february 2011 issue

BY TRACEY EATON

Fidel Castro’s supporters call it theft. Butvictims of the Cuban government say it’sjustice. Families whose loved ones have

been killed fighting the Castro regime have re-covered millions of dollars since 2000, tappinginto Cuban assets frozen in the United States.The problem is, there’s not much remaining

in the kitty, said Joseph DeMaria, a Miamilawyer who helped recover $47 million in 2006.“I believe there’s very little left,” DeMaria

told CubaNews recently. “I don’t think there’smuch upside to chasing these assets anymore.Most of the money has been drained and I thinkany new money is being created and handled ina way that it’s kept offshore and out of the reachof the United States.”DeMaria is a trial attorney at the Tew Carde-

nas law firm, which represented the family ofHoward F. Anderson, an American businessmanexecuted by firing squad in Cuba in 1961.

DeMaria went after Cuban assets for the And-erson family under a provision of the TerrorismRisk Insurance Act of 2002, which was passedafter the Sept. 11 attacks.The act allows people with judgments against

“terrorist” parties to pursue the assets of “anyagency or instrumentality of that terroristparty.” The law also says these assets can beused to satisfy judgments for compensatorydamages. Cuba is considered a terrorist partybecause it’s on the State Department’s annuallist of terrorism sponsors.The U.S. Treasury’s Office of Foreign Assets

Control issues regular reports on blocked as-sets. OFAC’s 2009 report linked $223.7 millionto Cuba. But it’s not a simple matter of pursuingthat money because the Castro regime doesn’tnecessarily own it, DeMaria said.“You have a lot of money that goes back and

forth between Cuba and the rest of the world,”

BY LARRY LUXNER

The announcement came late Friday after-noon, Jan. 15 — less than 48 hours afterU.S. and Cuban officials met for migration

talks in Havana: President Barack Obama haddecided to enact the most encouraging changesin years for Americans eager to visit Cuba.While the new rules don’t even come close to

abolishing the travel ban — only Congress cando that — they’re already making thousands ofCuba-watchers happy, as evidenced by the ava-lanche of congratulatory emails pouring intoCubaNews from trade associations, farm lobbies,religious groups, NGOs and at least one MiamiCuban exile organization.Much more will be known once the new rules

are published in the Federal Register by Jan. 30.For now, according to the White House, they:

n Expand “purposeful travel” by offering gen-eral Treasury Department licenses for academ-ic, religious and cultural trips to Cuba.

n Provide specific licenses for “people-to-peo-

ple” travel similar to the licenses provided from1999 to 2003 by the Clinton administration.

n Allow for non-family remittances of up to$500 per quarter for private entrepreneurial andcultural activities, provided those remittancesdon’t go to “senior members” of the Cuban gov-ernment or the Cuban Communist Party.

n Expand bilateral air links, allowing all U.S.international airports to operate charter flightsto Cuba besides the three already authorized todo so: Miami, New York JFK and Los Angeles.“Tonight, I’m going to party like it’s 1999, be-

cause we’re basically back to 1999,” ChristopherSabatini, senior director of policy at the NewYork-based Americas Society, told CubaNewsshortly after the regs were unveiled.“There are tweaks here and there, but this

policy basically brings us back to where wewere under Bill Clinton, with few exceptions.That’s pretty much it.”Geoff Thale, program director at the Wash-

In the News

Skirting the lawOFAC lets hundreds of individuals, comp-anies evade Cuba embargo ..........Page 3

OFAC’s Catch-22Getting your money unblocked may notalways be worth the trouble .........Page 4

Political briefsState Department says it has no informa-tion on defector Pedro Alvarez ....Page 5

Action at last?Leisure Canada, under new management,finally ready to move on Monte Barretoluxury hotel project .......................Page 6

NewsmakersFelice Gorordo, 28, said ‘identity crisis’ in-spired him to establish Cuban-Americanyouth group Roots for Hope .........Page 8

The rice paradoxSpecial report: Rice imports surge despiteideal growing conditions ............0

Fudging GDP?Cuba claims economy grew 2% in 2010, butwhat does that really mean? .......Page 12

Coke is itCoca-Cola finds ways to penetrate Cuba’slucrative cola market ...................Page 13

Remittance factorNew rules in U.S., Cuba help boost remit-tances to record levels ................Page 14

Vol. 19, No. 2 February 2011

See Assets, page 4

CubaNews (ISSN 1073-7715) is published monthlyby CUBANEWS LLC. © 2011. All rights reserved.Subscriptions: $479 for one year, $800 for two years.For editorial inquires, please call (305) 393-8760 orsend an e-mail to: [email protected].

Big payouts drain frozen Cuban assets,dashing hopes for future U.S. plaintiffs

See Travel, page 2

Obama eases U.S. travel rules to Cuba;huge boost in American visitors likely

2 CubaNews v February 2011

sponsor Cuba trips for religious purposes —as often and for as long as they desire.But all other educational exchanges would

require a specific license from Treasury’s Of-fice of Foreign Assets Control. That includeshigh schools, museums, college alumni,Elderhostels, chambers of commerce, Rotaryclubs, foundations, artists, doctors, NGOsand third-party student exchanges.Stuart Eizenstat, deputy treasury secretary

in the Clinton White House, told CubaNews“they’re trying to do the most they can withthe existing law, and I applaud it ... it’s a strongmove in line with the kinds of things we weretrying to do in the Clinton administration.”During a conference call Friday arranged

by the White House, a senior administrationofficial said the new regulations had not beendiscussed with the Cuban government.The official also told reporters that the

main difference between Obama’s people-to-people policy and Clinton’s people-to-peoplepolicy is that the new one focuses on increas-ing academic and religious travel to Cuba.Under Clinton, rules were also liberalized

for other groups of people, leading to chargesof abuse and accusations that Clinton was pro-moting outright tourism to Cuba.

MENENDEZ DISAPPOINTED, CANF PLEASED

Predictably, Sen. Bob Menendez (D-NJ) —a staunch embargo defender — said he was“deeply disappointed by President Obama’sdecision to extend an economic lifeline” to theCastro brothers, warning that it would “pro-vide the regime with the additional resourcesit needs to sustain its failing economy.”We couldn’t get an immediate reaction from

the Cuban Interests Section in Washington,though a government website did say that“with these measures, the blockade is left

ington Office on Latin America, was more dra-matic, calling it “the most significant relaxa-tion of the travel ban in the last two decades.”Added the Latin America Working Group,

which has lobbied for years for an end to theembargo: “We congratulate the White Houseon this forward-looking decision and look for-ward to a surge in travel to Cuba, and a moveto encourage Congress to finish the job andactually change the law.”While that’s not likely to happen for some

time — especially now that Rep. Ileana Ros-Lehtinen (R-FL) chairs the House Foreign Af-fairs Committee — it seems obvious that thenumber of Americans who can now find alegal way of getting to Cuba will skyrocket.

800,000 AMERICANS TO CUBA NEXT YEAR?

“With these changes, I think we’re going tosee upwards of one million people traveling toCuba by 2012,” said Sabatini, citing pent-updemand by Americans eager to see Cuba forthemselves — not to mention the 200,000 orso Cuban-American exiles already traveling tothe island this year under existing law.“You’re going to get environmental groups,

cultural groups, and National Geographic ex-peditions. Universities will restart programsthey had shut down. It may take a year to do,but we’ll be looking at close to 800,000 people-to-people travelers annually going to Cuba.”On the surface, colleges and universities

will be able to resume short-term survey pro-grams for their own students as well as othersas long as academic credit toward a degree isgiven. That was the case before the law wasaltered by President George W. Bush in 2004.In addition, churches, synagogues and

other religious groups will now be able to

Travel — FROM PAGE 1

Rajwant Singh, first vice-president of the InterFaith Conference of Metropolitan Washington, praysfor the release of Alan Gross along with 16 other rabbis, imams, monks and priests at a Jan. 11interfaith event at St. Matthew’s Cathedral. Gross, a USAID contractor from Potomac, Md., hasbeen held in a Cuban jail for more than 13 months on suspicion of espionage. His family and theWhite House insist that Gross, 61, was merely helping Cuba’s 1,000 Jews connect to the Internet.

17 INTERFAITH LEADERS URGE CUBA TO FREE ALAN GROSS

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intact and Washington’s policy is not substan-tially changed. However, these measures toease the blockade reflect the consensus of themajority of the U.S people’s demand for achange of policy toward the island.”Surprisingly, Miami’s top Cuban exile orga-

nization seemed to agree — sort of.“These measures promote the interests of

the people of the United States as well as theinterests of the people of Cuba,” said Francis-co “Pepe” Hernández, president of the Miami-based Cuban American National Foundation,which helped craft Obama’s new policy.“A greater ability to send remittances in

conjunction with increased contact and com-munication with those on the island will helpto break the chains of dependency that theCastro regime has traditionally used tooppress those inside Cuba,” he said.

NEW U.S. GATEWAY CITIES LIKELY

One immediate effect of the new rule willbe an expansion of direct charter flights toCuba from gateway cities other than the threeairports now approved to handle such flights:Miami, New York JFK and Los Angeles.Tampa, Fort Lauderdale, Atlanta and San

Juan are likely to be among the first to offerdirect service to Havana.“This is great news from an international

air service development standpoint,” Joe Lop-ano, CEO of Tampa International Airport, toldthe Tampa Bay Business Journal. “We will beginmeeting with air charter companies and work-ing with federal authorities to make sure wemeet all requirements for these Cuba flights.”Gulfstream International, which offers

Caribbean charter flights from TIA, runsCuba charters from Miami and has recentlyboosted the frequency of those flights to han-dle increased passenger and cargo demandamong Cuban exiles returning to their nativeisland to visit family and friends.Yet Sabatini cautioned that the new policy

could also have some downsides, particularlywhen it comes to travelers’ safety.“You will have 800,000 Americans running

around Cuba, but with no access to ATMs orU.S.-issued health insurance. People will becarrying wads of cash in Cuba because theycan’t use their credit cards,” Sabatini warned.“And students won’t be able to use their cell-phones because there are no roaming agree-ments [with U.S. carriers].”Meanwhile, Sabatini said he wouldn’t be

the least bit surprised if U.S. citizen AlanGross, who’s been imprisoned by the Cubansfor 13 months on suspicion of spying, is freedin the next few weeks (see box at left).

