Vol. 13, No. 1 January 2005 www.cubanews.com In the News Cuba tightens foreign-exchange rules Adios, free zones? as Alimport continues to buy U.S. food Government says Cuba’s zonas francas do BY TRACEY EATON “Families can barely feed themselves, and not create enough jobs .................Page 3 uban President Fidel Castro summed up there is little room for luxuries like children’s 2004 like this: “There couldn’t have been toys or a night out with the family,” said James Offshore bonanza C a worse year, and there couldn’t have Cason, the top U.S. diplomat in Cuba. “Castro is been a better year, either.” determined to remain on the wrong side of his- Sherritt, Pebercan strike oil near Santa Two hurricanes, a stubborn drought, spiral- tory, while Cubans wait for his strange and Cruz del Norte ...............................Page 4 ing energy costs and stepped-up U.S. sanctions unsuccessful experiment to come to an end.” hammered the economy. But Castro supporters Undaunted, Castro celebrated his 46th year in Uruguayan friends say Cuba survived and even moved forward. power on New Year’s Day. He has outlasted nine The economy grew at a rate of 5%, and unem- American presidents and is working on his 10th. Tabaré Vázquez vows to restore full dip- ployment dropped to 2%. A reserve containing He is the longest-ruling head of government on the planet. lomatic relations with Havana ......Page 6 up to 100 million barrels of oil was discovered off the northern coast (see page 4). “He’s a tough old bird,” said a veteran foreign And in late December, Castro delivered some journalist, stunned to see the Cuban leader Caracas connection remarkable news, saying for the first time that walking in public the other day just two months Venezuela, Cuba sign sweeping free-trade the island was finally emerging from the “Spe- after he shattered his kneecap in a fall televised around the world. and investment accord ..................Page 7 cial Period,” an economic austerity program launched in 1991 after the collapse of Cuba’s When Castro began his revolutionary cru- chief sponsor, the former Soviet Union. sade in 1953, he was a feisty young lawyer. Newsmakers Castro’s critics say the regime’s economic fig- Now 78, he’s one of the most recognizable Robert Werner takes helm of Treasury’s ures are revolutionary nonsense. And they con- political figures of modern times. And some say OFAC at a critical time for agency that en- tend that living standards are actually sinking. See Castro, page 3 forces embargo against Cuba ......Page 8 OFAC’s anti-Castro crusade devastates OFAC’s blacklist Travel agency accused of helping U.S. cit- Miami agencies catering to Cuba travel izens circumvent Cuba ban ........Page 11 BY SANTIAGO FITTIPALDI blow (see our exclusive interview with OFAC’s Business briefs obody’s sure how badly Cuba’s economy new director, Robert Werner, on page 8). During the latter half of 2004, according to Latest sugar crop projected at 1.8m tons; was hurt in 2004 by tough new U.S. re- Nstrictions on travel and remittances, but industry figures, 50,588 seats on charter flights Mexican firms avoid Cuba .........Page 12 one thing’s for sure: those restrictions have had to Cuba were reserved. That’s down from a crippling effect on South Florida travel agen- 118,938 seats during the same period in 2003. Lada room to grow cies, which are reeling from a drop in business. And last month, reservations fell to 13,735 — a two-thirds drop from December 2003. Russian automaker tries to win back con- Local executives interviewed by CubaNews say the traditional December travel season — Leading air-charter operator Marazul, which fidence of Cuban buyers .............Page 14 usually accompanied by increased remittance has been arranging travel to Cuba for 25 years, — was a bust this year. is a case in point. In December 2003, it handled Pyongyang and WMD With U.S. Census data showing 66% of all 3,500 passengers flying to and from Cuba. In December 2004, says vice-president Is North Korea helping Cuba acquire bio- Cuban-Americans living in Florida, companies authorized to engage in travel, remittances and Armando García, that number dropped to only logical weapons? ..........................Page 15 package deliveries to Cuba have spawned a vir- 260. As a result, the company has had to lay off tual cottage industry. more than 65% of its employees. CubaNews (ISSN 1073-7715) is published monthly Yet, with the Treasury Department’s Office of Before the tougher restrictions took effect in by Luxner News Inc. © 2005. All rights reserved. Foreign Assets Control now allowing exiles to June, Marazul flew two weekly Miami-Havana Subscriptions: $429/year. For subscription or edito- visit the island only once every three years