ■ Casa de Campo resort (D.R.) and Florida International University’s Applied ■ 5,000 acres of organic farming Research Center received a $1 million state grant to develop cellulosic ethanol technology. ■ Largest U.S. biomass power plant ■ The grant’s goal is to come up with a pre- 50 million gallons of molasses treatment process that can cheaply convert ■ 65 million lbs of furfural alcohol sugarcane bagasse to ethanol. The study will ■ 2.3 million crates of corn determine the feasibility of using Florida ■ 50 million lbs of rice bagasse as a feedstock for a future large-scale ■ 25,000 employees bioenergy plant somewhere in the state. *Information gleaned from Flo-Sun Inc. website Florida’s sugar industry now generates José “Pepe” Fanjul at Flo-Sun headquarters in Palm Beach, Fla. over a million tons a year of bagasse, a time drama “Cane” — which chronicles the controversial U.S. government subsidies that byproduct of sugar extraction. In addition, the Okeelanta facility has been lives and struggles of the scheming, cheating come to 22 cents a pound. chosen as the location for an ethanol plant Cuban exile, sugar-growing Duque family. The family also owns the nation’s largest that will produce 1-2 million gallons of the bio- The Fanjuls’ lawyers recently went after biomass power plant and Casa de Campo, the fuel annually. A $20 million state grant will be CBS to help protect the family’s public image, Dominican Republic’s premier luxury resort. issued to finance construction of the plant — backing off only after extracting a promise Alfy Fanjul contributes heavily to the the first of its kind in Florida — which will act from the network that the fictional Duques Democratic Party and co-chaired Bill Clin- as both a commercial facility and an R&D lab. would bear no resemblance to the Fanjuls. ton’s 1992 Florida campaign, while Pepe Fan- The Fanjuls are also well-entrenched in the jul is a staunch supporter of President Bush FANJUL’S VAST CUBA HOLDINGS Caribbean tourism industry. and the Republicans. Forbes estimates the In 1984, the family acquired the Dominican “CBS has given us assurances that it will be family fortune at $500 million. Republic’s posh Casa de Campo resort, locat- clear from watching early and subsequent With the CBS episode out of the way, Pépe ed on 7,000 acres along the country’s south- episodes that Cane is not about the Fanjuls, Fanjul says his family’s long experience in the eastern coast, from Gulf+Western. Long and that the fictional Duque family will not sugar, tourism and biomass energy sectors known as the top Dominican luxury destina- reflect the Fanjul family members or its busi- would make the Fanjuls worthy candidates to tion, Casa de Campo may serve as a model for nesses,” said Joseph Klock Jr., general coun- help rebuild Cuba once the Castros are gone. something similar in a post-Castro Cuba. sel for Flo-Sun Inc., in comments picked up “As a Cuban-American, I would like to help both by the Miami Herald and the Palm in the reconstruction of Cuba for sentimental WHAT ABOUT THE FAMILY MANSION? and economic reasons,” he told CubaNews. “I Beach Post. Regardless of what happens after Fidel and One reason the Fanjuls and their lawyers believe I’m in a good position to help Cuba be- cause our company is almost tailor-made for Raúl are gone, Pépe Fanjul says post-Castro won’t take legal action against CBS: the Cuba must create a political system that Duques’ main business is liquor — using Cuba’s economic reconstruction. It owns and runs real-estate, marinas, commercial ports respects private property, paving the way for their properties’ cane sugar to produce rum a smooth transition to capitalism. — while the Fanjuls strictly grow sugar cane, and aiports, free-trade zones and sugar refi- Recently, the Cuba Study Group, under the and produce refined sugar for American neries. It is also the largest renewable energy direction of co-chairman and Miami banker households, which includes the well-known company in the U.S., producing energy from Carlos Saladrigas, urged that any post-Castro Domino and C&H brands, as well as the sugar prouction and other green waste. These government in Havana provide property titles organic Florida Crystals brand. will be key skill sets to bring to the table in an for people now residing in houses and apart- And what a business that is. effort to grow the Cuban economy.” ments confiscated by the revolution. In pre-revolutionary Cuba, the Fanjuls Fanjul added: “Our desire is to cooperate owned 150,000 acres of cane, 10 sugar mills with a future Cuban government once Cuba is See Fanjul, page 11 December 2007 ❖ CubaNews 11 FINANCE Herzfeld plans to launch $300 million Cuba hedge fund BY LARRY LUXNER Herzfeld, who used to run JP Morgan’s cur- poised to benefit when the embargo is lifted,” or years, Tom Herzfeld has been known rency business in Asia on the derivatives side, said Thomas Herzfeld. “We are not a startup as the guru of closed-end funds. His said he sees Cuba as the next Vietnam. company. We’ve been in business a long time. FHerzfeld Caribbean Basin Fund, inaugu- “Cuba is one of the last communist coun- A lot of people would like to do what we’re rated in 1994, trades on Nasdaq under the tries. In our view, it is going to be the next one doing, and I’m sure many will — but we’re on CUBA ticker, and puts its investors’ money to topple, and there should be an incredible very solid footing.” into companies likely to benefit from an open- amount of [investment] opportunities there,” Herzfeld, writing in his company’s 2006 ing in U.S. relations with Cuba. he told hedge-fund newsletter FINalternatives. annual report, said “our portfolio strategy re- mains unchanged. We seek to invest in com- In late July, Herzfeld’s Miami-based firm, FIXED-INCOME, CURRENCIES AND BONDS Thomas J. Herzfeld Advisors, registered with panies that we believe will do well even if the the Securities and Exchange Commission for In a subsequent phone interview with trade embargo with Cuba is not lifted. a proposed non-transferable