“I would venture a guess that Alan Grosswill probably not be in a Cuban jail any longerthan the end of this month [January] — andprobably will be out sooner than that,” he said,noting the timing of U.S.-Cuban migrationtalks in Havana at which Gross’s imprison-ment and deteriorating health was brought uprepeatedly. “The White House couldn’t havemade these announcements without a Cubanpromise to release him.” q

Washington-based journalist and photographerLarry Luxner is the editor of CubaNews.

February 2011 v CubaNews 3

Washington-based journalist Ana Radelat hasbeen covering Cuba-related issues on Capitol Hillfor CubaNews since the newsletter’s birth in 1993.

OFAC allows hundreds of U.S. companies to skirt embargo

POLITICS

BY ANA RADELAT

Since 2000, the long-standing U.S. embar-go of Cuba has offered loopholes forcompanies exporting food and agricul-

tural commodities to the island.But new information gleaned from the U.S.

Treasury Department’s Office of Foreign As-sets Control (OFAC) shows that applicantsranging from Google to the Southern BaptistConvention were granted licenses to eithertravel to Cuba or conduct financial transac-tions with Cuban nationals.

Businesses that applied to OFAC for suchlicenses include Cargill (21 licenses), ArcherDaniels Midland (5), Riceland Foods (3) andCoca-Cola (2).In addition, several companies whose

assets were nationalized by the Castro regime— and whose claims against Cuba were latercertified by the U.S. government — alsoapplied for OFAC licenses.Atlantico del Golfo Sugar Co., a 500,000-

acre concern that was confiscated under FidelCastro’s agrarian reform program, applied forseven OFAC licenses.John Loeb, whose family was a key share-

holder in that company, said his lawyerssought licenses so they could be paid fromCuban funds frozen by the U.S. government.“A small amount of money was left over

[after the expropriations] but it was frozen byOFAC,” he said. “We use that money to paythe lawyers looking out after our claim.”

CUBA LICENSES SCRUTINIZED VERY CAREFULLY

Information about OFAC licenses releasedby the Treasury Department was heavilyredacted to block out mentions of the purposeof the license applications and whether or nota given application was approved.That rare glimpse into OFAC’s world is the

result of Freedom of Information Act requestby the New York Times that also disclosedlicensing information about other sanctioned

nations including Iran, Sudan, North Korea,Iraq, Libya and Burma.The disclosures revealed that American

companies conducted billions of dollars inbusiness with Iran and other U.S. foes, andthat several American businesses were per-mitted to deal with foreign companies be-lieved to be involved in terrorism.But approval of licenses relating to Cuba

were narrowly limited to what the law allowed— humanitarian activities, authorized traveland sales of food and medicine, said Stuart

Passengers board a Miami-bound Continental charter flight at Havana’s José Martí International Airport.

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Eizenstat, deputy treasury secretary duringthe Clinton administration.“The difference was there was so much

congressional oversight on the Cuban embar-go issue that [licensing] was really watchedlike a hawk,” said Eizenstat, who was once incharge of sanctions policy and is now a part-ner at Covington & Burling, a Washington lawfirm. “There was no wiggle room.”

OFAC LICENSES GIVEN FOR VARIETY OF REASONS

The amount of licensed trade between U.S.companies and Cuba was also a fraction of thebusiness generated with other sanctionednations, Eizenstadt told CubaNews. “But com-panies want to establish some kind of pres-ence in Cuba so that when normalizationoccurs, they’ll have a favorable position.”Nevertheless, the law authorizing food and

medical sales to Cuba was broadly interpret-ed by OFAC so that sales of lumber, chewinggum and even fish-oil capsules were allowed.U.S. financial institutions also applied for

hundreds of OFAC licenses.The Bank of America made more than 160

applications. Bank of America spokeswomanShirley Norton said her company took care inmaking sure business with Cuba “is withinboth the letter and spirit of the law.”“The overwhelming majority of our licens-

es relate to humanitarian or diplomatic activi-ty or are otherwise for purposes determined

by the U.S. government to be in the foreignpolicy interest of the United States,” Nortontold CubaNews.Examples of licensed transactions include

setting the estates of Cubans with relatives inthe United States, paying the salaries of offi-cials of international organizations posted inCuba, and collecting school tuition for thechildren of foreign diplomats in Havana.Other financial institutions will multiple

license requests include Citigroup (45), Bankof New York (95) and J.P. Morgan Chase (43).OFAC declined several requests for inter-

views for this article. But Tom Rothstein, adoctor with the New York-based Feinstein In-stitute for Medical Research, was willing totalk about his application.When he traveled to an international immu-

notherapy conference in Havana in 2008, hemet a Cuban researcher who became his part-ner in a quest to find a vaccine for cancer.He applied for an OFAC license to send his

Cuban partner medical equipment if needed,Rothstein said.More than 10,000 applications from individ-

uals and groups that included sports teamsand orchestras were submitted to OFAC forpermission to travel to the island.

REGULATIONS STILL INHIBIT U.S. FOOD SALES

Phillip Whitehead of Tishomingo TradingCo. in Mississippi said he applied for OFAClicenses to attend international trade fairs inCuba in 2008 and 2010.The first visit resulted in the sale of cattle to

the Cuban government, and he hopes theother will lead to a sale of purebred horses.Whitehead said recent changes in OFAC

licensing procedures will make it easier forAmericans like him seeking agricultural salesto travel to the island. But he said the island’spoor economy has prevented more sales.“You’ve got a lot of people fishing and not a

lot of people catching,” Whitehead said.Thanks to a change of regulations imple-

mented last year, farmers, ranchers and foodand medical salespeople no longer have toapply for OFAC licenses to visit Cuba.They must, however, notify OFAC of their

intent to travel least two weeks before theirtrip begins and write the agency again, nolater than two weeks after their trip, aboutbusiness conducted during the visit.Oscar Abrales, who travels to Cuba about

three times a year seeking sales for Cargill,said OFAC’s new regulations haven’t helpedmuch — especially since the Cuban govern-ment requires American visitors to apply forvisas, which can be a lengthy process.“It’s not any easier,” Abrales told us. “If I

have to go to Cuba, it’s a month-long process.But If I want to go to Panama, I just jump on aplane.” q

BY DOREEN HEMLOCK

Imagine sending money from your compa-ny to an employee overseas, and themoney gets stopped in a third country

along the way. You try to get the cash, butthe bank holding the moneyin the third country refusesto release it.

That’s the kind of messattorney Patricia M. Hernán-dez gets called to fix — oftenseveral times a year.

The problem comes fromstrict interpretation by U.S.authorities of Washington’sembargo on Cuba. To avertpenalties, U.S. banks typical-ly stop all funds related toCuba, even if the money isnot aimed directly for Cuba’scommunist government.

That means that a company from Panamaor the Netherlands — which can legally dobusiness with Cuba under the laws of theirhome country — may find their money relat-ed to Cuba suddenly frozen in a U.S. bankaccount, if somehow that money gets wiredthrough the United States.

Sometimes, the transfer through a U.S.bank is just an accident. A bank overseasmay see a wire transfer involving dollars androutes the money through a U.S. affiliatebank. The U.S. bank then sees Cuba on thepaperwork and seizes the cash to avertproblems with authorities, Hernándezexplained.

The company can appeal to the U.S. Trea-sury’s Office of Foreign Assets Control. Butnearly all appeals fail, she’s discovered.

“OFAC does not accept mistakes. It willnot release the funds,” Hernández toldCubaNews. The agency expects foreignbanks to adopt policies and procedures toavoid the mistakes, “to make it foolproof,”

she said.Hernández specializes in

banking cases at the Miamilaw firm of Avila RodríguezHer-nández Mena & Ferri.She’s also president of theSouth Florida BankingInstitute and often representsbanks in their appeals toOFAC.

Of all U.S. sanctions pro-grams on the books, she findsthose against Cuba the “mostcomprehensive” worldwide.Indeed, Hernández has foundrepeated problems withCubans naturalized as citizens

of Spain or other countries who decide toinvest in the United States and suddenly findtheir U.S. deposits blocked.

Many of those naturalized Cubans don’tknow that they must first apply to U.S. auth-orities to have their U.S. deposits or invest-ments unblocked. The individuals can getblocked funds released. But it often takessix weeks for the appeals process, saidHernán-dez, who handled one such case inJanuary.

In contrast, companies face tougher chal-lenges than individuals, with slim chances ofunblocking such funds.

“The fines for banks are so substantialthat the banks can’t afford to help you out,”


he told CubaNews. “And most of that money,because it’s going through the WesternHemisphere, if it’s a wire transfer, it’s going togo through New York at some point. Thebanks will spot the word Cuba or Havana andthey’ll just automatically freeze the transfer.“People think there’s all this money to

grab, but it’s not available for a victim of ter-rorism because it’s not Cuban assets. It mightbe the asset of somebody in London sendingmoney to somebody in Cuba, but it’s caughtup in the freeze.”Out of that “universe of blocked assets,

which could be a few hundred million dol-lars,” cautions DeMaria, very little of it isactually traceable to Cuba.

A FEW FAMILIES GRAB MOST OF THE CASH

Much of the Cuban money secured overthe past decade began to pile up in the 1960sin New York banks, DeMaria said.“It had been money that AT&T owed to the

Cuban telephone company,” DeMaria said,explaining that the utility became part of theMinistry of Communications once Castrotook over — hence it was state-owned funds.But it wasn’t clear how lawyers were going

to obtain that money until the Clinton admin-istration agreed to a law that allowed them touse frozen bank accounts to pay victims of theBrothers to the Rescue shootdown.Brothers to the Rescue is a Miami-based an

anti-Castro group. In 1996, Cuban MiG fight-er jets shot down two of the group’s planesover international waters, killing four people.The victims’ relatives later won a $187.6

million judgment, and wanted money fromthe frozen accounts, despite objections fromPresident Bill Clinton.But in 2000, Republicans in Congress

passed a law forcing Clinton to allow the vic-tims’ relatives to tap into the blocked funds.“So out of that money that was always in

there, the first big chunk went to the Brothersto the Rescue, about $90 million,” DeMariasaid. “Now fast forward and everybody is outthere trying to sue Cuba.“Cuba defaults on all these lawsuits. So if it

gets sued in state court or federal court, theyget a default. And these elected judges im-pose enormous judgments, hundreds of mil-lions of dollars. That’s where we come in. Weknew from reading the Brothers to the Res-cue file that there was more money left over.”DeMaria took his case to New York, to pur-

sue Cuban assets that JP Morgan Chase hadfrozen.

