Vol. 22, No. 1 January 2014

In the News 2014: Tighter cash flow adds

How Mariel measures up challenge to already complex scenario BY JOHANNES WERNER Where does the Mariel Zone fit in the With prices of Cuban export commod- big picture of EPZs? ...... Page 2 uba’s reformers — already busy ities such as nickel and sugar expected with currency unification, simulta- to continue their decline, tourism stag- Cneously encouraging and limiting nating, expenses for food imports des- Central Bank issues bonds private-sector growth, turning around tined to rise yet again, and many state Cuba will emit 20-year bonds to cover its dysfunctional state companies, and sell- companies likely to require continued budget shortfall in 2014 ...... Page 3 ing the Mariel export processing zone subsidies, the government will have to to investors, among many other tasks — extend its austerity policy in order to may also have to cope with tightening keep the country’s recent debt-service Domingo on Cuba cash flow in 2014. record clean. Notes from the Assembly: Majority, not As economic reforms have yet to “In 2014, international prices could unanimity ...... Page 4 produce any tangible results as far as trigger a shock of terms of exchange,” revenues go — just two years from the says Pavel Vidal, a former Central Bank 2016 deadline set by the lineamientos of economist who now teaches at Univer- Domingo on Cuba reform in 2011 — officials predict con- sidad Javeriana in Colombia. “In such How Spain and Cuba continue their dual- tinued sluggish GDP growth in 2014. a scenario, and given that the reform track relationship ...... Page 4 Following a disappointing 2.7-percent doesn’t show robust results in revenue increase in 2013 — 0.9 percent less than generation, a new adjustment in imports predicted — the economy is expected and a heightening of hard-currency re- Remittances growing fast to grow at a dismal 2.2 percent in 2014, strictions should not be dismissed.” U.S. remittances to Cuba reached a re- Economy and Planning Minister Adel As the overall deficit for 2014 is ex- cord $2.77 billion in 2013 ...... Page 6 Yzquierdo told the National Assembly at pected to reach 3.9 billion Cuban pesos, its year-end session. See Cash Flow, page 3 Chinese cars, hecho en Cuba Geely plans a semi-knock down assem- Cuba pitches Mariel Zone to investors — bly plant on the island ...... Page 7 and who is going to bat? Mariel Zone — the ultimate map BY VITO ECHEVARRIA Cartographer Armando Portela de- In his effort to attract manufacturers and service companies to the Mariel signed detailed maps ...... Pages 8-9 uban Foreign Investment Minis- ter Rodrigo Malmierca has been a Zone, Malmierca has all but ignored Cbusy man in recent months. Any- Cuba’s long-time investment partners Bank trouble hits U.S.-Cuba travel one keeping track of his movements will Canada and the European Union. Cuba has a hard time finding a bank for know that he has made the rounds visit- Will he have anything to show for the grand opening of the $900 million con- its U.S. diplomatic mission ...Page 10 ing allies worldwide, in an attempt to sell the Mariel Special Development Zone to tainer hub at the Port of Mariel, slated companies from Brazil, China, Vietnam for late January? and Russia. Malmierca can already claim some An investor’s Cuban divorce success in at least stirring up awareness Book review: Michel Villand, My Associ- In November, Malmierca toured Bra- zilian cities São Paulo, Porto Alegre, Rio of Mariel, and by extension the Cuban ate Fidel Castro ...... Page 14 Grande do Sul and Rio de Janeiro. In late market. October, he promoted Mariel to the Rus- After his pit stop in Beijing last Sep- sian Chamber of Commerce. The month tember, Havana’s annual FIHAV trade CubaNews (ISSN 1073-7715) is published monthly fair that was held two months later at- by CUBANEWS LLC. © 2013. All rights reserved. before, he was in Beijing, pitching the Mariel Zone to hundreds of Chinese tracted 62 Chinese companies (a 55-per- Annual subscription: $398. Nonprofit organizations: cent increase from the 40 that showed $198. Printed edition is $100 extra. For editorial in- businesspeople. Also in September, dur- ing a visit to Hanoi, Malmierca made a up in 2012). quiries, please call (305) 393-8760, fax your request At least some of these FIHAV partici- to (305) 670-2229 or email [email protected]. similar pitch to Vietnamese business people. See Mariel Zone, page 2 2 CubaNews v January 2014 rather than a private Chinese group,” depends on a series of factors in order Mariel Zone —FROM PAGE 1 said a China-based investor, who spoke for it to be viable, such as demand, ad- pants are likely to study the possibility on background. “This would be facili- equacy of the (bus) models, investments of locating at Mariel. Zhejiang Geely Au- tated at a high diplomatic level.” in manufacturing facilities, labor train- tomotive Corporation, one of the fastest- It remains to be seen how serious in- ing, etc.” growing automobile makers in China, vestors are with Mariel. So far, only one Secco declined to comment on reports hinted in a press release it may build a Brazilian company — glass maker Fa- that Marcopolo was unable to raise suffi- small assembly plant in Cuba, although navid SA — has reportedly expressed cient capital to launch a Mariel venture. it didn’t say where (see page 7). its intent to invest at Mariel. Reports of q If there’s manifest Chinese interest in Brazilian bus maker Marcopolo setting Mariel, it may be state companies that up shop there turned out to be prema- More information at www.zedmariel.com come first, one Chinese observer says. ture. “(The) company will not be open- “I think there would be a stronger pos- ing a factory in Cuba,” said Marcopolo Vito Echevarria, a New York-based freelance sibility that a state enterprise may end up spokesman José Carlos Secco. “The set- journalist, has written for CubaNews since our being a first mover on the Mariel project ting up of an operation in any country establishment in 1993. How the Mariel Zone measures up ts deepwater port and 180-square mile expanse place it assets being expropriated. among the most prominent Export Processing Zones Nor does Cuba seem to be willing to concede the rock- I(EPZ) in the hemisphere, but experts are split over the bottom wages competitors in the region offer to employers. prospects of the Mariel Special Development Zone. The law guiding the Mariel Zone continues the practice of Not surprisingly, observers linked to EPZs in the region forcing investors to hire employees through a government that are closely tied to U.S. markets — assembling apparel agency that has been charging a premium on wages. and other light products with low-cost labor — are having a Even so, one U.S. observer concedes a “limited scope” of hard time making sense of the Mariel Zone. success for Mariel, if investors take a long-term view. José Manuel Torres, executive vice president of the Aso- “If an EPZ is established with the intent of addressing the ciación Dominicana de Zonas Francas (ADOZONA), a trade hemisphere, there may be some limited scope,” said Anton group that represents companies operating in the EPZs Edmunds, a Washington-based trade consultant special- of the Dominican Republic, believes Mariel has a chance izing in Caribbean markets. “The Cuba plan may serve to position the country for 10 years down the road, more so than three to five.” To most European, Canadian and — of course — U.S. companies, Mariel makes sense once the United States lifts sanctions against Cuba. However, one group of businesses may already be able to take advantage of the Zone. The heart of the Mariel Special Development Zone Under the radar of U.S. observers, is a container terminal with a 700-meter pier (under Chinese, Brazilian, Russian and Indian