rights offering to CubaNews, Herzfeld said the new fund might “But at the same time, we place emphasis holders of the fund’s common stock (see be used to make private-equity investments. on companies which will benefit from CubaNews, August 2007, page 3). “My background is in emerging markets, resumption of trade with that country. Once Now the company plans to launch a $300 and it was a nice bet between my interests, U.S. law permits, we will consider direct million hedge fund that seeks to capitalize on future opportunities in Cuba — the ultimate emerging market. The new venture, dubbed Havana Partners, is to be ready by first quarter 2008. It will be “Cuba is one of the last communist countries. In our view, managed by Herzfeld’s son, Erik Herzfeld. it is going to be the next one to topple, and there should be an “Our existing closed-end fund is an on- shore retail product geared toward retail in- incredible amount of [investment] opportunities there.” vestors,” said the younger Herzfeld, who joined his father’s firm in March as head of — ERIK HERZFELD, HEAD OF ALTERNATIVE STRATEGIES AT THOMAS J. HERZFELD ADVISORS alternative strategies. “Institutional investors won’t get involved in closed-end fund. That’s not really their game, and we had a lot of in- quiries asking whether we’d offer something the firm’s expertise and the direction we see investment opportunities in Cuba — not only for them as well.” the Caribbean in general going,” he told us. in the country’s traditional industries, such as “Our strategy will be to look at other products sugar, rum, tobacco, mining, tourism and fish- like fixed-income, currencies and bonds — eries, but also in new areas, such as ethanol.” Fanjul — FROM PAGE 10 not just stocks.” The Herzfeld Caribbean Basin Fund, worth Havana Partners will charge a 2% manage- $8.5 million at inception, is now valued at over “I haven’t studied the specifics of ment fee and a 20% incentive fee, with a $1 $16.5 million. Its share price peaked on Jan. these proposals in detail, but I know and million minimum investment requirement. 22 of this year at $17.76 per share, while net respect Carlos Saladrigas,” Fanjul told But since U.S. institutional investors cannot asset value (NAV) hit $10.01 in early July. The CubaNews. “He is highly intelligent and it put their money directly in Cuba, Havana fund’s NAV as of Nov. 13 stood at $9.55. is good he and others are proposing dif- Partners will have to take its chances with ferent formulas for the Cuban people. other Caribbean Basin countries such as the RECENT RIGHTS OFFERING OVERSUBSCRIBED “In our view, the most important thing Dominican Republic and Panama. is not to try to figure out how to split the As of Dec. 31, 2006, the fund’s top holdings “The Panama Canal is widening, so there’s were in Florida East Coast Industries. (21.42% pie before there is a pie. Our focus is on going to be a lot more cargo and shipping economic development in a free-market of total); Seaboard Corp. (9.15%); Consoli- coming through, and the cheapest form of dated Water Co. (8.73%); Watsco Inc. (5.59%) system and helping to grow the Cuban transportation is rail and ship, so you’re going economy once its shackles are removed. and Florida Rock Industries Inc. (5.29%). to see a lot more tankers go through there in “From my own account, I bought over $1 We have learned to be patient. Any coun- a few years,” he told FINalternatives. try that wants to develop economically million in stock, and my son Erik bought must have a liberal economic system, FIRM TRUMPETS ‘15-YEAR TRACK RECORD’ $250,000,” said the elder Herzfeld, “so we’re great believers in the Herzfeld Caribbean free markets and protection of private Havana Partners is not the only fund of its property.” Basin Fund.” type that’s been proposed in recent months. On Nov. 1, Herzfeld announced that the The arrival of the post-Castro era will INTL Consilium LLC, based in Fort Lauder- certainly raise questions about the fate fund’s recently completed one-for-one, non- dale, manages a privately placed fund begun transferable rights offering was over-sub- of at least one of the Fanjuls’ former three and a half years ago. The company man- properties, which, to add insult to injury, scribed, raising $18 million after deducation ages $520 million worth of investments in sov- for expenses related to the offering. has long been used by the ailing Marxist ereign bonds, corporate bonds, stocks, local- revolutionary as a personal residence. The fund will issue 1,812,392 shares at a currency bonds and private equity (see final subscription price of $10.04 per share, “One of our homes is now the Mus- CubaNews, November 2006, page 4). eum of Decorative Arts,” Fanjul com- which represents 85% of the average volume- A few months ago, we reported on the Cuba weighted closing sale price at which shares of plained. “Other homes are used to en- Study Group’s proposed Cuban Enterprise tertain visiting diplomats. We under- the fund traded on Nasdaq on the expiration Fund, a $300 million fund aimed at helping date of Oct. 26 and the preceding four days. ❑ stand Fidel lives in one of our houses in start small businesses in a post-Castro Cuba Marianao, and that the old polo field at (see CubaNews, September 2007, page 1). Details: Thomas J. Herzfeld Advisors Inc., PO the back of the house is now being used ❑ “The difference between us and the others Box 161465, Miami, FL 33116-1465. Tel: as a helicopter landing pad.” is that we have a 15-year track record of in- (305) 271-1900. Fax: (305) 270-1040. Email: vesting in the Caribbean and companies [email protected]. URL: www.herzfeld.com. 12 CubaNews ❖ December 2007 port as well as specific industries in which plant to double its production. BUSINESS BRIEFS Cuba seeks Iranian investment, he continued. One ton of gypsum currently costs $90-100 BRAZIL’S PETROBRAS WON’T GIVE UP ON CUBA In mid-June, the two countries signed sever- on the world, while locally produced gypsum al memos of understanding as well as a 200 costs $30-35. Punta