April 2001 | May 2001 | September2001 | February 2002 | August 2002

 

 

AMCHAM CUBA NEWSLETTER

 

                                                                                                 

APRIL 2002

TABLE OF CONTENTS

 

1. US Tourists and the US Travel Ban

2. Have US Sales to Cuba Stalled?

3. Cuba’s Economy Still Struggles

4. US Military Visitors in Cuba

5. US Firms Support Cuban Workers’  Rights

6. Cuban Human Rights Censured

7. Cuban Economic Studies Issued

 

In brief….

 

 

[The April newsletter is offered by Am-Cham Cuba President Bob Weekley, serving as guest editor.]

 

1.  Winter Brought Many Visitors (Officials and Tourist of all Kinds) to Cuba.  Cold months in North America, combined with revived interest in travel abroad, brought hordes of US visitors, official and unofficial, to the “forbidden island.”  Winter and spring saw a stream of visitors including congress-men, state politicians, lobbyists, businessmen, farmers, university students, and non-governmental organizations taking the legally licensed route, plus thousands coming via third countries.  The Adminis-tration has approved a visit by former President Jimmy Carter and his wife, responding to an invitation from Fidel Castro over a year ago.  Carter’s May 12-17 visit will be the first by a US president in or out of office since Castro assumed power.

 

“Travel Ban” Highlighted.  Increased numbers of visits has renewed question as to why Americans are the only nationality not free to travel there.  Some travel publications see an added benefit in visiting Cuba now, before it is “spoiled and commercialized” by US tourists after the US takes down its

wall.  Concurrently, more vigorous enforcement by the Treasury Department’s Office of Foreign Assets Control (OFAC) has raised American awareness of the singular restrictions on freedom to travel.  OFAC Director Richard Newcomb recently testified on Capitol Hill that there really is no ban on travel per se.  He claimed that US travelers are subject to “restrictions on ‘transactions’ related to travel,” that is, that it is the spending of money in Cuba on tourism that violates the Trading with the Enemy Act.  Newcomb acknowledged that some 200,000 Americans visited Cuba last year, both legally (with licenses) and illegally.

 

Senators Investigate “Travel Ban.”   Senator Byron Dorgan (D-ND) convened his Senate Appro-priations Subcommittee to hear testimony on Cuba travel restrictions and has committed himself to bringing the “travel ban” to a vote this year.  (In July 2001, the House of Representatives voted 240–186 to end enforcement of the “travel ban,” but the change didn’t become law.) “When a policy has been in place 40 years and is not working, it seems to me it is time to evaluate that policy,” said Dorgan. US Treasury Secretary Paul O’Neill came close to agreeing when he told the Senate Subcommittee that, if he had full discretion in applying his investigative resources, he would agree that they would be better spent hunting Al Qaeda terrorists than unwitting tourists to Cuba.  However, a prompt White House “clarifying statement” in O’Neill’s  name said he supports the travel ban. 

 

Cruise Lines Eyeing Cuba.  Before 1959, Cuba was a major hub for cruise passengers.  Today, with the increased interest in Caribbean cruising, market analysts estimate that at least 750,000 US cruise passengers a year would visit Havana in The first three years after the US travel ban is lifted, and that by the tenth year 1.8 million would be expected.

 

2. US Sales to Cuba: on Again, Off Again? 

 

Agriccultural Commodities.  After delivery in November 2001 of the first orders of some $36 million worth of US agricultural commodities, the Cuban import agency Alimport placed a second round of orders of about the same magnitude.  In the first round, over a dozen major firms delivered corn, wheat, rice, soy, and poultry.  However, the US-Cuba Trade & Economic Council says Cuba may cancel a third round because the State Department has revoked previously approved visas for Cuba’s chief negotiators and buyers including Alimport’s president.  Some executives of the American exporting companies see the visa cancellations as an Administration effort to make sales to Cuba difficult and to disrupt the budding trade.  Sales of farm products were authorized under the 2000 Trade Sanctions Reform & Export Enhancement Act (TSRA).  Senator Pat Roberts (R-KS) has asked the Bush administration to reverse itself, noting that the US visa revocations jeopardize future sales.