construction, r.) that accommodates post-Panamax courtesy www.zedmariel.com Photo export goods have already swamped vessels. Also see Mariel Zone maps on pages 8 & 9. smaller markets of Central America, the Caribbean and South America. Jonathan Benjamin-Alvarado, a politi- cal scientist with the University of Ne- if coupled with free-trade agreements such as CAFTA-DR. braska at Omaha, believes that Chinese manufacturers can CAFTA provides preferential treatment and legal protec- use Mariel to assemble automobiles and heavy household tions for foreign companies that are vested in that island’s appliances for sales in nearby Latin and Caribbean markets, EPZs, giving investors the option of pursuing binding inter- thereby saving shipping costs. national arbitration against the host state. Rather than looking at EPZs in Jamaica, Honduras or the “I consider that [the Mariel Zone’s] success will depend Dominican Republic, Mariel prospects may have to look at on various factors, including the need to promote the sign- Asia for guidance, Benjamin-Alvarado suggests. The Cuban ing of a free-trade agreement with the potential markets, in- government is really seeking to repeat the technology trans- centives, and legal protection of investments,” Torres said. fer by EPZs in China and South Korea. Although Cuba is pursuing trade agreements with fellow “This is consistent with the larger trajectory of Cuban eco- members of the ALBA bloc and PetroCaribe, CAFTA-style nomic development dating back to the 1980s,” he said. “In free-trade agreements are out of the question. The Cuban fact, many of Cuba’s ventures during the Soviet period were government has drummed up benefits for investors oper- undertaken to enhance Cuban technological capabilities in ating in the Mariel Zone (from 100-percent ownership for critical scientific technical fields — biosciences, engineer- foreign investors, to a ready pool of skilled workers, to tax ing, nuclear science, and information technology — and fa- breaks), but it has not spelled out a legal framework that cilitating the technology transfer. Given the relative success would govern investor-host relations in the event of a legal in these areas, Cuba could potentially become a ‘technology dispute. A long-announced reform of Cuba’s foreign invest- entrepot’ for the Gulf/Caribbean basin.” ment law is expected to pass in March. “This is the long-term gambit – along with the possibility Cuba not only lacks the legal protections for international that Cuba could become a secondary ‘value added’ manufac- companies most neighbors offer, but currently has foreign turer in specific high-tech areas like genetics, biosciences executives in jail, as part of an ongoing anti-corruption cam- and computer sciences,” he said. paign. The trials have also resulted in investors’ in-country —Vito Echevarría January 2014 v CubaNews 3 FINANCE Deficit rising, Central Bank issues 20-year bonds BY JOHANNES WERNER 2014 — and the debt generated by it, Pe- draza said, according to Prensa Latina. uba will emit 20-year sovereign The remainder will be covered with new bonds to cover its widening bud- money printed by the Central Bank. get shortfall in 2014, Finance Min- BCC’S EUROBONDS C A bond issue will help control inflation Year Duration Amount € Interest ister Lina Pedraza told the National As- more efficiently, Pedraza told the parlia- sembly. ment. 2006 1 yr 400m 7% The 2.5-percent, 20-year bonds will “As only 30 percent of the fiscal defi- 2006 1 yr 500m 8% be negotiable instruments that can be cit will be monetized, the Central Bank 2007 2 yr 100m 8.5% transferred from one Cuban bank to gains more control over monetary sup- another, when necessary, Pedraza said, 2007 2 yr 100m 9% ply and inflation,” Vidal said. “With 2008 2 yr 66.25m 9% without providing any details. monetization, money printing depends The debt instruments will be traded on the fiscal budget, and not on the in- 2008 3 yr 67.19m 9.25% among Cuban banks only, according to struments and decisions of monetary 2008 4 yr 67.19m 9.5% a former Central Bank economist. policy.” Source: LSE “This is a key step in granting auton- Foreign observers in Havana describe omy to monetary policy in relation to the move as a conventional strategy Cuba has had to rely on bilateral govern- fiscal policy,” said Pavel Vidal, who now among tightly regulated economies to ment loans and high-interest bank loans teaches at Universidad Javeriana in Calí, fund budget deficits. Even so, the fact for fresh hard currency. Due to U.S. re- Colombia. “I think this is a very posi- that the government laid out the financ- sistance, the country is excluded from tive step to strengthen monetary policy, ing of the deficit is noteworthy. multilateral institutions and their lend- which is, in turn, key for the process of ing mechanisms. eliminating the dual currency system.” LITTLE FOREIGN INTEREST Foreign banks were only marginally This fall, Cuba began the gradual Even if they were allowed to partici- involved in Cuba’s recent effort to regain elimination of the convertible peso, also pate, international banks will keep their footing in international bond markets. known as CUC, to eventually remain hands off Cuban bonds, suggests a for- Seven years ago, the Cuban Central with the Cuban Peso (CUP) only. Ob- eign businessman in Havana who spoke Bank dipped its toes in the Eurobond servers believe the complex process on background. Another cash crunch is market on the London Stock Exchange of devaluing the CUC and boosting the likely ahead as the budget deficit widens, with two batches of short-term issues. CUP may take at least three years. and as long-time ally Venezuela is under This was followed by five additional se- The bond announcement comes as the pressure to reduce its commitments. ries of bonds in 2007 and 2008. officials forecasted a feeble 2.2 percent “No private institution would have any Only 15 percent of the two bond issues GDP growth rate for 2014. interest whatsoever,” he said. in 2006 were bought by international The revenues from the bond issue The Cuban government’s access to banks, mostly with a lending record will cover up to 70 percent of the deficit fresh hard currency is very limited. in Cuba; the other buyers were Cuban — forecasted at 4.7 percent of GDP in Since a default on foreign debt in 1986, state banks. q

