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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

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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. The Cuban- tourism, May 2003 American troika in the House of saying that through Representatives, the brothers Diaz- “these April 2004, Balart and their compañera, Ileana floating at $8.4 Ros-Lehtinen, clearly learned from hotels, billion. their 2003 mistakes when travel restaurants, This figure bills passed the House with theaters and seems too comfortable margins. They doubled entertainment high, their efforts and committed centers … exceeding themselves 24/7 to defeating any only leave Inside the Havana cruise terminal the total travel bills in 2005. They were behind income of successful not only by their own garbage, empty cans and trash paper, Cuba’s tourism industry in 2004 more efforts, but supported this time by for some miserable centavos.” than threefold, but the lost income a PAC that caused a number of 2003 However, more than corporate greed, probably’is in the billions. supporters to change their votes for the abandoning of Cuba’s cruise The embargo “has constituted a major as little as $500 to $1,000. No travel tourism ambitions may be a function obstacle to Cuba’s insertion in the bills passed. In fact, it wasn’t even of the fact that the industry is international cruise market,” the close enough for Rep. Jeff Flake dominated by three Miami-based transportation ministry’s memo said.’“It and others even to propose a vote, corporations that are unwilling and reduces [Cuba’s] field of action to a for fear of losing. unable to deal with the Caribbean marginal market — those companies The anti-embargo side has no island as long as the U.S. travel ban without U.S. participation, or those whose similar troika, and we should stands. Carnival Corp., Royal itineraries don’t include stops at U.S. understand why. It is personal for Caribbean Ltd. and Norwegian Cruises ports.” Continued on page 4 Lincoln, Mario and Ileana. Their together operate about 90 percent of the families were part of the Batista capacity in the Caribbean. dictatorship, and Fidel Castro and To be sure, the big three cruise Lull his barbudos defeated them. They companies have been salivating over Cruise passengers in Cuba are no more interested in the access to Cuba. The island is a big 2000 100,000 welfare of the Cuban people now white spot in the Caribbean, the world’s 2001 n.a. than their families were in the busiest cruise region. An industry study 1950s. If they were, they would in the 1990s concluded that 70 percent 2002 45,000 never support so many mean- of cruise ships in the Caribbean coming 2003 60,000 spirited regulations, which prohibit from U.S. ports could make stops in 2004 n.a. their fellow Cuban- Americans Cuba. This would amount to 35 vessels 2005 100,000* a week, for a total of some 80,000 Continued on page 4 source: Cuban media, Cubanco weekly passengers. So when a now- *projection

3 Analysis: Cruise tourism

Continued from page 3 but after seven years, traffic in Cuban cruise traffic peaked in Havana has stagnated at about one 2000 at 100,000 (see table); there cruise vessel a week. The most have been ups and downs since, consistent passenger traffic has with an upward tendency. Even come from ferry service to resort so, these numbers are peanuts town Varadero established in 2000 compared to the millions of cruise by a Cuban-Argentinean joint passengers in places such as San venture. The planned construction Juan, P.R., Montego Bay, of a nearby Terminal 2 for fast Jamaica, or Freeport, Bahamas. ferries, including a shopping mall, In the mid 1990s, a crisis-ridden and a docking facility across the Cuba decided it wanted its share bay, is still on ice. of the fast-growing Caribbean Havana’s Sierra Maestra Cruise Terminal A number of smaller players, cruise tourism. In December including Germany’s Hapag-Lloyd 1995, the tourism ministry opened the country for cruises by Continued on next page reopening a stylishly renovated Sierra Maestra terminal at the port of Havana, in walking distance to Old Havana’s biggest Cubanco president: Cruises are viable attractions. Alfonso Lavarello, president of Cubanco S.A., the Cuba’s first big catch was Italy’s Costa Crociere SpA, which Italian-Cuban joint venture managing the island’s cruise chose Havana as a home port for two of its vessels. But in and ferry terminals, defended the economic viability of 1997, Carnival Corp. became a minority owner of Costa, and cruise operations in Cuba. in 2000 decided to take over the entire company. Forced by For one, he predicts a record number of 100,000 cruise U.S. embargo laws, Costa immediately pulled its cruise ships passengers visiting the island this year. That would be a from Cuba and canceled a $62 million plan to expand the 66-percent increase from 2003. cruise terminal in Havana. As to profitability, Lavarello said that while it is true In 1998, when the Costa disappointment was on the horizon, that many Caribbean cruise destinations complain about Cuba granted Silares Terminales — a company part-owned receiving only a small share of cruise profits, Cuba is large, by a former Costa executive — a concession to operate five attractive and organized enough to negotiate a bigger terminals on the island. Silares has been able to expand traffic share with cruise companies. at Matanzas, Mariel, Santiago de Cuba and the Isle of Youth,