NOT MUCH LEFT IN THE KITTY

“That’s where we had to fight,” he said.“And then the Weininger family showed upwith a claim of about $20 million. We had aclaim of about $60 million. To make a longstory short, we eventually made a deal to splitit and they got their $20-something-millionand we got our $40-something-million.”Janet Weininger fought for the money on

behalf of her father, Thomas “Pete” Ray, a CIApilot whose plane was shot down in Cuba dur-

ing the 1961 Bay of Pigs invasion.Weininger was six years old when she last

saw her father alive. As a teenager, she beganinvestigating his death, eventually learningthat her father’s plane had been shot down inCuba and his body was reportedly kept in afreezer in Havana for 18 years.A Cuban named Enrique Rivero testified

that he saw Pete Ray’s body removed “onmany occasions in 1961 and 1962” and thatmore than once, he saw Cuban military offi-cials spit on Ray’s body and kick it. One armycommander even urinated on it, he claimed.DeMaria said Anderson’s body was also

abused. A revolutionary tribunal had convict-ed Anderson of conspiring to smuggleweapons to anti-Castro forces in 1961.“It was awful,” DeMaria said. “They ac-

cused him of being a spy…They drained allthe blood out of him before they shot him.And then they desecrated his remains. It wasvery bad, bad stuff.”The families of Ray and Anderson both ob-

tained multimillion-dollar judgments for dam-ages. Eventually their lawyers started work-ing together to try to collect the money.“We had to fight the banks,” DeMaria said.

“Then we even had to fight a company calledthe Cuban Electric Co., which is owned by anAmerican company that said they had a claim.They tried to knock us out. And we foughtthrough all that in the federal court.”U.S. District Court Judge Victor Marrero

ruled in favor of the families on Nov. 17, 2006.“I’ll never forget the day,” DeMaria said. “It

was a Friday.”Marrero’s 104-page order “said we win. We

get our money. A month later, we got ourmoney.” The Brothers to the Rescue victimsand the Ray and Anderson families wound upwith more than $170 million.“Since we grabbed most of the money in

the accounts, there’s not much that’s growinganymore. There might be a few million dollarshere or there.”

COLLECTING THE MONEY IS THE HARDEST PART

Some critics question whether victimsshould be awarded blocked Cuban assets.For starters, these critics contend, Cuba

shouldn’t even be on the State Department’sterrorism list. They cite a leaked February

Beware OFAC ‘blocked funds’ Catch-22

See Assets, page 9

Assets — FROM PAGE 1

Fla. lawyer Patricia Hernández

See Hernández, page 9

“These changes will not aid in ushering in respect for human rights. And theycertainly will not help the Cuban people free themselves from the tyranny thatengulfs them. These changes undermine U.S. foreign policy and security objec-tives and will bring economic benefits to the Cuban regime.”

— Rep. Ileana Ros-Lehtinen, new chair of the House Foreign Affairs Committee,reacting angrily to President Obama’s Jan. 14 announcement that he’d relax existingtravel rules, making it easier for schools, churches and cultural groups to visit Cuba.

“Today’s announcement is a welcome and long-overdue step in the right dir-ection for U.S. Cuba policy. These changes will permit more contact betweenAmericans and Cubans, which is good for both. Americans will be able to travelto Cuba for a greater variety of academic, religious and cultural reasons to actas ambassadors in a country where official contacts have yet to be normalized.”

— National Foreign Trade Council, reacting to the same announcement.

“It was the result of an interagency process that has concluded only in the lastcouple of days. They are rolling out now that they are ready to be rolled out.”— A senior administration official quoted by the Miami Herald. He dismissed specu-

lation the White House delayed issuing the new rules until after the Nov. 2 electionsbecause Democrats in Florida feared it would hurt them among Cuban exile voters.

“He can do anything he wants to the Cuban regime, but this is a case, at bot-tom, in its essence, about lying ... The evidence will show that he lied. He liedrepeatedly during these interviews.”

— Timothy Reardon, prosecutor for the Justice Department’s counterterrorism divi-sion, during opening statements at the El Paso trial of Luís Posada Carriles. The 82-year-old ex-CIA agent faces 11 counts of perjury, obstruction of justice and naturali-zation fraud in connection with statements he made to immigration officers in 2005.

“Cuban agents have decided this is an opportunity to put their Public EnemyNo. 1 behind bars. They want to show they are capable of being partners incounterterrorism efforts and that they don’t belong on the State Department’slist of states that sponsor terrorism.”

— Peter Kornbluh of the National Security Archive’s Cuba documentation project,noting that Cuba has offered unprecedented cooperation in the case against Posada,

sharing thousands of documents linked to a 1997 string of Havana hotel bombings.

“He wants to distance himself from the Cuban government, to save himself.”— Brothers to the Rescue founder José Basulto on Cuban spy Gerardo Hernández,

now serving a life sentence in federal prison. Hernández has admitted that the 1996shootdown of two Brothers to the Rescue planes happened over international waters.

““Money and goods can freely cross borders, I repeat, but not human beings.By contrast, drugs and weapons cross incessantly in either direction. The U.S.is the world’s greatest consumer of drugs and, at the same time, the greatestsupplier of weapons, as symbolized by the rifle scope published on Sarah Palin’swebsite or the M-16 shown on the election posters of former Marine Jesse Kellywith the subliminal message to open fire with a loaded ammo chamber.”

— Fidel Castro, pontificating in his latest “reflection” on the Jan. 8 massacre inTucson that killed six and injured 13, including Rep. Gabrielle Giffords (D-AZ).

“I believe the general feeling is fear, apprehension and panic. But it seems tome that those people freed from the government monopoly will channel theirenergy and talent in other ways and will gain social and political autonomy.”— Generation Y blogger Yoani Sánchez, telling Miami’s El Nuevo Herald Jan. 5 how

the pending layoff of 500,000 state workers may ultimately hurt the Castro regime.

“It looks to me like the signs are good for this year. Last year was very bad,so we’re really hoping that better things are in store for this year.”— Reineiro Espinosa, a 53-year-old bus driver and Santería practicioner, comment-ing Jan. 3 on the official Santería New Year’s forecast, which predicts 2011will be a year of change and “reorganization” for Cuba. AP notes that the

same Santería priests made similar predictions in 2010; none came to pass.

In their own words …STATE DEPARTMENT: WE HAVE NO INFO ON ALVAREZ

The State Department has no information aboutthe whereabouts of Pedro Alvarez, the formerCEO of Cuba’s food purchasing agency Alimport,Reuters reported Jan. 7, quoting a U.S. official.Miami’s El Nuevo Herald newspaper and several

Cuban-American websites reported that Alvarez,67, had defected to the United States.In response to questions, the U.S. official said he

didn’t know where Alvarez was. He gave no otherdetails and wouldn’t specify if other U.S. agenciesmight have information about the former official.In Havana, state-run media made no mention of

the reports from Miami, which claimed Alvarezhad escaped from Cuba after having been underinvestigation in Havana for alleged corruption.Alvarez — profiled in an exclusive interview in

the April 2004 of CubaNews — was a well-knownfigure to U.S. food executives and politicians whohave promoted U.S. cash sales of farm products toCuba under a 2000 exemption to the embargo.These sales, which Alvarez negotiated for years

in his role as chief of Alimport, reached a recordof $710 million in 2008, making the United StatesCuba’s top source of food imports. But sales havesince fallen off sharply (see box on rice, page 11).

CUBA REPLACES TWO TOP CABINET MINISTERS

Cuba announced a Cabinet reshuffle Jan. 7, fir-ing Construction Minister Fidel Figueroa de la Pazfor undisclosed “errors” and removing Communi-cations Minister Ramiro Valdes in order to givehim broader oversight over various ministries.De la Paz was removed “for mistakes made in

his job,” said CNN, quoting a government commu-nique, while 78-year-old Valdes — a historic leaderof the Revolution and vice-president of the Councilof Ministers — was “freed up” to manage not onlythe Communications Ministry but also theConstruction and Basic Industry ministries.Gen. Medardo Díaz Toledo will be the new com-

munications minister, and René Mesa Villafanawill assume the head of the Construction Ministry.

MIGRATION PACT RESULTS IN FEWER INTERDICTIONS

U.S.-Cuban cooperation has significantly slashedthe number of Cuban migrants making dangerousand illegal voyages to the United States, Havana’sdelegation to bilateral migration talks said Jan. 12.Reuters said the Havana discussions were over-

shadowed by the Alan Gross case (see page 2), butCuba’s delegates — headed by Deputy ForeignMinister Dagoberto Rodríguez — called the meet-ing “a fruitful exchange” held in an atmosphere ofrespect and said both nations had complied withtheir promises under existing migration accords.In a much more cautious statement, the State

Department said its delegation to the talks “high-lighted areas of successful cooperation in migra-tion, while also identifying issues that have beenobstacles” to implementing accords.According to the U.S. Coast Guard, the number

of Cuban migrants interdicted at sea fell to 2,088for the year ended Oct. 31, the lowest in 28 years.Likewise, Cuba says it responds systematically

to U.S. requests, offering valuable evidence tohelp prosecute migrant smugglers in U.S. courts.

POLITICAL BRIEFS



Leisure Canada Inc. plans 3 luxury properties across CubaBY LARRY LUXNER

Vancouver-based Leisure Canada Inc. en-visions at least $1 billion worth ofinvestments in three Cuban real-estate

projects — beginning with its long-delayedMonte Barreto business hotel in the center ofHavana’s upscale Miramar district.In a half-hour phone interview from Toron-

to, CEO Robin Conners told CubaNews thathis publicly traded company, in a 50-50 ven-ture with state-run Gran Car-ibe SA, is aboutto sign off onthe luxury all-suite hotel.“We’ve got

final approvalson architectureand engineer-ing. Some finalsite work needsto be done. Wewant to makesure there areno under-ground cavesbefore we startconstruction,” he said.“I know we’ve heard all this before,” Con-

ners said, acknowledging past hype over Lei-sure Canada’s press releases describing pro-jects that never materialized. “The differenceis, this is a new management team with aproven track record. We’ve gone back to themarket and raised substantial capital in termsof refinancing the company — just under $20million in the last year.”When finished, the Monte Barreto project

— which occupies an entire city block — willboast 716 guest rooms on seven floors, a fullconference center, commercial space, sixrestaurants and various bars and cafés.

