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www.cubanews.com ISSN 1073-7715

Volume 6 Number 10 THE MIAMI HERALD PUBLISHING COMPANY October 1998

Editor's Note MAJOR DEVELOPMENTS Hurricane Georges Impact Food Supply Shrinks There has always been an Alice in Wonderland quality to developments in Already reeling from a drought, got Meanwhile, the combined effect of natural Cuba, but a series of recent develop- hit by another catastrophe in the form of disasters, market fluctuations and such ments seems particularly bizarre and Hurricane Georges. The disaster didn’t stop could have a devastating impact on the rich in irony. from suggesting that Cuba’s already eroded living standards of . Take, for example, Fidel Castro’s com- economy could serve as a model to the More food will have to be imported. ments on the world economy. At the world. See Agriculture/The Economy, page 9 moment, Cuba is reeling from the impact See The Economy, Pages 6 & 7 of natural and man-made disasters that Aid Package in Jeopardy raise questions about whether Cuba’s Condos in Cuba Despite the dire situation, President economy will experience any growth A Canadian company is joining Gran Castro grandly rebuffed U.S. participation in whatsoever this year. But that has not Caribe to build Cuba’s first condos and time- an emergency food relief plan that the UN is stopped him from pointing with glee at share facilities. The development will be trying to put together. This has put the the plunge in stock market prices. located on some prime beachfront property. entire package in jeopardy. The irony, of course, is that the same See Trade & Commerce, Page 5 See Washington Report, Page 8 officials who decry the state of the world economy refuse to give any figures on Cuba’s own performance, probably Sugar Exports Down The Embargo Again because the news is all bad. The poor sugar harvests of recent years Henry Kissinger heads a group of promi- Moreover, even as the level of rhetoric mean Cuba has less sugar to sell abroad. nent current and former government offi- against “capitalism” and “neo-liberal glob- estimates sugar exports will cials in Washington who want to set up a alization” is heating up, Cuba is trying to earn Cuba only $800 million, but it could be blue-ribbon commission to review policy lure more capitalist investment. The lat- a lot less, raising serious questions about the toward Cuba. A supporter of the status quo est victory on this front is outlined on economy’s viability. labeled the proposal “bizarre.” Page 5, where we report on Canadian See Trade & Commerce, Page 5 See Washington Report, Page 8 plans to build a $250 million condomini- um, timeshare and luxury resort project. Nickel Slide Continues Environmental Disaster More? Well, there’s the new Cuban decree on “enterprise improvement,” To make matters worse, the price of In the rush to develop the economy, envi- which, stripped of the gobbledygook, another big export commodity is plunging. ronmental standards in Cuba have been means that even as the government If the price of nickel goes down any further, ignored for decades. A government inspec- decries capitalism, it is trying to square Fidel Castro warned, the government may tion of Nuevitas reveals just how badly pub- the circle by updating Marxism to meet have to close at least one plant. lic health has been affected by this neglect. the demands of the free-market system. See Mining, Page 12 See The Environment, Pages 10 & 11 The decree appears to say that there should be a relationship between the INSIDE wages earned by workers and the profits earned by their enterprise. International The Economy But for real irony, the relationship OAS and Cuba...... 2 Official Optimism ...... 6 between Havana and Washington is hard U.S. and United Nations...... 2 New Labor Code ...... 6 to top. The latest development (see page Hurricane Impact ...... 7 8) is a proposal to establish a blue-ribbon Congress: Talk But No Action ...... 2 panel in the to review poli- Trade & Commerce Washington Report cy toward Cuba. That is all well and UK-Cuba Insurance Deal...... 3 Aid Package in Trouble ...... 8 good, but look who’s behind it—former New Industrial Gas Plant ...... 3 Cuban Policy Review? ...... 8 U.S. State Department officials, who in Tourism Pace On Track ...... 4 their day promoted the status quo as the Agriculture best of all options. Hotel Target ...... 4 Food Supply ...... 9 The Mad Hatter would feel right at Oil Production...... 4 The Environment home. Sugar Exports ...... 5 Port of Nuevitas ...... 10 —Juan M. Vasquez Bus Sale ...... 5 Mining Nickel and Nickel Prices ...... 12 INTERNATIONAL OAS to Cuba: Still No No Change in Policy as Congress Adjourns The 105th Congress will end without any new legislation concerning Cuba. The 28th General Assembly of the The Cuban issue came up repeatedly during the session, but despite efforts by both Organization of American States ended with supporters and opponents of existing policy to change the law, every move was blocked. no resolution of the issue involving Cuban Food and Medicine Exemption. An attempt by Americans for Humanitarian Trade With re-entry into the regional body. A Mexican Cuba, a coalition of organizations headed by the U.S. Chamber of Commerce, to lift sanc- proposal to create a group of “friendly coun- tions on the sale of food and medicine to Cuba died in negotiations over a $56 billion tries” to find ways to return Cuba to the OAS appropriations bill that sets the 1999 budget for the Department of Agriculture. won no support and was left off the agenda. When the Senate considered the bill in July, Sen. Chris Dodd, Democrat of Connecticut, “The ball is now in the Cubans’ court,” won support for an amendment that would have allowed the unrestricted sale of medicine said foreign Minister Miguel Angel Bureli and food to nations subject to unilateral U.S. economic sanctions. But Dodd’s amendment Rivas of Venezuela. “We all expressed our was restricted by another sponsored by Sen. Robert Torricelli, Democrat of New Jersey, desire that this issue be resolved soon and that banned U.S. food and medical sales to nations considered by the State Department to that the OAS be the one to establish the be terrorist states—such as Cuba. communication that will allow us to end this An effort to strip Torricelli’s amendment from a final bill failed in a Sept. 28 conference old quarrel one day and have total harmony aimed at reconciling the differences between the House and Senate bills. in our fraternal group.” House conference members Jose Serrano of New York and David Obey of Wisconsin, Luiz Felipe Lampreia, foreign minister of both Democrats, argued that U.S. farmers would benefit from new markets if Dodd’s Brazil, said the issue should be a matter of amendment, without Torricelli’s restrictions, was allowed to become law. priority for the OAS, but he added that Cuba But the chairman of the House Appropriations Committee, Rep. Bob Livingston, must be willing to hold a dialogue on issues Republican of Louisiana, opposed scrapping Torricelli’s amendment. House Speaker of democracy. Newt Gingrich had also weighed in with his support for Torricelli’s restrictions. “Unfortunately,” he added, “it seems that In a July 29 letter, Gingrich urged Rep. Joe Skeen, Republican of New Mexico, the there is no willingness to hold such a dia- chairman of the House subcommittee controlling the bill, to keep the Torricelli amend- logue.” ment in a final version in order to ensure that there is no weakening of U.S. sanctions on A spokesman for the Cuban Foreign trade with Cuba. Ministry, Alejandro Gonzalez, said Cuba “It is unclear how long the Castro regime will survive, and at the time of the inevitable would never accept conditions to regain transition phase in Cuba, our embargo will constitute critical leverage for the achievement membership in the OAS. of our principal policy objective in Cuba: free elections for the Cuban people and the estab- lishment of a democratic government,” Gingrich wrote. UN to U.S.: Still No The debate over the Dodd and Torricelli amendments ended when House conference members voted 7-6 to strip both from the final bill. Senate conferees decided not to chal- For the seventh consecutive year, and by lenge the House position. The result: no change in the U.S. trade embargo against Cuba. the most overwhelming margin yet, allies "Solidaridad." A rival proposal by Sen. Jesse Helms, the Republican chairman of the and enemies of the United States voted for a Senate Foreign Relations Committee, fared no better. non-binding resolution demanding an end to Helms’ “Solidaridad” bill aimed to greatly expand a provision in the Helms-Burton Act the trade embargo against Cuba. that funds “democracy-building efforts” in Cuba, including support for dissidents on the The vote in the General Assembly was 157 island. Solidaridad would raise funding of Sec. 109 of Helms-Burton from the current to 2, with 12 abstentions. Only Israel joined level of $3 million to up to $25 million and amend it to include humanitarian assistance to the United States in voting against the “victims of political repression, and their families.” motion. Helms’ new legislation also placed new restrictions on the sending of private donations Last year, U.S. diplomats had somehow of humanitarian aid to Cuba and proposed moving operations of the U.S. government’s managed to persuade the Central Asian “TV Marti” from South Florida to the U.S. Navy base in Guantanamo, where broadcasts nation of Uzbekistan, a former Soviet repub- would supposedly be harder to jam. lic, to join them in defying United Nations Helms’ effort drew support from the Cuban American National Foundation, but there rejection of the embargo, but this time was no matching legislation in the House. Cuban-American lawmakers Reps. Ileana Ros- around even the Uzbeks failed to support Lehtinen and Lincoln Diaz Balart, Republicans from Miami, had reservations about the Washington. provision allowing U.S. aid to flow into Cuba. In addition, although the proposal foresaw Abstaining were El Salvador, Nicaragua, the aid to dissidents and their families being distributed by non-governmental organiza- Estonia, South Korea, Georgia, Lithuania, tions in Cuba, such as the Catholic Church, the move was opposed by church officials and Latvia, Macedonia, Morocco, Nepal, Senegal other non-governmental agencies. and Uzbekistan. Helms-Burton Waiver. An administration attempt to win Congressional support for a waiver The number of countries voting against of a Helms-Burton Act sanction also floundered. Under a May 18 agreement between the the trade embargo has been steadily increas- United States and the European Union, the Clinton administration promised to seek a ing since 1992. Last year’s vote was 143 to 3, waiver from Congress to shield European investors from the Title IV provision that denies with 17 abstentions, but support for this visas to foreign executives whose companies “traffic” in former U.S. property in Cuba. In unpopular policy hit rock bottom this year. return, European countries would withhold all government help from nationals who invest Most of the representatives made clear in disputed properties. that the essential objection lies in the “extra- But Helms argued that the European “disciplines,” as the self-imposed E.U. rules are territorial” nature of U.S. policy, which seeks called, were much weaker than Helms-Burton itself, which he said is more effective in to punish nations that trade with Cuba. preventing foreign investment in Cuba. Helms wants stronger assurances from European Thus, the resolution cited the Helms-Burton officials in exchange for support of the effort to amend existing law. An 11th-hour effort law as a particularly objectionable element of by Sir Leon Brittan, the chief E.U. negotiator on the issue, failed when key lawmakers U.S. policy toward Cuba. with whom he met on Sept. 24, refused to endorse the U.S.-E.U. deal. The outcome of Cuban Foreign Minister Roberto Robaina this prolonged negotiation, which began almost as soon as the Helms-Burton deal was said the Helms-Burton law had had a “brutal signed in March of 1996, remains very much in doubt, although Brittan said as he left impact” on his country and was undermin- Washington that he believed a deal might yet be forged. ing the system of international commerce.