Alegre contains 8 million Brazilian state-owned giant Petrobras is tak- million euro ($289 million) loan from Tehran. tons of the mineral, which means there’s ing another look at deep-sea exploration in The loan will finance Iranian equipment for enough to meet demand for at least 50 years. Cuban waters in the Gulf of Mexico, Brazilian the transport sector, mainly in railroad materi- officials said Nov. 7. al and vehicles; hydraulic machinery; and RUSSIA RESTRUCTURES POST-SOVIET DEBT “Petrobras is interested in oil prospecting in materials for the energy sector. Russia’s lower house of parliament on Nov. Cuba,” said Miguel Jorge, Brazil’s minister of “Both countries have important business 16 ratified an intergovernmental agreement on development, industry and trade, at the annu- ties. Cuba needs train wagons and other Iran- restructuring Cuba’s $166 million post-Soviet al FIHAV trade fair in Havana. ian products, and we are interested in Hav- debt to Russia. Diplomatic sources told Reuters that a high- ana’s well-developed biology projects,” the Under the agreement, the debt will be level Petrobras delegation had visited Cuba in minister said. “Venezuela intends to purchase restructured over a 10-year period, with a September and that a team of technical Iranian agricultural products and construction four-year grace period and a 5% rate for experts were in Havana for talks with Cuba’s materials. So, the deal will also help boost arrears. The debt is to be repaid in euros. state oil company, CUPET. Iran-Venezuela trade relations.” The deal, signed in Havana on Sept. 28, Jorge said he didn’t know whether any 2006, does not cover Cuba’s debt to the Soviet agreements would be signed during a visit EMBARGO SCARES AWAY U.K. OIL PROSPECTORS Union, which is subject to separate discus- Brazilian President Luiz Inacio Lula da Silva Gold Oil PLC and Minmet PLC have agreed sions and is estimated at $26 billion. plans to make at the end of the month. to cancel an agreement relating to oil and Meanwhile, trade between Cuba and Russia He said Brazil had ample deep-water techno- exploration interests in Cuba and Latin Amer- reached $250 million in the first nine months logy and can build exploration platforms that ica to allow Minmet to pursue opportunities in of 2007. Russia’s export of motor vehicles, air- are in short supply in the current rush to find the United States, the companies reported in craft and equipment for the Cuban energy sec- new deposits spurred by high oil prices. statements picked up by Thomson Financial. tor constituted the bulk of this trade. Petrobras prospected for oil in Cuba “The Minmet board considered that oppor- Government minister Ricardo Cabrisas said between 1998 and 2001, but withdrew after tunities in the U.S. and Cuba could not be pur- nine Cuban enterprises operate in the Russian sinking an estimated $16 million in a coastal sued by the same company due to the long- market, while over 20 Russian companies wildcat well that turned out dry. In 2003, standing U.S. embargo on doing business in engage in official talks with their counterparts Petrobras studied seismic data on Cuba’s Gulf Cuba,” said Minmet. on the island. of Mexico prospects but took no decision. The companies agreed to swap shares as The Cuba-Russia Business Committee, cre- Interest in Cuba’s Gulf of Mexico blocks part of the agreement, signed early this year ated in April 2005, is formed by 82 Cuban picked up after Spain’s Repsol-YPF SA discov- and cancelled in October. The deal gave Gold companies and 80 Russian firms. ered a small deposit of light oil in 2004 that Oil a 24.76% stake in Minmet and Minmet a Russian interest has focused not only on tra- was not commercially viable. Repsol has since 4.9% interest in Gold Oil. ditional products but also non-traditional sec- joined forces with Norsk Hydro and India’s With the termination of the deal, Gold Oil tors like pharmaceuticals, biotech and IT. ONGC Videsh. The consortium plans to drill will sell its 8.3 million Minmet shares, and Unofficial sources have said there is talk a second well late next year. Minmet its 22.95 million Gold Oil shares. about a Russian offer to update Cuba’s fleet of Proceeds from the sale will be distributed Lada cars — most of them 20 to 30 years old COPA TO STEP UP PANAMA-HAVANA FLIGHTS back to the companies. — including those sold to individual owners at Panama’s Copa Airlines will increase the fre- Details: Gary Moore, CEO, Gold Oil PLC, preferential prices. quency of flights to Cuba in 2008. Representa- Sandy Lane, Kingswood, Surrey KT20 6ND, tives of both nations signed a cooperation England. Tel: +44 1737 833597. Fax: +44 CHINA, CUBA SIGN TV BROADCAST AGREEMENT accord with paves the way for the new flights, 1737 830133. Email: [email protected]. China and Cuba signed an accord in early beginning in May 2008. November to extend broadcasting of TV pro- This accord will allow 500 additional visitors CIEGO DE AVILA GYPSUM PLANT TO MODERNIZE grams in their respective countries. from Panama to arrive every day in Havana, The gypsum extraction plant and refinery The document was inked at the Cuban via four daily flights to the Cuban capital. located in Punta Alegre, in northern Ciego de Embassy in Beijing by Grissel Pérez, general Weekly flights will now increase to 28, com- Avila province, is being modernized with an director of Cubavisión Internacional and Du pared to the present 21. eye towards increasing production. Hao, manager of China International TV Corp. Copa, a code-share partner of Houston- Despite its 30-year-old technology, some 250 Through an agreement signed last year, the based Continental Airlines, currently offers tons of gypsum is processed monthly and Chinese distribute the Cuban TV signal in 150 116 daily flights to 36 destinations in 21 coun- delivered to Cuba’s four cement factories. international-level hotels in 15 provinces, tries throughout the Americas. Jorge Luís Pérez Rancaño, deputy director mainly Beijing, Shanghai and Guangdong. of the Building