BIDDING FOR MONTE BARRETO TO START SOON

“Under the old management, this projectwas going to be built in three phases. Whenwe restructured the company, we decided itdidn’t make any sense to build it in threephases, because that would have negativelyimpacted the customer experience,” he said.“The first phase had the spa and restau-

rants, and because of the way it was designed,we would have had to support the other twophases even though they wouldn’t have beenbuilt yet. The efficiency would have been verynegative,” Conners added.He explained that Leisure Canada will see

“fairly significant savings” in constructioncosts by not building Monte Barreto out overan 8- or 9-year period as originally planned.Bidding is now scheduled to start in mid-

February, a process that normally takes 90days. Construction should then begin laterthis year, with completion in 30-36 months.“We’re utilizing a building technology that

has not yet been used in Cuba,” he explained.“It’s a cement pre-cast technology that’s verygood for any environment where you’ve gothigh humidity and hurricanes. It’s been used

in South Florida and other places with sub-tropical conditions, and is very highly regard-ed for this kind of application.”Monte Barreto represents a $200 million

investment, though Conners wouldn’t talkabout financing arrangements.“It’s not up to me to discuss how the part-

nership would choose to finance this,” he toldCubaNews. “We’ve got several options, and

This is the 4th in a series of special reports ongolf and marina projects in Cuba. For moredetailed information on Leisure Canada Inc.,call the company toll-free at (888) 600-8687 orvisit its website at www.leisurecanada.com.

TOURISM

Company CEO Robin Conners

See Leisure, page 7


we’re working with Gran Caribe to decidewhich suits best the needs of this venture.”The next project is Jibacoa, a giant golf-

and-marina complex involving $800 million indevelopment that Conners says will resemble— and eventually compete with — Casa deCampo in the Dominican Republic.The giant resort is located on a 5.5-square-

kilometer tract of oceanfront property 65 kmeast of Havana and 55 km west of Varadero.It’s being built in four phases, with Phase I

costing $150 million (see maps, page 10).“Jibacoa is still in the planning stages,” he

Leisure — FROM PAGE 6

1950s-era jalopie lumbers past a rural highway sign on the way to Jibacoa.

“As we go through the various stages ofdevelopment, the product mix keeps chang-ing and being added to. So eventually, we’llhave golf, hiking, cycling and a whole bunchof other amenities,” Conners told us.“We will probably have at least six hotels,

and we would be operating them. Our back-ground is hotel development and resorts, sowe have considerable expertise in this.”

CONNERS: NEW TEAM HAS ‘A TON OF EXPERIENCE’

Leisure Canada’s third venture foreseesinvestment of $125 million in a 350-room, all-suite hotel on Cayo Largo, an island skirtingCuba’s southern coast that’s part of a network

cans came to Cuba, around half of themCuban exiles visiting their families. That num-ber will rise dramatically, now that the Obamaadministration has opened the door to reli-gious, academic and “people-to-people” travel(see our front-page story in this issue).“Along with the other growth Cuba has

seen, all of a sudden you’ve got U.S. citizenswho are allowed to visit,” he said. “And theCubans have been extremely successful atdeveloping the Latin American market in thelast four years.”Conners conceded that “Cuba is not a sim-

ple place to do business,” but that the poten-tial is huge because nobody in Cuba is cur-rently offering a luxury resort experience on

par with Casa de Campo.“Typically the market looks for 15-18%

return on investment. We’re confident we canachieve those returns given the strength ofCuba’s growth in tourism. They’ve had thelargest single quarter growth in the last 10years,” he concluded. “If we didn’t feel themarket was deep enough to support our pro-jects, we wouldn’t go ahead with them.” q

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of coral reefs stretching over 100 kms.That property covers 29.5 hectares, accord-

ing to the company website (see map above).Conners, 55, is originally from Vancouver.

He started in the airline business and eventu-ally came to work for Intrawest, a largeCanadian resort developer. He became CEOof Leisure Canada in September 2009, in amanagement shakeup that saw the departureof Vancouver financier Walter Berukoff asexecutive chairman.Berukoff, 66, also resigned from Leisure

Canada’s board of directors as well as its sub-sidiary, Wilton Properties, though he kept thetitle of chairman emeritus “in appreciation ofhis numerous contributions to the company”Conners said in a press release.

PROJECT DOESN’T DEPEND ON U.S. MARKET

“The team we now have in place, quitefrankly, has a ton of experience, so our abilityto operate hotels, golf courses and resorts ata proper price and make sure they’re builtwell is one of the things that differentiates usfrom a lot of other people,” Conners toldCubaNews.“We’ve had some discussions with other

operators, but we feel we’re better off operat-ing these products ourselves.”Conners said luxury suites at the Monte

Barreto will go for around $200 a night — andthat while an end to the U.S. travel ban wouldbe nice, “our research shows that the Cana-dian and European markets are more thanstrong enough to absorb all our capacity.”

The Latin American market shouldn’t beoverlooked either — nor should the U.S. mar-ket, even without run-of-the-mill tourists.Last year, he pointed out, 600,000 Ameri-

told us. “The first phase includes two golfcourses, the first hotel and all the infrastruc-ture — water and sewage treatment facilities,roads and power plant. That’s why the firstphase ends up being very expensive.”Conners said Leisure Canada wants to

speed up development of the project’s twogolf courses, “because it takes two years toseed, and for literally a year after you plant thegrass, you can’t use the course.”Although the first phase calls for roughly

300 units, Jibacoa is designed to eventuallyhave 2,200 residences including a mix ofapartments, casitas and hotel rooms arrangedin neighborhood villages.

Holland’s Romar Finance is working withCuban authorities to turn Havana’s decay-ing waterfront Tarara property into a world-class resort, reports Golf Course Report inits December 2010 issue.

Tarara, whose beach was once regardedas among Cuba’s best, has been a weekendgetaway since the 1920s but has been deadas a destination for decades. Now, however, state-owned Cimex SA has

been directed to bring it back to life — andaccording to GCR “has enlisted Romar tospiff up the property’s houses, rebuild andenlarge its marina, and renovate its motel.”Later, reports the newsletter, “the part-

ners will add new bungalows and condos,some hotels, berths for mega-yachts, ashopping area and an 18-hole golf course.”Cimex, Cuba’s largest corporation, oper-

ates 80 companies including banks, gas sta-tions, video stores, a travel agency, a satel-lite TV provider and a recording studio.

Details: Romar Finance, Holland FinancialPlaza, Gustav Mahlerplein 109-111, PO Box75926, 1070-AX Amsterdam. Tel: +31 20 794-6096. URL: www.romar-finance.com.

Dutch to renovate Tarará


BY LARRY LUXNER

If the Versailles Restaurant in Miami’s LittleHavana district is ground zero for the fad-ing generation of Cuban exiles who spend

their sunset years plotting against Fidel andRaúl while sipping cortaditos, then Tinta yCafé — a cozy, hole-in-the-wall cof-feehouse located three and a halfmiles east along Calle Ocho — isclearly the anti-Versailles.Here, amid the empanadas,

fresh-squeezed orange juice andiced café con leche, friendly serviceand a surprisingly refreshingdiversity of political opinions thrivein a neighborhood not normallyknown for such tolerance.“This place has gotten bomb

threats because they would holddiscussions about anything andeverything under the sun,” FeliceGorordo, one of Tinta’s most loyalpatrons, told us over breakfast lastmonth. “Early on, the owner madeit very clear that she would respectall viewpoints.”The Miami-born Gorordo is exe-

cutive director of Roots of Hope, anonprofit group known in Spanishas Raices de Esperanza.At 28, he’s also the youngest per-

son ever profiled by CubaNews.

CUBAN-AMERICAN IDENTITY CRISIS

Both of Gorordo’s parents arefrom the central Cuban city ofSancti Spíritus. His father, a policeofficer, fled to South Florida as aPedro Pan refugee in 1961; hismother — who works in schooladministration — followed in 1972. After graduating from Miami’s

private Belén Jesuit High School,Gorordo went to Washington’sGeorgetown University, where hestudied government.“In 2002, my freshman year, I

had an identity crisis,” Gorordoexplained. “It was sparked by a teacher atGeorgetown who told me that if I thought I’dget to know Cuba from books, I was mistak-en. So I decided to go to Cuba. It was beforethe 2003 restrictions imposed by Bush, so wecould still travel there on a family license.”That didn’t sit well, however, with the

young man’s parents — who were adamantlyopposed to the trip.“My family thought I was crazy. They

couldn’t understand why I would want to go,”he recalled. “The night before the flight, mymom cried and refused to see me off.”But upon his return, he said, “everyone

was waiting for me at the airport. My momtook me to La Carreta [a popular Cubanrestaurant in Miami], and we talked all night.”

This is the trip that sparked Raices deEsperanza, said Gorordo — who’s been backto Cuba 10 times since then.“At that time, we really didn’t have any sort

of agenda or mission. We were a bunch ofyoung people, a loose affiliation of students

ting involved.” Since its first conference,Roots has held annual meetings at George-town, University of Pennsylvania, Princeton,Duke, University of Miami and Cornell; its2011 conference will be at Boston College.“The UM conference was the most charged

debate we’ve ever had on theembargo,” he said. “We’re muchmore diverse than our parentswere, but we don’t take a standon the embargo, even though itcomes up all the time. We also

don’t get involved in lobbying, butwe do support people-to-people.Our focus is not regime change.”But Gorordo wanted to do more

than have fellow students discusspolitics; he needed a cause.