2 CUBANEWS October 1998 TRADE & COMMERCE INSURANCE In Their Own Words UK-Cuba Insurance Venture “The business community in the United States could increasingly contribute to making A partnership between Britain’s Heath common sense prevail in Congress, making such restrictions (on U.S. trade with Cuba) Group and the Cuban insurance company go through another phase, until they are totally eliminated.” ESICUBA opened for business in October. Foreign Investment Minister Ibrahim Ferradaz, noting “growing interest” in Cuba on the The move represents the first direct and part of the U.S. business community, as quoted by the Cuban economic weekly Negocios. active foreign participation in Cuba’s state- controlled insurance market. “The day that the state decides that those self-employed people, those who have Until now, ESICUBA had enjoyed a acquired a certain amount of money, may invest and create enterprises, that will be the monopoly on the hard-currency insurance day we stop being socialists and become capitalists.” business, but the gradual reforms intro- Commentary on defending regulations that limit self-employment activities. duced into the Cuban economy in the 1990s (The commentary described the current situation, under which dollar-earning hotel employ- have created growing opportunities in the ees and other service employees earn more money than professionals, as “a reality imposed by field of insurance for overseas companies. the circumstances but, undeniably, it cannot last forever…”) These include business property insurance and industrial and engineering risk insur- “It is good to have a discussion of prices, see if they are too high, and compare with ance. other prices. This is right, since we approved for the markets to operate based on the Alejandro Gil, Heath de Cuba’s managing laws of supply and demand.” director, told The Financial Times that “peo- Agriculture Minister Alfredo Jordan, interviewed on Radio Rebelde, ple in Cuba are crying out for these kind of about complaints of high prices in the (private) farmers’ markets. services.” He said the company would seek clients among foreign investors requiring “I have seen physical changes that demonstrate the progress that has been made in the insurance for hotels, warehouses, industrial past three years…We think we can help with the quality system, with the upgrading of plants and other types of commercial enter- equipment, and with securing more efficiency.” prises. Patrick O’Ferral, president of Lloyd’s Register of Shipping, Investors are required to seek protection in an interview on Cuban television during a recent visit to the island. with insurers authorized to do business in Cuba, provided rates are internationally “We regret that the Cuban government has decided to put politics ahead of the basic competitive, but, until now, all of those insur- needs of the Cuban people.” ers have been entirely Cuban. As a result, U.S. State Department spokesman James Rubin, expressing disappointment over Cuba’s according to Gil, many investors have rejection of U.S. participation in a United Nations efforts to supply food aid to Cuba. sought insurance in their country of origin. ESICUBA will hold a 51 percent stake in “This showed a higher degree of tolerance from both sides. Criticism flowed freely, the new joint venture. and that is very important. It showed that maybe one day a pluralistic Cuban can exist, where Cubans of different beliefs can co-exist.” FISHERIES Cuban exile Eloy Gutierrez Menoyo, president of Cambio Cubano, Lobster Catch Goal describing a conference called “Cuba in Evolution” held in Dallas and sponsored by Cuba expects to catch 11,200 tons of lob- The Dallas Morning News whose participants included former and current government ster this year, most of which will be sold on officials in Havana and Washington, as quoted in the Dallas Morning News, Oct. 6. the international market to obtain hard cur- rency earnings, the Cuban state media has “Through investments, visits, inspiration and example, we should find a way to alleviate reported. the suffering of the Cuban people and help them find a route toward liberty and democracy.” Orlando Rodriguez Romay, minister of the Former President Jimmy Carter, in a speech in Santander, Spain, Oct. 3. fishing industry, said recently Cuba has (Carter urged Spain to “help correct the mistake that is U.S. policy toward Cuba.”) reached new international trade agreements to sell some 1,600 tons of lobster and lobster tails for about $20 million. Fifteen clients in lion on a plant for the production of oxygen, figure represents illegal consumption of Europe purchase 60 percent of Cuban lob- nitrogen, and liquid argon, some carbon 1,162 megawatts per hour, the equivalent of sters, he said, and efforts are being made to dioxide plants, oxygen and nickel plants for total electrical consumption by 8,000 “aver- expand sales in Eastern Europe and Asia. the nickel enterprises, and other industrial age” Cuban families for one month. gas plants.” The report said the fraud usually consist- ENERGY The state-owned steel company will be ed of altered meters and direct connections New Industrial Gas Plant one of the principal buyers of the industrial to “air conditioners, freezers or other high Oxiacero, S.A., a facility that will produce gases produced at the first plant, according energy consumption equipment.” oxygen and nitrogen for industrial consump- to Miguel Solarama, director of Antillana de The crackdown on consumer fraud tion, began operating in Havana recently, Acero. “Having oxygen is important for the against the electrical company is related to paving the way for a 25 percent reduction in metallurgical process. This is the first time Cuba’s continuing difficulty in paying for energy use by Cuba’s principal steel produc- we have sufficient oxygen for the metallurgi- imported fuel, the nation’s most expensive er, Antillana de Acero. cal process since we began operations.” import commodity. The company is a project of the German In 1996, according to an official report enterprise Messer, whose director for Latin Fraud Against Electrical Company compiled by the U.S. Central Intelligence America, Jurgen Nicklaus, was present for A recent one-month inspection conducted Agency, fuel imports rose to $1.06 billion, the inauguration. by Cuba’s state-run electrical company dis- nearly twice as much as the total food He told reporters in Havana that the com- covered 222 cases of fraud by consumers in import bill of $610 million, which represent- pany had plans to expand its operations in Havana’s six residential zones, according to ed the second most expensive range of Cuba. “We will invest approximately $40 mil- a report in the state-run news media. The import products.

