Cuban economy performing in line with forecasts

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1 3 July 2017, Issue 923 Highlights this issue: Tourism Minister says sector will grow irrespective of US policy change Concern expressed in US about effect of travel restrictions on cuentapropistas Russia and Cuba discussing extensive cooperation on joint pharma production Spanish government calls for rapid approval of EU treaty Cuban economy performing in line with forecasts Cuba s Minister of Economy and Planning, Vice President Ricardo Cabrisas, has told Cuba s Council of Ministers that the country s economy is largely performing in line with forecasts. According to Granma, Vice President Cabrisas stated that the country s gross income for the first six months of 2017 stood at 53% of the amount planned for, largely because of positive tax revenues. He added that the country s fiscal deficit is expected to be lower than planned across the same the period. Reporting to ministers in preparation for a meeting of the National Assembly which is due to be held on July 14, Vice President Cabrisas reportedly told colleagues that the country s investment plan for the first six month had almost been fulfilled, and that investments were expected to grow in the second half of In his reported remarks, he also said that: Cuba will continue to implement measures aimed at guaranteeing that vital economic activities are well resourced, to ensure that they meet the targets outlined in the country s 2017 plan; Cuba expects to meet 98% of its investment plan, with substantial growth in activity expected in the second part of this year; The agricultural sector initially showed favourable results, especially in relation to vegetable production. Milk and beef output is, however, below expectations; Problems with the railway system have negatively affected the transport and distribution of goods and supplies; Although raw sugar production was up by 20% over 2016 overall, it was 0.3m tonnes less than had been planned for; Tourist arrivals increased by 20% up to the end of May over the same period in Visitor numbers totalled 2.3m. The Caribbean Council is able to provide further detail about all of the stories in our Cuba Briefing publication. If you would like a more detailed insight into any of the content of today s issue, please get in touch with a member of our team here.

2 The country s continuing drought has negatively affected the country s 2017 plan. At the end of May, the amount of water stored in dams to supply the general population stood at 43% of capacity. Storage of water intended for rice production was at just at 27% of capacity. Other issues discussed at the meeting included modifications to policies regarding the awarding of idle stateowned land. This involves extending such grants from 10 to 20 years for individuals on a renewable basis. Speaking about this, Marino Murillo, head of the Policy Guidelines Implementation and Development Permanent Commission said that while 31% of the country s agricultural land has been transferred in this way, applications for idle lands had slowed in recent years. He attributed this slowdown to the fact that land which remains available tends to be less fertile; infested with marabou; distant from population centres and basic services; or have limited accessible water supplies. The meeting also addressed changes to regulations relating to self-employment. Although Granma said that further details will appear in the media shortly, it quoted Mr Murillo as saying that the issues which needed to be addressed were: The use of raw materials and equipment of illicit origin Tax evasion and under-reporting of income Inaccurate and poor accounting Irregularities in the contracting of goods and services by incorporated entities and individuals. At the meeting, it was noted that although non-agricultural cooperatives face continued shortcomings, they constitute an alternative to the state, freeing it from the responsibility of administering some productive activities and services, which are not considered key to the national economy. It was therefore agreed that the experiment, initially launched four years ago, will continue in order to redress any failings and enable government to continue to monitor the results. Cuba Double digit growth in 2017 tourism arrivals. Tourism arrivals in the first semester of 2017 increased by 22.2% (or 2.53m visitors), according to José Daniel Alonso, the Director General of Development, Investments and Business at the Ministry of Tourism (Mintur). However, Mr Alonso said that Cuba expects this figure to peak at 4.2m visitor arrivals at the end of This is approximately the same number of visitors as Speaking at the XII International Seminar on Journalism and Tourism, Mr Alonso said that the island was still planning to have 68,200 rooms available by the end of 2017 and 100,000 by At present, Cuba has 114 hotels under foreign management contracts. This equates to 66.8% of the country s total rooms. Huge areas of usable farmland left fallow. A new Cuban government statistical report has revealed that more than half of