TIGHT CASH FLOW — FROM PAGE 1 not part of a bilateral political deal.” state companies to boost exports, says Under Nicolas Maduro — Hugo Vidal. Whether many state companies or 4.7 percent of GDP (the government Chávez’ besieged successor — Venezu- will be in a position to take advantage doesn’t reveal what part is in hard cur- ela has continued to provide Cuba with is another question, as their dysfunc- rency), the Central Bank is floating do- half its oil needs at subsidized prices, tion continues. Even new ones such as mestic bonds among Cuban banks and and apparently maintains a high level of Azcuba and BioFarmaCuba are already cranking up the money printing ma- Cuban medical service purchases. How- generating defaults, as deputies in the chines (see article on same page). ever, Venezuelan-Cuban mega projects, National Assembly learned recently (see Raúl Castro announced in 2009 that such as offshore oil drilling, a new refin- Notes, page 4). meeting Cuba’s foreign debt obligations ery at Matanzas, and a ferronickel plant What’s more, tax revenues may be was a top priority. Even so, some foreign in Moa, have been put on ice. rising, as small, privately-owned busi- players in Cuba are concerned, fearing To be sure, other foreign observers in nesses begin to gain traction. Tax col- that Cuba is just one cutback decision in Havana are less pessimistic, believing lections have grown marginally in 2013, Caracas — or a hurricane — away from that Maduro will continue Venezuela’s but there are now 440,000 cuentapro- the next default. commitment to Cuba, and that it will be pistas, 45,000 more than at the end of “Cuba is entering into a very tough able to do so as long as the oil price re- last year, and some of them are gaining period with severe liquidity issues, and mains above $90 a barrel. Also, Cuba has stable footing. Also, the government has [there is] a real risk of what happens if been quite successful recently in diversi- granted licenses to 270 non-agricultural Venezuelan support is cut further,” said fying its medical service exports, thanks cooperatives. one foreign businessman in Havana who to agreements with Brazil, Ecuador and The Mariel Special Development Zone spoke on background. The country “has Arab countries. is another wild card. No manufacturer been successful in renegotiating vari- Finally, even though their effect is dif- has publicly committed to opening shop ous sovereign debt deals, with Russia, ficult to predict, the reforms do have an at Mariel, but Cuban officials are opti- China, Japan, France, Netherlands and upside. mistic, talking about some 300 compa- others,” he added. “But I don’t see how Currency reform and devaluation will nies that have expressed interest (see this translates into new money, which is open a window of opportunity for Cuban Mariel, page 1). q 4 CubaNews v January 2014 Notes from the National Assembly BY DOMINGO AMUCHASTEGUI dadelas, solares) in the city of Havana “lacking just about everything, yet there he bad news at the year-end ses- still is no encompassing or far-reaching sion of the National Assembly of policy to deal with this problem,” stated TPeople Power was expected: At 2.7 a lawmaker from Havana, also to much percent, GDP growth for 2013 fell short applause. of a 3.6-percent goal. Adel Yzquierdo, -The Minister of Foreign Trade and Minister of Economy and Planning, em- Investment, Rodrigo Malmierca Díaz, phasized falling prices for key exports described foreign trade operations as such as sugar and nickel, together with riddled with irregularities, such as pick- increasing costs of food imports, while ing the wrong providers, prolonged trying to downplay the many deficien- delays in finalizing contracts, and mis- cies of state companies. ficiency, negligence, and lack of control. management and negligent handling of Expected growth of 2.2 percent for -Defaults that continue to persist, 82 shipments. Lawmakers added examples: 2014 will be even lower, very far from percent of them concentrated in the Crucial spare parts arriving in Cuba for the 6 percent Cuban economists sug- Ministry of Agriculture, the province of the sugar industry in Holguín province gest. Havana, BioFarmaCuba, and Azcuba. In- faced delays of two months, disrupting President Raúl Castro also stressed credible as it may seem, these last two preparations for the sugar harvest. a tourist industry that continued to de- corporations were created just recently -The General Comptroller of the Repub- crease for a second year in a row, along — based on new financial and manage- lic, Gladys Bejerano Portela, announced with the failure of industries that could rial principles — but already they are ac- that “everyone is to be audited every 18 help replace costly imports. cumulating defaults in large numbers. months;” lawmakers highlighted that in •Expenditures in 2014 will be up 2 “If the state sector doesn’t eliminate local assemblies more and more citizens percent from the 2013 budget; revenues its own deficiencies and illegalities, it are publicly denouncing wrongdoings are 1.7 percent less than 2013. The over- will not be able to demand people act ac- and cases of corruption. all deficit for 2014 is expected to reach cordingly,” a lawmaker from Matanzas 4.7 percent (3.9 billion CUP). Specif- province said to much applause. MAJORITY, NOT UNANIMITY ics have yet to be provided as to what -According to Deputy Minister of Pub- -A big debate when passing the new La- percentage of the budget will be in hard lic Health, Dr. Reynol García, the main bor Code was triggered by equal rights currency. Fifty-four percent will be spent health problem today are unsanitary and opportunities regarding gender is- on social services, mostly in education conditions leading to a rise of “acute sues and physical limitations. Various (27%) and public health (22%). diarrhetic diseases,” aggravated by sew- lawmakers, including Mariela Castro, ers and drainage systems completely objected to the approach and wording NEW COMPANIES, NEW DEFAULTS broken down and in need of major re- of the new labor code, questioning the •Criticism from lawmakers in discus- pairs. work of the judicial and constitutional sions at committee level focused on: -Currently there are 1,600 slums (ciu- -Lack of discipline, corruption, inef- See National Assembly, next page Analysis: The Cuba-Spain dual track BY DOMINGO AMUCHASTEGUI action between the two governments followed similar par- allel developments. A sworn enemy of Communism and a arallel patterns in the field of for- close ally to the U.S., Francisco Franco rejected repeated eign policy, in the case of Cuba, pressures and demands from Washington to join efforts to Pshould not suggest contradictory overthrow the Castro government. The Spanish embassy courses of action or aiming at opposite in Havana knew perfectly well how many Spanish Commu- results. It has never been the case, and nist veterans from the civil war and WWII were working Spain is an excellent example. together with the Cuban government. Cuba was visited by During the first week of December, a Spanish delegation numerous Spanish Communists such as Dolores ‘La Pa- representing Izquierda Unida (IU) and the Partido Comuni- sionaria’ Ibarruri, socialists such as Felipe González (future sta de España (PCE) visited Cuba. A first reaction will tend head of the Spanish governent after the transition), and to suggest that this is “business as usual” among commu- other republican figures; the Spanish Republic was revered nists and leftists. by Cuban revolutionaries, and solidarity was conveyed in The next day, an official delegation arrived in Havana from different ways. the Government Junta of the Autonomous Community of None of these patterns created tensions, conflicts or oth- Galicia, led by its president, Antonio Núñez Feijóo. Núñez erwise with the Spanish authorities. Franco also dismissed also represents the leading political force of Galicia, the domestic pressures to get tough on Fidel Castro. And not Partido Popular, a conservative party by every standard that only this, but he encouraged its institutions and the private currently controls the central government of Spain. sector to engage in extremely friendly and advantageous, Núñez, after detailed talks with Cuba’s First Vice President multibillion economic relations until his death in 1975. and the Ministry of Foreign Trade and Investment, signed an Cuba’s fishing fleet and bases in the Canary Islands and agreement of cooperation aimed at renewing and expanding other major industrial and transport projects were closely bilateral relations in trade, services, tourism, public health, attached to Spain’s readiness to work together. Franco’s ob- IT, telecommunications, and biotechnology, among others. jections to Fidel Castro and his policies were made public, Contradictory? Not quite. After 1959, the patterns of inter- See Cuba-Spain, page 6 January 2014 v CubaNews 5 BRIEFS NEW FOREIGN INVESTMENT LAW COMING Setting a date for the long-awaited re- CUBA LAW CONFERENCE IN ORLANDO NON-MILITARY HEADING MARIEL ZONE OFFICE form of Cuba’s foreign investment law, A conference scheduled for Feb. Ana Teresa Igarza, who was ap- Raúl Castro told the National Assembly 20 and 21 in Orlando will focus on pointed general director of the office that the draft law will be submitted to Cuba’s economic reforms and the that manages the new Mariel Special the parliament in March. changing legal environment. Development Zone The Council of Ministers is currently The keynote speech will be by Rep. (ZEDM), was a working on the project, the Cuban Kathy Castor, a Tampa Democrat dark-horse candi- president said in his closing speech of who is advocating closer relations date for the job. the Assembly’s winter session, without with Cuba. Observers in providing details. “Cuba 2014: What the U.S. Legal Cuba highlighting Foreign investment is of “crucial and Business Communities Need to the military’s key importance to speed up the economic Know” includes a dozen discussion role in the economy and social development of the country,” panels, covering specific industries had expected a Castro said. such as energy, mining and the general or colonel environment, pharmaceutical and to head the Mariel NEW PORT TO OPEN IN JANUARY healthcare, small business in Cuba, Igarza Zone, a keystone Phase One of the new container as well as telecommunications and project of Cuba’s terminal at the Port of Mariel will be IT, and topics ranging from the economic reforms. officially opened in January, President Mariel Special Development Zone While young, Igarza has considerable Raúl Castro told the National Assembly. and intellectual property, to recent expertise and credentials in foreign He didn’t give a date, but the opening changes in U.S. policy, Cuba’s new trade and in dealing with foreign invest- may coincide with the visit of Brazilian economic policy and the impact ments. As a member of a rising group President Dilma Rousseff during the of the Cuban diaspora. Panelists of female cadres at the Ministry of For- Cuba-hosted summit of CELAC mem- include lobbyist and former Rep. eign Trade and Investment (MINCEX), ber nations in Havana, Jan. 28-29. Bill Delahunt, Brookings Institution she has traveled extensively. Using Brazilian funding of $640 analyst Richard Feinberg, consultant million, Brazil’s Grupo Odebrecht Phil Peters, Andrés Fanjul, co-owner CHAMBER GETS NEW CHAIRWOMAN is building the container port at the of sugar giant Fanjul Corp., pub- Odalys Seijo García was appointed small town 30 miles west of Havana. lisher and music entrepreneur Hugo chairwoman of the Cuban Chamber of The first phase of the deep-water port Cancio, travel company owner Tessie Commerce in December. project, including 700 meters of pier, Aral, and energy analyst Jorge Piñón. She has years of experience in for- was scheduled to be completed in The event, at the Loews Portofino eign trade as a cadre at the Ministry of December. Once fully operating, the Bay Hotel, is organized by Miami at- Foreign Trade and Investment. Mariel container terminal will replace torney Tony Zamora and sponsored Her predecessor, Estrella Madrigal, the Port of Havana as Cuba’s main port by the Florida Bar International Sec- was abruptly arrested in November, of entry for goods, placing the island at tion, as well as Cuba Media LLC (the just before the inauguration of the In- the forefront of shipping hubs trying to owners of this newsletter and Cuba ternational Havana Fair (FIHAV) 2013. benefit from the Panama Canal widen- Standard). The reasons for her arrest have not ing, which is slated for completion in For information and registration, been disclosed, but the circumstances 2015. contact Tony Zamora at arzlaw@att. point to weighty charges, according to The port will be operated by Singa- net. sources in Cuba. pore-based PSA International.

NATIONAL ASSEMBLY — FROM PREVIOUS PAGE seems to suggest greater decentralization and autonomy less incentives for to allow industries and services to ac- affairs committee. The committee chair- private owners and cess the market once thay have met man rejected such objections, until Vice the self-employed. their obligation with the state sector. President Miguel Díaz-Canel suggested Some of Presi- -Emphasizing the need to follow up on a middle ground based on new wording. dent Raúl Castro’s the growing role of cooperatives, the im- In the end, in a most unsual way, the most important portance of this form of property. new Labor Code was passed by a major- closing remarks: -An increase, and a larger role, of the ity vote, not by unanimity. -We have continued to strictly meet “non-state” sector is to be expected, •Currency reform: Vice President our international financial obligations. avoiding mistakes and lack of control. Marino Murillo Jorge, also chairman of A significant contribution in the course -An extraordinary session of the Na- the Implementation Commission, and of such developments has been the suc- tional Assembly will be held next March President Raúl Castro, were extremely cessful restructuring Cuba’s foreign to debate and pass a new foreign invest- reassuring concerning the currency debt, all of which helps to increase Cu- ment law (Note: Not just additions and unification and exchange process. Legal ba’s financial credibility. We have imple- adjustments to the existing law 77 of possession of convertible pesos (CUC) mented a consistent policy, and success, 1995, as indicated by different sources will be fully respected; people should in stabilizing domestic finances. in the recent past, but a new law). not harbor any sort of fear about damag- -We will continue to move forward ing consequences. “without pause, but without haste,” de- Former Cuban intelligence officer Domingo •Cooperatives. Murillo also made spite friendly appeals to move faster and Amuchastegui has lived in Miami since 1994. clear that cooperatives will have a less- similar appeals from those who would He writes regularly for CubaNews on the Com- er degree of taxation and more access like to see failure and defeat. munist Party, Cuba’s internal politics, economic to wholesale markets, something that -We will continue to move ahead with reform, and South Florida’s Cuban community. 6 CubaNews v January 2014 REMITTANCES U.S. remittances growing at brisk pace emittances to Cuba reached a re- lease about the survey. “Everything de- A spokesman for Englewood, Co.- cord $2.77 billion in 2013, 6.57 pends on the next liberating measures based Western Union, which handles Rpercent more than the previous of the Cuban government.” the bulk of U.S.-Cuba remittances, de- year, a Miami-based consulting firm The developing world is expected to clined to comment on the company’s concludes, extrapolating from a recent receive $414 billion in migrant remit- performance and remittances to Cuba, survey of several hundred residents in tances in 2013, an increase of 6.3 per- before 2013 earnings are released. South Florida. cent over the previous year, according Between 1.062 million and 1.181 mil- According to the survey by The Ha- to the World Bank. However, if Cuba re- lion Cubans who live in the United States vana Consulting Group, remittances mittances are growing as fast as the sur- send money to the island, the Havana may break another record next year. vey suggests, this would go against the Consulting Group survey suggests. Of “In 2014, the $3 billion barrier for cash trend in Latin America and the Caribbe- the 822 interviewees contacted at su- remittances could be broken for the first an, which continue to be affected by the permarkets in South Florida and Miami time,” the company said in a press re- spotty recovery of the U.S. economy. See Remittances, next page