CUBANEWS October 1998 3 TRADE & COMMERCE TOURISM raked the island, causing significant damage The two hotel chains involved are in some tourist resorts.) France’s Accord Group and Portugal’s New LTI Hotel Deal Canada led arrivals with 144,000 tourists, Amorim Enterprise. LTI International Hotels of Germany followed by Italy (108,000), Germany, Spain In addition to the renovations, financing signed a management and marketing con- and France in that order, according to the will be provided to begin construction of a tract with Gaviota, S.A. for two new hotels in ministry. German tourism, which was new hotel in Cayo Coco, where the first of Holguin and Varadero, according to reports enough to replace Spain as the third most the 1,300 new hotel rooms that Accord- in the Cuban press. The future LTI Los important source of visitors to the island, Amorim will build in Cuba will be located, Cactus, a four-star hotel with 309 rooms, is increased by 58 percent, compared to the according to the Cuban state report. being built in Pesquero Beach on the north same period last year. In a related development, Radio Rebelde coast of Holguin province and should open The report said 80,000 South American reported that the Gran Caribe chain ended its doors in October of 1999. The five-star tourists from Uruguay, Chile and Argentina the first half of the year with revenues total- LTI Jardin del Caribe Hotel will have 300 are expected to travel to Cuba this year, ing $84 million and a profit of $28 million. rooms and is scheduled to open in Varadero although Mexico continues to be the main Marketing Director Jorge Felix Casanova by the year 2000. source of Latin American tourism for the said the company needed to reduce costs. island. Tourism Pace on Track Year-end Hotel Target The Tourism Ministry announced that Hotel Renovation Deal The government expects to complete the more than 936,000 foreign tourists visited A mixed French-Portuguese company has construction of six new hotels across the Cuba during the first eight months of 1998, agreed to renovate and improve seven island before the end of the year, the about 18 percent more than during a similar hotels belonging to the state’s Gran Caribe Ministry of Construction announced. The period last year. chain, as well as another hotel to be built. hotels will increase capacity on the island by Hotel occupancy rates increased by 9 per- According to an announcement in the 1,400 rooms. This is in addition to the 600 cent during the period, the government said. state-run media, the agreement “stipulates a built in the first five months of the year. The Tourism Ministry said approximately $25 million investment for some renovation According to the Union of Caribbean 28,000 hotel rooms were available in 179 works in Havana’s Sevilla Hotel, Cienfuegos’ Construction Enterprises (UNECA), a hotels throughout the country. Jagua Hotel, Varadero’s Cuatro Palmas, as branch of the ministry, the new hotels are As a result, officials predicted that the well as Santiago de Cuba’s Casa Granda, the Internacional Hotel III and Taino in country would have no trouble meeting the Venus and Bucanero Hotels.” The seventh is Varadero, the Gregorio Hotel in Cayo Coco, 1.43-million goal scheduled for 1998. (The the Taino 3 Hotel, which remains under con- Parque Central and Casas Hotels in Havana report was issued before Hurricane Georges struction in Varadero. and Las Brisas Hotel in Guardalavaca.

NATURAL RESOURCES Increase in Domestic Production Cuba produced 5.6 million barrels of oil through the first half of recently drilled by Sherritt International in the same field and the year, some 400,000barrels above the expected yield, according expects to produce 2,000 barrels of oil per day. to a report in the labor movement weekly . According to the state-owned enterprise Cuban Petroleum The report attributed the increase to extractions from recently (CUPET), domestic production in Cuba at the end of the first drilled wells in the fields of Puerto Escondido, north of Havana, semester was running at 34,000 barrels of oil per day, a yearly pace and recently discovered fields in Matanzas province near Varadero of 12.4 million barrels. The daily average for the first semester was and Majaguillar. 30,770 barrels, making the yearly total 11.2 million barrels. “The oil field known as Majaguillar 3 is producing more than The official goal for 1998 remains 11.3 million barrels, or just 1,500 barrels of a heavy crude oil per day, which is generally slightly above the annual production level for each of the last three burned in the boilers of thermal plants for generating power,” the years. Total fuel imports, according to figures supplied by the report said. “In addition, every day up to 1,200 barrels are extract- Economic Commission for Latin America and CUBANEWS esti- ed from each of the three new facilities of Varadero.” mates, total about 45 million barrels per year. (See graph and Last year, three more wells, which produce more than 5,000 bar- CUBANEWS, August 1997.) rels per day, were drilled in Puerto Escondido. A fourth well was Oil and By-Products Availability 16 /In Million Tons SOURCE: CEPAL, 1997/A ESTIMATE 14 Imports 12 Total Availability Domestic Production 10

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0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997/a

4 CUBANEWS October 1998 TRADE & COMMERCE SUGAR TOURISM Canadians, Gran Caribe Aim Dismal Sugar Exports Reported By Cuban Media To Build 2,000 Resort Units A recent report on the sugar harvest on Radio Havana estimated that sugar exports The Cuban government and a Canadian would produce $800 million in export income this year, nearly 16 percent below the real estate and development company have export-income figure for sugar of $951 million reported in 1996 by the Economic established a joint venture to build luxury Commission for Latin America (CEPAL). resorts in prime beachfront areas to include The most recent harvest, which ended in June, may have been the lowest ever at some timeshare, condominium, and hotel and 3.2 million tons (see CUBANEWS, June and July, 1998). resort facilities. Moreover, the same report said one-third of the earnings, or about $266 million, would The joint venture will be called Cuban be used to repay loans, yielding net earnings of no more than $534 million, which may Club Resorts and will be a partnership of also be a record low. Cuban Canadian Resorts International and In 1990, sugar exports produced income of $4.3 billion, but lower harvests and falling Gran Caribe Hotel Corp., one of the govern- prices have combined to lower income ever since then. The worst year so far, according ment’s principal hotel and tourist companies to figures provided by CEPAL, was 1995, when sugar exports yielded only $704 million. with more than 35 separate properties in its These days, Cuban officials tend to play down the relative importance of sugar in the portfolio. economy, arguing that tourism has overtaken sugar as the biggest hard-currency earner. “We are very proud that a Canadian com- But sugar exports still account for nearly half of Cuba’s total annual merchandise export pany is the first in the world to launch a earnings and, by all accounts, the country’s hard currency income this year will be signifi- timeshare and beachfront condominium cantly reduced by the lower sugar harvest and lower world prices for sugar. industry in Cuba,” said David McMillan, In fact, a closer look at the figures suggests that the report on Radio Havana may have president of the Canadian enterprise. been far too optimistic. Consider: If one subtracts from this year’s 3.2-million-ton harvest “We share the same determination as our the estimated 700,000 to 800,000 tons destined for domestic consumption, this leaves only partners, Gran Caribe, in ensuring that this some 2.45 million tons available for export; at an average price of around $230 a ton, this new industry is built properly in Cuba,” he works out to about $560 million in export earnings for sugar in 1998. added. That figure is nearly $300 million less than the $845 million which official, published According to the Canadian partner, Cuban Cuban figures say was earned from sugar in 1997. Club Resorts plans to construct luxury Nor will things get better anytime soon. F.O. Licht, the sugar market statistician and resorts with more than 2,000 units in Santa analyst, estimated that as a result of Hurricane Georges, the 1998-1999 Cuban sugar crop Maria, Santa Lucia, Varadero, Cayo Coco, will come in at around 3.2 million tons again. and other beach locations over the next 10 years. The cost, according to the company, will be about $250 million, which would Facts & Stats about Sugar make it one of the largest business transac- tions to be completed in Cuba. Cultivated Area ...... 5 million acres Development is scheduled to begin in March of next year with construction of 354 Harvesters ...... 4,200 units in Santa Maria del Mar, located 11 Railroad lines (Km) ...... 8,000 miles (18 kilometers) east of Havana, and 260 more units in Santa Lucia. Sugar Mills ...... 156 According to the company, prices for the timeshare units are expected to start from Refineries...... 16 $5,000 for a one-week interval, while condo- Alcohol Distilleries ...... 13 miniums are expected to start at about $200,000. Liquid Yeast Plants ...... 10 The resort is clearly intended to attract Bagasse Board Factories ...... 6 Canadian travelers, who represent the largest source of visitors to the island, Bulk Storage Terminals ...... 7 although joint venture officials said they intended to market the company’s proper- SOURCE: RADIO HAVANA CUBA (JULY 17 BROADCAST) ties in both Canada and Europe. Cuba is also the principal Caribbean destination of Canadian tourists; in 1997, about 170,000 TRANSPORTATION least quite minimal.” Canadians visited Cuba, compared to French Sale of Buses Cuba owes France some $550 million in 153,000 for the Dominican Republic, 100,000 outstanding debt, roughly half of which rep- for Jamaica and 91,000 for the Bahamas. A recent visit to France by Jean-Claude resents commercial debt to private compa- “this is our country’s first joint venture of Gayssot, French minister of infrastructures, nies. Although the French minister this kind,” said Alejandro Escobar, president transport and housing, led to the signing of announced during his visit that Cuba intends of Gran Caribe and vice president of Cuban nine agreements or letters of intent in the to “work on acceptable bilateral solutions in Club Resorts. “While it is a new concept to sectors of transport, tourism and housing. order to repay its debt,” reports in the us, we see the tremendous potential growth The deals include the sale by the Paris French news media said the government is it offers.” Independent Transport Authority of 150 sec- unwilling to facilitate French investment in Arcadia Design Architects of Huelva, ondhand buses for about $1.8 million Cuba by insuring or subsidizing private Spain, has been retained as the design archi- (roughly $12,000 per bus) and the planned investors or extending credit. tect for the project. The company said a sale by the French National Railroad Paris Les Echos, a leading financial and group of Cuban architects and engineers Company of secondhand railroad rolling economic daily, said considerable skepticism would also be involved. stock for some $27 million. exists about Cuba’s ability to repay its old Reports in the French news media debt. described the prices as “if not nominal, at