Materials Enterprise in Ciego The new accord extends the service to 1,500 IRAN MULLS J-V SHIPPING LINE, OIL EXPLORATION de Avila, said the technology is being refur- hotels, while Cuba will provide broadcasts to Tehran and Havana have agreed to establish bished with new parts and components. all facilities related to the tourism sector. a joint shipping line to boost Iranian-Latin He mentioned a drilling set that was recent- Since 2004, the Cuban Institute of Radio and American trade, Iran’s finance minister ly acquired including a forklift truck and a Television (ICRT) similarly broadcasts pro- announced Nov. 5. compressor. grams by three Chinese TV channels in Iran’s talks with Cuban officials have yield- On the industrial line, sieves used to classify English, Spanish and Chinese. ed positive results, Massoud Mir Kazemi said the material were replaced by new ones, as The accords include documentaries, soap upon his return from the second trade meet- well as conveyor belts and rollers. A setting operas, music, cartoons, history and chil- ing of the Non-Aligned Movement member furnace was renewed, and a new scales set up dren’s and nature programs subtitled in their states in Cuba, held Nov. 1-3. in the sack filling and weighing area. respective languages. Mir Kazemi also said Iran could use its vast Rancaño said three new trucks with a capac- Separately, Chinese and Cuban officials have experience to help Cuba explore oil in its Gulf ity of 23 cubic meters each will improve the signed other agreements, including one to re- of Mexico waters. He did not rule out Iran’s transportation from the deposit to the process- new the contract for the supply of Cuban nick- future entry into the Cuban oil sector, report- ing plant, as they only had two old trucks el to China, another to exchange technicians ed Al-Ittahad of the United Arab Emirates. available. This new equipment — along with and products related to the oil sector, and a He said contracts had been signed on trans- the repair of an excavator — will allow the third to jointly promote energy conservation. December 2007 ❖ CubaNews 13 MEDICINE MEDICAL BRIEFS Singapore, Cuba fight dengue fever CUBA’S VENEZUELA MISSION SAVES MANY LIVES Some 40,000 Cuban health specialists serv- ingapore and Cuba, both known for Also heavily into researching the disease, ing in Venezuela have saved more than 57,000 excellence in controlling dengue fever, the IPK has produced over 200 publications lives in Venezuela since the beginning of the S have joined forces to work together on on dengue since 1982, noted Ibrahim. Barrio Adentro mission in April 2003, claims researching the scourge. EHI head Dr. Ng Lee Ching noted that government news agency ACN. The Straits Times of Singapore reported because dengue was not endemic in Cuba, Dr. Pablo Feal Cañizares, deputy director of Sept. 15 that besides coming up with findings outbreaks there have been intermittent. Also, the Cuban medical brigade in Venezuela, said to help over 100 tropical countries fight the unlike in Singapore, only a single dengue type that over 70% of the population living in mosquito-borne disease, the two nations also usually hits at a time, so it is easier to study remote regions of that South American coun- expect to feed off each other’s experience. the disease. try have benefited from the program. For instance, Singapore, now hit by the Two other differences exist between the Feal Cañizares said that the improvement of type called Den-2, is looking to Cuba for cues two countries: One is that temperatures drop health indicators is reflected in the decrease on battling Den-3 and Den-4, which broke out below 20 degrees C. in Cuba, which slows of infant and maternal mortality rates. He there in recent years. These types of dengue down breeding among the Aedes aegypti mos- pointed out that between 1995 and 2005, near- could also hit Singapore, where people have quito and also its ability to spread the disease. ly 1,000 children died every year due to cur- low immunity to them. The other difference is that people in able infections, diseases and HIV/AIDS. A memo of understanding was signed be- Singapore live more closely together. The The Cuban doctor noted that over 256 mil- tween Singapore’s Environmental Health Inst- prosperous city-state’s population density is lion medical examinations and 168 million itute (EHI) and Cuba’s Pedro Kouri Institute. 6,400 people per square kilometer, compared educational activities have been carried out The Genome Institute of Singapore will also to Cuba’s 100 people per square kilometer, over the last four years in Venezuela as part of be in the loop. which means the disease can spread more the Barrio Adentro mission. “Cuba has faced their own challenges. It is quickly in Singapore during an epidemic. The program involves 6,000 clinics, 388 not really in an endemic region, so they have NEA’s director-general for public health, polyclinics and 492 rehabilitation centers seen the cases more intermittently and this Khoo Seow Poh, noted that Singapore and across the country. has allowed them to study the diseases bet- Cuba had independently come up with similar PROGRESS REPORTED IN RETINITIS PROGRAM... ter,” said Yaacob Ibrahim, Singapore’s envi- approaches to the war on dengue. ronment and water resources minister. “So Both have homed in on eliminating breed- Thanks to the development of a national with the better knowledge that Cuba has ing sites, involving the community and impos- program for the early diagnosis of retinitis gained, I think this will be very helpful for us ing big fines on individuals or firms caught pigmentosa in Cuba, treatments are more effi- in an endemic region.” breeding the Aedes aegypti. cient and patients have been able to improve Cuba, strong in biomedical research and in In the area of involving the community, the quality of their life, reports program direc- the race to find a dengue vaccine, had at least Cuba has a pilot project which trains retirees tor Obel García Baez. five epidemics between 