ANALYSIS: CUBA-SPAIN — FROM PAGE 4 and Cuban exports to Spain by 50 percent. but did not interfere in Cuban affairs or jeopardized in any Right now in Havana, more than way its normal bilateral relations. 200 Spanish companies have a At the time of the collapse of Eastern Europe and the presence, including more than Soviet Union, Felipe González’ government extended con- 50 joint ventures. Last November, siderable assistance and trade and financial opportunities at Cuba’s FIHAV (Feria Interna- to Cuba, regardless of the tensions caused by Spain’s Min- cional de La Habana), the foreign ister of Economy, Carlos Solchaga, due to his analysis and country with the biggest representation (120 companies) recommendations concerning the Cuban crisis. was Spain. Currently, Spain is Cuba’s third-largest supplier, Then came the first government led by the Partido Popu- behind China and Venezuela, while Cuba is the fifth biggest lar and José María Aznar (1996-2004), who decided to play client for Spain in Latin America and the Caribbean. along with U.S. policies toward Cuba. Aznar sponsored and At the fair, Fernando Lanzas, General Director of Pro- masterminded the European Union Common Position on motions of Spain’s Foreign Trade Institute, stressed that, Cuba (La Posición Común); he became the standardbearer “Cuba is one of the most interesting countries for the op- of Cuban dissidents in Europe, and the main opponent to portunities it has to offer.” Cuba’s closer association to the Lomé Convention and its potential benefits. SPECIAL RELATIONS WITH AUTONOMIAS Trade, investments, and cooperation dropped to its low- Meanwhile, Cuba has learned a very special lesson in est levels, including those from the Spanish autonomías dealing with Spain. The volume and diversity of relations (Autonomous Communities) and NGOs, and Spain ceased with the Spanish autonomías is increasing every year, in- to be Cuba’s most important market and source of coopera- cluding NGOs and universities. Until recently, the clos- tion, although by 2002 a steady recovery was quite visible est ties, institutional and economic, were with the Basque under the influence and demands of the Spanish private Country, Andalusia, Canary Islands, Baleares, and Valen- sector. cia. Now Galicia joins this special sort of relationship, but Such a trend would gain considerable ground under the with an advantage over all the others: Gallegos — 38,000 new socialist government of Rodríguez Zapatero to last un- of them — form the largest community of Spanish citizens til 2008, when it will succumb to the impact of the world and descendents in Cuba. economic crisis. By 2007, Spain was Cuba’s third trading The Galicia agreement is another clear confirmation that partner, with $1 billion in bilateral trade, and the EU had Rajoy’s PP goverment is on a constructive path aimed at a decided that it was time to revise the Common Position and significant improvement of Spain’s relations with a very dif- “resume an open and comprehensive dialogue with Cuban ferent government, the Cuban government, a government authorities on all topics of mutual interest.” that keeps close ties with IU-PCE. On Dec. 16, the EU began a review of its mandate con- BACK TO FRANCO’S PATTERNS cerning Cuba, aimed at engaging in negotiations that may If Aznar’s government abandoned the patterns followed put an end and/or bypass the obstacles of the Common by Franco, today the new Partido Popular government, led Position. Already, a number of EU countries have put aside by Mariano Rajoy, is clearly going back to Franco’s pat- this obstacle and are conducting cooperation programs and terns. They have insisted publicly, again and again, on the projects with Cuba. Germany, Italy, Netherlands, Greece, need for dialogue, cooperation and respect; they have de- Cyprus, are among those favoring a new approach, and tached themselves from any political activism in support Lady Ashton seems very receptive also. At the coming of Cuban dissidents, and moreover have rejected every at- meeting, everyone will be looking at Spain’s readiness or tempt by dissidents and U.S. authorities to make the Cuban not to put behind Aznar’s Common Position. Evidence indi- government the guilty party in the Payá-Carromero case. cates there are reasons to be optimistic. Their foreign affairs ministries are keeping a perma- nent dialogue. Trade is getting back on its feet with a total Former Cuban intelligence officer Domingo Amuchastegui has lived of euro 719 million ($981 million); between January and in Miami since 1994. He writes regularly for CubaNews on the Com- June 2013, Spanish exports to Cuba grew by 40 percent munist Party, Cuba’s internal politics, and economic reform. January 2014 v CubaNews 7 COMPANIES Chinese automaker to assemble cars in Cuba BY JOHANNES WERNER All Geely vehicles sold to Cuba in 2013 s the Cuban government is gradu- were made at the Uruguayan plant. ally freeing new-car sales for indi- On Dec. 19, official media announced viduals, Chinese automaker Geely, that for the first time since 1959, indi- A viduals will be allowed to purchase new already the No. 1 auto seller on the is- land, is positioning itself for growth in Courtesy Geely Photo: cars without a permit. The state will re- Cuba and the wider region. tain its monopoly over new-car sales. The company is planning to establish a “Geely International actively takes semi-knock down (SKD) assembly plant measures in relevant areas and has in Cuba, Shanghai Geely International achieved essential progress,” the com- Corporation, Geely’s international arm, pany said in a recent statement about announced in a press release. the Cuban market. The company didn’t provide any spe- “Geely is continuously improving the cifics. storage structure of its bonded ware- This would not the first time vehicles The Geely CK has been Cuba’s house and is adopting multi-channel are made in Cuba. State companies, as best-selling auto model since 2009 supply methods” for spare parts, the well as Brazilian manufacturer Busscar company said. Geely’s warehouse in Geely set a target of opening 15 assem- Cuba now is at 80 percent of capacity, up and China’s Yutong have assembled bly plants overseas by 2015, according buses in limited numbers on the island. from 34 percent last year. The company to an article by Automotive Logistics has also signed agreements with SASA, In semi-knock down assembly, a man- magazine. ufacturer typically exports a kit with a local auto service provider operated complete car body, usually coated or by the Committees for the Defense of GEELY’S EXPANSION PLANS the Revolution, to jointly open standard already painted, to then add engine and Cuba is the company’s largest market transmission, tires, wheels, seats, head- service stations and spare-part sales in the Caribbean, Central America and stores. lights, glass, batteries, interior plastics, northern part of South America. Geely or other components in final assembly, Nearly 10,000 Geely-brand cars and sold at least 3,200 vehicles to Cuba in trucks are already circulating on Cuban some of them locally sourced. 2013, in two batches; the Geely CK has “At the request of several ministries in roads, the company said. Government held the spot of most-sold new car model agencies, such as the Committees for Cuba, including the Ministry of Foreign in Cuba since 2009. The company is also Trade and Investment, the Ministry of the Defense of the Revolution, the Min- selling vehicles in Costa Rica, Colombia istry of the Interior, and the Ministry of Communications, and the Ministry of and Venezuela. Metallurgy Industry, Geely Internation- Tourism, have been the only buyers of In 2012, the company opened a con- new cars until now. Geely’s CK models al is now preparing to launch the SKD tract assembly plant in Uruguay in a joint project in a local place,” the company are used as senior government officials’ venture with a local partner, making it cars; most police cars in Havana are said in the press release. Geely’s first in the Western Hemisphere. The announcement comes as the Cu- Geely CK models as well. At present, 80 The plant, with a capacity of 20,000 cars percent of rental cars in Cuba are Gee- ban government is seeking manufac- per year, is supplying primarily Merco- turers to open shop at its new Mariel ly CK, EC7 and EC8 models; all rental sur markets Brazil, Argentina and Uru- agencies are state-owned. q Special Development Zone, an export- guay, as well as Chile. Forty percent of oriented zone around a deepwater port the components in Uruguay are locally 30 miles west of Havana. sourced, with a goal of reaching 60 per- For more information, go to www.geely.com In an ambitious global expansion plan, cent by the third year. and www.geelyauto.com.hk.