was due to Sen. Max Baucus’ pledge to hold up nominations Perspective on Cuba (contd.) for the Treasury Department until the Administration agreed to change its position on new payment restrictions for exports from visiting or supporting their families in time of need. to Cuba. While the fundamental difficulty regarding All their actions need to be seen for what they are: Personal payments is still to be resolved, the White House did back vendettas. down and did issue a change. This has never happened Travel aside, we also saw something that has never before. And without much fanfare, Sen. Byron Dorgan happened before in Congress with regard to any Cuba issue: successfully added his own version of the Emerson The effective use of political give-and-take. Led by Rep Jo amendment to the Senate Treasury appropriations bill, which Ann Emerson in the House, her amendment to the Treasury was passed without objection at the Committee stage. appropriations bill dealing with the payment issue passed In both the House and the Senate, concessions were made unanimously in Committee and without any objection on for the first time regarding Cuba, because the anti-embargo the floor. But more than that, a sufficient number of side used its own political leverage. Representatives then withheld support for the hotly contested The lesson seems clear. Victories can be won in the same Central American Free Trade Agreement (CAFTA), in order way that most political victories are won: Use of one’s to secure what is believed to be an agreement from House political power in the way that all politicians understand. leadership that the Emerson language will not be struck from *** the bill during Conference Committee deliberations. Meanwhile, the whole forest is being reshaped — by If the House leadership now lives up to what is believed forces totally outside the influence of the United States. to be the “deal,” this would represent a real breakthrough While the anti-Castro members of Congress and their allies and a lesson. in the Administration, such as Dan Fisk and Roger Noriega, The same happened in the Senate: For the first time, an Continued on next page Administration made a concession on Cuba. In this case, it

4 Analysis: Cruise tourism M o r e o n t h e E m b a r g o

Continued from previous page SENATOR PONDERS AG STANDALONE BILL U.S. Sen. Byron Dorgan (D- and Seetours, and Britain’s Fred Olsen Cruise Lines and Sun N.D.) is pondering launching a Cruises, have filled some of the gaps left by Costa, but none standalone bill that would lift of those companies is making major commitments. additional restrictions on Meanwhile, a number of cruise-ferry operations from agricultural sales to Cuba. Bahamas, Cancún and Jamaica to Cuba have come and gone This standalone approach quickly. would be a move away from the The next object of Cuba’s desire became Festival Cruises. current strategy of reversing new The ambitious, Italy-based startup grew fast and showed a restrictions on agricultural sales keen and long-term interest in Cuba, which was especially to Cuba by de-funding welcome since it came in the aftermath of 9/11. Cuba granted enforcement via amendments to Festival a long-term agreement at the cruise terminal in the Treasury budget bill. Havana. The affair reached its peak when Fidel Castro In a “clarification” Feb. 22, the Dorgan personally came aboard a Festival cruise ship when it docked Treasury Department prohibited in Havana in February 2002, dining with Festival Chairman U.S. companies from letting Cuba pay for goods once they George Poulides. arrive on the island. U.S. companies had used this method since But then, after just two full seasons of making Cuba the the trade began in late 2001. winter home port for its modern, 1,500-passenger Mistral and Some Cuba trade advocates believe the de-funding approach the smaller Bolero, Festival went belly-up, a victim of the doesn’t make practical sense for agricultural sales. Even if a post 9/11-slowdown, high debt and fidgety lenders. current de-funding amendment passed in Congress’— and Cuba had to fall back again on an assortment of small and would be signed by the President — the restrictions would midsize European cruise companies, operating mostly old er still stand, making it unlikely for any company to sell food to and smaller ships, in the shadow of the industry’s Big Three. Cuba under previous payment methods. At this point, there is no cruise company on the horizon Similar de-funding amendments are pending for travel to that would be in a position to make major commitments to Cuba “But the difference of de-funding between travel and Cuba — especially now that the industry as a whole seems to agriculture is significant,” says one Washington observer. “If have outstayed its welcome on the island. you de-fund [enforcement], the law is still on the books. I don’t A little more than three years after his dinner aboard the know of a lot of companies that would violate a law, even if Mistral, Castro announced that cruise ships wouldn’t be it’s not enforced. Travel is different. Or do you think spring welcome anymore. breakers care about what’s legal or not?”