1977 and 2002. It has to help their neighbours spot and destroy In a Nov. 16 article, he told Granma the dis- poured $50 million into a sustained dengue- mosquito breeding grounds in their homes, ease’s prevalence had jumped from 1.4% of the control program. even when there is no outbreak. ❑ population in 1990 to 4.4% in 2004. This figure includes 2,718 men and 2,378 women with higher rates in the eastern Cuban provinces of Granma, Las Tunas and Paper: Going to the dentist is no picnic in Cuba Camagüey. The cases belong to 3,053 families uba’s Juventud Rebelde has published a lems in the education system. and 24.3% of all cases are blood-related. stinging criticism of the state of dentis- Cuba takes pride in its free health and Retinitis pigmentosa is a degenerative, Ctry in Cuba. education systems as the two most impor- genetic disease that causes the progressive Reuters, reporting on the expose, said a tant achievements of the socialist society death of ocular cells called photoreceptors team of reporters from the state-run news- built after the revolution led by Fidel Castro resulting in increasing loss of eyesight. paper fanned out to 22 dental clinics in vari- in 1959 and official criticism is rare. ...BUT CUBAN EYE-CARE FALLS SHORT IN ANTIGUA ous provinces only to discover the problems But the economic crisis that hit Cuba after were the norm, not exception in the free sys- the Soviet Union collapsed in 1991 and Not everyone in the Caribbean is happy with tem of more than 1,000 facilities. tougher U.S. sanctions have taken a toll, Cuba’s much-hyped eye program. “The majority of the 22 clinics lacked ade- National Director of Dentistry Dr. Armando On the small island of Antigua, residents are quate professional and technical personnel, Mojaiber de la Peña was quoted as saying, complaining that they’ve not been able to more than half had passed through crisis with Cuba’s annual hard-currency budget access the program for several months now. due to a lack of water, dentist chairs, materi- cut dramatically since the 1980s and 1990s. One would-be patient told the Antigua Sun als to fill cavities, significant delays for den- Mojaiber de la Peña told Juventud Rebelde newspaper that his efforts to see a Cuban tures,” according to the article headlined that thousands of dentists and technicians vision specialist was stymied when he was told “Dentistry Dilemma.” were being trained, more resources were by the clinic that the Cuban doctors had gone Other problems included services provid- flowing into the system and dentists who on vacation in August and had not returned. He said that no explanation had apparently ed through underground clinics — at a charged for services pursued. been provided to patients, neither has word “Today our data compares with developed price — and patients waiting for hours in been offered about when or if the eye pro- countries; 68% of Cuban children up to age 5 offices with little air-conditioning and few gram would be restarted. toilet facilities. have no cavities and 90% of the population up Dr. Marcelino Fajardo, Cuba’s ambassador The Oct. 28 report followed by just a week to 18 years have all their teeth,” he said. to Antigua, said the initiative will be resumed a similar critical article on healthcare in gen- After that, Mojaiber de la Peña admitted, as soon as a new agreement can be signed eral and publication of a story in the dentures may be hard to come by, with Cuba between the two governments. Communist Party daily newspaper Granma, currently producing only half of its annual Fajardo added that the lone ophthalmologist detailing teacher shortages and other prob- denture demand. stationed in Antigua had completed her two- year term and has since returned to Cuba. 14 CubaNews ❖ December 2007 FOREIGN INVESTMENT Blacklisted British online entrepreneur gives up on Cuba BY VITO ECHEVARRÍA the West African nation of Cape Verde. the U.S.-based http://enomcentral.com. ince the mid-1990s, Stephen A. Marshall Marshall’s comments are consistent with “So, if OFAC did not shut him down, an had been a fixture within Havana’s expa- those confidentally made to CubaNews a year internal review of Enom could have found Striate community. ago by a Canadian web entrepreneur who Stephen to be a client it needed to distance The 38-year-old businessman, originally asked not to be named. That Canadian also itself from and shut him down from the do- from Yorkshire, England, had come to Cuba left Havana because of Cuba’s lack of interest main registration side,” said the businessman, to start up a venture dedicated to providing in attracting foreign investors. who asked not to be identified for this article. online travel services. He was often seen en- Cuba’s changing priorities seem to be rais- OFAC spokesman Andrew DeSouza would tertaining friends and business clients at the ing questions about the future of the island’s not confirm or deny reports his agency had a Club Nautico, near his office at the Marina e-commerce sector, which was made possible direct hand in shutting down Marshall’s sites. Hemingway complex in western Havana. by tech-savvy foreigners like Steve Marshall In an email to CubaNews, DeSouza said Marshall’s firm, Tour and Marketing Inter- and one-time competitor Robert Sajo, creator “the regulations administered by OFAC gen- national Ltd., registered in the British Virgin of the Cuban government’s commercial por- erally prohibit persons subject to U.S. juris- Islands, served a growing clientele through his tal www.cubaweb.cu. diction from providing services to those on primary website, GoCubaPlus.com, and over Eren said that Marshall could have pre- the SDN list.” 100 related sites (see our profile of Marshall, vented his travel service from being designat- Therefore, Enom would certainly have CubaNews, March 2004, page 8). ed a “national of Cuba” had he also conducted been subject to legal pressure from OFAC online travel bookings to other countries like regarding Marshall’s sites. Said Eren: “If his During the late 