REMITTANCES — FROM PREVIOUS PAGE The survey detected “profound differ- themselves as mixed-race, and only 5.82 ences in buying power among Cubans percent as black. according to regions.” The lion’s share The vast majority of recipients, 99.2 International Airport, 62.8 percent said of the remittances — 41.7 percent — is percent, use remittances to buy food. they send remittances to Cuba. going to Havana. When the provinces are However, 45 percent also use the hard Surprisingly, younger people are more grouped in three regions — west, center currency to pay for telecommunications, likely to send money; 93.8 percent of and east, the differences are stark. The particularly cell phones. A small part of those surveyed were between ages 20 West receives 56.8 percent of all remit- remittances go to investments in private and 49. In contrast, the majority of re- tances, the central region 29.2 percent, businesses. And some also goes to pay- cipients on the island are older than 50, and the East only 14 percent. ing for hotel stays in beach resorts that most of them women. “The numbers confirm that the East- had previously been off-limits for Cu- “In other words, currently on the is- ern region is the poorest. Its low hard- bans. land women have a bigger role in the currency buying power make the East- —JOHANNES WERNER management of financial resources at ern population the most economically home than men,” the study says. “She is and socially vulnerable of the nation.” the one who determines, generally, how The survey also found that 82.13 per- For more information, go to http://thehavana- resources are used, and how they are cent of those sending remittances are consultinggroups.com. spent or invested.” white, while 12.05 percent described

In November, the Cuban government created the Mariel Special Development Zone (ZEDM), a key project for Cuba’s economic reforms. However, no detailed official maps are available. Cartographer Armando Portela designed these maps exclusively for CubaNews. 10 CubaNews v January 2014 TRAVEL Bank trouble highlights vulnerability of U.S.-Cuba travel BY DOREEN HEMLOCK SWIFT RESPONSE TRIGGERS OPTIMISM The swift reprieve has companies op- .S. businesses handling travel timistic that a longer-term solution will with Cuba reacted with relief Dec. be found by Feb. 17, so that trips can U9, when the island’s diplomatic continue — ensuring revenue not only mission in the United States restored for U.S. travel firms but also for Cuban services that issue visas and process hotels, restaurants, transportation com- Daniel Hernández Photo: passports. panies, artisans, shopkeepers and oth- But the companies remain concerned ers that rely on U.S. visits. about a possible repeat stoppage, since “There’s a lot of money at stake,” said Cuba reinstated consular services only Peggy Goldman, president of Friendly on a temporary basis until Feb. 17. And Planet Travel, which organizes “people- No bank, no travel: executives say the problem underscores to-people” tours to Cuba since 2012. “In Cuban Interests Section in Washington how red tape and unpredictability add the worst-case scenario, [the Cubans] a premium to their costs and prices for can make it possible to get the visas counts through March 1 and accepts its U.S. travel to Cuba. somewhere else and not in Washington, deposits through Feb. 17. The two-week suspension had no mea- D.C. “The Cuban Interests Section regrets surable impact on travel, because it was the inconveniences caused to Cuban short. Visitors from the United States to THE SEARCH FOR A BANK CONTINUES and American citizens by the suspen- Cuba generally receive their documents The sudden suspension Nov. 26 fol- sion ... and will provide timely informa- in advance, be they Americans traveling lowed problems by the Cuban Interests tion on the evolution of this matter,” a on “people-to-people tours” or Cubans Section in Washington, D.C. — Cuba’s statement said. returning to their homeland on Cuban U.S. diplomatic mission — to find a bank At the heart of the problem is the 51- passports, travel executives said. for its U.S. accounts. Cuban officials an- year-old U.S. embargo on Cuba, which U.S. travel companies had mobilized nounced M&T Bank had said in July bans most U.S. banking with the com- quickly to urge Havana and Washington that it dropped all business with foreign munist-led island and sets strict rules on to find a solution to the visa issue, so missions in the United States, and Cuba transactions allowed. Penalties can be that their businesses and thousands of couldn’t find a replacement. hefty. passengers planning Cuba trips would Under the temporary solution, M&T not be hurt. Bank handles the Cuban mission’s ac- See Bank trouble, next page Tourism stagnates, and so do revenues

fter two decades of near-uninterrupted growth, tour- MONTHLY VISITORS IN CUBA, 2012-13 ism in Cuba stagnated in 2013, according to new data Arrivals Areleased by the National Statistics Office (ONE). 400,000 Mainly due to weakness in European source markets and 350,000 a likely slowdown of U.S.-Cuba travel, the number of visi- tors through November stagnated slightly above 2.5 million, 300,000 causing Cuba’s tourism industry to miss the 3-million target set at the beginning of 2013. Despite a 7-percent spike in 250,000

November, arrivals for January-November were down 0.4 200,000 percent from the same period in 2012. Meanwhile, revenues from January through September 150,000 remained level from 2012, at 1.412 billion CUC (US$1.525 billion). Revenues from lodging, retail and recreation 100,000 showed slight declines, but they rose in transportation and 50,000 gastronomy. While the number of recreational tourists stagnated, busi- 0 J F M A M J J A S O N D J F M A M J J A S O N ness travel declined 9.8 percent, and events tourism dropped 2012 2013 Source: ONE a hefty 35.5 percent through September. However, health tourism rose 5 percent. Source markets with continued weakness are Britain Hotel occupancy from January through September (-2.9%), France (-6%), Italy (-8.8%), and Spain (-12.1%). dropped to 46 percent, from an already low 48.2 percent in The number of visitors from countries in the “Other” the same period of 2012. category, which is made up mostly of travelers from the Canada, which accounts for nearly 1 million tourists, re- United States, was down 3.6 percent for the first 11 months mains the engine of Cuba’s tourism industry and the most of 2013. reliable source market, with a 2.9-percent rise in visitors Meanwhile, domestic tourism grew 12.6 percent in the through November 2013. Other strong-performing source first seven months of the year — the most recent data avail- markets were Germany (+6%), Mexico (+9.4%), Venezuela able — compared to the same period in 2012. (+23%), Chile (+31%), and Colombia (+5.8%). —Johannes Werner January 2014 v CubaNews 11 Survey: U.S. travel to Cuba keeps growing he number of U.S. travelers to Cuba keeps edging up, likely reaching a historical high KEY FINDINGS OF THE U.S-CUBA TRAVEL SURVEY Tof 600,000 in 2013, a survey among people in 2012 573,986 total U.S.-Cuba travelers South Florida commissioned by the Miami-based Havana Consulting Group suggests. 475,936 Cuban Americans In 2012, according to the consulting firm, 574,000 98,050 other U.S. citizens and residents U.S. citizens and residents traveled to Cuba. As of 2013 569,232 total mid-December 2013, 569,000 U.S. passengers had traveled to Cuba. (Jan-mid-Dec.) 471,994 Cuban Americans According to the survey, 67.4 percent of those in- 97,238 others terviewed travel to the island. Of those, 87 percent travel once a year; 6.2 percent travel at least once 87% travel at least once a year to Cuba every quarter, suggesting a substantial number who 3.1% travel quarterly travel on business. The median stay in Cuba is be- 1.8% travel every other month tween five and seven days. 1.3% travel monthly Of the travelers, more than one-third — 36.3 per- cent — visit tourist resorts; 54.9 percent of the beach Median stay in Cuba: Five to seven days visitors go to Varadero. More than 80 percent of the beach visitors said they stay in hotels. As to trans- 36.3% of all U.S. travelers visit beach resorts in Cuba portation, one-third rent cars, and 17.87 percent hire 54.9% of those go to Varadero, 21.8% to Guardalavaca, 13.4% to government-owned taxis. Cayo Santa María The study estimates that Cuban Americans visit- ing the island spend between $660 million and $665 Cuban American travelers spend up to $665 million a year in Cuba million annually there.