Perspective on Cuba (contd.) As U.S. policy concentrates on each tree, Cuba enjoys concentrate on whether it’s OK for Cuban Americans to partnerships never thought possible just a few years ago and send toilet paper to their relatives, China and Venezuela is a player in reshaping the entire forest. are altering the forest as a whole, right under our noses. Who are we kidding? What will be the reaction in Congress The president of China signs an agreement to invest when just over the horizon from our southern coast sits an $1.5 billion in nickel operations; the Canadians discover oil rig with Chinese and Cuban flags? 100 millions barrels of oil 34 miles from Havana (that is One could make the case that the U.S. is becoming – each three years self sufficiency for Cuba); Cuba’s income from day – far less relevant to Cuba as Castro concentrates tourism, nickel exports, sales of pharmaceutical products elsewhere. are all up; Repsol from Spain announces it will drill for What is at stake is not just policy toward Cuba, but how oil in the Gulf less than 60 miles from U.S. shores, but the U.S. will find its place within a rapidly changing Latin this time with partners from China, Norway, and possibly America, with Cuba and Venezuela playing increasingly now India; Venezuelan President Hugo Chávez buys $500 accepted roles. million of Argentine debt, provides subsidized oil to its It is now up to more rational politicians supported by Caribbean neighbors, and Cuba’s doctors work in places agricultural and other groups, to use their political clout and where no doctor has been seen for years; and governments set the U.S. on a different policy course. throughout Latin America increasingly chart a course away from U.S. dominance, with economic policies far closer Kirby Jones is founder and president of the U.S.-Cuba to those of Cuba and Venezuela than Foggy Bottom. Trade Association and has been a consultant to companies The U.S. policy response to this? Calling Castro and and organizations conducting business in and with Cuba Chávez bad names. since 1974.

5 M o r e o n t h e E c o n o m y

CUBA INTERESTED IN GAS FROM TRINIDAD INDIAN OIL FIRM SEEKS CUBA BUSINESS Cuba, as well as several other Caribbean countries, has Executives of expressed interest in a joint venture with Trinidad and Tobago ONGC Videsh for the supply of gas. Vice President Carlos Lage held Ltd., the discussions with Prime Minister Patrick Manning on the issue international arm during the recent summit of the Association of Caribbean of India’s Oil States (ACS) in Panama.Trinidad, an oil and gas producer, and Natural Gas did not immediately join Petrocaribe, a regional agreement Corp. Ltd., will created by Venezuela in June aiming to provide oil at accompany the preferential prices to Caribbean states. Indian minister of state for AIR TRAFFIC KEEPS RISING external affairs Reflecting a rise in tourism, one hundred international during a visit to Cuba in early September to talk about oil airlines will be offering service to Cuba by the end of the investments, India daily The Telegraph reports. According year, up from 92 at the end of 2004, according to the Cuban to the newspaper, ONGChas been in talks about the Civil Aeronautics Institute (IACC). The most prominent acquisition of two oil fields, as well as a 30-percent share newcomer in June was Virgin Atlantic Airways, which is flying in 10 offshore blocks in which Spain’s Repsol-YPF is twice weekly on a London-Havana route. planning test drilling. To catch up with rising air traffic, Cuba is expanding several ONGC has offshore experience and operates on oilfields airports and building an air traffic control center. Construction in Sudan, Russia and Myanmar. underway at Havana’s José Martí International Airport will Meanwhile, Repsol-YPF will invest $57 million in a allow the airport to handle 500 passengers per hour, up from second deep-sea drill in Cuban Gulf waters, Spanish 350. A new control tower was recently completed at the airport. business publication Cinco Días reported. Repsol announced in June it would partner with China’s CNOOC CUBA TRYING TO ATTRACT SENIORS and Norway’s Norsk Hydro in a second exploration, after Cuba’s tourism ministry is about to launch a new program coming up empty-handed in Cuba during a first, $80 aiming to attract seniors to visit the island. Cuba is trying to million, drill last summer. Repsol retains 40 percent of woo the age 70-plus crowd by offering specially-designed 15- the partnership; the other partners own 30 percent each. day packages that includes visits to Havana, Cienfuegos, Trinidad, and Santiago de Cuba. advertisement Focused. Low Prices.

