November 03 Newsletter
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Cuba Trade & Investment News A service of NORTH AMERICAN PARTNERS, Tampa, FL, USA, a marketing management firm connecting business to new markets. Vol. VII, No. 9 September 2005 Embargo Updatet Economyt STARWOOD CLAIMS CUBAN LAND ... GOVERNMENT ENDS CRUISE DREAMS Just days after the U.S. Department of Justice announced In a decree published Aug. 3 in the Gaceta Oficial, the the Foreign Claims Settlement Commission reopened a Cuban government revoked the concession of an Italian- program to file claims against the Cuban government for Cuban joint venture that had administered Cuba’s cruise ship confiscated properties, Starwood Hotels & Resorts Worldwide and ferry terminals since 1998. Inc. registered a claim for 400 acres of land in and around The termination of the contract for Cubanco S.A. and Silares Havana that originally belonged to phone company ITT. Terminales Caribe N.V., signed by Vice President Carlos Lage, Starwood’s claim left U.S. observers puzzled because it is came 10 weeks after Fidel Castro said in a speech that “Cuba generally believed that Cuba seized all U.S.-owned properties will not receive cruise lines.” in 1960. Also, the hotel giant’s long-term interest in “These floating hotels, restaurants, theaters and participating in Cuba’s entertainment centers … only leave behind garbage, empty tourism industry might be cans and trash paper, for some miserable centavos,” Castro complicated by the said in May. claim. Cuba had been courting European cruise lines for a decade. White Plains, N.Y.- But the efforts have proven to be an uphill struggle, with mixed based Starwood, formed results (see analysis, page 3). in 1980, took over ITT Corp. A Cubanco official said Aug. 13 that Silares was continuing and its Sheraton subsidiary in regular day-to-day February 1998; Starwood at that operations. It isn’t time sold most telecom and clear whether and how technology assets of ITT. the dissolution of Hotel chain In July 1997 — a few Cubanco will affect rediscovers old telecom assets months before the takeover existing cruise and by Starwood — Italian- ferry operations. Dutch telecom STET paid ITT an estimated $25 million for The latest cruise line Cruising into the sunset the use of ITT’s claimed land in Cuba. That agreement expires to pick Cuba as a home in 2007. port is Spain’s Pullmantur Cruises, which stationed its Holiday Starwood’s late filing, first reported in the Miami Daily Dream in the Port of Havana last winter. The company, which Business Review, is based on the assumption that the Cuban signed a three-year contract in December 2004, is currently government legally left the properties in the hands of Starwood advertising Cuba cruises for the coming winter season. Continued on page 2 ITALIAN CRUISE EXEC BEGS TO DIFFER ...while enjoying best of both worlds In an e-mail to Cuba Trade & Investment News, the The Sheraton Hong Kong Hotel & Towers, majority- president of Cubanco S.A. said the legal grounds of the owned and managed by Starwood’s ITT Sheraton termination decree were not valid. subsidiary, includes a Casa del Habano cigar store as a In an Aug. 2 decree, the Cuban Council of Ministers tenant on its premises. Just after Starwood bought ITT said the Cubanco joint venture was dissolved; the and its Sheraton subsidiary in 1998, the company sought operation of the terminals therefore reverted to the state. – and received — permission from the U.S. Treasury Cubanco President Alfonso Lavarello counters that the Department’s Office of Foreign Assets Control (OFAC) to company should exist at least through Aug. 6, 2022, the continue leasing space at the hotel to Casa del Habano. deadline for the concession the Cuban state agreed to in The cigar retail chain is owned and operated by Habanos the contract of 1998. S.A., a joint venture between the Cuban state and Spanish- He didn’t respond to questions as to what steps he was French tobacco company Altadis S.A. planning to take. M o r e E m b a r g o N e w s M o r e o n C u b a’ s E c o n o m y POWER CRUNCH EASING CASTRO MAY VISIT BIG APPLE The tense electricity situation in Cuba improved during Fidel Castro might be visiting New York in September August, after one broken generator at the Felton power plant for a United Nations conference. This would be Castro’s in eastern Cuba went back on the grid. In contrast to out-of- first trip to the United States since September 2000, when control blackouts of more than 10 hours per day during the he took part in the UN Millenium Summit. first half of July, the situation is now marked by planned, UN General Secretary Kofi Annan called for the Sept. rolling blackouts. 