BANK TROUBLE — FROM PREVIOUS PAGE periods of only one year or two, execu- an emergency requires they travel to tives said. the island. Tom Popper, president of Insight U.S. travel companies know first-hand That makes for steady business in Mi- how difficult banking can be for busi- Cuba, which took more than 3,500 peo- ami’s Little Havana for immigration and ple to Cuba on “people-to-people” tours ness allowed with Cuba. tax specialist Lucy Marrero at Sunset Friendly Planet Travel’s Goldman said in 2013, figures the costs of compliance Express & Associates. She helps clients and unpredictability add a “double-digit” she’s had instances where customers with paperwork for Cuban passports. paying her company have noted “for trip premium to his operations. That helps The Cuban government renews pass- explain why Americans pay from $2,400 to Cuba” on their checks and had the ports for Cuban citizens for a two-year- checks intercepted by their banks. to $6,000 per person for his five-day to period, and after two renewals, requires two-week tours — more than they’d “Dealing with money because of the citizens apply for a new one. The price: embargo is a headache,” said Goldman. pay for guided tours to other Caribbean about $220 for a renewal and $440 for a isles. William Hauf, president of Island new one. “It’s the most expensive pass- Travel & Tours, said a bank in California “When we first got news of the suspen- port in the world,” said Marrero from sion [of consular services], we were try- closed down his Cuba-related account, her strip-mall office. after bank employees made mistakes in ing to come up with Plan B, Plan C, ev- During the suspension, Marrero said erything,” said Popper. “All of that costs how they handled some transactions. she had at least one client who did not “They decided to get rid of me, instead money.” get her Cuban paperwork back in time If Cuba’s mission in Washington can’t of trying to make sure their people are to travel. Others who submitted pass- well-informed and well-trained,” said find a U.S. bank by Feb. 17, travel com- ports for processing had been worried panies hope that Cuba will process Hauf, whose company now organizes they might not get the documents be- nine flights a week to Cuba from Tampa documents somewhere else. But there fore they traveled in early 2014. seems to be a hitch: Money from the and Miami. “The banks in the United Marrero hopes the two-week suspen- States are paranoid. They don’t want to processing apparently helps fund the sion won’t create a backlog and length- Cuban Interests Section, and handling do business with Cuba.” en processing times, which recently The U.S. State Department said it is elsewhere wouldn’t pay those bills. had been running about two weeks for Cuba would need to find a way to route working with Cuba to find a new bank in renewals and up to six months for new the United States. some money back to Washington, travel passports. executives said. A repeat suspension could potential- “How long processing takes is hard to ly affect more than 400,000 travelers Still, with so much money and busi- say,” Marrero said. “With Cuba, it’s un- ness at stake, travel leaders foresee yearly. Cuba estimates about 100,000 predictable.” Americans visited in 2012 on “people- some solution come February to keep to-people” tours, and charter companies THE COST OF UNPREDICTABILITY visitors flowing to Cuba. Said Goldman estimate at least 350,000 Cuban-Ameri- Unpredictability adds to the extra of Friendly Planet Travel: “It would be cans on flights last year. Both numbers costs that U.S. companies already pay ridiculous to have all this come to a stop have been rising in recent years. to comply with Cuban rules, as well as because of a bureaucratic snafu.” q But consular services are key even for U.S. rules for business allowed under Doreen Hemlock, former Havana bureau people who don’t travel. Many Cubans the embargo. Long-term planning is chief and now business writer at the South living in the United States invest to keep further complicated, because some U.S. Florida Sun-Sentinel, is a regular contributor their Cuban passports current in case licenses for businesses are granted for to CubaNews. 12 CubaNews v January 2014 SERVICE EXPORTS Brazil may boost number of Cuban doctors, again he Brazilian government will evaluate the number of between Brazil, the Pan American Health Organization doctors needed under the Mais Médicos program in (PAHO) and the Cuban government. Brazil has been strug- TMarch, President Dilma Rousseff announced during a gling to find enough Brazilian doctors and foreign doctors visit of a Cuban-staffed hospital near São Paulo Dec. 13. contracted on an individual base. “If necessary,” the number of foreign doctors hired under As Brazil pays $4,000 per doctor each month, revenues the program started in September may be in- for Cuba at the current staffing level are esti- creased again, Rousseff said; Brazilian officials mated at $250 million per year. have said they hoped to double Mais Médicos In November, Brazil added 3,000 Cuban doc- from currently 6,500 to 13,000 doctors. tors to the 2,400 Cuban doctors already in the The program, aiming at improving health country since September. The current total of services in under-served rural and poor urban 5,400 exceeds the previously announced num- areas, is eminently popular and has helped ber by 1,400. Even so, this still is below the boost Rousseff’s political standing, after mas- 6,000 announced by the Brazilian government sive street protests swept the country in sum- in May this year. mer. The summer demonstrations included Bra- During her participation in the opening of zilian doctors protesting the contracting of for- the José Alencar hospital in São Bernardo do eign doctors, apparently causing the govern- Campos, Rousseff was accompanied by her popular prede- ment to backtrack temporarily. On Aug. 21, the Brazilian cessor Luiz Inácio ‘Lula’ da Silva and Health Minister Alex- health ministry and PAHO announced Aug. 21 to contract andre Padilha. 4,000 Cuban doctors as a backbone for the fast-expanding Five thousand four hundred of the currently 6,500 foreign medical program in needy regions of Brazil. doctors in the program are contracted under an agreement —Johannes Werner