CELLPHONES 4 CUBA

The perfect opportunity presen-ted itself when President RaúlCastro declared in March 2008that ordinary Cubans, for the firsttime, could own mobile phones —a luxury that until then had beenreserved for a select few.Well aware of Cuba’s reputation

for having the lowest mobile pene-tration rate in Latin America,Raices launched Cellphones forCuba, which aims to provideyoung Cubans with refurbishedcellular phones.So far, C4C has collected some

4,000 handsets.“Most of the ones we collect are

old and can’t really be refur-bished. The ratio of phones wecollect versus the ones we send toCuba is one in five,” said Gorordo,so instead, those phones are soldto recyclers.“For an iPhone or a Blackberry,

you get $25 or $30. An old Nokiagets you a dollar. Some recyclerspay us by the pound.”To date, Gorordo says his bud-

dies have shipped 300 handsets to Cuba,though the goal is 10,000. He’s even negotiat-ed a deal with his alma mater, GeorgetownUniversity, so that all recycled phones collect-ed on campus go to Roots of Hope.“We send them to Cuba through three dif-

ferent distribution networks: students, artistsand religious organizations. We give phonesto young people who otherwise wouldn’t havethe means to buy the hardware,” he told us.“We just finished a Christmas shipment,

sending 120 phones to 60 young people forthem — one to keep and one to give away.”Gorordo added: “We do not want to control

who gets the phones as long as it’s peoplewho need them. We want to give them the

NEWSMAKERS

A new voice in Miami: Felice Gorordo’s Roots of Hope

Roots of Hope founder Felice Gorordo at Tinta y Café along Miami’s Calle Ocho.

who were kind of going through the samething — trying to get in touch with our rootsand find our own voice.”Gorordo and his friends decided to form an

organization of Cuban-American students andsponsor a conference at Harvard University.

FOCUS IS PEOPLE-TO-PEOPLE, NOT THE REGIME

By the time Roots of Hope was formally es-tablished as a nonprofit, nonpartisan Section501c(3) organization two years later, it had100 student members at eight schools. “Today, we’re at 55 universities with 3,500

alumni,” Gorordo told CubaNews. “And wehaven’t gotten attacked as much as wethought we would. To a certain extent, theolder generation likes the fact that we’re get-

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See Gorordo, page 9


means and tools to connect and communicateamong each other.”Although the C4C campaign has been fea-

tured by CNN, BBC, NPR and the Wall StreetJournal, what really put Gorordo’s little groupon the map was the Juanes concert — whichin September 2009 attracted some 1.1 millionCubans to Havana’s Plaza de la Revolución.Roots of Hope played a key role in neutral-

izing initial Miami opposition to the historicevent, which was overwhelming.“We realized very early on that the guy had

great intentions. He didn’t want to go thereand sing for Fidel and Raúl; he wanted to sing

Gorordo— FROM PAGE 8

“Today, we’re at 55 universities with 3,500 alumni. And we haven’tgotten attacked as much as we thought we would. To a certain extent,

the older generation likes the fact that we’re getting involved.”— FELICE GORORDO, FOUNDER OF RAICES DE ESPERANZA [ROOTS OF HOPE]

for the people. He felt the youth were thefuture, and he wanted to inspire young peopleto become agents of change.”Gorordo said one of the Colombian rock-

er’s conditions for doing the Havana concertwas that when he took the stage, he could saywhatever he wanted.

JUANES CONCERT MARKED A TURNING POINT

“There were no barriers. Both sides weresuspicious of the others’ intentions, but wewanted to take politics out of it.”Gorordo, newly married and the father of a

year-old baby girl, received several threatsbecause of his promotion of the concert. Buthis people eventually won over the Cubancommunity through common sense.Some 30% of all young Cubans attended the

memorable event, during which Juanes at one

et is around $150,000, though in 2012 it’s sup-posed to double to $300,000.One of Roots’ biggest corporate backers is

Bacardi Corp., which sponsored a film aboutJuanes at Miami Beach’s Colony Theater.“We also get support from Carlos Saladri-

gas,” a wealthy Miami executive and co-chairof the Cuba Study Group, said Gorordo.“He was the first to support us, but he did

so with one condition: that there be no condi-tions on the money we receive. We’ve gottenoffers from people to give us much more thanwe’ve ever been able to raise, but we said nobecause there were conditions attached.” q

Hernández— FROM PAGE 4

Doreen Hemlock, former Havana bureau chiefand now business writer at the South Florida Sun-Sentinel, is a regular contributor to CubaNews.

Cuba claims lawyers Robert Muse, Joseph DeMaria

point shouted out “Viva Cuba Libre!”In Miami, 73% of Cuban exiles watched the

Sep. 20 extravaganza; an opinion poll after-wards found support for the event had leapedfrom 27% to 53%. The biggest shift came fromolder exiles, who went from only 17% in favorbefore the concert to 48% afterward.“We proved people wrong both here and

over there. The Juanes concert was a tippingpoint in terms of our perception, and it’ssomething we can point to that was historic, awatershed moment,” said Gorordo, whorecently gave up his job at Liberty Power towork full-time for Roots of Hope.The organization is 100% funded through

private donations, he said. This year, its budg-

2009 State Department cable saying terror-ism was unlikely to originate in Cuba.If Cuba isn’t a terrorist threat, they say,

then victims shouldn’t collect assets underthe Terrorism Risk Insurance Law.But DeMaria insists the Anderson fami-

ly’s reward is well-deserved. “Their father,Mr. Anderson, owned gas stations and otherbusinesses in Cuba. He had gone downthere in the pre-Castro era and made invest-ments that got expropriated. So they sawthis money as their inheritance, somethingtheir father worked hard for.”Others have also won judgments in

Florida. Brothers Gustavo and AlfredoVilloldo, for instance, were awarded $1.179billion in the wrongful death case of theirfather, who killed himself after the Castro

Tracey Eaton, former Havana bureau chiefof the Dallas Morning News, lives in St. Augus-tine, Fla., where he teaches journalism, writesa blog and contributes regularly to CubaNews.

regime took his General Motors dealer-ship and other businesses.But collecting the money hasn’t been

easy. DeMaria said he spent three yearson the Anderson case and is proud of thework he did — though he expects thefight for Cuban assets to continue.“You still have hundreds of millions of

dollars in judgments out there,” he said,suggesting that a claims tribunal be set uponce the Castro era is over and Cubawants to “get into the good graces” of theUnited States.“You say to Cuba, if you want to open up

commerce and have relations with theU.S., you’ll have to pay off these claims.” q

Assets— FROM PAGE 4

Journalist and photographer Larry Luxner isthe editor of CubaNews. For more information,write to Raíces de Esperanza/Roots of Hope, POBox 260486, Miami, FL 33126-0486. Tel: (305)735-1868. URL: www.raicesdeesperanza.org.

she said. In U.S. financial cases related toCuba, violators are subject to fines of up to$100,000 for individuals and $1 million forentities, or up to twice the pecuniary gainarising from the violation.

Officers and others who knowingly partici-pate in a violation can be fined up to $100,000or jailed up to 10 years. Property may also beforfeited, Hernández told CubaNews.Hernández had one instance where cash

was unblocked; it involved a Latin Americanfirm that sells food to Cuba. A bank in CentralAmerica had mistakenly routed a Cuba-relat-ed payment exceeding $100,000 through abank in the U.S., where the money was seized.Hernández was able to prove that a similar

sales of food products by a U.S. companywould be legal, under a 2000 exemption to theembargo that lets U.S. exporters sell food toCuba for humanitarian purposes.Authorities allowed the bank to release the

cash — much to the client’s delight.There’s no exact tally on how much money

is blocked in U.S. banks that is not directlylinked to the Castro regime.Lawyers filing claims against Cuba for U.S.

clients say most cash directly traceable to theCuban government has been tapped and paidout. Much of the new money being seizedcomes from small businesses, small banks orindividuals accidentally tripped up by OFAC’sarcane rules.“Most international transactions with Cuba

are structured to avoid U.S. banks,” explainedRobert Muse, a Washington attorney whospecializes in Cuba issues.OFAC declined comment on a breakdown

of blocked funds. Its latest annual “TerroristAssets Report” lists $223.7 million in allblocked funds related to Cuba in 2009, anamount relatively steady for years.The tally was $231.8 million in 2008 and

$268.3 million in 2005, OFAC reports show.That total means little, however, to the

small business owner from Europe or LatinAmerica who finds his Cuba-related moneyfrozen in a U.S. bank because his bank slippedup.Hernández has had clients come to her

office, upset and frustrated. She tells them notto expect the money back, noting that in mostcases, “OFAC won’t budge.” q


of pre-crisis levels. As the costly state paddiesbecame unsustainable in the ‘90s, the govern-ment began to encourage cooperatives andindividuals to produce rice in tiny plots (0.6acre per farmer) even with very low produc-tivity as a way to alleviate the food deficit anddeflect the rising cost of imported rice.The so-called “popular rice” initiative was

successful and Cuba recovered, albeit briefly,its lost production capacity. But droughts andpoor supplies limited further growth.Highly subsidized prices and low wages

are not great incentives. The governmentpays 2.80 pesos (9¢) per pound of producedrice, even though the prevailing world marketprice is 24¢/lb.For a small farmer growing 0.6 acres

leased to the government that means a grossincome of $198 per year, assuming an averageagricultural yield of one ton per plot.

IMPORTS REACH RECORD LEVELS

Cuba’s annual per-capita rice consumptioncurrently exceeds 155 lbs, up from 110 lbstwo decades ago.At the same time, Cuba’s is now importing

record amounts of rice, and the countryseems unable to reverse that trend. As therest of Cuba’s domestic food production fails,authorities are compelled to boost rice im-ports as the most cost-effective commodity.Large rice paddies grow better in rich allu-

vial low plains with poorly drained soils alongCuba’s south coast, but the “popular rice” ini-tiative has spread cultivation to higher landselsewhere.Although the large paddies receive 40 to 50

BY ARMANDO H. PORTELA

With imports on the rise, domestic pro-duction softening, world market pri-ces double those of five years ago

and Cuba’s cash-strapped economy desperatefor new sources of income, the supply of ricefor Cuba’s 11.2 million inhabitants has be-come an urgent matter for the Castro regime.Apparently Cuba has reached its maximum

capacity to produce rice under prevailing con-ditions. The bottom line: with the likelihoodof future investment in state-run farms verylow and with farmers discouraged by poorincentives, don’t expect any rapid increase inrice production.Rice is a traditional a staple of the Cuban

diet, and time has only increased its signifi-cance. Despite good growing conditions,however, rice now accounts for up to 20% ofCuba’s food import bill.In the past, the cultivation of sugar cane

was blamed for Cuba’s limited success in ricecultivation, since sugar cane demands vastgrowing areas, uses the best soils and occu-pies most of Cuba’s agricultural labor force.But with sugar output now only 15% of what

what it used to be, and the amount of landunder sugar cultivation slashed by 60% since2002, this can no longer be a valid excuse.Rice cultivation is suffering from an acute

shortage of labor, with some paddies havingjust one man to care for 120 acres or more.Up until 1990, Cuba depended on large

state-owned rice plantations for rice produc-tion. Planned back in the years when fuel,machinery, fertilizer and labor were in abun-dance, those paddies in the provinces of Pinardel Río, Matanzas, Sancti Spíritus, Camagüeyand Granma accounted for the majority ofCuba’s rice output.But after 1990 the shortage of essential

supplies depressed rice production to a third

AGRICULTURE

Rice imports surge despite ideal growing conditionsinches of rain per year and are crossed bysome of Cuba’s largest rivers, most paddiesare irrigated. To guarantee the constant sup-ply of water required to grow rice, dozens offresh-water reservoirs and hundreds of kmsof master canals provide a crucial link.However, decades of neglect have badly

damaged Cuba’s irrigation infrastructure.Presumably irrigation has also triggered thesalinization of soils and groundwater, furtherreducing agricultural yields. q

This is the 3rd in a series of articles by ourcorrespondent Armando H. Portela that examinevarious sectors of Cuban agriculture. In our nextissue, we’ll take a look at Cuba’s coffee industry.