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6 M o r e o n t h e E c o n o m y

CASTRO: HISTORY MATTERS CUBANIQUEL MAKES $40M INVESTMENT Fidel Castro turned 79 Aug. 13, showing no signs of wanting Grupo Empresarial Cubaníquel said it is investing more to step away from the helm. “If I have lived many years, that’s than $40 million to build a railroad yard and a 7-mile conveyor because I practiced a lot of sports. I climbed mountains, which belt linking a nickel mining area with the René Ramos Latour is good for the heart,” he said two days after his birthday to processing plant in Nicaro, the oldest in Cuba. A German physical education graduates.. “It is the Olympics of history company began building the conveyor belt late last year. The that matter, though, and there we will take the gold medal.” project is expected to be completed by the end of this year. The state company earlier this year announced a three-year, INTERIOR MINISTER LOSES JOB $450 million expansion plan of the Pedro Sotto Alba plant in One of two interior ministers in Cuba lost his job in May, Moa, which it operates jointly with Canada’s Sherritt according to a decree published Aug 26 in the Gaceta Oficial. International Corp. Cubaníquel is also modernizing the Wilfredo López Rodríguez was “freed of his duties” to “pursue Comandante Ernesto Che Guevara plant in Moa, and studying other tasks,” the decree said. López, 54, had held his post the launch of a ferronickel plant with Chinese partners. since Jan. 27, 1995. The other interior minister is Ricardo World nickel prices have exploded over the past few years, Cabrisas, a former minister for foreign trade. due to a combination of lower-than-expected production by Australia, and fast-rising stainless steel production in China.. CUBA, PANAMA ON GOOD TERMS AGAIN Cuba and Panama re-established full diplomatic relations, DROUGHT CONTINUES IN THREE PROVINCES a year after Cuba called its ambassador back from Panama. Officials of Cuba’s water institute said savings programs The diplomatic conflict flared up after outgoing President and drought relief projects continue in at least three eastern Mireya Moscoso pardoned four exile Cuban men deemed and central provinces. Camagüey, Las Tunas and Holguín terrorists by Havana. Panama is Cuba’s main trade partner in provinces barely benefited from the heavy rains brought by Central America. Fidel Castro and Panama’s populist President Hurricane Dennis in July, and are still affected by the drought.. Martín Torrijos, who had worked for restablishing ties since Reservoirs in Las Tunas are at only 21 percent of capacity, in assuming power, celebrated the event Aug. 20 in Havana. Camagüey at 16 percent.

CUBAN MED SCHOOL GETS SISTER CAMPUS CUBAN BANK OPENS CARACAS OFFICE President Hugo Chávez announced that Venezuela will Cuba’s Banco Exterior received a permit from Venezuelan open a medical school similar to Cuba’s Escuela regulators to open an office in Caracas. Starting in October, Latinoamericana de Medicina (ELAM) “as soon as the Banco de Exportación y Comercio Exterior C.A. will possible.” Chávez made the announcement during the provide financing for Cuban companies’ exports. Venezuela graduation has become Cuba’s largest trade partner. The opening of the ceremony commercial bank is part of a free trade agreement between of the five the two countries signed in November. In April, Banco year old’s Industrial de Venezuela opened a subsidiary in Havana. first cohort. The school CUBA BUYING VENEZUELAN TEXTILES has been Banco Industrial de Venezuela (BIV) is providing preparing financing worth some $560,000 to Venezuelan clothing thousands manufacturers for production and exports to Cuba, daily El of young Nacional reports. The companies will make underwear and Venezuela will open its own ELAM people uniforms that will be sold to the Cuban government. The from all Venezuelan government has earmarked $119 million of over the hemisphere — including the United States — for financing for sales to Cuba at BIV. Another $81 million were medical careers. The program, free of charge, is aimed at earmarked for Bancoex, another state trade bank. people who otherwise can’t afford the education. Between the two schools, Cuba and Venezuela plan to SCRAP METAL DEAL CATCHING FLAK train 200,000 doctors over the next decade. A Venezuelan agreement with Cuba to send scrap metal Meanwhile, Misión Milagro (“Miracle Mission”), a to the island has come under fire from opposition politicians program that provides free eye surgery in Cuba to poor Latin in Congress. Critics are complaining that Venezuelan Americans, is expected to have treated more than 100,000 foundries are forced to import raw materials, Business News patients flown in from all over the continent by the end of Americas reports. Venezuela’s heavy industry holding October. The administrators say they believe the program company CVG has recently begun to deliver all scrap metal could treat 600,000 people a year. from its Alcasa, Venalum and Bauxilum subsidiaries to Cuba.