3 Cuba s arable land remains uncultivated, despite government attempts to increase food production. Cuba s National Statistics Office indicated that there had been only minor improvements in 2016 compared with the previous year. The report said that just 2.7m hectares (7m acres) of the country s total arable land (6.2m hectares, or 15m acres) were under cultivation. Cuba continues to import large quantities of foodstuffs. The full Cuban report can be read at Global commitment to climate change sought. Cuba has called on all states to show a greater commitment to climate change at a meeting of UNESCO. During an intergovernmental preparatory meeting for the Declaration on Ethical Principles in Relation to Climate Change, the Cuban delegation said that the implications went beyond environmental consequences, threatening to have a severe socio-economic impact on many nations. Marrero says tourism will grow irrespective of US policy. The Cuban Minister of Tourism, Manuel Marrero, has said that the island will continue to grow its tourism product, irrespective of the new US travel policy announced by President Trump on June 16 (see Cuba Briefing June 19, 2017). Mr Marrero, who was speaking to participants at 9 th International Varadero Gourmet Festival, particularly praised the non-state sector, noting that there are currently close to 2,000 private restaurants and 22,000 rooms in private homes available for rent. He added that the Tourism Ministry was prepared to support any management model in the tourism sector. He also noted that although there is now greater private sector involvement in Cuba s heritage cities such as Trinidad and Santiago de Cuba, the State has also started construction on new hotels in these areas. A workshop held at the event brought together Cuban and international industry experts to undertake a diagnosis of the main issues affecting the quality of service in Cuba, and the action required to improve service levels. Marabou clearance underway to increase sugar acreage. More than 12,000 hectares of marabou have been cleared from fields in the province of Ciego de Ávila since The land is now used to grow sugar cane, according to the news agency ACN. The report said that the objective now is to use equipment including bulldozers, machetes and axes to clear another three thousand hectares of marabou, a thorny bush which grows wild on abandoned land. The plant was first introduced to Cuba in the mid-nineteenth century for ornamental purposes. According to the report, more than 80,000 hectares of marabou still grow in Ciego de Ávila province. Road upgrade planned between Trinidad and Cienfuegos. A new study led by the Ministry of Science, Technology and Environment (CITMA) is underway, aimed at improving the road between Trinidad and the city of Cienfuegos. The development is of particular interest to the Tourism Ministry, as the road runs along the coastline, and serves as a tourism corridor between both cities to the central southern region of Cuba. Cuban media reports say that the road will have its original landscaping restored, and that the changes will provide enhanced sea views for travellers. The improvements are also expected to open access to small beaches and result in the construction of roadside cafeterias.

4 New homeopathic asthma medicine. Cuban media outlets are reporting that a homeopathic green medicine for the treatment of asthma has been developed by the Juan Manuel Marquez Paediatric Hospital. It is said to relieve the immediate crisis and intensity of any attack, and to improve respiration. Social communicators encouraged to strengthen confidence in the revolution. Members of the Cuban Association of Social Communicators (ACCS) have been told that it will be necessary to unveil the imperial pretensions through all possible channels, in light of the measures introduced by President Trump. Speaking at the ACCS national assembly, Rosa María Pérez, President of the organisation, said that the new US policy would require members to communicate well, with messages that are clear, emotional, optimistic and with attractive aesthetics, to strengthen the confidence of the people in the Revolution. The meeting was attended by Joel Suárez, Head of the Ideological Department of the Central Committee of the Cuban Communist Party. Dissident arrests reported. Reports in the US media say that up to thirty members of the Ladies in White have been arrested in advance of an intended protest. The leader of the dissident group, Berta Soler, was among those held. She was recently banned from leaving the country after the White House invited her to attend President Trump s speech in Little Havana which reversed aspects of President Obama s policy of détente. United States Concern expressed about who will suffer most from US travel restrictions. Collin Laverty, the President of Cuba Educational Travel, which specializes in arranging exchange programmes and people-to-people travel for US citizens to Cuba, has said that he expects that the Cuban population as a whole is likely to be hurt by the new US travel policy, as opposed to government officials. Mr Laverty, who has sent some 12,000 US travellers to Cuba since 2013, told Travel Week that the policy of allowing US citizens to travel only with organised groups, will push people away from private houses and restaurants, and back into hotels. He added that if the US regulations broaden the designation of Cuban military companies beyond one or two companies that have clear linkages to the Cuban military, it could potentially freeze US travel to Cuba. New cruise line calls approved. Victory Cruise Lines, a single ship company, has received approval for its 202-passenger vessel, Victory I, to sail to Cuba. The line will call at Havana, Cienfuegos, Trinidad, Santiago de Cuba and Maria La Gorda, and will sail out of Miami. The company said that it wants to have overnight stops in at least three ports. Speaking to the cruise industry trade press, Bruce Nierenberg, President and CEO of Victory Cruise Lines, said that as a small ship company, Victory will seek most of its berths in smaller, less visited ports. He told industry publication Cruise Critic that President Trump s statements would benefit the line. We are allinclusive, so have total control over the tours ashore, their content, the way they are managed, the personal involvement of our tour leaders and all related issues of participation, he said. The fact that the tours are included in the price of the trip in every port will ensure that our guests can comply with the US regulations. He also noted that there was nothing to stop passengers from travelling on their own on a cruise, and that a small ship line would be the best way for an individual traveller or a family to see the island, meet Cuban citizens, and learn about the history and culture of the country. The company has yet to determine the start date and itineraries for its Cuba cruises.