Havana-born Armando Portela, a contributorto CubaNews since the newsletter’s birth in 1993,has a Ph.D. in geography from the Soviet Aca-demy of Sciences. Portela resides in Miami, Fla.


LETTERS TO THE EDITORSETTING THE RECORD STRAIGHT ON CLAIMS

The expropriation of American property inCuba was not the result of President John F.Kennedy deciding not to buy Cuban sugar, asstated in a recent article in CubaNews.It was President Eisenhower who did not re-

new Cuba’s sugar quota as a response to thoseexpropriations, which occured in mid-1960.JFK instituted the embargo later, when com-pensation (as required by law) was not forth-coming. The expropriations are the reason forthe embargo of Cuba, not vice-versa.U.S. certified claimants, of which I am one,

remain uncompensated for these expropria-tions to this day — as are hundreds of thou-sands of Cuban-Americans and millions ofmore people in Cuba itself. U.S. law requiresthat these claims be resolved before theembargo can be lifted.I believe that resolution of the property

rights issue is the key to prosperity in Cuba. Americans who seek to engage Cuba in

commerce and travel will not enjoy similarprotections in Cuba as they do at home. Assuch, there are no transparent enforcementagencies , no contract sanctity and no inde-pendent judiciary to resolve disputes.Establishing “clear title” in Cuba will draw

the necessary capital from both the previousowners as well as international investors torevitalize Cuba’s infrastructure and economy.This is not the view of a latifundista looking

to recover his old house and throw a familyonto the streets (a common myth), but theexperience of a Cuban who accepts that Cubahas changed and, despite abundant resources,remains destitute.In this context, no one is taking greater

risks than those like me — “partnering” witha regime that, history demonstrates, essential-ly converted legal expropriations into theft.Repression and corruption are the only

means to defend these unjustifiable acts; con-ditions that worsen as the regime “reforms.”Consider the hypocrisy: now the Cuban gov-

ernment wants to “reprivatize” many of thesevery same properties.Some argue that property claims are irrele-

vant after 52 years. The same argument couldbe made regarding the Holocaust or repara-tions for slavery — but not in law-abiding,progressive societies. Failure to address andresolve the property issue will haunt Cubaand its partners for years to come.

— Javier García-BengocheaJacksonville, FL

KUDOS FROM A PRESIDENT

I’ve just received your issue containing Dor-een Hemlock’s article about my company (seeCubaNews, December 2010, page 14).Having had some really atrocious reporting

in the past, I compliment you on the article.I don’t think anyone has ever so clearly and

concisely captured the essence of our organi-zation as you did. Thank you very much.

— Paul A. Schuler, President and CEOClean Caribbean & Americas, Davie, FL

The U.S. Rice Producers Association “applauds the Obama administration” for loosen-ing restrictions on academic, religious and cultural travel to Cuba, but said in a Jan. 14press release that U.S. laws regarding Cuba must change further.

“USRPA urges Congress and the administration to enact broader reforms to restore therights of American citizens to travel and sell food to our Cuban neighbors,” said the Hous-ton-based organization, which represents rice farmers in Arkansas, California, Lousiana,Mississippi, Missouri and Texas.

USRPA notes that a bill sponsored by Rep. Colin Peterson (D-MN) but which died in com-mittee, “would have created exponential growth for U.S. exports to the Cuban market bylifting the requirement for Cuba to pay for agricultural goods through third-country banks.It would also remove the travel ban, which would increase demand for agricultural productsand the resources Cubans could use to pay for them.”

The rice growers’ group cited a 2009 International Trade Commission study projectingthat U.S. exports to Cuba would jump by nearly $500 million if those travel and bankingrestrictions were abolished. Rice exports would fare particularly well, considering thatCuba was the top market for American rice before the 1959 revolution.

Marvin Lehrer, senior advisor on Cuba for the USA Rice Federation — which representsmainly exporters — told CubaNews: “Anything that improves the Cuban economy is goodfor the U.S. rice industry because the problem of not being able to buy rice from the U.S. isan economic one. So these measures are a very good beginning. We’ve been on record for15 years as opposing the embargo as no longer necessary.”

For nearly three years, said Lehrer, U.S. exporters haven’t shipped a single grain of riceto Cuba. State-run purchasing agency Alimport prefers to source rice from Vietnam — buy-ing 400,000 metric tons annually — because the Vietnamese offer Cuba soft credit terms.

Overall, U.S. food sales to Cuba fell by 30% from January through November comparedwith the same period in 2009, meaning trade has fallen by half in the last two years, accord-ing to the New York-based U.S.-Cuba Trade and Economic Council.

Cuba imports about 60% of its food, and the United States has been its top provider foryears despite political tensions and the nearly 50-year-old trade embargo. Yet U.S. foodexports to Cuba through November were $344.3 million compared with $486.7 million dur-ing the same period in 2009, according to USCTEC.

The Castro regime can only buy U.S. farm goods with cash, under a 2000 exemption tothe embargo — but Havana is cash-strapped due to the impact of three hurricanes in 2008,the global financial crisis and its inefficient state-run economy. As a result, Cuban purchas-es of U.S. frozen poultry, wheat, soy products, corn, beans and other products peaked at arecord $710 million in 2008, falling 24% to $528.5 million in 2009.

The report said Cuba was turning more to countries such as Brazil, France, Canada,Russia and China where it could purchase food on credit. The communist-led island wasalso giving preference to state-run suppliers over private ones, the report said.

Details: Marvin Lehrer, Senior Advisor/Cuba, USA Rice Federation, 4301 N. Fairfax Dr., #425,Arlington, VA 22203. Tel: (703) 236-2300. Fax: (703) 236-2301. Email: [email protected].

OR: Dwight Roberts, President, U.S. Rice Producers Association, 2825 Wilcrest Dr., Suite #505,Houston, TX 77042. Tel: (713) 974-7423. Fax: (713) 974-7696. URL: www.usriceproducers.com

U.S. RICE EXPORTERS PRAISE NEW TRAVEL RULES


for most of the increase, while revenues fromtourism and communications also went up.Some 75% of Cuban exports come from

services such as tourism, communicationsand the export of doctors and other profes-sionals to countries like Venezuela, Angola,Algeria and Qatar, which pay for the serviceson a sliding scale linked to oil prices.Prices for oil rose significantly in 2010, as

they did for Cuban exports nickel and sugar.The latest ONE numbers appeared to cor-

rect recent statements by Economy MinisterMarino Murillo, covered by the official media,that exports had increased 41.5% last year,though authorities were not immediatelyavailable for comment.Local analysts estimated Cuba’s current

account registered a surplus of about $1 bil-lion in 2010, though little data was available.Many debts to governments and business

were restructured or went unpaid in 2009, for-eign company bank accounts frozen, divi-dends owed joint venture partners postponedand imports cut a staggering 37%.Castro said in December that all frozen

accounts would be settled by the end of 2011.Western diplomats and businessmen said

Cuba was gradually unblocking the funds butat the same time still moving slowly on for-eign debt payments and dividends owed itsforeign partners operating in the country.Cuba last reported its foreign debt at $17.8

billion in 2007. Analysts say it now standsabove $21 billion, or close to 50% of GDP andsome 25% more than annual export revenues.Cuba’s growing debt and service payments

are a key reason for President Raúl Castro’spush to overhaul the nation’s Soviet-style eco-nomy, according to government insiders.The reforms, to be discussed at the Sixth

Communist Party Congress in April, includedrastic budget cuts, massive layoffs and anend to generous state subsidies. q

abroad bore fruit for a 2nd consecutive year,Reuters reported Jan. 7, quoting ONE figures.The surplus was nearly twice the $2 billion

reported in 2009 — great news for Cuba, butonly a first step toward getting its debt-riddeneconomy out of the woods.Cuba has been struggling with severe fin-

ancial problems since 2008, when hurricanes,

Towards the end of last year, the Cubangovernment predicted it would finish2010 with a GDP growth of 1.9% (see

box). Cuba’s Oficina Nacional de Estadísticas(ONE) later fine-tuned its preliminary num-bers, putting 2010 growth at a respectable2.1% and forecasting that the economy willgrow by 3% this year.But even that 2.1% seems wildly unrealistic

when you look at the whole picture.That’s because ONE uses non-productive

sectors to calculate GDP growth, skewing thenumbers.For example, communal services rose 3.5%

last year, public education was up 4.5% andpublic health jumped by 5.7%. The two biggestwinners — science and technology and cul-ture and sports — shot up by 7.8% in 2010.Yet the only productive sector of Cuba’s

economy to show any impressive growth wasmining (up 8.2%), followed by hotels and res-taurants (up 6.3%).Meanwhile, transport rose by only 2.8% and

manufacturing a minuscule 1.5%.Even more alarming were the number of

productive sectors that registered declines:public utilities (down 0.8%); agriculture (down2.8%); fisheries (down 4.2%); construction(down 12.2%) and sugar (down 16.4%).It makes little sense, for example, that the

value of science and technology (218 millionpesos) was higher than the value of the sugarindustry (185 million pesos) — or that cultureand sports (1.9 billion pesos) is worth morethan the entire agriculture, cattle and forestsector (1.76 billion pesos).Taken as a whole, it appears to CubaNews

that while Cuba’s non-productive sector grewby 4%, its productive sector — the part thatactually matters — shrank by 1.4%.Nevertheless, the island racked up a $3.9

billion trade surplus in 2010 as President RaúlCastro’s efforts to cut imports and earn more

the global financial crisis and internal ineffi-ciencies left it without funds to pay its bills.ONE said 2010 exports rose 12.9% to $13.6

billion, led by the selling of services at $9.4billion. Imports fell 3.3% to $9 billion.Higher prices for Cuba's main exports —

nickel, petroleum derivatives and medical andother technical services — likely accounted

ECONOMY

Cuba claimed 2% growth in 2010, but numbers can lie


MARKETING

Coke finds ways to penetrate Cuba’s thriving cola marketBY VITO ECHEVARRÍA

When The Coca-Cola Company decid-ed to go global in 1906, one of thefirst countries it expanded to was

Cuba. And, as any bartender knows, Coke isone of two crucial ingredients in a “Cubalibre” — the other being rums.