CUBANEWS October 1998 5 THE ECONOMY Official Mood Optimistic New Rules for a Socialist (?) Economy As Cuban Economy Reels The old Marxist axiom—“From each according to his ability, to each according to his needs”—has undergone a slight but significant change in the new, “reformed” Cuban Over the last few months, the level of economy, to judge from a decree approved recently by the government. political rhetoric in Cuba has been rising as The decree is called “Overall Guidelines for Enterprise Improvement” and is intended President Fidel Castro warms to his current to streamline the administration of state-controlled enterprises, using procedures imple- favorite theme: the evils and dangers of mented by the Revolutionary Armed Forces (FAR) in its own businesses. “neo-liberal globalization.” As the world The attempt to introduce a measure of capitalist efficiency into the Cuban system flies financial crisis has widened, the Cuban in the fact of the government’s renewed efforts to justify its rejection of “neo-liberal” eco- leader has lost no opportunity to lecture nomic policies, but it suggests that, behind the rhetoric, the authorities realize that they international and domestic audiences about must put their economic house in order or face disaster. how, as he sees it, the crisis reveals the At the outset, some 95 enterprises or state businesses will be involved in what is essen- irreparably flawed and unsustainable nature tially an effort to improve management and bookkeeping. The enterprises in question of the existing world capitalist system. involve 115,000 workers and include a broad range of Cuban companies, from the nickel President Castro, who has taken to quoting and steel industry to sugar-producing entities, light industry, trade, culture, communica- large, translated tracts from the British mag- tions (the Institute of Cuban Radio and Television, or ICRT), finance and even public azine “The Economist” to back his argu- health. ments, clearly appears to relish playing the The “overall principles” that will govern the reform process, as outlined in a report in role of Doomsday preacher, warning of dire the Communist Party daily , include the following guideline: consequences to the world and humanity if “Individual incentives are the basis of the enterprise system. Collective incentives will the international economic system is main- be based on the efficiency obtained. The socialist principle: Each individual produces tained in its current state. He has even according to his capabilities, and each is rewarded according to his work.” allowed a gloating tone of “I told you so” to The substitution of the word “work” for “needs” suggests that there will henceforth be creep into his speeches, especially when some correlation between productivity and the ensuing reward, a capitalist principle not referring to Russia, where he is on record as previously considered part of the Marxist creed. saying in the past that socialism was The decree also established a labor and wage policy based on four objectives: “stabbed in the back” by unscrupulous • Obtaining a better relation between salaries and economic results. (Another provi- reformers backed by the West. Taking the sion close to the heart of capitalism.) cue from their leader, Cuban economic plan- • “Establishing an adequate difference to encourage workers to occupy higher posi- ners have also joined the offen- tions of more responsibility.” (This appears to mean that greater responsibility will mean sive, bemoaning the flaws of market-driven a higher salary, a governing principle in Western economies, at least since the Industrial global “neo-liberalism” and even hailing Revolution.) Cuba’s state-controlled, centrally-planned • “Decentralizing the factors that determine the salaries.” (In other words, giving socialist economy—albeit adorned with a supervisors—instead of party bosses—a greater say in promotions and raises.) few “capitalist elements”—as a bastion of • “Self-financing the application of the established wage-related measures.” (In other stability, security and social justice amid the words, establishing the notion that there is a relationship between company earnings and international turmoil. individual salaries, yet another Marxist heresy.) Nevertheless, it will not have escaped The new decree establishes 18 salary ranges, with a minimum of 130 pesos and a maxi- many observers that while Cuba’s leaders mum of 700 pesos. are turning up the political rhetoric, they Even more “revolutionary” is a provision that will require contributions of between 5 have very little to say in public about the and 7 percent “of the salaries earned by the enterprises” to support Social Security. current state and performance of the Cuban It is unclear whether the contribution will come from individual salaries or from the economy. As is customary in Cuba, upbeat company revenues, but the wording suggests it will take the form of a payroll tax for each forecasts and targets abound, most of them worker. (If so, that would put it in the same range as the Social Security tax on U.S. work- dating back to the beginning of the year. ers, which is 6.2 percent.) Firm statistics on growth or sector produc- The Council of State approved Decree-Law 187 in late August. tion so far this year are much harder to find. There is a suspicion that the reality of Cuba’s economic experience this year, a Cuban officials: that the Cuban economy is tion of market economy mechanisms as an reality that includes a record low sugar har- on an onward-and-upward path to recovery. example of how to protect oneself—or at vest, one of the worst droughts in recent his- But, in contrast to his usual bland, factual least make oneself less vulnerable to—the tory and a mauling by Hurricane Georges style, Rodriguez introduced a strongly politi- kind of sharp, large-scale outflows of capital (and all this on top of a continuing U.S. eco- cal tone, clearly inspired by President that have buffeted other emerging markets nomic embargo), may not match the Castro’s recent diatribes about the begin- during the current crisis. (In this sense, rhetoric about the Cuban “economic alterna- ning of the end of capitalism and the disas- Cuba is certainly helped by the fact that it tive” being put forward by the country’s ter of “neo-liberal globalization.” does not have a stock market or an interna- leaders and ideologues. Rodriguez held up Cuba’s economic tionally convertible currency.) Rodriguez In a September 30 speech to community course as an example of how to achieve cited the example of Cuba’s banking sector, groups from several nations, Cuba’s eco- development without adopting a “neo-liber- where the government has allowed more nomic minister, Jose Luis Rodriguez, who al” market economy. He went on to describe than 10 overseas banks to open representa- has a reputation as a staid but competent Cuba as a “counterbalancing factor,” stand- tive offices in Cuba but, as a deliberate poli- technocrat, was happy to tell his audience ing against the dominant trend of “neo-liber- cy, has stopped short of authorizing full- about how the island’s economy had shown al” free-market economics which he, in a fledged foreign banking branches. “What signs of recovery in the last few years. faithful echo of President Castro, said was would have become of Cuba if we had had Citing old figures, the minister followed leading the world to disaster. Rodriguez foreign banks here, with all this situation (of what seems to be a now established well- cited Cuba’s controlled and gradual opening financial crisis),” the minister said, clearly worn script for public presentations by to foreign investment and its cautious adop- suggesting that the country would have suf

