AmCham Cuba Newsletter for July 2001

910 17^th St. NW, Washington DC 20006-2601, tel: 202-833-3548, amchamcuba@aol.org

TABLE OF CONTENTS

1. No sanctions relaxation for Bush

2. But Congressional initiatives seek to ease embargo

3. Trademark dispute surfaces again

4. Some Cuban indicators up

5. Others show economic difficulties   

6. New diplomatic and trade contacts

7. Castro waves his ideological flag

8. "Friends of AmCham Cuba", new, more select, membership category

9.  Documents and meetings offering analyses/contacts to Cuba-watchers

1. Bush consistent in opposing relaxation of sanctions.  Media reports say Bush will maintain his “moral” objections to the Cuba’s government until Castro “frees its political prisoners, holds democratic, free elections, and allows free speech”   ( - Karen deYoung, Washington Post).  To stem increasing “people-to-people” visitors to Cuba, the President recently ordered “stricter enforcement” of the embargo,” specifically asking Treasury “to enhance… enforcement capabilities of the Office of Foreign Assets (OFAC)” to tighten sanc-tions implementation, prevent “unlicensed and excessive travel”, enforce remittance limits, and try to assure that “humanitarian and cultural exchanges actually reach pro-democracy activities in Cuba.”  Bush embraces Congressional initiatives to fund Cuban dissidents, would overcome jamming of Radio and TV Marti broadcasts (he named longtime Spanish-language radio host Salvador Lew as its new Director), and asked for more funds for non-governmental organizations (NGOs) promoting pro-democracy programs in Cuba (- Reuters). 

The President’s key nominees for Western Hemisphere matters can be expected to carry out his views.  Elliott Abrams, Assistant Secretary of State for Inter-American Affairs under Reagan will join the National Security Council.  Ex-Ambassador Otto Reich, Reagan’s head of State Department Office for Public Diplomacy for LA and the Caribbean, has been nominated to be Assistant Secretary of State for the Western Hemisphere, but this nomination has been widely criticized and Reich was the subject of a 1987 US Comptroller General report criticizing “covert propaganda activities” to build US public support in support of Nicaragua’s contra rebels.  Bush named Roger Noriega, longtime aide to Senator Helms, to be US Representative to the Organization of American States. 

Regulations finally out on US food sales, effective July 26, will be “more restrictive than drafted but not as bad as feared”, Ana Radelat reported in the July CUBANEWS.  Prepared foods and agriculture products may be approved after case-by-case review of written contracts from Cuban buyers (see full commodity list at www.fas.usda.gov/itp /sanctions.html).  No US or private financing of sales will be allowed.

The regulations were stalled for some months because of Commerce/Treasury disagreements on how far the embargo would be eased.  In the end, Commerce won operating control and Treasury’s Foreign Export Control Office has only an oversight function.  Public comments may be made until September 10.  Medical sales will continue under 1992 Cuban Democracy Act rules.

However, not all of President Bush’s Cuba policies are endorsed by anti-Castro Cuba-watch groups.  Rep. Bob Menendez (D-NJ) decried Bush’s recent waiver of Title III of the Helms-Burton law that allows Americans to sue those using seized US properties in Cuba, as Clinton had waived it every six months.  Menendez said it was the act of a “dishonest and weak” president, insulting to Cuban-Americans, and hurtful to Cubans under the Castro dictatorship.  The Cuban American National Foundation (CANF) described Bush’s action as “not all that was hoped for.”   The EU welcomed the waiver.  The head of Cuba operations for the Spanish hotel chain Sol Melia, Gabriel Canaves, anticipating renewal of the waiver, said it was “pressing ahead…to consolidate its already dominant position on the Caribbean island where it manages 20 hotels.”   

2. Capitol Hill counters with initiatives to ease restrictions.  Congressional Democrats hope to prevail this year on incremental steps to soften of the embargo, like easing restrictions on sales of food and medicine, although not to seek a broad rollback of sanctions which could invite a Bush veto.  In fact, the House on July 25 voted 240-186 (67 Republicans, 172 Democrats) to lift the travel ban, but narrowly rejected (227-201) full repeal of the trade embargo.  Senate Republican leader Trent Lott (R-MI), supporter of the sanctions, said “the Senate may have to bow to reality and…lift at least the travel ban portion” (- Vicky Allen for Reuters), although political analysts suggest that this could jeopardize re-election hopes of both President Bush and Florida Governor Jeb Bush. Cuban officials and huge demonstrations in Cuba have urged complete lifting of the US embargo.  Meanwhile, the Heritage Foundation’s Daniel Fisk urges restructuring of several legislative initiatives to increase aid to nascent micro-enterprises and independent Cuban organizations so as to promote eventual democratic transition and uphold Cuban desires for self-determination.   

As a direct challenge to the trade embargo, Pastors for Peace, whose 90-person delegation took 80 tons of humanitarian assistance into Cuba via Mexico, announced this month that they would bring back a Cuban-made rat poison, again via Mexico, to benefit areas in the US where rat-induced health problems exist.  Although commercialized on other continents, Biorat is called “unsafe” by some nations.  There were media reports that the US disallowed the importation. 