Yet despite the long association betweenthe world’s most famous brand name and oneof its last remaining communist states — andthe fact that current U.S. law explicitly allowsCoca-Cola to ship its products directly toCuba — the only Coke actually sold on theisland comes not from the United States butfrom Mexico, Brazil and other countries.

CubaNews asked Kenth Kaerhoeg, a mediarelations official at Coke’s Atlanta headquar-ters, why that is.“To the extent that some of our products

are available in Cuba, it is not through a com-pany-authorized bottler or distributor but viaindependent third-party distribution,” Kaer-hoeg told us.That’ll change, of course, once the U.S.

trade embargo is lifted and Coke can onceagain establish bottling plants on the island,as well as a local distribution system.Until that happens, the company is unlikely

to change its current policy. Said Kaerhoeg:“We do not comment or speculate on potentialfuture actions of our company.”

NAME RECOGNITION STILL STRONG ON ISLAND

One obvious explanation for Coca-Cola’slow-key policy is that it doesn’t want to offendthe powerful Cuban-American community inSouth Florida. Another is that market condi-tions inside Cuba aren’t yet lucrative enoughto warrant the investment of shipping itsproducts directly to the island.Coca-Cola still officially holds a $27.5 mil-

lion claim against the Castro regime for con-fiscating its plants in 1961, though that seemsa drop in the cola bucket compared to thecompany’s $31 billion in fiscal 2009 revenues.Even so, “in 1977, Paul Austin [chairman

and CEO of Coca-Cola Co. from 1966 to 1980]quietly flew to Cuba, where he held secretmeetings with Fidel Castro — presumably tonegotiate the company’s return to the coun-try,” writes Mark Pendergrast in his 2000bestseller “For God, Country and Coca-Cola.”“His mission failed, except for some

Havana cigars which Castro sent to RobertWoodruff [president of Coca-Cola from 1923to 1954] by way of Austin. Having promisedPresident Carter that he would report on histrip, Austin met with him briefly in the WhiteHouse,” said Pendergrast.“When acid-penned William Safire learned

of the episode, he concluded that it was anefarious scheme to obtain Cuban cane. ‘TheCarter-Coke-Castro sugar diplomacy is notmerely a potential conflict of interest, wroteSafire. ‘It’s the real thing.’”

TuKola is sweeter and cheaper than Coca-Cola.

Despite Coke’s official absence from theCuban market for nearly half a century, itsname recognition is still high. According to a2006 survey on brand awareness in Cuba con-ducted by marketing experts Emilio Moralesand Joseph Scarpaci, Coca-Cola ranked ninthamong all global brands in Cuba for brandawareness — making it more recognizableamong average Cubans than Panasonic, LG,Christian Dior, Nestlé and Calvin Klein (seeCubaNews, January 2011, page 14).Yet it’s not clear how Coke would stack up

against the island’s local cola brand, TuKola.“It’s a hypothetical question. My opinion is

that if Coke were around and were affordable,folks would drink it,” Scarpaci said, addingthat “TuKola is about half the price of Coke.”

COMPANY IS CAREFUL NOT TO OFFEND EXILES

Mauricio Claver-Carone, director of the US-Cuba Democracy Political Action Committee,points out that even if it succeeded at sellingdirectly to Cuba, the company would have“only one potential client” — state purchasingagency Alimport.“For Coca-Cola to truly benefit from doing

business in Cuba, it would have to be able tofreely market its products at competitiveprices. That can only happen upon Cuba’sfood and trade monopoly ending, and a freeand competitive market taking shape,”Claver-Carone told CubaNews.

“Doing business right now only with Cas-tro’s monopoly would represent a pittance ofbusiness,” he added.“It doesn’t need to take any risks as its

name recognition among Cubans is alreadyhigh, so it has nothing to gain from supplying

Castro’s anti-competitive monopoly. When Isay risks, I mean disappointing the Cuban-American community, which has a long anddeep relationship with Coca-Cola.”That “deep relationship” the anti-Castro

lobbyist refers to was embodied by Cuban-American businessman Roberto Goizueta,who was Coke’s CEO from 1980 until hisdeath in 1997.Goizueta’s career with Coca-Cola predated

the revolution. In pre-Castro Cuba, he waschief technical director for five Coca-Cola bot-tling plants. In 1960, he fled to Miami andjoined Coca-Cola USA, working his way upthe corporate ladder from there.Goizueta made sure his company officially

had nothing to do with Cuba — a policy thatcontinued even after his death.“He wasn’t one of those Cubans who was

active in Cuban-American politics,” said Dan-iel LaFuente, a spokesman for the Miami-based Cuban American National Foundation.“While Goizueta never extravagantly high-

lighted his Cuban heritage, as he could have,he was very much an American businessmanand I am sure that this legacy of not havingCoca-Cola USA deal with Cuba is a legacy ofhis tenure.”

DOES COKE REALLY HAVE IT BOTH WAYS?

Nevertheless, unlike rival PepsiCo, whosepresence on the island is relatively small,Coke has a major presence in Cuba throughits Mexican bottler, Coca-Cola FEMSA de CV.Some might argue that Coke has it both

ways with Cuba; the parent company in At-lanta can deny that it’s doing business direct-ly with the Castro regime, thereby placatingthe hardliners in Miami, while its Mexicanbottler is quietly generating sales in Cuba.But CANF’s LaFuente doesn’t view things

quite so cynically.“I don’t think they are playing it both ways

necessarily,” he told CubaNews. “When youconsider the difference in product [high-fruc-tose corn syrup vs. sugarcane], it might bethat the product being made in the U.S. [withcorn syrup] wouldn’t be as popular in Cuba asits sugar-filled counterpart from Mexico.”With political hardliner and pro-embargo

congresswoman Ileana Ros-Lehtinen (R-FL)enjoying her new status as chair of the HouseForeign Affairs Committee, it might makeeven more sense for Coke to keep its distancefrom Cuba these days.“While I don’t think it would cause serious

ramifications to Coke’s performance in theU.S. or in Miami,” said LaFuente, “it’s correctthere’s a possibility of particular congression-al leaders making a bigger deal about Cubathan they should.” q

Vito Echevarria, a New York-based freelancejournalist, writes regularly for CubaNews aboutbusiness, e-commerce, the arts and entertainment.

Editor Larry Luxner contributed to this article.

JO

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BY EMILIO MORALES & JOSEPH L. SCARPACI

The global economic crisis hasn’t puteven a dent in remittances sent to Cubain 2010. On the contrary, money wired

to the island last year was on course to exceed2009 levels by 16.2%.At no time since Cuba’s economic opening

in 1993 have remittances — which now standat $2 billion — hit this high-water mark.It’s almost as if Presidents Raúl Castro and

Barack Obama had dreamed up this schemetogether. But a few factors explain this timelyconfluence of policies on both sides of theFlorida Straits.For starters, the allowable daily maximum

was increased to $5,000. In addition, insteadof traveling to Cuba once every three years,Cuban-Americans could now visit immediateand extended kin as often as they wish.

ANOTHER CAMPAIGN PROMISE FULFILLED

Self-employment categories have expandeddramatically, so more downsized public work-ers can ply their trades in new professions.And what better source of capital for these

budding entrepreneurs than family cash giftsfrom South Florida?The clincher is that Raúl Castro announced

on Dec. 20 that not only are these policychanges unprecedented, but as far as he’sconcerned, they’re irreversible.Soon after arriving in the White House,

Obama fulfilled one of his Cuba-related cam-paign promises by increasing the amount ofmoney that could be sent, and by allowing un-limited family visits by Cubans in the States.Two years of these policies have unleashed

a considerable amount of capital on the

island, as well as planeloads of U.S. merchan-dise arriving in the form of gifts for lovedones (see CubaNews, October 2010, page 13).For a cash-poor island of 11.2 million inhab-

itants, the new regulations are impressive:limits rose from $300 every three monthsunder the Bush administration (sent only toimmediate family), to $5,000 daily to nuclearfamily members as well as close relatives(first and second cousins, aunts and uncles).

$2.2 BILLION IN CASH AND GOODS EVERY YEAR

And now, under new rules just announcedJan. 14, any American may send up to $500per quarter to any Cuban — excluding seniormembers of the government or Communist

SPECIAL REPORT

Washington, Havana line their nests with remittances

Party — to support “private economic activity.”Many companies that wire money have

lowered their fees for Cuba, which were thehighest in Latin America and the Caribbean.Western Union, the world’s largest money-transfer entity, cut its 2009 rates by half.Until December 2010, WU was required to

send money from the United States to Cuba inU.S. dollars, whereas other money-transfercompanies could wire in pesos convertibles(CUCs), valid only in Cuba. Now that WU canwire funds in CUCs, loved ones on the islandwon’t be subject to a 20% ‘fine’ tacked on at theCuban end of the transferEven though WU has 151 outlets through-

out Cuba, the company lost its market leader-ship position because of the 80-cents-on-the-dollar restrictions. That should change withnew regulations issued by the U.S. TreasuryDepartment’s Office of Foreign Assets Con-trol (OFAC), which raise the maximum wireamounts from $5,000 to $10,000.Two out of three Cubans on the island now

receive money from their families overseas,and 80% of it comes from the United States —mostly from the roughly one million émigréswho have left the island since the 1990s.Wire transfers, however, constitute only

half of the resources reaching Cuba. Reliableestimates are that another $2 billion arrive onthe island in the form of medicine, clothing,shoes, food and other products. That means$4 billion in aid will have reached two-thirdsof the Cuban people in 2010.Over the past 17 years, we estimate that $18

billion in cash and $19.5 billion in merchan-dise has entered Cuban households. Thattranslates into an average annual rate of $2.2billion, and a grand total of $37.7 billion inunder two decades.