 

Other High Tech Sales to Cuba.  Brazil’s National Development Bank reportedly is providing export financing for Brazilian exports to establish wireless (cellular) phone systems across Cuba.  The Brazilian bank also finances other industrial products for Cuba.  Meanwhile, Spain is providing equipment and technology transfer for assembly of photovoltaic panels to provide power to facilities in remote locations throughout Cuba.

 

Recent Breakthroughs in Sales to Cuba Increases Pressures to Ease Sales Restrictions.    Watch for the 2002 Farm Bill to include provisions for more normalized trade rules.

 

But Trade With Cuba Has Its Risks.  On April 3, James Sabzali, a Canadian citizen living in Pennsyl-vania, and two fellow business executives who are US citizens, were convicted under the Trading With the Enemy Act for exporting water purification chemicals to Cuba via Canada.  The three face prison sentences and millions of dollars in fines.  Sentencing is scheduled in June.  Reuters reports a public outcry in Canada, major supplier to Cuba.  Sabzali, the Canadian, was in an especially acute bind because, if he had observed the US export restrictions on Cuba, he would have been guilty of violating a Canadian law Foreign Extraterritorial Measures Act  which makes observance of the US embargo a crime. 

 

US Energy Sector Sees Major Potential in Cuba.  The Cuba Policy Foundation (CPF) has released a new report: “The Potential for the US Energy Sector in Cuba” which concludes that US energy firms could earn “$2-3 billion annually in new revenue,” once the US lifts its trade embargo.  The report also foresees Cuba as a significant market for equipment and supplies for the oil and gas sector and notes that Cuba needs significant investment in energy generating capacity.  Substantial petroleum reserves,  3-4 billion barrels, are waiting to be tapped in the Cuban sector of the Gulf of Mexico, according to the authors.  This report can be found at the CPF web site, www cubapolicyfoundation org..

 

New oil strike.  CubaNews recently reported that a Canadian Joint Venture, Pebercan, is now producing up to 3,500 barrels per day from its new well, Canasi 5.  Pebercan plans to start drilling a sixth well in a field which now produces some 13,000 barrels per day.

 

3.  Cuban Economy Continues to Struggle.  The Cuban economy managed a 3% growth rate in 2001 despite a major hurricane, low prices for Cuban exports, and a global drop in tourism following September 11.  Hurricane Michelle damaged thousands of buildings and homes as well as telecommu-nications and other infrastructure.  Michelle damaged 54% of the sugar crop.  Tourism, hard hit by the global slowdown after September 11, was estimated for 2001 at about 1.8 million visitors, short of the 2 million goal; and earnings from tourism were off 8% from year 2000.  Prices for nickel, in which Cuba ranks sixth largest in world production, plunged in 2001.  New joint ventures with foreign companies continued to increase in 2001, but at a slower rate.

 

But Cuban Cigars Are Still Hot.  Cuba’s annual five-day cigar festival drew 600 cigar aficionados from 47 countries.  They attended luxury auctions, banquets, an art exhibit, visits to tobacco production areas, and other gala events.  Proceeds from the auction went to the Cuban health system.

 

4.  US Military Experts Visit Cuba’s Military Facilities and Bases.  In February, General (ret.) Barry McCaffrey, former “drug czar” and now a professor at West Point, and General (ret.) Charles Wilhelm, former Commander-in-Chief of  the US Southern Command, led a delegation of the DC-based Center For Defense Information (CDI) on its annual visit to Cuban military installations and talks with senior Cuban officials including President Castro.  Such US military visitors explore potential cooperative steps in the security field and seek to build long-term relationships with senior Cuban security officials, with the objective of improving cooperation and communication in coming years.  US delegations have visited defensive sites, military bases, lectured at Cuban military colleges and think tanks, and toured border guard installations.  Asked about the threat the Cuban military poses to the US, General McCaffrey said it is a “zero threat.”

 

Security Cooperation Could Stem Caribbean Drug Traffic .  With nearly two million tourists annually, Cuba is concerned about the possibility of a drug culture taking root, according the report of the CDI visit.  The Cuban archipelago’s thousands of tiny islands could be used by international smugglers.  Asked whether Cuba plays a role in the drug traffic, General McCaffrey said, “I see no evidence at all that the Cubans are in any way facilitating drug trafficking.  Indeed, I see good evidence of the opposite.  I strongly believe …Cuba is an island of resistance to drug traffic.”   More about the US – Cuba Cooperative Security Project can be found at www uscubasecurity org.