7 M o r e o n t h e E m b a r g o

GOP SENATOR TRYING TO CALM WAVES ... described as the undermining of restless nations such as ma Sen. Arlen Specter (R-Pa.) sought a meeting with Fidel Bolivia and Ecuador by Venezuela and Cuba. Castro when traveling to Cuba in mid-August. The stop in Havana followed a visit to Caracas where ... WHILE TOUGH TALK CONTINUES Specter, according to observers, was trying to smooth Barely a week after Specter’s visit to Caracas and his plead relations with the United States’ fourth-largest oil supplier. for a moderation in tone vis-à-vis Caracas, Christian A Specter spokesman told the Washington Post that Coalition founder and Republican activist Pat Robertson Specter was in Cuba to visit the prison at the U.S. naval publicly called for the assassination of Venezuelan President base at Guantánamo. He didn’t say whether the meeting with Hugo Chávez. Castro materialized. Specter had met with Castro on three Robertson’s remarks have heightened concerns in Caracas occasions before; the topic of those meetings was mainly and Havana. CIA Director Porter Goss said in March during U.S.-Cuban a Congress hearing that a prohibition to assassinate foreign cooperation politicians does not apply to “terrorists who are enemies of on drug the United States.” The same month, Goss included Chávez interception. in a list of “actors who clearly are causing us problems.” The travel Robertson said in his “700 Club” show that Chávez is activity by making Venezuela a “launch pad for Communist infiltration the chair of and muslim extremism.” the Senate Just after Robertson’s assassination remarks, Chávez and Judicial Fidel Castro announced that 100,000 poor people from the Committee, hemisphere, including the United States, will undergo zero- who is cost eye surgery in Cuba this year, as part of Cuba’s Specter: Talking to Bush and Chávez considered a “Milagro” medical program. Chávez also said Venezuela moderate Republican, came at a time when Secretary of might offer the poor in the United States gasoline at lower Defense Donald Rumsfeld visited Paraguay and Peru, in an prices. The Venezuelan state, via oil company PdVSA, owns effort to rally those governments against what Rumsfeld some 13,000 Citgo gas stations in the United States.

STATE APPOINTEE SEEN AS RICE CONFIDANTE MIAMI STILL WITHOUT GRAMMIES Thomas Shannon, who will replace Roger Noriega as the The sixth annual edition of the Latin Grammy awards State Department’s point man for Latin America in September, ceremony continues to be held in Los Angeles, far away from is described as a career diplomat who gained Condoleezza Miami. Miami politicians have put a lot of effort into attracting Rice’s trust while working on her side at the National Security the show to their city, but protests against the participation of Council. Since March 2003, he was special counselor of the Cuban musicians by anti-Castro activists in 2003 have stopped president and chief of Latin American affairs in the NSA. He the Grammy organizers from returning the event there.The worked for the embassies in Caracas (1996-99), Brasilia organizers said that sponsors were scared away by the (1989-92) and Guatemala (1984-86). From 2002-2003, he was protesters. deputy subsecretary of state for Latin America, in charge of relations with the Caribbean and Andean nations. SPANISH COURT RULES IN CASTRO FAMILY FEUD Fidel Castro’s sister Juanita, who owns a pharmacy in U.S. MAY DEPORT POSADA TO VENEZUELA Miami, won a $45,000 judgment in a libel suit in a Spanish A federal immigration judge in El Paso said that he would court against her niece, Alina Fernández. Fernández, Fidel’s order the deportation to Venezuela of suspected terrorist Luis daughter, is an outspoken critic of her father. The suit against Posada Carriles — who is a Venezuelan citizen — if he is the publisher of Alina’s memoirs, Barcelona-based Plaza & denied U.S. protection. The U.S. prosecutor told the judge Janes (the Spanish subsidiary of New York-based Random Aug. 29 that Posada can’t receive asylum because he is a House), dragged on for seven years. Juanita Castro told the terrorism suspect. Miami Herald that she spent the $100,000 in court costs, to A deportation is not guaranteed, though. The judge can still defend her family’s honor. suspend the procedure in case there’s credible evidence Posada “People who were eating off Fidel’s plate yesterday come would be tortured. Venezuela has sought Posada’s extradition here and want money and power, so they say whatever they because he fled from a Venezuelan prison in 1985. His case, want, even if it’s not true,” Juanita told the newspaper. “They related to the bombing of a Cuban airliner in 1976, is still can do whatever way they want, but not by offending my pending. Cuba, which is also seeking Posada for a series of parents. Juanita Castro objected to the description of her hotel bombings, said it would be satisfied with Posada’s parents, Angel Castro and Lina Ruz, in Fernández’ book, standing trial in Venezuela. “Alina: The Memoirs of Fidel Castro’s Rebel Daughter.”