POLITICS (ZKB) had picked up a Cuba portfolio an “egregious” and “willful” way. Other after Swiss banking giants UBS and than saying that violations involved U.S. FINES BRITISH BANK Crédit Suisse canceled their business unlicensed travel by U.S. employees of Dollar transactions with Cuba over with the island seven and five years Weatherford to Cuba, an OFAC press a four-year period played a minor role ago, respectively. UBS in 2004 paid the release describing the settlement did in a $33.12 million settlement between United States a fine of $140 million, not specify how the Swiss company the U.S. Treasury Department’s Office after the U.S. complained that the bank used U.S. assets in its Cuba business. of Foreign Assets Control (OFAC) and had swapped old dollar bills for new The OFAC document cites three Weath- Royal Bank of Scotland, according to a ones for Cuba-related customers. erford-owned U.S. subsidiaries, as well Treasury Department statement. While the foreign banks’ Cuba busi- as Colombian, Middle Eastern and UK The British bank had been under ness is often an afterthought for U.S. subsidiaries. investigation since 2010 by U.S. regula- investigators focusing on Iran, Syria The OFAC deal with Weatherford is tors after the bank incriminated itself and Sudan, the enforcement has been part of a $253 million settlement that over violations of U.S. sanctions mainly disruptive for companies doing busi- also resolves investigations by the De- related to US dollar transactions with ness in Cuba. partment of Commerce’s Bureau of In- Iran and Sudan. dustry and Security, the U.S. Securities and Exchange Commission, and the The alleged violations included 24 OFAC CUBA SETTLEMENTS IN 2013 electronic US dollar transfers involving U.S. Attorney’s Office for the Southern Cuba between 2005 and 2009, for a total Weatherford (Switzerland) $91m District of Texas. of $290,000. Royal Bank of Scotland (UK) $33m “This matter is now behind us,” said The $33 million OFAC settlement, Ameron Int’l Corp. (US) $0.4m Weatherford CEO Bernard J. Duroc- which is part of a $100 million agree- World Fuel Services (US) $0.04m Danner in a press release. ”We move forward fully committed to a sustain- ment, continues a string of record-set- American Express Travel (US) $5m ting fines by the Obama Administration able culture of compliance.” for foreign banks over alleged viola- Intesa SanPaolo bank (Italy) $3m The violations of U.S. Cuban Asset tions of U.S. sanctions. American Steamship (US) $0.3m Control Regulations, according to an Recent settlements and fines for EGL Inc. (US) $0.3m OFAC press release, included 441 financial companies in part related to Source: OFAC transactions for $69.3 million between Cuba business include $5.2 million for a 2005 and 2008. Weatherford provided travel subsidiary of American Express, OIL SERVICES FIRM SETTLES U.S. DISPUTE oilfield equipment and services to enti- $3 million for Italy’s Intesa SanPaolo Switzerland-based oil and gas servic- ties involving Cuba, the OFAC press S.p.A., and $348,000 for the American es company Weatherford International release said without specifying how Steamship Owners Mutual Protection Ltd. settled an Office of Foreign Assets U.S. assets were used. The company and Indemnity Association. Control (OFAC) investigation by paying declined to describe the allegations. Late last year, Switzerland’s fourth- a fine of $91 million. The three-year period mentioned largest bank dropped its business OFAC alleges that various subsidiar- roughly coincides with a first — unsuc- with Cuba, yielding to pressure from ies of Weatherford violated U.S. sanc- cessful — offshore exploration run in Washington. Zürcher Kantonalbank tions against Cuba, Iran and Sudan in Cuban waters by Spain’s Repsol YPF. January 2014 v CubaNews 13 COMPANIES Eyes on Latin America, Antonov may sell more jets to Cuba in principle with the Ukrai- sphere to fly Antonov jets. Cubana de nian aircraft maker and Rus- Aviación this year began operating three sia’s Ilyushin Finance Co., new An-158 ordered in 2011, on routes and that the three sides are from Havana to Santiago, Guantánamo, “getting close” to signing a Holguín, Nassau, Santo Domingo, Can- final agreement. cún and Caracas. Photo: Courtesy Antonov Photo: Flag carrier Cubana de Aviación, Antonov and Ily- SEVEN MORE JETS ushin Finance just complet- During delivery of the third jet at an ed high-altitude tests with a airshow in Moscow in August, Cuba Cubana An-158 jet in Ecua- reportedly signed an order for the leas- dor and Bolivia. The two An- ing of three more An-158; the three ad- dean countries, both close ditional jets were scheduled for delivery allies of Cuba, apparently in 2014. Russia’s Ilyushin Finance Co. is High-altitude tests in Ecuador and Bolivia: An-158 have expressed interest in financing the leasing deal for the three purchasing the jets as well. aircraft under an agreement with Rosex- BY JOHANNES WERNER “During this expedition, following de- imbank. mands of potential customers from the Now, Cuba is negotiating delivery of pparently using its leverage with region, Antonov … and its partner Ily- seven more An-158 jets. close allies in Latin America, Cuba ushin Finance … conduct the airplane The An-158 is a midrange, 100-seater Ais trying to expand a previous or- tests under conditions of alpine air- derivative of the Antonov-148. The jet is der with Antonov Design Bureau from fields,” Antonov said in a press release manufactured under Russian-Ukrainian three An-158 jets to 10. Nov. 15. “This expedition is an important cooperation with final assembly in Kiev, Quoting Antonov’s Deputy General constituent to promote the aircraft of the Ukraine. Sixty-five percent of its com- Designer, Alexander Keeva, Russia’s Ko- AN−148/AN−158 family into the market ponents are Russian-made; the jet also mersant daily reported that the Cuban of Latin America.” uses French, German and U.S. parts, government has reached an agreement Cubana is the first airline in the hemi- but U.S. components represent under 10 percent, thus avoiding conflict with U.S. sanctions against Cuba. Since 2004, Ilyushin Finance has de- livered three long-haul Il-96 and four BRIEFS medium-range Tu-204 to Cuba under a around the Port of Mariel. Russian state guarantee program that CHINESE FIRM SIGNS WIND POWER DEAL UNE will install the 34 1.5 mw, direct- supports high-tech exports. The guaran- In what is the by far biggest wind drive, permanent-magnet wind genera- tees were provided through state bank power deal so far for Cuba, Xinjiang tors at Herradura on the northern coast Vneshekonombank (VEB), a subsidiary Goldwind Science & Technology Co. of Las Tunas province, with comple- of Roseximbank. will supply 34 wind turbines with a total tion expected by June 2015. Goldwind Even though the Russian government capacity of 51 megawatts to Cuba, the customized the units to adapt to the has been guaranteeing and guiding Cu- company announced in a press release. specific wind speeds and climatic condi- ba’s aircraft purchases, the going has The Xinjiang-based turbine maker did tions at Herradura. not always been easy. In 2009, Flight In- not disclose the terms of the contract. ternational magazine reported that Cuba The agreement includes delivery, VARADERO GETS SCANDINAVIAN FLIGHTS rejected delivery of one of three Tu-204 transportation of Chinese and Cuban Swedish tour operator Apollo and its ordered in 2007. Cubana de Aviación technicians, installation, and mainte- sister company Novair began non-stop did not take the Tu-204-100CE cargo nance under a two-year warranty. flights from Stockholm to Varadero on aircraft after Vneshtorgbank attempted The sale of the turbines, to Unión Dec. 6. to charge a higher interest rate than the Eléctrica (UNE) via Energoimport, Novair, a subsidiary of Switzerland- agreed 8 percent. is Goldwind’s second to Cuba. The based tourism giant Kuoni Holding, will company sold six 750-kw units to Cuba use Airbus 330 aircraft on once-a-week FROM PURCHASE TO LEASING in 2009 for an expansion of the Gibara flights, scheduled to end by March Cuba went through a pronounced cash wind park. 2014. crunch in 2008-10, during which it froze In its first wind parks at Gibara and Cuba has been successful in landing hard-currency accounts and resched- on the Isle of Youth, Cuba first used direct flights from secondary European uled debt agreements. Spanish and French technology, respec- markets this winter season. Denmark’s In February this year, Russia agreed tively. Albatros Co. and Bravo Tours began to convert the previous purchase of The Goldwind deal comes amid a Copenhagen-Varadero flights in No- five jets into a leasing deal. Russia is renewed push by Cuba for wind, solar vember. Tour operators from Poland now leasing three previously delivered and biomass projects, and three weeks and Russia are offering weekly Vara- Ilyushin-96-400 long-haul jets and two after a German renewable-energy dero flights from Warsaw and Moscow, Tu-204SM mid-range aircraft to Cuba industry delegation visited the island. respectively, this winter season. through South American Aircraft Leas- The Cuban government is also trying The first Novair flight to Varadero ing Co., a Cyprus-based company with to attract renewable-energy companies drew travelers from Sweden, Finland Russian owners. All three An-158 jets to the new export manufacturing zone and Norway. are leased from SAAL as well. q 14 CubaNews v January 2014 BOOKSHELF Lessons from one investor’s Cuban divorce BY JOHANNES WERNER he doesn’t have to thank Fidel, but Raúl. or 13 years, Michel Villand — self- Michel Villand, Francis Matéo As of 2009, Raúl and his team were firmly described Socialist, entrepreneur- Mon Associé Fidel Castro in charge, while Fidel was sidelined by Fial dynamo, Récit de l’incroyable aventure d’un illness. And Raúl stated repeatedly that patron and wom- Français à Cuba honoring Cuba’s foreign obligations was anizer — was Histoire d’être, 2012 among his top priorities. practically mar- ried to Cuba. But ISBN 978-2-848790-02-2 THE BOTTOM LINE in the course of Spanish translation: Another point readers may miss, due to his resentment over unfair treatment: the stormy rela- Mi Socio Fidel Castro tionship, Villand French companies and investors — most became a stilted Cuba, un desvío en el paraiso foreign investors, for that matter — have French lover, and RVF Editores, 2013 done just fine in Cuba, thank you. the whole thing ISBN 9788461646968 One of the French entrepreneurs ended in a nasty mentioned in Villand’s book is Gérard divorce. Bourgoin, the ‘Chicken King’ turned oil As often hap- of the Fidelista system kick in, in the tycoon in Cuba. Similar to Villand, his pens after high- shape of a Prime Minister who gets an Pebercan oil venture on the island ends profile breakups, investigation underway, three tough in dissolution in 2009. But the divorce in- the slighted party publishes their ver- old ladies that are inspecting the books cluded $140 million paid by Cuba; that, sion of the story. Villand, out of his ‘ex- at the factory, and a veteran general of and Pebercan‘s profitable 16-year run ile’ in Southern Spain, hired journalist the revolution who, as Minister of the most likely make for a quite healthy bot- Francis Matéo as a ghost writer, and out Interior, personally makes sure that the tom line for its investors. came, in 2012, Mon Associé Fidel Castro. thieves at the plant get caught. And then there are long-term business Not surprisingly for a post-divorce successes of larger French corporations genre book, ‘My Associate Fidel Castro’ COOKING THE BOOKS in Cuba — Pernod Ricard, Altadis, Ac- is colored by resentment; it is not only a So Cubanacan brings in a new plant cor, Bouygues, Sanofi, you name it. damning obituary of Fidel-style Commu- manager, the hemorraging apparently But Villand is right about warning nism, but also portrays Raulista reforms stops and the joint venture settles into readers to not jump into Cuba unpre- as a Mission Impossible. a decade of seemingly successful busi- pared. The book’s most valuable contri- That said, this is a must-read for any- ness. But Villand suspects the new man bution are the real-world descriptions one doing business with Cuba. in charge of the plant just to be more of employee and management behavior Even though I disagree with Villand’s clever at working in his own pocket than in the Cuban system that often clashes big-picture conclusions (I will get to that his predecessor. His worst fears come head-on with the interests of investors. later), I couldn’t stop gobbling up his true years later, when an accountant One of the idiosyncracies of doing unique insights into the Cuban nomen- confesses that the Cubanacan employee business in Cuba is the often uneasy klatura in the waning years of Fidelismo had worked with a double set of books coexistence with a state-company joint and his sharp observations. all along. venture partner, where executives earn Things begin to fall apart for Villand the equivalent of a few dozen dollars a OVERCOMING DYSFUNCTION when his ‘associate’ Fidel falls seriously month, while handling multi-million dol- Pain de Paris, the industrial-bakery ill and the protection of the Comandante lar decisions. joint venture with a network of outlets en Jefe evaporates. In 2007, the joint ven- in Havana, became too successful, if you ture is up for renewal, but Cubanacan THE SYSTEM’S DELICATE SPOT believe Villand. In his account, his hands- wants the French partners out, offering Under Fidel, this emerging system on, patron-style management overcame a ridiculously low price for their share. was kept in check partly with frequent some of the dysfunction generated by Villand fails to get support in higher inspections and rotation of top execu- employees that were hand-picked, con- places this time. tives. But when power changed hands at tracted, controlled and underpaid by the From there on, it’s divorce proceed- the top after 2006, it became evident that government ings. The French partners are willing to little fiefdoms of corruption had formed What eventually breaks the joint ven- take the case all the way to a court of in state companies that threatened to be- ture’s neck, though, is a dysfunctional international arbitration in London, and come empires once economic reforms joint venture partner — in his case state — long story short — in 2009, the Cu- underway since 2010 opened up more company Cubanacan — whose execu- ban government pays them — as Villand spaces. So justice has begun to crank tives are often wary of foreigners (partic- puts it — a ‘draconian’ sum of several out corruption convictions against state ularly the assertive and successful kind, million euros to settle the case. company executives, Cuban-style, with if you believe Villand), and beholden That’s particularly an achievement, little transparency. Some foreign busi- more to their political advancement at considering that it was the year 2009, ness executives were caught in the wide best, and their own pocketbook at worst, the height of a pronounced cash crunch corruption dragnet as well, and inse- than to the joint venture’s success. and capital flight that forced the govern- curity about the rules of the game has In a first shock after just six months in ment to freeze hard-currency accounts spread among foreigners in Havana. 1997, Villand realizes that Pain de Paris in Cuban banks. Villand puts his finger on that delicate had been fleeced to the tune of $300,000 Villand racks his brain over why Fidel spot in Cuba’s state-capitalist system, by its Cuban employees. paid up. My guess is, the French entre- and that’s his book’s most valuable con- That’s when the checks and balances preneur is barking up the wrong tree — tribution. q January 2014 v CubaNews 15 SPORTS MLB concedes Cuban participation in Caribbean Series he Baseball Confederation of the to Rican and Dominican club team play- Cuba’s participation in the tournament Caribbean confirmed the ers participating in the had a “special character,” and that the Tparticipation of a Cuban club winter tournament play Caribbean Baseball Confederation will team in the 2014 Caribbean Series, with MLB teams during have to apply with the U.S. Treasury official daily Granma reported. regular season. Department’s Office of Foreign Assets The tournament, scheduled for “With pleasure we are Control (OFAC) regarding Cuban par- Feb. 1-7 on Margarita Island in Ven- announcing that, once ticipation on a year-to-year base. ezuela, will include the Cuban team we get official documen- Confederation officials previously in- from Villa Clara province — the tation from the Baseball sisted Cuba’s participation would have national champions of the 2012-13 Confederation of the to be permanent. season, known as Azucareros — as Caribbean, the Cuban The 2015 Caribbean Series will be held a “guest.” Baseball Federation ac- in Puerto Rico, which may make Cuban The announcement comes after 2012-13 national club cepts to participate as participation more complicated, Araujo Major League Baseball told the champion Villa Clara guests in the 2014 edi- added. Latin American organizers of the will represent Cuba tion,” said national team Araujo said in October that his office Caribbean Series in August that it at the Caribbean Series Manager Higinio Vélez filed an application with the U.S. govern- would not cooperate with the 2014 in a press conference. ment to verify that MLB is not in viola- tournament if a Cuban club team was in- On Dec. 5, Joel Araujo, tion of U.S. sanctions against Cuba, and cluded. MLB’s consent is crucial since MLB’s Latin America and international that a license was pending. most of the Mexican, Venezuelan, Puer- development manager, told ESPN that —Johannes Werner