CUBA FERTILE GROUND FOR B2B TRANSFERS

The Obama administration’s relaxation oftravel restrictions led to a 120% rise in Cuba-bound air passengers in 2010 over 2009.Nearly 400,000 exiles visited Cuba last year,making them the island’s 2nd-largest sourceof tourism after Canadians.The rise in charter flights means that four

Cuban cities — Havana, Camagüey, Holguínand Santiago de Cuba — are now regularlyserviced, carrying more than 1,000 Cubanand Cuban-Americans to the island daily. Theweekend before Christmas 2010 registered 55flights alone.High season in November and December

generated more than 20 flights daily. Recentlyannounced economic changes could meanthat 30% of these trips are really business-to-business (B2B) ventures. How so?There’s reason to believe that around

120,000 Cuban-Americans are helping familymembers invest in small, legitimate business-es that are authorized by the government. Nolonger are self-employment and the blackmarket the only ways to earn a living outsidethe public realm.Business trips should produce a consider-

able increase in remittance totals. Theyreflect more than a chance help out familymembers and invest money.In fact, Cuba is fertile ground for multiply-

ing B2B capital transfers, not just for thosewho live there but also for Cuban-Americanswho lack work because of the economic crisisin South Florida.These ventures could turn into thousands

of small international businesses, with ‘silentpartners’ just north of Key West.

RELAXED CARGO RULES HAVE HELPED TOO

Lifting travel restrictions has also helped toslash package shipment rates to Cuba by almost60%. In textbook-like fashion, as prices havedropped, demand has risen — and so too hasthe number of packages shipped to Cuba.Tom Cooper, president and owner of Miami

See Remittances, page 13


Gulfstream Air Charter, whose firm operatesdaily flights of 146-seat Boeing 737 aircraft,reports that the average weight rose from 85lbs (38.5 kg) to 132 lbs (60 kg) of baggage perpassenger.“The first 44 pounds are free,” Cooper said.

“From there on, you have to pay a dollar perpound, the industry average.”No doubt, family reunification has been a

huge motivator among the Cuban diasporaduring he past 20 years. This sets them apartfrom the émigrés of the first 20 years follow-ing the 1959 revolution.Such generational differences among the

diaspora — combined with material depriva-tion on the island, the series of crises thatthose back home have confronted and ayearning to be with loved ones — will likelydrive travel and remittance trends over thenext few years.In short, Cuban society today differs great-

ly from what it was a half century ago, andeven 17 years ago when the first economicopening took hold.

CELLPHONES A KEY DRIVER IN REMITTANCES

Allowing all Cubans to possess and use cell-phones without fear of sanctions contributedto the 14.24% increase in remittances sent in2009 compared to the year before.In the three years since the prohibition was

eliminated, mobile phone use has surged.As of August 2010, Cuba had one million

cellphone lines in service. Interpreting thisphenomenon means moving beyond a simpleassessment of satisfying untapped demandafter so many years.Instead, we posit that it reflects the ability

of Cubans to adapt rapidly, when allowed, totechnological changes — as well as to satisfytheir desires for a better standard of living.Usage data indicate that in just three years,

Etecsa (the Italian-Cuban joint-venture tele-

com monopoly) earned nearly $684 million ingross revenues from cellphones alone, notcounting landlines and fax lines.Some 90% of that total came from remit-

tances. By 2013, we expect 1.4 million cell-phones to be in use, which will add another$737 million to Etecsa’s revenues.Once again, this will be financed largely by

remittances sent by Cubans living overseas.Cellphone activation and service rates shoulddrop by 2013 as mobile telephony becomes anengine in B2B transactions, playing a key rolein consolidating the private sector.Raúl Castro’s key priority is restructuring

the Cuban economic system. His efforts are

Emilio Morales, former marketing directorat Cuba’s state-owned CIMEX SA, and JosephScarpaci, emeritus professor of geography atVirginia Tech, wrote this article for CubaNews.

Details: The Havana Consulting Group.URL: www.thehavanaconsultinggroup.com.

but as a supply-chain mechanism to help dis-tribute agricultural goods and industrial in-puts essential for entrepreneurship.Furthermore, liberalizing automobile and

truck sales could boost Cuba’s total annualremittances from the current $2 billion to asmuch as $3 billion.Most new car buyers now face a byzantine

state-controlled car lot of mostly older vehi-cles; current car and truck owners have moreflexibility in selling their cars to individualprospective buyers.

CUBA TO BECOME TOP REMITTANCE RECIPIENT

With help from the diaspora, Cubans couldpurchase between 50,000 and 80,000 vehiclesin the first year following the new measures.About 80% of those autos would be used, butthe new-used ratio should change over time.The Obama government policy changes

announced in December increased allowablewire transfers from $5,000 to $10,000. This isan undeniable signal that available credit todevelop Cuba’s private sector is coming fromfamily members residing off the island.New remittance levels could place Cuba as

the top recipient of business remittances inLatin America and the Caribbean.Is all this the result of a secret courtship

between Washington and Havana? Analystswill have to wait a few months to find out, butit looks like the honeymoon nest is beingfeathered with cash. q

being hotly debated at all levels of society,even though the real decision-making is con-fined to a small cadre of Raúl’s top advisors.Still, the return to a budding private sector

is a crucial component of the new proposal,something Raúl described as “irreversible.”Private-sector openings in 1993 barely

pulled a desperate Cuba out of the SpecialPeriod over the ensuing seven years.On a scale of one to ten, the current reform

proposals register a tepid 5, where as the1993 changes were a moribund 1.The new model requires equally new meas-

ures to jump-start it. Firing 500,000 workerswas challenging, but within just two months

Cubans have filed 100,000 applications tostart new businesses.Such a wave of mass firings will test to what

extent Cubans are willing to meet this chal-lenge, and at what point these shock meas-ures are acceptable.The Castro regime should have a ‘Plan B’ at

the ready, in order to avoid a social crisis justin case this massive downsizing backfires.Recent announcements to consider the

authorization of buying and selling cars couldbe an energizing force in restructuring theCuban model.It would mark a long stride towards a mar-

ket economy, not so much for private travel,

Remittances — FROM PAGE 12

BOOSTING PURCHASING POWER AND CONSUMPTION IN CUBA


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If your organization is sponsoring an upcoming event, please let our readers know! Faxdetails to CubaNews at (301) 949-0065 or send e-mail to [email protected].

Jan. 24: Exclusive screening of clandestine documentary about the plight of human rightsactivist Dr. Oscar Elias Biscet. Film will be shown at the Rafik Hariri Building on the campusof Georgetown University, Washington. Details: Kate Reid, Hispanic & Latin American Student

Association, Georgetown University. Email: [email protected]. URL: www.oscarscuba.com.

Feb. 3: “Outlook on the Americas” luncheon, InterContinental Hotel, Miami. Speakers: JoséFernández, assistant secretary of state for economic, energy and business affairs; EduardoSolorzano, CEO of Wal-Mart Latin America; Susan Kaufman Purcell of the Center for Hemis-pheric Policy, and Jeffrey Schott of Peterson Institute for International Economics. Cost: $75.Details: Allison Parmiter, Association of American Chambers of Commerce in Latin America, 1615

H Street, NW, Washington, DC. 20062. Tel: (202) 463-5573. Email: [email protected].

Feb. 7-11: Informática Habana 2011, Palco, Havana. 14th International Convention & Fair.Cost: CUC 300 . Details: Palacio de Convenciones, Calle 146, e/11 y 13, Cubanacán, La Habana.

Tel: +53 7 202-6011. Fax: +53 7 202-8382. URL: http://evento.informaticahabana.com.

Mar. 15: Lecture by Gen. Gustavo Chui, London Metropolitan University. Chui is co-authorof book, “Our History is Still Being Written: The Story of Three Chinese-Cuban Generals inthe Cuban Revolution.” No charge. Details: Stephen Wilkinson, Director, Center for Caribbean

and Latin American Research, London Metropolitan University, 31 Jewry Street, London N7 8DB,

England. Tel: +44 20 7320-3060 / +44 795 638-1640. Email: [email protected].

Mar. 31-Apr. 2: “Cuba Futures: Past and Present,” Bildner Center, City University of NewYork. 50+ panel discussions planned over a 3-day period, covering art, civil society, politics,dance, film, history, Santería, theater and urban life. Cost: $175 (students $35). Details: Bild-

ner Center for Western Hemispher Studies, Graduate Center/CUNY, 365 Fifth Avenue, Suite #5209,

New York, NY 10016. Tel: (212) 817-2096. Fax: (212) 817-1540. Email: http://cubasymposium.org.

Apr. 3-6: 12th Sustainable Tourism Conference, Fairmont Southampton, Bermuda. STC-12will bring together Caribbean and global tourism specialists to share their experiences insustainable tourism. Cost: $695. Details:Caribbean Tourism Organization, 80 Broad St., #3200,

New York, NY 10004. Tel: (212) 635-9530. Fax: (212) 635-9511. Email: [email protected].

Apr. 4-8: IV Cuban Earth Sciences Convention & Fair, Palco, Havana. Focus is on Cuban andCaribbean earth sciences. More than 600 abstracts already received; abstracts accepted untilJan. 30. Cost: CUC 260. Details: Palacio de Convenciones, Calle 146, e/11 y 13, Cubanacán, La

Habana. Tel: +53 7 202-6011. Fax: +53 7 202-8382. URL: www.cubacienciasdelatierra.com.

Apr. 23-May 5: US/Cuba Labor Exchange Seminar to Cuba. Includes one week of laborcourses at the Lazaro Peña School of the Cuban Workers Central Union. Hosted by the Con-federación de Trabajadores Cubanos. Price: $1,650 (inc. round-trip airfare between Cancúnand Havana; 2 meals a day, transportation, translation and visas). Details: US/Cuba Labor Ex-

change, PO Box 39188, Redford, MI 48239. Tel: (313) 575-4933. Email: [email protected].

CALENDAR OF EVENTS

february 2011 issue

Documents

millionto cuba

tappinginto cuban assets

cuban officials

cuban government

cuban communist party

charter flightsto cuba

thinkany new money

assets of anyagency