1990s, he even used a com- sites were based elsewhere, that wouldn’t be panion site, RealEstateCuba.com, to dabble in the Bahamas or Jamaica. According to an OFAC press release issued the case.” selling the limited number of luxury condos This would explain the continued existence that the Cuban government allowed to be con- in December 2004, Marshall’s firm became a “national of Cuba” because it was “the official of Marshall’s companion site, www.digital- structed and sold to wealthy foreigners look- panorama.net. ing for a second home in Havana. tour operator representing the Cuban govern- ment’s Agencia Receptora Ecotur SA, one of According to CubaNews sources, that site In 2005, European Business magazine re- has an IP location in the Bahamas — effec- Cuba’s largest local agencies.” ported that Marshall’s 2004 revenues from tively shielding it from legal action by OFAC his online Cuba travel business came to 1.06 Marshall’s inclusion on the SDN list may or any other U.S. government agency. ❑ million euros (a little over $1 million). seem overblown to those who know him per- But lately, Marshall’s websites seem to sonally, since he only engaged in online trav- Details: Stephen Marshall, Managing Direc- have disappeared into the ether. el bookings, and because the SDN list also tor, Viajes Tenerife VIP/Estival Tour Las Am- Not long ago, the U.S. Treasury Depart- cites nefarious people linked to drug-traffick- éricas, Local 1ro, Centro Comercial Villa Blan- ment’s Office of Foreign Assets Control ing rings and terrorist groups like al-Qaeda. ca, Av. de Austria 36, San Eugenio Alto, Costa added most of them to its list of Specially Meanwhile, a businessman engaged in his Adeje 38660 Santa Cruz de Tenerife, Spain. Designated Nationals (SDNs). own e-commerce venture told CubaNews that Tel: +34 922 751752. Fax: +34 922 798574. Under OFAC regulations, persons subject most of Marshall’s domains are registered at Email: [email protected]. to U.S. jurisdiction are barred from doing business with any entity or individual on the SDN list. This means U.S. citizens or groups Paper studies U.S., Cuban tourism cooperation who are licensed to travel to Cuba cannot make their travel arrangements through any n analysis of the potential relationship The authors found a deep distrust be- of Marshall’s travel sites; they may only use of U.S. and Cuban tourism interests tween the people of the two countries, while, travel agents authorized by OFAC to make A by Sergei Khrushchev and two co- at the same time, U.S. dollars are desired in bookings to Cuba. authors, published in the November 2007 the Cuban economy. The authors contend OFAC also says that foreign firms active in issue of the Cornell Hotel and Restaurant that, if the current embargo were lifted, U.S. Cuba and conducting business on behalf of Administration Quarterly, suggests that the hospitality industry-sponsored research Cuban entities are “nationals of Cuba” for the U.S. hospitality industry can begin to help could be a way for the United States to get purpose of barring Americans from doing any bridge the economic gap between Cuba and its “foot in the door” in Cuba, while dis- business activity with them. the United States. pelling some of the distrust. “If his company is totally dedicated to pro- As the son of the former Russian premier, “We see a historic opportunity for prof- moting tourism in Cuba, that makes him a Khrushchev has the unusual position of liv- itable investment in a ‘new Cuba,’” says the ‘national’ of Cuba,” said Hal Eren, a Washing- ing in the United States but having dealt analysis. “Not only can the U.S. hospitality ton attorney and former OFAC official famil- with both the Cuban people and Fidel Cas- industry participate in shaping that new iar with the agency’s sanctions program. “His tro. Khrushchev is now a senior fellow at the Cuba, in partnership with locals, but we con- business’ exclusive dedication is for Cuba, Watson Institute for International Studies at tend that now is the time to advance pre- which makes him eligible for the SDN list.” Brown University. scriptive, forward-thinking insight designed Reached by phone in the Canary Islands, Khrushchev’s co-authors are Tony L. to shift the thinking of the U.S. business Marshall declined to comment on OFAC’s Henthorne, Ph.D., chair of tourism manage- community about Cuba and, in so doing, activities against him. But he confirmed that ment and professor of marketing at the shift the thinking of the Cuban government, he indeed pulled out of Cuba over a year ago. University of Southern Mississippi, and businesses, and people about their neigh- “The investment climate in Cuba changed Michael S. LaTour, Ph.D., chair and profes- bors to the north.” when China and Venezuela started cutting sor of marketing at the University of Nev- The article, “Cuba at the Crossroads: The deals with Havana,” said the entrepreneur, ada, Las Vegas. Role of the U.S. Hospitality Industry in Cu- who now runs Online Travel Management. The article explains the three scholars’ ban Tourism Initiatives,” is accessible for a He added that along with the more favor- personal experiences and their recent quali- limited time at http://cqx.sagepub.com/cgi/- able investment climate in the Canary Islands, tative research in Cuba. reprint/48/4/402. he’s also eyeing real-estate opportunities in December 2007 ❖ CubaNews 15