5 US Treasury imposes new fines on AIG. The US Treasury has imposed a US$149,000 penalty on the US insurance company American International Group (AIG) for committing 29 violations of the US trade embargo. The company was fined for providing cover for several shipments of goods to or from Cuba, linked to entities on the island. It is AIG s second penalty in three years. The others involved its Canadian subsidiaries. Southwest to concentrate on Havana. Southwest Airlines has said that it will reduce the number of flights it operates to Cuba, although the Tampa to Havana route will remain as is. The airline said that in future it will focus on serving Havana, and will cease operations in both Varadero and Santa Clara on September 4 this year. The airline has a twice daily Havana service. Europe Spanish government calls for rapid approval of EU treaty. Spain has called for rapid parliamentary ratification of the Political Dialogue and Cooperation Agreement (ADPC) between the European Union (EU) and Cuba, signed in December 2016 (Cuba Briefing December 12, 2016). Responding to a written question from Pablo Bustinduy of Podemos, the Government said that it wished to see the agreement ratified by the Spanish Parliament, and implemented as soon as possible. Mr Bustinduy had called on the government to be one of the first EU states to endorse the ADPC, arguing that this would demonstrate Spanish leadership in relation to improved European relations with Cuba. Copies of archives to be transferred. Spain s government archive is to provide facsimiles of several historic documents currently in its possession to the Cuban National Archive. The documents include several files which are of historical significance to Cuba, including the academic degree of Cuba s national hero Jose Martí, and a map of early planned extensions to the country s railway system. Russia Joint medical and pharmaceutical enterprises under discussion. Government officials and business representatives have met to discuss the possible establishment of joint ventures in medicine and pharmaceuticals in both countries. The discussions took place at a Cuba-Russia Medical-Pharmaceutical Business Forum in Havana. The event, the first of its kind, was aimed at developing value chains between those involved in commercialising pharmaceutical entities in both countries. The forum was also intended to identify opportunities for bilateral academic collaboration. Ten prominent Russian companies attended, and discussed the licensing of Cuban products for the Russian market; technology transfer; and the establishment of joint ventures with Russian investment to produce medicines and pharmaceuticals in Cuba. According to reports in Granma, the event also addressed the provision of raw materials and advanced equipment for pharmaceutical manufacturing processes in Cuba. Speaking to Granma, the Marketing Director of BioCubaFarma, Mayda Maurí Pérez, said that Russia was potentially a strategic partner and that there were good prospects of establishing a Russian Federal programme that would enable Russians to benefit from innovative Cuban-developed products. Attendees also looked at Cuban-Russian medical-pharmaceutical enterprises and academic projects, established under license in Russia. Ms Maurí Pérez said that BioCubaFarma hoped that Russian investors would be open to establishing pharmaceuticals and biotechnology related production plants in the Mariel Special Development Zone. First Russian trained oil industry experts graduate. The first Cubans to obtain master s degrees in geology, oil drilling, exploration and exploitation have graduated from the Gubkin Russian State University of Oil