BOOKSHELF

HANDBOOK OF CONTEMPORARY CUBA THE MAN WHO LOVED DOGS This compilation of essays provides an Salim Lamrani The plot of this gripping novel has update on the latest Cuba research and The Economic War Against Cuba its origin in the assassination of Leon is great for the ref- A Historic and Legal Perspective on Trotsky in Mexico City in 1940. But its erence shelf. the U.S. Blockade main character reflects conflicts many Including re- Monthly Review Press, 2013 Cubans are facing today. searchers from Leonardo Padura is probably the best- Cuba, the book ISBN: 978-1-58367-340-9 selling Cuban author right now, thanks maintains a strong to his dark detective novels that shed a focus on Raúl Cas- THE ECONOMIC WAR AGAINST CUBA dubious yet somehow appealing light on tro’s reforms and Think Barack Obama is easing up on today’s Havana. But that’s outside the is- their impact. Cuba? Think again. His administration land; inside Cuba, Padura is still rather Authors include has issued record fines against third- tolerated than embraced. economists from country banks doing business in Cuba. In his latest novel, Padura created the Cuba and else- After more than half a century of failing fictional character of where, such as Pavel Vidal Alejandro, to achieve their political goal of regime Iván Cárdenas Ma- Omar Everleny Pérez Villanueva, Emily change, U.S. economic sanctions con- turell, a great hope Morris, and Archibald Ritter. The book tinue to weigh as heavily as ever on the of modern Cuban lit- also features essays by Carlos Alzu- Cuban economy, stunting growth and erature in his youth, garay, Carmen Antón-Guardiola, Maria causing disruption. until he dared to Aristigueta, Larry Catá Backer, Miguel Salim Lamrani, Docteur ès Études write a story that Barnet, Hilary Becker, José Chofre-Sir- Ibériques et Latino-américaines at the was deemed coun- vent, Amparo Sánchez Cobos, Margaret University of Paris- Sorbonne Paris IV ter revolutionar y. Crahan, Mauricio A. Font, Alberto Ga- and a widely published French journal- When the plot be- briele, Armando Nova González, Mario ist, doesn’t hide his sympathies (the gins, Iván is a loser: A. González-Corzo, Yvon Grenier, Cami- Revolution) and antipathies (U.S. foreign a humbled and de- la Piñeiro Harnecker, Zoya Kocur, Ar- policy), but his overview of U.S. sanc- feated man with a mando Chaguaceda Noriega, J.R. Paron, tions is very helpful quiet, unremarkable Robert A. Portada III, Carlos Riobó, for anyone doing life. We’ll leave you with that, to find out Jorge Luis Romeu, and David Strug. business in Cuba. for yourself who ‘The Man who Loved The book includes Dogs’ is. chapters on the em- Hint: It’s not Iván. Mauricio Font, Carlos Riobó (eds.) bargo’s/blockade’s Handbook of Contemporary Cuba origins, their provi- Leonardo Padura Economy, Politics, Civil Society, and sions, how they con- The Man who Loved Dogs Globalization travene internation- al law, and how they A novel translated by Anna Kushner Paradigm Publishers, 2013 affect the lives of Farrar, Straus and Giroux, 2014 ISBN: 978-1-61205-225-0 everyday Cubans. ISBN: 9780374201746 16 CubaNews v January 2014

Kathy Castor • Jorge Piñón • Andrés Fanjul • Phil CALENDAR OF EVENTS Peters • Hugo Cancio • Tessie Aral • Bill Dela- hunt • Alfredo Duran • Tony Zamora • Jay Brick- man • Parke Wright • Johannes Werner • José Pallí • Richard Feinberg • Paolo Spadoni • José Gabilondo If your organization is sponsoring an upcoming event, please let our readers know! Send details to CubaNews at johanneswerner@ Conference cubastandard.com. CUBA 2014 Feb. 20-21: Cuba 2014 — What the U.S. Legal and Business Communities Need to What the U.S. Legal and Know. Loews Portofino Hotel, Orlando. Contact: Tony Zamora, [email protected]. Business Communities Feb. 24-28: 16th Festival del Habano — Trade fair and largest international meeting Need to Know for Havana cigar enthusiasts. Havana. Information: www.habanos.com. Keynote by Rep. Kathy Castor 12 discussion panels Feb. 13-23: 23 Feria Internacional del Libro — Largest book fair in the hemi- with dozens of Cuba experts sphere, at the historical Morro-Cabaña fortress. Focus country: Ecuador. Havana. In- February 20 & 21, Orlando, FL, formation: http://feriadellibro.cubaliteraria.cu. Loews Portofino Bay Hotel Contact: [email protected]

March 15-23: Feria Internacional Agropecuaria (FIAGROP) — Cuba’s largest Sponsored by agribusiness fair at Boyeros, in suburban Havana. Includes a cattle fair and the na- Florida Bar Cuba Media LLC tional rodeo championship. Information: [email protected]. Association International Section April 8-12: Feria Internacional de la Construcción (FECONS) — construction industry fair. PABEXPO, Havana. Information: http://fecons.netcons.com.cu, direc- [email protected].

April (date TBA): Gibara Low Budget Film Festival — a rare festival for off-off mainstream films from Latin America, in Gibara, a provincial town in eastern Cuba. www.festivalcinepobre.cult.cu.

May (date TBA): Feria Internacional del Turismo 2014 (FITCuba) — Cuba’s larg- Editor est tourism industry fair. Yulier Ávila Varona, [email protected]. JOHANNES WERNER

June 3-6: 8th Cuban Cardiology Congress — Cariovascular Disease: Our Chal- Washington correspondent lenge in the 21st Century. Palacio de Convenciones, Havana. Contact: Dr. Eduardo ANA RADELAT Rivas Estany, [email protected]. Political analyst DOMINGO AMUCHASTEGUI June (date TBA): Expomatanzas — regional trade fair of the province that includes tourist resort Varadero, the city of Matanzas, and many of the island’s onshore oil Feature writers and gas fields. Centro de Convenciones Plaza América, Varadero. Information: www. VITO ECHEVARRIA expomatanzas.cu. DOREEN HEMLOCK Cartographer June 23-27: International Convention of Cuban Industry (Cubaindustria) — ARMANDO H. PORTELA first edition of what is planned to become an annual convention and fair for Cuban manufacturers and their foreign partners. Palacio de Convenciones and PABEXPO, Havana. Details TBA. CubaNews (ISSN 1073-7715), founded in 1993, is published monthly by Cuba Media LLC, PO Box 566346, Miami, FL 33256-6346. June 23-27: 7th International Conference of Electrical Engineering (FIE 2014) Annual subscription via PDF delivery: $398. Academic, nonprofit organizations: $198. Delivery — electrical engineering conference in Santiago de Cuba. Contact: Dunia Barrero via PDF and print: $100 extra per year. Formigo, [email protected]. Please visit www.cubanews.com to learn more about our newsletter. To order a subscription, call CubaNews at (305) Sept. 22-25: International LABIOFAM Congress 2014 — event that focuses on 393-8760, fax us at (305) 670-2290, or send an e-mail Cuba’s pharmaceutical products, held in conjunction with the 3rd International Sym- to [email protected]. Contents may not be distributed by any means posium of Cancer Therapy Products. Palacio de Convenciones, Havana. Contact: without prior written permission of the publisher. Lirka Rodríguez Pérez, [email protected]. Cuba Media LLC grants authorization to photo- copy items for internal or personal use, provided the appropriate fee is paid directly to Copyright Clear- Nov. 3-9: 32nd International Havana Fair (FIHAV 2014) — Cuba’s largest trade ance Center, 222 Rosewood Drive, Danvers, MA fair with major presence of Cuba’s foreign partners. PABEXPO, Havana. 01923. For details, visit www.copyright.com.