VICKI HUDDLESTON (1999-2002) “My proudest moment was when Jimmy Diplomats — FROM PAGE 7 The first woman ever to head USINT, Vicki Carter went to the University of Havana and ana assignment — there were 50,000 bicycles Huddleston had already served as coordina- called for the Cuban government to allow an in Cuba. tor of the State Department’s Office of Cuban up-or-down vote on the Cuban constitution. “Three years later, there were 800,000 bicy- Affairs before beginning her stint in Havana. That was an amazing moment, and it showed cles, mostly the heavy Chinese kind, and no But she didn’t have a lot of breathing space, just how much might be achieved in Cuba.” fat people at all,” he said. “It was a sad time to because the Elián González affair exploded Huddleston added: “Many people in Miami be there. We of course sat and watched. Peo- onto the world’s headlines in January 2000, supported what we were doing, but the more ple thought the end was near. When I stopped only a few months after her arrival. conservative Cuban-Americans did not, and in Miami on my way to Havana, I saw bumper “President Clinton had decided he’d change so the Bush administration decided to change the policy.” stickers reading ‘Christmas in Havana,’ and our policy on Cuba, even though when he was those people actually believed it.” After leaving USINT, Huddleston was first elected, he had promised the Cuban Am- named U.S. ambassador to Mali. In retire- Yet Flanigan says this was wishful thinking erican National Foundation that he’d bring on the part of the Cuban exile community. ment, she’s now a visiting fellow at the Brook- the hammer down on Fidel, which he did. ings Institution, where she directs the “U.S. “What most people seem to forget is that This led to passage of the Cuban Democracy Policy Toward a Cuba in Transition” project. this was a country under the control of a very Act,” she said. “It’s isolation that keeps Castro going. That rigid army and Ministry of Interior. They con- Even so, Clinton permitted people-to-people is why U.S. policy is hugely at fault for prop- trol all the communications and all the wea- travel, church exchanges and bilateral sport- ping up this regime,” she said. pons — and there was no desire on the part of ing events. “Unfortunately, our relationship has broken Fidel Castro to permit anything to open up. “Cuban-Americans were allowed to travel down, and Dagoberto [Rodríguez, ex-chief of Sure there were dissidents, a handful of them, there at least once a year, and many people the Cuban Interests Section in Washington] but they were arrested and put in prison.” thought the Clinton administration would ev- told me they haven’t spoken with the principal Regarding U.S.-Cuba relations during his entually lift the travel ban,” she said. “I believe U.S. officer in Havana since I left five years tenure, Flanigan said: “Inertia is an important that’s where we were headed, and I believe ago. I wish they would; they need to.” CONCLUSIONS Huddleston’s colleagues have all reached conclusions of their own, with Smith insisting that Raúl Castro, the man now running Cuba, sincerely wants to reform the system. “He’s in charge of the armed forces, and they are deeply involved in the economy, and in a very constructive way. They’ve shown themselves to be good businessmen,” said Smith. “But there is Fidel, still in the back- ground. Many of the decisions Raúl wants to make, Fidel wouldn’t approve of. So Raúl doesn’t want to move too far too fast.” Five ex-USINT chiefs sound off on Cuba policy during a Nov. 14 event at Washington’s Brookings Institution. Ferch discounted the idea Fidel remains a key factor in the decision-making process. thing in diplomacy, and inertia took hold for 100% that Fidel used that little boy Elián in “Fidel Castro is already gone,” he said. “If the three years I was there. Not much hap- order to stop the Clinton administration from you had a panel of physicians up here rather pened. Cuba wanted to make sure the U.S. moving any further. Much more than that, it than ex-Foreign Service officers, you might wasn’t a problem, so they tried to maintain a reinvigorated a very tired revolution.” be hearing that a man in his condition cannot decent relationship, though they didn’t do Huddleston recalled gazing out the 5th-floor be making decisions. anything to make it a more productive one.” window of her office and seeing the anti- Ferch added: “The Cuban hierarchy was Neither did the United States, apparently. American marches growing larger by the day very realistic and pragmatic. I assume that “We had very few opportunities to make — first thousands of people, then tens of thou- characteristic is still there, so I have little doubt real progress,” he said. “One of them might sands, and finally hundreds of thousands. that if we engage them, they’ll engage us in a have occurred while I was there, but it didn’t. “These were all organized demonstrations, realistic manner. They’re not acting out of ig- “After all, we had an election and a new and everyone had to come, but every Cuban I norance or emotions, but rational thinking.” administration which at least had some peo- knew, from dissidents to civil servants, ag- Taylor predicted a transition to a more open ple who were sympathetic to improving the reed that Elián had to come back. It gave Fi- society. relation a little. But in the end, they just con- del the greatest cause he could ever hope for.” “It’ll still be very controlled. It’ll be a system tinued the same old policies.” Even after George W. Bush became presi- like China or Vietnam where you have no pol- Flanigan seems not to have had much luck dent, Clinton’s people-to-people measures itical rights,” he said. “But even the Chinese cultivating official sources at the top. were continued; at the same time, Huddleston people are more free today than they’ve ever “Carlos Aldana was considered the prime earned the wrath of some Cuban officials for been in the history of China.” minister, but he quickly disappeared from the distributing thousands of cheap, $10 AM-FM- Flanigan said anything Washington does scene [in September 1992]. I never talked to shortwave radios to whoever would accept now must be in its own interests “because I him,” he said. them (see our exclusive profile of Huddleston in don't think we can expect reciprocity, espe- “My contacts with the Cuban government the July 2005 issue of CubaNews, page 8). cially given the current situation in Havana.” were steady, regular and correct, but also “When the Bush administration came in, the However, he added that there’s a “risk- testy and at a relatively low level.” new measures were continued. Our interests reward ratio” in dealing with Cuba that all In the end, he said, “we missed opportuni- section began distributing books all over political operatives must keep in mind. ties, but I’m not sure they were real. Fidel Cuba. It was a hugely vibrant time,” she said, “It’s not just a bilateral relationship; it’s emo- needed us more as an enemy than as a friend. noting that dissident Oswaldo Payá, founder tional, and there are votes involved,” he said. We could have taken steps to open up, but I’m of the Varela Project, was able to gain 10,000 “Yes, we’ve missed chances, but it’s not the not sure he would have reciprocated in any signatures on a petition seeking a referendum end of the world. We should look forward and solid way.” to change Cuba’s constitution. find opportunities to make it work.” ❑ 16 CubaNews ❖ December 2007