6 and Gas in Moscow. The degrees were awarded as part of a cooperation programme between Cubapetroleo and Rosneft. Cuban officials said that the graduation opens up the opportunity to improve the skills and knowledge of a greater number of Cuban specialists. The Americas New Bahamas government set to maintain close relationship. The Bahamas Foreign Minister, Darren Henfield, has confirmed that the country s new government will continue to maintain a close working relationship with Cuba. Cuban media reports, released after Mr Henfield met with Cuba s Ambassador to the Bahamas, Ismara Varga, noted that the Bahamanian Foreign Minister is expected to make a visit to Cuba in the near future. The Bahamas has a migration agreement with the Bahamas. In 2016 the then government of the Bahamas repatriated 1,179 Cubans migrants in transit to the US. Havana condemns terrorist attack in Caracas. Cuba has condemned what it described as the terrorist attacks in Caracas against the country s Supreme Court. In a statement, it said that it was unjustifiable that certain governments and political figures were presenting the attack as a police rebellion in an attempt to manipulate the event and incite the rupture of the civic-military union. The statement went on to praise President Maduro s actions, which it described as intended to prevent chaos and call for the legitimate defence of constitutional order. It also criticised the Organization of American States (OAS) and its Secretary General, Luis Almagro, arguing that both have become through their silence, accomplices of what happened and what may happen. Rest of the world Australia exploring new opportunities in Cuba. Australia s Foreign Minister, Julie Bishop, has made an official visit to Cuba. In a statement following her return home, she said that in addition to discussing the country s economic reform programme, she had used her visit to explore opportunities for Australian businesses. She said that in her discussions with Cuban minsters, a number of sectors with potential for collaboration were identified. These included: Mining and exploration Renewable energy Medical and veterinary research Biotechnology Tourism Food production Manufacturing. The visit culminated in the signature of an MOU on enhancing diplomatic consultation. The possibility of medical cooperation within the Pacific was also explored, and discussions took place on collaborative research with BioFarmaCuba, particularly in the fields of melanoma and diabetes treatment, and tick eradication. New Zealand seeking to strengthen cooperation. New Zealand and Cuba have expressed an interest in deepening economic and political relations during a visit to Havana by New Zealand s Foreign Minister, Gerry Brownlee.

7 Speaking after a meeting with the New Zealand delegation, Cuba s Foreign Minister, Bruno Rodriguez, said that Cuba attaches importance to relations with New Zealand, and looked forward to expanding its triangular cooperation in Pacific states. Mr Brownlee said that he believed that both island nations could strengthen their cooperation, particularly in relation to agriculture. We think island states that depend on this sector should help each other, he said. Please do not forward this publication Copyright 2017 The Caribbean Council Cuba Briefing is produced for Cuba Initiative Members and subscribers by the Publications Division of The Caribbean Council, Temple Chambers, 3-7 Temple Avenue, London EC4Y 0HP, United Kingdom. No legal responsibility is accepted for any errors or omissions. Publisher: The Caribbean Council Editor: David Jessop Subscription Rates: 200/US$450 per annum for 45 issues for up to 3 users (a discounted rate for additional users and companies registered in the Caribbean is available on application) For subscription enquiries contact: emily.soar@caribbean-council.org Cuba Briefing is a subscription publication which is available to paying subscribers and members of The Caribbean Council only. It should not be forwarded internally or externally within your organisation. All recipients need to be subscribed directly via The Caribbean Council distribution list. If you have not received this publication directly from the Caribbean Council, and would like to subscribe or be added as part of your company's membership, please contact emily.soar@caribbeancouncil.org now or subscribe online at Corrections or amendments should be sent to: publications@caribbean-council.org