6 CUBANEWS October 1998 fered the same flights of capital and funds that have so weakened the Southeast Asian economies and Russia. For this reason, he went on, sectors like banking and commer- cial retail would remain firmly in the hands of the state. 9/24, midnight

The message behind all these pronounce- 9/24, 9pm ments seems clear. Political economics con- 9/24, 8pm strained by the anti-capitalist ideology of President Castro and his supporters will remain the order of the day in Cuba. The Cuban leadership clearly feels that what it 9/24, 8am sees as the current crisis of Western capital- ism vindicates its rejection so far of Western- 9/23, 8pm style capitalism. There is an underlying sense that the government believes it has 9/23, 8am done enough, in terms of making conces- sions by adopting market-style reforms, to achieve economic survival and maintain Hurricane Georges Damage Assessed social and political unity—the oft-repeated goal of “saving the Revolution.” As CUBANEWS went to press, there were still questions about how badly Hurricane Sometimes, this official satisfaction bor- Georges affected the Cuban economy, but, as the accompanying illustration demon- ders on smugness. Osvaldo Martinez, the strates, the storm swept across virtually the entire island and inflicted serious damage. black-bearded head of the Economic Affairs According to the Ministry of Sugar, the storm damaged 630,000 hectares of croplands, Committee of Cuba’s National Assembly, has or 1.55 million acres. More than 200,000 hectares, roughly half a million acres, suffered over the last few months emerged as one of flood damage. Georges’ winds destroyed or seriously damaged 428,000 hectares (1.05 the main intellectual theorists of President million acres) of sugarcane, the ministry estimated. Castro’s crusade against “neo-liberal” global- Even so, the official Cuban news agency, , used significantly lower fig- ization.” Liberally quoting from both Karl ures to estimate the damage, saying only 160,550 hectares of croplands—roughly one- Marx and Jose Marti (and, of course, fourth of the Sugar Ministry estimate—were affected by the hurricane. President Castro), Martinez has recently The French bank Societe Generale announced that, in order to help Cuba overcome appeared several times on national television the immediate effects of the hurricane, it would lead an effort to organize a syndicated to explain to the Cuban population that loan of $230 million, primarily designed to fulfill a sugar-for-oil barter deal with overseas Western-style “neo-liberal” economics are in traders. Sources told reporters in Havana that the deal would carry very high interest “total crisis” and that Cuba is “an example rates of 18 to 20 percent and would be payable within 24 months, an unusually tight and an exception” amid the turmoil. “We are restriction. better prepared than anyone else” to resist the effects of this crisis, Martinez added. For a man viewed not so long ago by some months of the year. Nevertheless, the con- saying that gross receipts would increase to foreign observers as a potential economic sensus among most foreign diplomats, busi- $1.8 billion this year, compared to $1.5 bil- reformer, Martinez now seems to feel more nessmen and analysts is that Cuba’s eco- lion last year. comfortable in the role of faithful ideologue nomic recovery has lost considerable steam Although it is unlikely that this increase to the Cuban president. and that GDP growth for 1998 will be around will compensate for all the other anticipated But it is striking that while Cuban officials 1 percent, if that. This will be the lowest losses, this does not stop President Castro are happy to theorize at length about eco- growth recorded in the last four years after and his supporters from displaying a relent- nomic policy, they are far less forthcoming officially announced GDP increases of 2.5 less optimism. One Cuban official at the about giving hard details to justify the appar- percent in 1995, 7.8 percent in 1996 and 2.5 Bogota trade fair told potential investors on ent official optimism in the Cuban economy. percent last year. October 3 that the Cuban economy should (So is CUBANEWS—See Page 9.) When Among the factors seen to have held back achieve a rate of growth of 4 to 6 percent in pressed after his September 30 speech to the Cuban economy this year is the record the year 2000, with sugar production coming estimate Gross Domestic Product (GDP) low sugar harvest, which Cuban officials in at seven million tons (!) and gross tourism growth so far this year, Rodriguez simply have announced at around 3.2 million tons, earnings at $2.6 billion. Based on current declined to give a figure, even for the first the effects of which are discussed elsewhere developments, the first two forecasts seem six months, let alone for the just-ended third in this issue (Page 5). Cuba’s nickel earn- frankly unrealistic, and the last highly specu- quarter. This is strange when one recalls ings, similarly discussed elsewhere (Page lative. that half-way through 1996, just a few 12), are another big factor. Meanwhile, President Castro, who never months after the introduction of the infa- Some relief will be gained from lower loses an opportunity to occupy a stage or mous Helms-Burton Law, Vice President world oil prices, but as Rodriguez admitted, create one for himself, has convened an Carlos Lage rushed to tell foreign journalists this will not be enough to fully compensate international conference of economists to in Havana that the economy had grown by for the drop in export earnings. meet in Havana January 18 to 22. The sug- 9.6 percent in the first six months of that In addition to this bad news on the export gested theme, “Globalization and year. Asked whether the government still income front, Cuba, and especially its agri- Development Problems,” sounds innocuous stood by its original official growth target for cultural sector, also suffered from the impact enough, but it seems likely that Castro’s 1998 of between 2.5 and 3.5 percent, of the drought and Hurricane Georges. The apocalyptic worldview will hold center stage. Rodriguez replied cryptically but unconvinc- effect of this dual tragedy on the food supply If the last few months are anything to go by, ingly, “We haven’t renounced our aspiration is discussed further on Page 9. the participants are certain to hear more (to achieve it)!” On the brighter side, the Cuban govern- about Cuba’s political economics and ideolo- But while he gave no figure, he insisted ment is counting heavily on continued gy than about economic policy. that the economy had grown in the first nine growth of the tourism sector, with Rodriguez