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. 27: “Rebuilding Cuba: The Critical Issues.” Private seminar at Riviera Country Club, fast-growing region. Subscribe to Caribbean UPDATE, a Miami, to discuss possible funding strategies for privatization, confiscated properties and monthly newsletter founded in 1985. Cor- the reconstruction of a new Cuba. Speaker: Thomas Herzfeld. Details: Babun Group Consult- porate and government executives, as well as scholars and journalists, depend on this ing, PO Box 546135, Miami, FL 33154. Tel: (305) 884-0441. Email: [email protected]. publication for its insightful, timely cover- age of the 30-plus nations and territories of Dec. 1: “Cuba: What to Expect,” Westin Colonnade Hotel, Miami. Speakers at all-day event the Caribbean and Central America. include Brian Latell, Frank Mora, Alcibiades Hidalgo, Eugenio Yáñez, Carlos Alberto Mon- When you receive your first issue, you taner, Orlando Gutiérrez, Andy Gómez, Marcos Antonio Ramos, Hans de Salas, Steven G. have two options: (a) pay the accompany- ing invoice and your subscription will be Ullman, Jorge Piñón, Antonio Jorge, Mario González Corzo, Jorge Pérez-López, Susan K. processed; (b) if you’re not satisfied, just Purcell, Otto G. Reich, Pamela Falk, Damian Fernández, Mauricio Claver, Bruce M. Bagley. write “cancel” on the invoice and return it. Keynote speaker is U.S. Commerce Secretary Carlos Gutiérrez. Cost: $45 including lunch. There is no further obligation on your part. The cost of a subscription to Caribbean Details: Cuba Transition Project, University of Miami, PO Box 248174, Coral Gables, FL UPDATE is $277 per year. A special rate of 33124-3010. Tel: (305) 284-2822. Fax: (305) 284-4875. Email: [email protected]. $139 is available to academics, non-profit organizations and additional subscriptions Dec. 5: Cuba session on final day of 31st Miami Conference on the Caribbean, Hotel Inter- mailed to the same address. To order, contact Caribbean UPDATE at Continental. Cost: $800. Details: Caribbean-Central American Action, 1818 N St. NW, #310, 116 Myrtle Ave., Millburn, NJ 07041, call us Washington, DC 20036. Tel: (202) 466-7464. Fax: (202) 822-0075. URL: www.c-caa.org. at (973) 376-2314, visit our new website at www.caribbeanupdate.org or send an Dec. 8-15: Study tour to Cuba for students and staff at London Metropolitan University. email to [email protected]. We accept Tour “to take in aspects of Cuban history, economy, conservation and architecture as well Visa, MasterCard and American Express. as music and culture.” Cost: £888 (inc. airfare from UK, five nights at Hotel Habana Libre, guides, transfers, etc.). Details: IISC, London Metropolitan University, 166-220 Holloway Road, London N7 8DB. Tel: +44 20 7133-2405. Email: [email protected].

Dec. 12: “The Scientific Revolution in Cuba: Highlights and Future Prospects,” London. Speaker: Luís Alberto Montero-Cabrera, Consejo Cientifico, University of Havana. No charge. Details: International Institute for the Study of Cuba, London Metropolitan University, 166- Editor & Publisher ■ LARRY LUXNER ■ 220 Holloway Rd, London N7 8DB. Tel: +44 20 7133-2405. Email: [email protected]. Washington correspondent Feb. 5-6, 2008: “Cuba After Fidel Castro: A New Era in Havana.” Brookings Institution, ■ ANA RADELAT ■ Washington. Speakers: Vicki Huddleston, Jaime Suchlicki, Mark Falcoff, Ann Bardach, Philip Political analyst ■ ■ Peters, Francisco Hernández, Julia Sweig, Daniel Erikson, William Leogrande, Riordan Roett, DOMINGO AMUCHASTEGUI Peter Hakim, Carlos Saladrigas, Carmelo Mesa-Lago, Marifeli Pérez Stable, Andrés Gómez, Feature writers ■ VITO ECHEVARRÍA ■ Jorge Piñón and Kirby Jones. Cost: $1,875. Details: Brookings Institution, 1775 Massachusetts ■ HELEN J. SIMON ■ Avenue NW, Washington, DC 20036. Tel: (800) 925-5730. Email: [email protected]. Cartographer ■ ARMANDO H. PORTELA ■

Graphic designer INTERNATIONAL STOCK PHOTOS ■ CARI BAMBACH ■ If your business needs high-quality photo- graphs of Cuba — or anywhere else — to (ISSN 1073-7715), founded in 1993, illustrate annual reports, articles, bro- is published monthly by Luxner News Inc., PO Box 1345, Wheaton, MD 20915, USA. chures or presentations, you’ve come to Subscriptions: $429/one year, $800/two years the right place. Luxner News Inc. has over (special rates available to academics and non-pro- 15,000 color images on file from 84 coun- fit groups). Please visit www.cubanews.com to learn more about our newsletter. tries in North, South and Central America, To order a subscription, just call at the Caribbean, Africa, Europe, the Mideast (301) 452-1105, fax us at (301) 949-0065 or send an and Asia, depicting a variety of topics e-mail to [email protected]. ranging from agriculture and aerospace to Contents may not be distributed by any means without prior written permission of the publisher. tourism and zoology. For details, please Luxner News Inc. grants authorization to photo- call Luxner News Inc. at (301) 452-1105 copy items for internal or personal use, provided or search our user-friendly website at: the appropriate fee is paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, www.luxner.com MA 01923. For details, visit www.copyright.com.