3. Cuban & US trademark protection.  Panelists at a CIP (Center for International Policy) meeting June 7 examined Section 211 of the 1998 US Omnibus Appropriations Act, initially passed late at night, reportedly with support of industry lobbyists. This section of law prohibits the US from respecting trade-marks of Cuban origin.  Scholars, lawyers, and Cuban Interests Section representatives explained difficulties for US firms and for US-Cuba trade policy due to this  Section, the process of protecting trademarks in Cuba, and allegations of US violations of treaty commitments to Cuba.  They said Senator Baucus’ (D-MN) initiative to terminate it is unlikely to survive, but repeal may be possible by tacking a provision onto another potentially viable bill.  Trademark specialist Peter Weiss, Esq., stated that Congress can override treaties, but Article 62 of the Vienna Convention on the Law of Treaties allows a breach by one party to face reciprocal abridge-ment by the affected party, so application of Section 211 would give Cuba a legal basis for denying US trademarks.  Section 211 also violates an Inter-American Convention on trademarks.

Speakers were concerned that the WTO (World Trade Organization) might rule against US implementation of the provision, for example in favor of French-based Pernot-Ricard marketing in Cuba under a rum distribu-tion agreement. They see Section 211 as a threat primarily because of potential reciprocal Cuban violations against US firms like Coca-Cola or Ralph Lauren – to name two of the 4000-some US trademarks registered in Cuba referred to by John Kavulich, President of the US-Cuba Trade & Economic Council, Inc.  Kavulich said Cuba has made no attempt usurp intellectual property aside from Bacardi, noting that, in fact, it is not a US firm but a US subsidiary of a Barbados-based company.  Gustavo Machin of the Cuban Interests Section said US registered trademarks account for 23% of all Cuba's registered trademarks.  

4. More food on Cuban tables?   In late May, Promar International cautiously described a “reboun-ding food market” in Cuba, which may allow US food and agriculture companies to provide more products, inputs, and expertise (- PR Newswire).  The firm, based in Alexandria, VA, offers to help investors understand Cuba’s economy today (EVP Tom Earley is at 703-739-9090, or www.promarinternational.com/Brochures /cubaWsamples.pdf) and to explain operations of Cuba’s food and agriculture markets, foreign investment, trading alliances, and niches within Cuba’s markets.   Others agree that some indicators are up: Recently the Wall Street Journal described the role of subsidiaries of Del Monte Foods and International Multifoods, among others, in rebuilding Cuba’s market.  The Associated Press mid-July said flatly that, “with the aid of foreign capital, Cuba’s economy is recovering from a slump sparked by the collapse of … the Soviet Union.” 

More indicators of rebound include reports of higher revenues from tourism and family remittances, and record cigar production.  By mid-July, Cuba had produced 80 million Havana cigars for export, and was on target for “record output” of 170 million for the year, according to TabaCuba.

5. Other economic indicators cautious.  Though tourism will remain the engine of Cuba’s economic growth, projections have dropped to about 10% growth per year said Tourism Minister Ibrahim Ferradaz, and 2010 arrivals probably nearer to 3.5 million than the 10 million previously projected. 

New hotel building, service, food quality, and recreational activities also fall short of expectations, according to the UK’s Latin American Monitor. 

In recent weeks, (a) Cuba blamed intermittent blackouts on power plant problems; (b) Chilean fishing firms suspended shipments of canned horse mackerel, also sardines and anchovy, in the face of Cuban non-payment of up to $23 million in debt for imports from Chile in 2000; and (c) a Cuban Central Bank report cited by Reuters shows a rise in Cuba’s trade deficit to 8.1% ($3,173 billion) and a balance of payments deficit of 44%. 

Deficit spending and Cuba’s lack of access to long-term funding have raised creditors’ fears that the healthy GDP growth for 2000 of 6.2% and economic recovery may be short-lived.  Mark Frank for Reuters reported June 27 that 5% growth in the GDP (Gross Domestic Product) is hoped for in the year 2001, a level reaffirmed July 5 by Jose Luis Rodriguez, Economy Minister; but this is down from the 7.7% growth attained in 2000.  Sugar production is well below target, despite last minute efforts to raise it.  And rice production is getting Chinese technical advice in hopes of recovery.  

Withdrawal of the French oil exploration firm Total in the early 1990s, and cancellation this spring of Brazil’s Petrobras’ three-year offshore exploration agreement after a well proved to be dry, leaves only Spanish driller Repsol YPF which expects to begin work this summer on 3000 line kms. of 2D seismic data.  Smaller oil firms from Canada, Britain, France, and Sweden help Cuba with existing wells and exploration, said Ralph Galliano’s US*Cuba Policy Report June 30.    

Non-payday reports continue on various fronts.  Savings are nil, and small enterprise successes are choked by the state, wrote Tania Diaz Castro for CubaNet. 