CUBANEWS October 1998 7 WASHINGTON REPORT Cuban Refusal of U.S. Clinton Asked To Create Cuba Policy Review Panel Offer Puts Aid Package A group of prominent Republicans that includes former Secretaries of State Henry Kissinger and Lawrence Eagleburger has urged President Clinton to form a bipartisan In Jeopardy panel to study U.S. policy toward Cuba, drawing immediate criticism from supporters of the U.S. embargo. By Ana Radelat Arguing that the policy has not been fully reviewed in nearly 40 years—since the A U.S. offer to help the United Nations United States imposed sanctions on Fidel Castro’s government in the early 1960s—the with emergency food relief for Cuba was group is spearheading an effort to establish a “National Bipartisan Commission on Cuba.” rebuffed by Cuban President Fidel Castro, Its members include former Undersecretary of State William Rogers; former Defense hindering the international organization’s Secretary Frank Carlucci; Sen. John Warner, Republican of Virginia; former Senate effort to collect more than $20 million in dis- Majority Leader Howard Baker Jr., a retired Republican of Tennessee; and former Sen. aster aid for Cuban drought victims. Malcolm Wallop, Republican of Wyoming, who is now a Washington lobbyist whose In July, Cuba asked the U.N. World food clients include the Sherritt Intl. Corp., a major foreign investor in Cuba. Program for help because the island’s east- According to an Oct. 13 letter to Clinton signed by Warner and 14 other sitting mem- ern provinces had suffered major crop and bers of Congress, the panel would be patterned after the “Kissinger Commission” estab- livestock losses due to a severe drought (see lished by President Reagan in 1983 to review policy in Central America. story, Page 9.) The World Food Program The new panel would consist of “distinguished Americans who are experienced in inter- determined that more than 615,000 inhabi- national relations” and represent “a cross-section of U.S. interests, including public health, tants of the eastern provinces of Holguin, military, religion, human rights, business and the Cuban American community.” Las Tunas, Granma, Guantanamo and Eight members of Congress, four Democrats and four Republicans, would serve as Santiago de Cuba “urgently need assistance “counselors” to the commission, an organizer of the effort said. for the nine months until the next harvest in The commission would consider the national security risk Cuba poses to the United May.” These slated to receive the interna- States and the indemnification of U.S. certified claimants whose property was expropriat- tional aid were identified by the U.N. as the ed by Fidel Castro’s government. It would also study the impact of the U.S. trade embar- “most vulnerable population in Cuba,” mean- go against Cuba on U.S. relations with its allies, the U.S. and Cuban economies and ing infants, children, pregnant women, nurs- Castro’s political strength. ing mothers and the elderly. The letter to Clinton noted that, in the past two years, “numerous delegations from the The United States has been the major con- United States have visited Cuba, including current and former members of Congress.” tributor to World Food Program appeals and “These authoritative groups have analyzed the conditions and capabilities on the island was a major player in U.N. relief efforts on and have presented their findings in the areas of health, the economy, religious freedom, behalf of other nations hostile to human rights and military capacity. Also, in May of 1998, the Pentagon completed a study Washington, including and on the security risk of Cuba to the United States. However, the findings of these delega- Sudan. Nevertheless, Castro said he would tions, including the study by the Pentagon and the call by Pope John Paul II for the open- reject relief from the U.S. government. ing of Cuba by the world, have not been reviewed by U.S. policy makers,” the letter said. During a speech of nearly five hours on Gary Jarmin, an activist who founded Christian Voice, an evangelical rightwing lobby, Sept. 28, Castro said U.S. participation in the said the idea to create the commission circulated among Republican lawmakers and for- U.N. appeal would be hypocritical since the mer Reagan administration officials three years ago, but was put into the “deep freeze” United States “has blockaded us for 40 after the Cuban government shot down two Brothers to the Rescue planes in February of years.” 1996 and the Helms-Burton Act was approved. “The United States wants to destroy the However, Jarmin, who lobbied against the Helms-Burton Act, said the time is ripe for a , crush it through an ideo- re-thrinking of U.S.-Cuba policy. “We have come to the point where it’s clear that nothing logical and economic war,” Castro insisted. short of an invasion of Cuba will bring about the results we’re looking for,” he said. “It’s The United States had indicated to the time to try a new approach.” U.N. food relief agency that it would con- Jarmin also said that the support for a White House panel on Cuba is growing in the tribute up to a third of the money asked for Senate. Among the 12 Republicans and three Democrats who have already on to the effort in the appeal, or nearly $7 million in donated are Sens. Rick Santorum, Republican of Pennsylvania; Craig Thomas, Republican of foodstuffs. U.S. officials vowed to monitor Wyoming; Pat Roberts, Republican of Kansas; Kit Bond, Republican of Missouri; and distribution of the aid to ensure it went to Chris Dodd, Democrat of Connecticut. the most needy. The House’s three Cuban-American lawmakers, however, were quick to express strong After Castro’s rejection, State Department opposition to the prospect of a change in Cuba policy. Reps. Ileana Ros-Lehtinen and officials expressed disappointment. “We Lincoln Diaz-Balart, both Republicans from Miami, and Robert Menendez, Democrat of hope that the Cuban government will recon- New Jersey, also wrote Clinton on October 13, asking him to reject the proposal. sider its position,” said spokesman James The House lawmakers maintained that “the idea for this commission came from a Rubin. group of former members of congress and high government officials who are now busi- Abby Spring, spokeswoman for the WFP nessmen apparently seeking to subvert the will of the American people and the intent of in New York, said the absence of U.S. partic- congress because of these businessmen’s pecuniary interests.” As a lobbyist for Sherritt, ipation “is going to hurt the appeal greatly” Wallop was singled out and accused of working for a company that “is exploiting Cuban by making it more difficult for the organiza- workers on stolen U.S. property.” tion to reach its $20.5 million goal. The House lawmakers concluded their letter by noting that, since the Helms-Burton “There’s not a whole lot we can do when law “exhaustively outlines U.S. policy toward a transition government and a democratical- (Cuba) refused a major donor,” Spring said. ly elected government in Cuba,” no further review of policy toward the island is needed. So far, only three nations have pledged to “There’s strong bipartisan support in Congress and the White House for the embargo, help: Spain, with promised aid of $332,000; and to suggest otherwise is just bizarre,” said Jose Cardenas, the Washington representa- Switzerland, $337,000; and Norway, with an tive of the Cuban American National Foundation. “This sort of (proposal) is just not going undetermined amount of canned fish. to happen.” Ana Radelat covers Cuban issues from —Ana Radelat Washington for CUBANEWS.

8 CUBANEWS October 1998 AGRICULTURE/THE ECONOMY Food Imports/As Percent of Total Imports Hurricane Will Force Cuba 25 To Import More Food 20 The damages caused by Hurricane Georges will force the government to make additional expenditures to replace the food 15 that the country was supposed to produce in 1998. Because this comes on top of the drought-related losses suffered earlier this 10 year (see CUBANEWS, August, 1998), the government will once again be forced to import more food at the expense of other 5 necessary commodities. Although the level of food imports remains well below pre-crisis levels, the 0 need to buy food overseas to feed the Cuban 1989 1990 1991 1992 1993 1994 1995 1996 1997 people has seriously restrained the import Food Imports/In Millions Dollars capacity of the government. This has 1000 served to hamper the recovery effort, which occasionally seems to be on the verge of take-off yet never quite gets there—in large 800 part because of the lack of fuel and basic industrial commodities that can only be pur- chased abroad. 600 The inability of the agricultural sector to feed the population makes the government 400 depend on imports to meet basic per capita caloric requirements. Currently, food accounts for 20 to 25 percent of all imports, 200 which means that the scarce resources devoted to buy fuel, lubricants, machinery, 0 transport equipment, spare parts, chemicals, 1989 1990 1991 1992 1993 1994 1995 1996 1997 technology and everything else that the SOURCE: CIA BOOK OF FACTS, 1997; CUBANEWS ESTIMATES economy needs in order to thrive—or simply survive—are made even scarcer. This year, the combined effect of natural for export, and must do so at a time when (see CUBANEWS, March 1998), is 2971, and disasters, market fluctuations and political prices for these products (sugar and nickel) the “basic” level is 2218, but in 1993 and developments could have a devastating are depressed. The consequent reduction of 1994, the intake level fell to a daily average impact on the already eroded living standard hard currency earnings, coupled with the of 1863 and 1948 calories, respectively. They of Cubans. need to import more food because of the have improved since then, but the situation Some of the events, of course, were unpre- shrinkage in domestic output, will undoubt- outlined above raises the specter of a recur- dictable and unavoidable. Such was the case edly harm economic performance across the rence. with the warm and rainy winter that dis- board. Only increased income from tourism, The recent announcement by President turbed the normal vegetative cycle, affecting tobacco and a few other sectors—fisheries, Castro that Cuba had made emergency pur- the yields of many crops; the potato harvest, for example—might yet allow Cuba’s econo- chases of rice and peas to compensate for for example, yielded only 70 percent of the my to show modest growth and stave off a losses produced by the hurricane may be previous year’s total. This was followed by recession. only the first sign that the country may be an abnormally long and severe drought that No picture of the circumstances that led facing another era of near-famine such as the ended only after the hurricane, damaging the country to the current situation would one experienced just four years ago. At the the rice crop and banana plantations. As a be complete without considering the chronic time, following the social outburst of August result, rice fields will yield only half of the incompetence and bizarre structure of the 1994 in Havana, the government consented predicted harvest, and the banana will be agricultural sector. The government’s stub- to make some timid reforms in agriculture in similarly affected. born determination to keep a tight grip on order to improve agricultural yields. At the same time, the somehow pre- the centralized economy, including all The reforms worked—that is, they had dictable (but also inescapable) collapse of aspects of agriculture, is an indisputable the intended effect of improving yields and both sugar and nickel prices (see Pages 5 deterrent to growing more food. The harass- making more food available—but the road to and 12) has added to the pain. Combined, ment of the private farmers’ markets is just further change has been cut short. New these two commodities account for nearly 70 one manifestation of government activity reforms seem to be blocked by the relative percent of the export value of all Cuban that discourages individual effort and buoyancy in hard cash from tourism and goods, so any market fluctuation is keenly domestic food production. individual cash remittances from abroad. felt on the island. Under the circumstances, One of the more dangerous consequences However, considering that economic the failure of the sugar harvest, which of the foregoing is that the modest success reforms are urgently needed—and that this CUBANEWS has detailed in preceding that Cuba has enjoyed in raising the levels of seems to happen only when the government issues, could not have come at a worse per capita intake of calories in the last few faces a dire situation—the bad times that time because it introduced yet another years could slide back to the frightening lev- may be in store for Cuba could be harbin- unwanted development. The result is that els experienced earlier in this decade. The gers of another wave of reform. Cuba has a lower volume of products to sell “optimum” per capita level of caloric intake, according to the Ministry of Public Health —Armando H. Portela