and charter flights using a 123-seat Continental rial inquiries, call us at (301) 365-1745, send a fax to Airlines Boeing 737, and one weekly flight on a (301) 365-1829 or e-mail us at [email protected]. limiting remittances only to immediate family members, the sector has been dealt a severe See Travel, page 2 2 CubaNews ❖ January 2005 tion was driven by concerns over how to stay violation of U.S. law. Travel — FROM PAGE 1 competitive in the new business environment. As such, he believes December may have 55-passenger American Eagle ATR. It also Others have taken more desperate steps. been a stronger travel month than official operated a charter from New York JFK using José Martín, president of Rumbos Travel, data suggest, as many may have simply pur- Delta Airlines equipment. became one of Miami’s most vocal opponents chased tickets to third-country destinations That flight was eliminated in July, and Mar- of the new regulations, citing not only con- that have also become an important vehicle azul now operates only two charters a week cerns about his travel business but also a for the transfer of money and goods. from Miami using the smaller ATRs. With the need to visit the island frequently to attend to De Salas estimates informal couriers now ethnic travel market dwindling, most of Gar- his ailing mother and son. In August, he com- charge as much as 25% of the amount of cash cía’s current passengers are U.S. executives mitted suicide. sent, up from a previous 15%. involved in legal food trade with the island. Martin’s widow, Sandra, said OFAC in- There are also legal loopholes, he says, The use of smaller aircraft and the higher formed her that she would need to apply for a with travel under religious licenses being one cost of processing passengers to comply with new license to run the business, as the previ- of the most popular. Church and synagogue ous one was issued under her husband’s U.S. regulations, García says, has boosted leaders holding licenses have been organiz- round-trip airfares by $100 or more. It now name and was not transferable. The company — which once ran a network ing group tours to Cuba for “religious purpos- costs an average $500 to make the 55-minute es” since new restrictions were imposed, pro- trip and back. of seven branches in Miami, Hialeah, Sara- sota, Tampa and West Palm Beach — now viding a more direct and legal route. DELAYS, CONFUSION AT OFAC operates out of a single location in Hialeah. “Cubans in South Florida,” concludes de Salas, “have adapted quickly to restrictions on That doesn’t bode well for many South “The restrictions have made it much more difficult for Cuban-Americans and more both sides.” On the other hand, Marazul’s Florida working-class exiles who are eligible García says the restrictions have had a ripple to travel but remain sensitive to price shifts. recently arrived Cubans to visit the island, but this hasn’t stopped them from seeking alter- effect on South Florida’s economy. Another obstacle, he told CubaNews, has “This is a chain,” he says, “that affects been confusion over the application process native routes,” says Hans de Salas, a research associate at the University of Miami’s Insti- everything from travel agencies, the airport — especially after the U.S. Treasury’s Office and even the many stores where exiles buy of Foreign Assets Control (OFAC) changed tute for Cuban and Cuban-American Studies. products to take to Cuba.” application forms and guidelines several BACK-DOOR ROUTES TO HAVANA times over the past few months. García hopes OFAC will accelerate the Delays in securing licenses are a recurring De Salas says there is evidence suggesting approval process, in a move that would lend complaint. Although OFAC said it approved many are traveling to Cuba via third-country some relief by allowing those waiting for 2,600 and rejected 3,600 of the 6,200 applica- routes such as Cancún and Nassau, albeit in licenses to finally make the trip to Cuba. tions for family licenses it received between Aug. 10 and Nov. 10, García suspects the fig- ures are inaccurate. Marazul alone, he says, has helped 2,500 to ADIOS FOR CUBA’S FREE-TRADE ZONES? 3,000 prospective travelers file applications. uba’s free zones could disappear in a In each free zone, there are only three or Many of them have been waiting for months relatively short time, warn European four companies that produce something; for a reply from Washington. Cexecutives interviewed by the BBC. the rest of us are inherently importers,” Dania-based Gulfstream Air Charter, which According to the executives, who asked said one executive who has already been operates flights to Cuba, has seen profits drop to remain anonymous, the Castro regime told to start packing his bags.