Finally, hoped-for achievements of debt restructuring talks with the Paris Club foundered last month as positions remained far apart. 

6. Cuba’s foreign ties.  Cuba says China is shipping buttons and beans, not arms as widely touted by the US media mid-June.  German Economy Minister Werner Mueller said Cuban “reforms…were heading ‘in the right direction.’” He attended the July 9 opening of a Cuban-German joint venture to produce industrial gas.  Venezuela’s outgoing head of DISIP (Security & Intelligence) last month denied that its exchanges with Cuba are any tighter than with the US.  Palestinian leader Yasser Arafat sent Castro thanks for a “strong and unbreakable friendship” shown in a week’s “solidarity meetings” in Havana (Cuba broke relations with Israel in the early 1970s).  A Swedish youth association vice president defied Cuba’s book ban recently by taking donated books to 20 independent Cuban libraries.  The Pope in early July praised efforts by visiting Cuban bishops to revive Cuba’s Catholic church, but also criticized the US embargo as “unjust and ethically unacceptable.”  And a resumption of normally biannual Cuba-US migration talks, to be the first Bush Administration contact with Cuba, was scheduled for NYC at the end of June.

7. Fidelismo continues.  Recent anti-American rallies in Havana claim attendance by as many as “one-tenth of the country’s 11 million people”.  Castro held forth at length and showed no signs of frailty.

Recent government confiscation of homes recalls initial seizures of luxury residences in the 1960s.  Isabel Garcia-Zarsa (Reuters) reports that the 18-month campaign against housing “irregularities” focuses on the 85% of Cubans who own their own homes but whose “over-sized” houses may have been purchased or expanded with cash, incorporated stolen materials, or were illegally rented.  Granma reported 1,400 house confiscations last year.    

8. New AmCham Cuba Membership Category Available.  To respond to some long-time members seeking additional information privileges including the special Cuba reports which we provide to our corporate members, and to allow these members in turn to give more support to AmCham Cuba than the normal annual $100 individual subscriber fee, Friends of AmCham Cuba has been created as an intermediate membership group.  We have already welcomed a few "Friends” who pay less than corporate members ($500 or $1500 year) for essentially the same information and privileges. 

We invite you to consider becoming a Friend of AmCham Cuba, too, or to identify a business associate interested in taking part in our informational programs and gaining access to our in-depth reports, joining speakers at the head-tables, and coming to special briefing sessions from time to time.  Friends of AmCham Cuba will normally contribute $500/year. 

When it is again appropriate to re-open in Cuba, we expect to want to move guickly. This elite group of Cuba-watchers, together with AmCham Cuba's corporate members, will be in on the first organizational efforts when this American chamber of commerce returns to Havana to support US businesses there.      

9. New resource materials and opportunities.  Intelectuales vs. Revolucion?: El Caso del Centro de Estudios sobre Americas, CEA, examines the complex and turbulent relationship between Cuban social scientists and the state.  Authors Alberto F. Alvarez Garcia and Gerardo Gonzalez Nunez were members of the CEA research team in Havana from the mid-1980s to the mid-1990s.  Their analysis takes the form of a new volume of the Coleccion Ciencias Sociales Cubanas published in Montreal (Ediciones Arte D.T).      

Cuba Going Against the Grain: Agricultural Crisis and Transformation is a new 50+ -page publication by Oxfam America.  Minor Sinclair and Martha Thompson present a scholarly report on Cuban agriculture’s turnaround since the crisis of the 1990s, its strategic restructuring, new institutions, innovation by farmers, successful land reform, sustainable practices, and painstaking steps towards rural recovery  - with sound progress despite the loss of trading partners, the lack of  international financial institution support, and Cuba's economic difficulties.  Information on this study funded by the Ford Foundation is available at tel. 617-728-2438 or e-mail info@oxfamamerica.org. 

The next annual Miami Conference of the CLAA (Caribbean/LatinAmerican Action) will focus on Free Trade and Integration: Implications for the Caribbean Basin.  To be held at Miami’s Inter-Continental Hotel December 4-7, the preliminary program for this always huge meeting identifies many US and Latin American leaders and scholars, but no Cuba-specific speakers or panels.   Registration by September 15 is least costly.  Call 202-466-7464 or e-mail aedmunds@claa.org.      

Corrections: 

We recently reported that Crowley Lines made the decision to by-pass Havana rather than deliver licensed humanitarian goods from the US.  Cuba advised Crowley that its vessel would be denied permission to dock. 

We also erred in describing the Cuba Policy Foundation.  Created in April by senior US diplomats who served under previous administrations, the Foundation has reminded us that it is a “small but politically significant group of Cuban-Americans”, non-partisan, “centrist”, and “dedicated to a sensible and more-humane policy toward Cuba” and desirous of presenting factual information to the public.  Its leaders want the Cuba embargo ended and travel to Cuba to resume.   

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Enjoy your summer! 

Sincerely,

Phoebe Lansdale

Executive Director

July 30, 2001

Editorial review:  Robert Weekley, President