8 C O N F E R E N C E S & E V E N T S News from the

•8th International Transportation Fair (FIT 2005), Havana, Sept. 21-24 Sales Department th •5 International Encounter of Nature Tourism in Cuba ++The USA Rice Federation Aug. 25-26 organized a mini- (TURNAT), Pinar del Río, Sept. 26-29 •5th Interamerican Meeting on Labor and Social Security Law, conference in Havana with executives of state food importer Havana, Oct. 18-21 Alimport S.A. to promote U.S. rice in Cuba. On the second •23rd International Havana Fair (FIHAV), Havana, Oct. 30-Nov. 6 day of the two-day conference, Alimport announced it would •Biotechnology Havana 2005: For a sustainable food production, buy 100,000 metric tons of U.S. paddy rice and 30,000 tons of Havana, Nov. 27-Dec. 2 •First International Mango Congress, Santiago, May 2006 milled rice in the coming months, putting the total of rice •Cubadisco 2006 (music fair), Havana, May 20-28 purchases ahead of 2004. Cuba buys the bulk of its rice in Asia, but U.S. imports could quadruple, Alimport President Call (941) 330-0303 or send an e-mail to [email protected] Pedro Álvarez said. U.S. rice sales to Cuba had dropped 50 for more information on events percent in volume and 60 percent in value from January through May this year, as a result of new restrictions by Washington. The “Primera Conferencia de Arroz Cuba-USA,” held at the Hotel Nacional in Havana, aimed at providing more M o r e o n t h e E m b a r g o information about the use of U.S. rice in Cuba, and an update about U.S. rice production and international markets. The U.S. KATRINA DISRUPTS CUBA TRADE delegation, headed by USRF President Lee Adams, included The three U.S. ports handling the bulk of agriculture exports company executives from Arkansas, Louisiana, Mississippi, to Cuba were hit hard by Hurricane Katrina. Regular shipping Virginia, Texas and California.++ in New Orleans, Gulfport and Mobile was interrupted as of ++A 10-member Cuba delegation from Nebraska headed deadline of this newsletter, and it wasn’t clear when traffic by Gov. Dave Heineman Aug. 13-17 received a letter of intent would resume. from Alimport for the purchase of $30 million worth of goods Damage along the Mississippi Delta and the ports of New over 18 months. Beyond an already-agreed purchase of 13,000 Orleans and metric tons of beans, Alimport said it would like to buy 25,000 Gulfport was tons of corn, 25,000 tons of wheat, 15,000 tons of soy, and especially 100 to 200 dairy cows from Nebraska producers through early heavy. 2007.During the negotiations, both sides also expressed their It wasn’t interest in investigating the possibility of selling beef, liver clear whether and paper. The delegation, which negotiated and signed the any Cuba contracts at the Hotel Nacional in Havana, included Greg shipments Ibach, director of the state Department of Agriculture, Stan wereGarbacz of NDA, Charlie Witmer of Stateline Bean damaged or Producers Cooperative, Brett Morrison of Nebraska Bean Inc., Bryce Kelley of Kelley Bean Corp., Mark Jagels of The port area of Gulfport was devastated destroyed. the Nebraska Corn Board, David Hilferty of the Nebraska Cuba exports rebounding Wheat Board, Keith Olsen, president of the Nebraska Farm U.S. agricultural sales to Cuba are rebounding, after a Bureau, and Chuck Hibberd of the University of Nebraska. 25-percent drop in the first half of the year. Just in one Heineman said he expected Nebraska producers to sign more week of August, some 250 U.S. businesspeople were in contracts in November.++ Cuba to explore business opportunities. ++Coinciding with the delivery of 93 heifers aboard a U.S.- In late July, the U.S. Treasury Department bowed to chartered vessel, including 40 from Vermont, a delegation from pressure, declaring it legal for U.S. exporters to be paid that state visited Cuba in the first week of August. The for goods once they arrive on the island, as long as Cuba delegation, headed by Republican Lt. Gov. Brian Dubie and pays a third-country bank before the goods leave the Steven Kerr, state secretary of agriculture, negotiated the sale United States. of more dairy cows, apples and powdered milk. No additional Alimport Director Pedro Álvarez said in mid-August that heifer deals were announced, but Kerr said Alimport agreed U.S. purchases reached $326 million so far this year, and to double a previous order of Vermont apples to 4,000 bushels. that he expects the state food import agency to match or This was Dubie’s second and Kerr’s third visit to Cuba. Dubie slightly exceed the $470.1 million record set in 2004. The also met with Foreign Trade Minister Raúl de la Nuez, to talk predicted increase comes although Cuba bought $300 about establishing exchanges between U.S. and Cuban farmers million worth of goods elsewhere early this year, after new and ranchers. Late last year, Cuba signed a letter of intent, restrictions imposed by the Treasury Department expressing its interest in buying cows, milk powder and apples complicated sales procedures. from Vermont, but the going has been slow.++