CUBANEWS October 1998 9 THE ENVIRONMENT that the known environmental problems rep- AMA and other related state agencies who Inspection of Nuevitas resent only the tip of the iceberg. The appre- targeted the following objects as a priority: Reveals Serious Damage hension becomes more serious as it • Drinking water quality and the aqueduct becomes apparent that there is a strong link conditions. In contrast with the decades of neglect between the continuing degradation of the • The sewage system. that produced an official inability to protect, environment and the prolonged slump in the • The domestic waste collection and dispos- preserve and restore Cuba’s environment economy, a development that has resulted in al systems. and natural resources, the government has the exhaustion of some key natural • Air quality and industrial emissions to the recently started to acknowledge that dam- resources. atmosphere. age has been inflicted on the environment as Growing concerns have finally reached • The treatment and disposal of industrial result of the prolonged effort to transform the authorities. These, in turn, commis- wastes. the country’s economy. sioned the newly created Environmental • The health and safety of the workforce Officials continue to insist that the current Agency (AMA, the Spanish acronym) within and the population’s main health problems. environmental problems were created the Ministry of Science, Technology and • The environmental protection of the before 1959 and that any worsening is only Science to carry out the arduous task of shoreline, wetlands and beaches and pro- the logical by-product of development and assessing the damage. AMA started from tected animal species. demographic growth for which the govern- hot spots such as industrial hubs, depleted • The observation of the sanitary and cus- ment cannot be blamed. Authorities also agricultural regions, urban areas or protect- toms regulations in the port. insist in maintaining the old, mistaken ed zones under environmental stress. The • Oil spills and industrial accidents. notion that the Cuban model of development resulting appraisals reveal ingenuity, as well • The observance of zoning codes. is in and of itself a guarantee of environmen- as alarm over an extended situation that evi- It is no exaggeration to say that the over- tal protection, an assertion that apparently dently was unexpected and has probably all assessment revealed a disastrous envi- requires neither evidence nor demonstration astonished government leaders. ronmental situation by any standard. nor proof. Problems are mostly inherited — An example of the AMA’s inquiries is a The inspection determined, for example, it is said— and they arise from a lack of report of the Nuevitas industrial hub pre- that the failure to chlorinate drinking water, resources, a critical problem aggravated by pared in 1996. along with the poor condition of the treat- the U.S. embargo. Located on the north shore of Camagüey ment plant and the absence of systematic The official promotion of these ideas cre- province, Nuevitas is a modest port-town of water quality analysis, were directly linked ated an atmosphere that allowed official and 43,000 inhabitants (0.4 percent of the coun- to the alarming level of parasitism and diar- public ignorance of environmental deteriora- try’s population). It enjoyed the benefit of a rhea among the population. In the first four tion to flourish. To convert the official ideol- government investment program in the months of 1996, one of every forty inhabi- ogy into reality, data was ignored or under- 1970’s that transformed the site from a port tants went to the doctor suffering from acute estimated, the record was distorted by mis- specializing in sugar exports and local fish- diarrhea. guided interpretations, and official con- ing into one of the most important industrial It was also found that in some neighbor- cern—if it existed at all—was hidden from centers in Cuba. Other locations selected hoods domestic sewage is directly dis- the public. In many cases, authorities simply for industrial and port improvements as part charged into the streets and runs freely to were not informed, in order to avoid rocking of the government strategy of those years Nuevitas Bay, where the runoff joins other the boat. It was not until 1995 that the were the Mariel-Havana-Matanzas belt in untreated domestic, commercial and indus- Cuban government started to make some western Cuba, the huge Cienfuegos node on trial sewer discharges. Some existing oxida- gradual changes in the Soviet-style model of the south-central coast and the bi-polar hub tion ponds are in fact out of service, includ- environmental legislation and infrastructure Santiago de Cuba-Moa on the eastern end of ing two in the local hospital. that used to leave environmental protection the island. Solid wastes could be observed elsewhere in the hands of those ministries that custom- Among other facilities of lesser impor- in the town, and the municipal dumpsite is arily generated the greatest level of damage. tance, Nuevitas hosts the following national- located within the boundary of the city. (See CUBANEWS, July 1998) scale industries: Open disposal and burning of solid waste in This departure from the customary style • The “26 de Julio” cement plant built in dumpsites are the most common methods of is proceeding very slowly, however. Instead, 1970 with a nominal capacity of 600,000 tons, dealing with trash. it is mostly limited to the partial disclosure or 12 percent of the national potential out- But perhaps the most alarming situation of some general problems that were already put. was found in the industrial facilities; many of known to Cuban scholars—soil degradation, • The “Diez de Octubre” thermal power the problems were found to be common for water pollution, and deforestation. Another plant finished in 1969, with a designed several facilities, while others are specific to novelty is the occasional attention devoted to capacity of 442 MW, roughly equal to 13 per- a particular site. environmental problems in the official news cent of the nation’s total. A hazardous plant, the Wires and media. This is confined in large measure to • The “Revolucion de Octubre” fertilizer Electrodes Factory, for instance, was found specific economic sectors and territories plant completed in 1975 that produces about to lack control of its liquid and gaseous that the government has already decided to 15 percent of Cuba’s nitrogenized fertilizer wastes, thus ignoring the concentration of confront, such as the Cauto River Basin, output and is a major manufacturer of heavy metals in the untreated wastewaters Havana Bay, and the general reforestation ammonia and hydrochloric acid. discharged into the bay and its environs. program. • The “Tarafa” sugar bulk terminal that han- Residual ashes of zinc and asbestos are The lack of scientific analytical data col- dled up to 6 percent of the country’s sugar disposed of in an open space and washed or lected by specialists on the ground is an exports before the collapse of the industry. blown away by rains and winds, polluting extended affliction that frequently hampers Other relevant industries and facilities are both the bay and the town. The plant annual- both official and independent assessments, an asphalt plant, a factory of electric wires ly generates some 20 to 30 tons of this which—deprived of any trustworthy points and electrodes, a dairy pasteurizing plant, a waste. of reference— are therefore forced to rely fish-processing plant, a pre-fab plant and the Uncontrolled oil spills was reported, as on interpretations of incomplete data, intu- old “Pastelillo” oil terminal and tank farm. was the unsafe storage of hydrochloric and itive deductions and generalizations. The This comprehensive assessment was per- sulfuric acids. most obvious and troubling conclusion is formed by a group of twenty specialists of There is no way for individual workers to