14-16 summit to reinvigorate efforts to fight poverty and The blackouts coincided with a heat wave — this was the terrorism, topics dear to Castro. More than 170 heads of hottest July in Cuba since 1951. state are expected to attend. In a speech in July, Fidel Castro asked Cubans for “a little In 2000, Castro stayed at the Cuban UN mission in more patience,” and said there were programs for $682 million midtown Manhattan; the U.S. secret service at the time to update Cuba’s aging electricty infrastructure. allowed Cuban agents to bring their own firearms. If Castro decides to attend the September meeting, it probably won’t be announced until shortly before the event. Cuba buys small diesel generators Although the United States in 1947 agreed not to block MAN B&W Diesel Group, a subsidiary of Germany’s any foreign head of state from visiting the United Nations MAN AG, sold 21 generators to Cuba for $26.7 million, headquarters in New York, a spokesman said the State Danish daily Nordjyske Stiftstidende reports. The two- Department may “take a hard look” at new Iranian stroke generators will be used in six new power stations President Mahmoud Ahmadinejad. U.S. officials accuse in Cuba, as part of a new backup system. The order him of involvement in a 1979 hostage taking. represents 20 percent of MAN B&W’s Danish subsidiary’s annual production. The first generators will be delivered Starwood, from page 1 early next year. until 2003. Spain’s El País reported in June that Cuba is buying Starwood puts the value of the land, including a large tract diesel generators worth $100 million from Spain’s near José Martí International Airport, at $63 million. Guascor S.A. and for another $100 million from a German According to the Miami Herald, the land was owned by Radio unit of DaimlerChrysler AG. Corporación Cubana, a subsidiary of ITT, and used for international telephone service until 1992. It’s unclear how Starwood could have retained ownership of the properties until 2003. Company spokespeople didn’t return calls from Cuba Trade & Investment News. Starwood’s claim so far has been the only one filed under the new program. The deadline for filings is Feb. 13, 2006. The first Cuban Claims Program was completed in 1972, with 5,911 claims filed for a total of $1.8 billion, plus 6 percent interest per year since confiscation. Some $1.6 billion of the recognized claims pertain to Five MAN B&W generators at work corporations that have received more than $3 billion in tax in a Honduras power plant breaks for their Cuban losses. More embargo news on page 5 More economy news on page 6 Cuba Trade & Investment News is a monthly publication of North American Partners (NAP), Tampa, FL, USA. CTIN is distributed to subscribers via mail and e-mail. Publisher Andrew Goddard P.O. Box 13752 Tampa, FL 33681-3752 USA Tel: 813 839 6988 Fax: 813 831 3811 E-mail: [email protected] www.cubatradenews.com Editor Johannes Werner E-mail: [email protected] SUBSCRIPTIONS Call 813 839 6988. One year $300. In Canada and Mexico, add $15 postage. COPYRIGHT NOTICE No part of this publication may be copied, photographed or duplicated without NAP’s consent. 2 Perspective Analysis: Cruise tourism on Cuba Why Cuba calls it quits Cuba has the biggest growth defunct European cruise line got long- By Kirby Jones potential for cruise tourism in the term contracts that seemed to tie up Caribbean — and it seems it will stay Cuba’s cruise berths for decades, the Right under our noses that way for a while. mood wasn’t too good in Miami. Back to school, baseball playoffs, Cuba cut an important link with the While Cuba may stand to lose only football begins, Congress comes cruise industry in early August by “miserable centavos” by cutting off back into session – September is a revoking the contract of Silares European cruise lines, it is not getting the good time to look at the state of Terminales Caribe N.V., an Italian big dollars because the mega cruise ships U.S.-Cuban relations. company that had operated the island’s from Miami and Fort Lauderdale aren’t To some, it may seem like the cruise terminals for seven years. docking at the island’s ports. In a 2004 trees haven’t changed. But to this The move came 10 weeks after Fidel memo, the Transportation Ministry observer of U.S.-Cuba relations for Castro, in a speech directed to calculated the U.S. embargo-related loss more than 30 years, the whole forest Caribbean in cruise is changing in fundamental ways. neighbors, tourism *** poured acid income, Look at what happened over this over cruise just from summer in Congress.