9 C o m p a n y B r i e f s Flag carrier Bangalore, India-based Biocon Ltd. said it expects Biomab, Cubana de a cancer drug it is jointly developing with Cuba’s CIMAB Aviación signed S.A., to hit the Indian market this or next year. The five a preliminary monoclonal antibodies it develops with CIMAB — the agreement with marketing arm of Cuba’s Center for Molecular Immunology Russia’s (CIM) — could turn into “large global opportunities” in the Ilyushin Finans next two to three years, Biocon said. Co. to pay $250 In other news, CIMAB and Indonesia’s Innogene million for the Kalbiotech Pte Ltd., a subsidiary of PT Kalbe Farma, signed lease-purchase a cooperation accord in Jakarta to develop and produce a Cuban Tu-204 of three cancer drug. The monoclonal antibody is known as 1E10. medium-distance Tupolev Tu-204 jets. One of the three *** Tupolevs will be a cargo version. The signing of a definitive Cuban son legend Ibrahim Ferrer died at age 78 in Havana, agreement is expected before November. days after returning from a four-week concert tour in Europe. Earlier this summer, Cuba’s Aviaimport S.A. agreed to a Ferrer’s smooth voice was a staple in Cuba for five decades, $100 million purchase of two Ilyushin IL 96-300 long- but he wasn’t distance jets for use by Cuban President Fidel Castro. Both internationally purchases are financed with a loan from Roseximbank. “discovered” until the *** 1997 success of “Buena Martinique-based Groupe Bernard Hayot (GBH), the Vista Social Club,” a official Renault distributor in Cuba, has sold an undisclosed recording of aging Cuban number of Brazilian-made Renault Clio and Korean-made musicians arranged by Renault-Samsung SM3 models to car rental agency U.S. guitarist Ry Cooder. Havanautos S.A., a subsidiary of state Ferrer had since produced holding CIMEX. two solo albums with The import of the Clio models Britain’s World Circuit was duty-free, thanks to Cuba’s label. He won a Latin and Brazil’s membership in the Grammy in 2000 for “best new artist.” Latin American Integration *** Association (ALADI). A GBH Montreal-based oil and gas company Pebercan Inc. said executive told Cuban media that its second-quarter revenues were US$19.78 million, up 65 the duty-free import reduced the cars’ price by 25 percent. percent. Net income rose 91 percent, to $6 million. Pebercan, GBH, a $1.5 billion (revenues) conglomerate with roots in which partnered with Sherritt International Corp. in a major France’s “overseas departments,” opened an office in Havana recent find just off Cuba’s northern coast, expects production in 2002, under “exceptional terms” by the Cuban government. to rise from 13,218 bpd to 18,000 bpd by the end of the year.

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