10 CUBANEWS October 1998 protect themselves from the high level of Morbidity Figures /Nuevitas noise, dust, gases and fumes. Some deafness 1995 CASES 1996 CASES JAN-APRIL 1995 RATE PER 1000 cases were reported among the workers. Hepatitis (A & B) 53 17 1.2 The Cement Plant does not provide either Syphilis 132 83 3.1 treatment or control of the quality and amount of its liquid and gaseous wastes. The Blenorrhea 536 127 12.5 emission of dust into the atmosphere is esti- Scabies (outbreaks) 55 10 — mated at 900 kilograms per hour! To this fig- Pediculosis (lice) 24 no data 0.6 ure are added the cement spills produced in Meningitis (bacterial & viral) 21 14 0.5 the manufacturing, transportation and stor- Acute Diarrhea 3,729 1,096 76.3 age processes. Hydrocarbon spills are common and its Acute Respiratory Disease 12,149 8,660 282.6 abundant residues are discharged directly Suicide 9 3 20.9 into Nuevitas Bay. At the time of the audit, the fuel holding tanks of the factory had not roughly one fifth of its capacity. Other local the technology was widely known to be inef- been inspected for ten years. industries most likely followed a similar pat- ficient and environmentally unfriendly. The examination of the Fertilizer Plant tern. Currently, the industrial slowdown is giv- disclosed a host of elementary and frighten- Nuevitas can be taken as an archetype of ing nature a break, but other evils are taking ing violations, such as the customary dispos- what takes place in any of Cuba’s major their toll. The use of inadequate raw materi- al of mercury (!) into the wastewater that industrial hubs. They may be different in als (the super-dense and sulfur-rich Cuban otherwise runs untreated into the bay. It was size, industrial specialization or in age, but oil used in power generation, for instance), also found that the production lines, ware- all them have in common the widely accept- the massive failure of protective systems and houses, port storage facilities serving the ed standard of environmental indifference the extended decline in levels of industrial plant and chemical transportation pipes were that governed official thinking. In addition, discipline have become leading causes of sources of frequent and extensive spills of their “boom years” occurred at a time when industrial pollution. sulfuric or nitric acids, ammonia, hydrocar- bons, and nitrates. The customary way to eliminate the spills is to wash them away into the plant sewer system, which dis- charges directly into Nuevitas Bay through SANTO 0 0.5 1 1.5 km DOMINGO CAYUELO an underwater emission pipe. This pipe, in 0 0.5 1 mile POINT POINT turn, had not been inspected for many years 10 DE OCTUBRE and was reported to leak profusely. THERMOELECTRIC The Thermal Power Plant is reported to PLANT have disabled its neutralization pits, thus Tarafa throwing all liquid wastes directly into the bay. Moreover, there is no control, monitor- REVOLUCION DE OCTUBRE 26 DE JULIO ing or analysis of these industrial wastes. FERTILIZER PLANT CEMENT PLANT The poor physical condition of the plant is mentioned as the cause of important power RAILROAD generation losses and of exaggerated water Nuevitas STATION OIL TANK FARM consumption by the plant. The residues pro- FISH PROCESSING GUINCHO duced by maintenance of the boilers, partic- PLANT COVE PASTELILLO POINT ularly rich in heavy metals, are inadequately FISHING PORT disposed of in the municipal dumpsite. As in other industries, oil spills are described as MOLINO POINT severe and rehabilitation is considered an GUINCHO POINT urgent matter. A laconic note on the workers permanent COCO POINT exposure to hazardous industrial fumes was included. SABINAL KEY MATERNILLOS POINT Some records of the health conditions of BONITA the town’s dwellers were included as an BEACH attachment to the AMA’s report. Auditors SA M N A TA selected some transmissible diseases linked YA LU N A C B O IA to living standards, hygiene, social behavior C O B V E E A and environmental factors. Some figures are C Area H frankly outrageous (see chart above). Enlarged Above At the moment when the inspection was performed, Nuevitas—along with the rest Nuevitas Havana BALLENATOS of the country—was living through KEYS the worse moment of the economic crisis that nearly paralyzed NUEVITAS BAY industrial activity. At best, pro- Area Enlarged duction was only intermittent, if not indefinitely suspended. Several produc- tion lines of the “Revolucion de Octubre” fer- tilizer plant, for instance, have been idle for years, and by 1997 the plant produced

CUBANEWS October 1998 11 MINING Sherritt International Stock Prices/In Canadian Dollars Nickel Prices Continue 7.5 7.0 Downward Slide 6.5 Toronto Stock 6.0 Exchange 900 In our August issue, we suggested that a 5.5 5.0 ruinous combination of factors—the contin- Sherritt International Corp ued collapse of nickel prices on the world 4.5 market and the high production cost of 4.0 Cuban refineries—could eventually force the government to shut down operations, as it 3.5 did at the beginning of the “” 3.0 at the Plant in Moa. Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct It may have seemed far-fetched at the 1997 1998 time, but in late September, during a cele- bration of the Committees for the Defense of Nickel Daily Cash Price/In U.S. Dollars Per Pound the Revolution, Fidel Castro himself 2.7 announced that his government could be 2.6 obliged to take this unwanted action. 2.5 According to him, the steep decline in nickel 2.4 prices has gradually narrowed the differ- 2.3 ence between income and expenses, making 2.2 continued operations senseless if trends fail 2.1 to improve. 2 Over the past 45 months, nickel prices 1.9 have fallen from $4.68 per pound to an aver- 1.8 age of $1.86 in late September. In other 1.7 words, nickel prices last month were rough- Jan 1998 Feb Mar Apr May June July Aug Sept ly 40 percent of what they were at the begin- ning of 1995. Then, in October, daily aver- SOURCE: TORONTO STOCK EXCHANGE. LONDON METAL EXCHANGE ages plunged below the $1.80 mark, a record low for the last 12-year period. This nickel has been the chronic burden of the to be the most cost efficient of its kind, with year alone, the collapse is equivalent to a industry. The conventional estimate, based production costs estimated at $1 to $1.60 per loss of $2,160 per ton, which could mean a on recent government reports, is that costs pound. potential loss of $145 million insofar as antic- are in the range of $1 to $2.20 per pound, At any rate, the evidence suggests that ipated Cuban output. which represents a substantial improvement Cuba’s nickel export earnings this year will The reasons for this long and steady compared to the early 1990s and came about fall below—and maybe well below—last downfall are related to a market surplus fol- as a result of a modernization program year’s reported earnings of $415 million. lowing massive Russian nickel sales after requiring significant investment. Most of the that country’s manufacturing industry col- efficiency gains were the result of sharp lapsed. With no hint of important Russian reductions in fuel usage, together with an increase in the amount of nickel extracted production cuts on the horizon, experts THE MIAMI HERALD PUBLISHING COMPANY have been very cautious in making fore- from the mineral ore. casts, and certainly fail to show any confi- At any rate, the collapse in prices has pro- dence about predicting an imminent price duced a sharp decline in the price of Sherritt recovery, particularly in view of the forth- International Corp. shares quoted on the Editor Mark Seibel coming initiation of operations at Murrin Toronto Stock Exchange. Prices have fallen Managing Editor Juan Vasquez Murrin facility in Australia. Production by roughly three-fifths over the past twelve Business Manager Isabel Entenza costs there are expected to be among the months—about the same as the fall in the Contributing Editor Armando Portela lowest in the world, ranging from $0.36 to price of nickel since 1995—from a high of Art Director Ed Fiol $1.32 per pound, well below the today’s C$7.80 in early October of the past year. On CUBANEWS is a monthly publication of the world market averages. Moreover, the out- September 29th, the day after the Castro’s Miami Herald Publishing Co. that reports on put could eventually exceed one quarter of gloomy announcement, Sherritt shares economic, political and commercial trends in slipped a further 5.7 percent, from C$3.7 to Cuba. © Copyright 1998 by The Miami Herald the current world demand. Publishing Company. All rights reserved. Even the ongoing Cuban modernization C$3.45, and fell again to C$3.05 a few days later. Reproduction or transmission without the express program, designed to improve the efficiency written consent of CUBANEWS is strictly prohibit- of its outdated and costly industry, may Patrice Merrin Best, a Sherritt spokesper- ed. CUBANEWS, One Herald Plaza, Miami, prove unable to keep up with such steep son quoted by the Toronto Sun, said that the Florida 33132. Toll-free telephone in Canada, the competition. cobalt coming from the Moa plant is helping United States, Puerto Rico & the U.S. Virgin True production-cost figures at Cuba’s the company to cope with the circum- Islands: 1-800-376-3324; outside these areas call nickel plants have customarily been hard to stances. Cobalt (cathode, 99.8 percent puri- (305) 376-3324. Fax: (305) 995-8026. Annual sub- come by. Even those disclosed by the gov- ty) is currently priced at $18.25, down from scription rate for 12 issues is US $350. ernment appear to be the result of guess- $25.50 at the beginning of the year—a slump CUBANEWS is also available -line as part of of 30 percent, but not as bad as nickel’s Knight Ridder Inc.’s PressLink worldwide elec- work, and often contain a lot of lapses and tronic network. incongruities that make it difficult, if not price collapse. impossible, to assess performance. The Pedro Soto Alba plant, formerly Moa Government experts may not know, or may Nickel Co., jointly operated by Sherritt and THE MIAMI HERALD PUBLISHING COMPANY the Cuban government, reported in the first even prefer not to know. Publisher Alberto Ibargüen In general, the cost of producing Cuban half of this year a production level of 13,588 tons of nickel plus cobalt. This plant claims President Joe Natoli

12 CUBANEWS October 1998