 

5.  AmCham Cuba and National Policy Association Solicit US Corporate Commitment to Cuban Workers Rights.  A recent letter to AmCham Cuba business members highlighted problems facing Cuban workers who can not organize freely and are subject to exploitative government policies.  A number of US firms have responded so far, endorsing the Principles for Private Sector Investment in Cuba, drawn up by the NPA.  The principles generally call for companies to: respect the worker’s right to organize freely, not condone political coercion in the workplace, protect of the right to hire and pay workers directly, avoid child labor, avoid work- place discrimination, encourage a healthy and safe working environment, and respect due process.  Endorsement of these principles is a step towards encouraging the normalization of commercial and diplomatic relations with Cuba.  More about the NPA principles can be found at www npa1 org.. 

 

6. Cuban Human Rights Issues on Center Stage.  As part of the run-up to the annual UN Human Rights Commission (UNHCR) meetings, the first months of the year witnessed Cuban government agitation and considerable inter-national discussion about Cuban human rights abuses. 

 

In the UN Commission, Cuba accused the US of pressuring Latin American countries to support a resolution censuring Cuba.  On April 19, a UNHRC resolution, passed by two votes (23-21 with 9 abstentions), called on Cuba to grant individual liberties (freedoms of speech, press, association, and assembly) and to accept a visit from a UN representative to assure compliance.  In a nod to Cuba’s apologists, the Commission recognized Cuban government efforts to “give effect to the social rights of the population despite an adverse international environment” – apparent reference to the US embargo of Cuba.

 

Within Cuba, dissidents say they have gathered 10,000 signatures to ask the Cuban National Assembly for a referendum on reforms.

 

7. Cuban Economy in Transition, ASCE Vol. 11 Published.  This 500-page tome of the Association for the Study of the Cuban Economy (ASCE) contains papers from the 2001 confer-ence -- provocative articles, essays, and data in Spanish and English.  Information on this, and previous volumes, is at www ascecuba org..  ASCE announces that its twelfth annual meeting will be held in Miami, August 1-3, 2002.

 

In brief –

 

Chilean-Cuban Joint Food Processing Venture Begins Sales in Cuban Retail Shops.  After several years of sales of some 40 processed food products to the tourist industry, and exported abroad, the Rio Zaza joint venture now is permitted to sell its products on the Cuban domestic market.  Last year Rio Zaza sales in Cuba were about $24 million.

 

Sister City Accord between the State of Pennsylvania and Province of Matanzas, Cuba.   President Castro and Michael Diven, Pennsylvania state Representative, were on hand to witness the signing.  Diven said he hopes the agreement for cooperation between Pennsylvania and Matanzas will help create a bridge between the two nations.  

 

Church World Service Attends 40^thGeneral Assembly of Cuban Council of Churches.  The Church World Service has humanitarian programs in some 80 countries and is a member of the US National Council of Churches.  After a five-day visit, Executive Secretary Rev. John McCullough said he was very impressed with progress made in health and agricultural programs in Cuba. 

 

US Business Executives Again Invited to Visit Cuba.  In cooperation with the Center for Cuban Studies, Alamar Associates is again hosting professional executives on a visit to Cuba June 4-7.  On this fully licensed trip, US visitors will meet with Cuba officials involved in managing its economy, and will visit selected sites such as Free Trade Zones, farmers’ markets, dollar retail outlets, and enterprise offices.  Alamar will also arrange smaller private meetings with Cuban counterparts.  Information is available at alacuba @aol.com or call 202-530-5234.

 

U. of Miami Announces $1 Million Grant for Research on Cuba’s Transition.  In February, the university’s Institute for Cuban American Studies (ICCAS) announced receipt of $1 million, first-of-its-kind grant from USAID (US Agency for International Development) for its Cuba Transition Project.  The pioneer academic program will examine the multiple issues affecting Cuba’s transition to democracy.

 

[The Chamber is been pleased to issue the April newsletter as submitted by Guest Editor: Bob Weekley. ]

 

*     *     *

 

As emerging events warrant, we will bring you more objective reports on US-Cuba relations and trends.  Meanwhile, we welcome your notices of meetings and opinions which we might share with other AmCham Cuba members and others interested in US business prospects in Cuba.

 

 Sincerely yours,

Phoebe Lansdale                                                                         April 25, 2002