CubaSource, 01/12/01 Via NY Transfer News * All the News That Doesn't Fit This issue is for private use only, not for redistribution ------------------------------------------------------------ L A T I N A M E R I C A D A T A B A S E CubaSource: Political & Economic News and Analysis of Cuba ISSN Pending Volume 2 Number 1 January 12, 2001 ------------------------------------------------------------ Copyright 2001, Latin America Data Base (LADB), Latin American Institute, University of New Mexico Director: Rebecca Reynolds Bannister Editor: Robert Sandels Staff writers: Patricia Hynds, Carlos Navarro LADB ARCHIVES: Back issues are referenced to provide historical background relevant to the articles in this newsletter. These can be accessed with a subscription to the LADB searchable on-line archives at http://ladb.unm.edu/ by clicking on Search Archive. For subscription information, e-mail info@ladb.unm.edu or call 1-800-472-0888. In This Issue: CUBA CUTS TELEPHONE CALLS FROM US FOR SECOND TIME RUSSIAN PRESIDENT VLADIMIR PUTIN VISITS CUBA * Cuba cancels plans to finish building nuclear plant CUBA ADMITTED TO AFRICA, CARIBBEAN, PACIFIC GROUP ------------------------------------------------------------- ********************* U.S. Relations ********************* CUBA CUTS TELEPHONE CALLS FROM US FOR SECOND TIME In December 2000, Cuba cut telephone communications from the US for the second time in two years. The act was in response to a recently passed law permitting access to Cuban funds frozen in the US. In a wrongful-death suit against Cuba in December 1997, US Circuit Court Judge James Lawrence King awarded US$187 million to the families of Hermanos al Rescate pilots killed by Cuban jet fighters in the 1996 shootdown (see NotiSur, 1996-03-01). But President Bill Clinton blocked access to the frozen funds for payment of the compensation on national- security grounds (see EcoCentral, 1998-11-05). However, the US government paid the families US$300,000 in compensation from the funds (see NotiCen, 1999-02-11). In March 1999, King advised the families to seek the money from payments made by ATT, MCI, and six other long-distance carriers to Empresa de Telecomunicaciones de Cuba (ETECSA) for telephone-service charges. King ordered the companies to cease payments to ETECSA. In retaliation, Cuba cut ETECSA connections with five of the seven US companies in February 1999. At the time, the companies owed ETECSA US$19 million (see NotiCen, 1999-03-11). In August 1999, the US Circuit Court of Appeals in Atlanta reversed King's March ruling on the grounds that, because ETECSA was a joint venture between the Cuban government and the Italian firm Telecom Italia, it could not be held responsible for Cuban government debts. Instead, said the court, the families might seek compensation from frozen funds belonging to EMTELCUBA--ETECSA's government-owned predecessor. When the US companies resumed payments to ETECSA in April 2000, Cuba restored the communications links (see CubaSource, 2000-05-10). Then in October 2000, the US Senate passed a bill to allow courts to dip into the frozen funds owed the Cuban government and ETECSA to pay the US$187 million award. The funds, which go back to 1966, total around US$160 million. Clinton signed the bill Oct. 29 and immediately released US$58 million of the frozen funds for payment. In response to the new law, Cuba imposed a 10% tax on calls from the US to Cuba and warned that it reserved the right to cut service again if the US tried to freeze Cuba's income from the telephone tax. The tax went into effect Oct. 25, 2000. The tax amounts to about US$0.25 per minute on calls from the US. Calls routed from the US to Cuba through third countries were to be charged the same tax by foreign companies handling the calls. In imposing the tax, the Council of State said it viewed the US law as a further tightening of the embargo against Cuba. The council took the opportunity to reargue the shooting down of the Hermanos al Rescate planes. It said the US was giving Cuban funds to "terrorist groups based in the United States, under the pretext of indemnifying relatives of persons who died in an incident which took place very near our coasts, provoked by dozens of violations of our air space over several years and about which...they had been warned many times." The US never responded to Cuban requests to prevent the Hermanos flights over Cuba, the statement said. As for compensation for families of the victims, the statement said the US had never compensated any of the victims--which Cuba estimated at over 5,000 killed and injured--of US-sponsored terrorist raids in Cuba since 1959. Sergio Plasencia, vice president of the Cuban central bank, said the tax revenue would be used to recover the funds frozen in the US and that, if the funds were returned, the tax would be lifted. The anti-Castro Cuban American National Foundation (CANF) said the tax was a form of extortion, and the State Department said the tax was illegal under the 1996 Helms- Burton Act. The Treasury Department, which has to authorize payments to Cuba, issued no ruling, so the telephone companies decided not to pay the tax. On Dec. 15, Cuba cut connections for incoming calls from the US. During the first weeks of the cutoff, there were some reports that Cuba had not cut all connections and that calls were going through. Most media accounts reported long waits for connections through third countries. The Council of State decree promised to take action against companies that routed outgoing US calls through third countries. At the end of December, Foreign Minister Felipe Perez Roque said that, depending on the circumstances, Cuba would gradually tighten the communications embargo even to the point of a total suspension of all telephone contact with the US. [Sources: Inter Press Service, 08/20/00; Spanish News Service EFE, 10/24/00, 10/25/00; PR Newswire, 12/07/00; Granma (Cuba), 10/23/00, 12/11/00; Reuters, 10/25/00, 12/08/00, 12/15/00; Associated Press, 12/15/00, 12/16/00; The Miami Herald, 12/16/00; Notimex, 10/25/00, 12/28/00] ********************* FOREIGN RELATIONS ********************* RUSSIAN PRESIDENT VLADIMIR PUTIN VISITS CUBA Russian President Vladimir V. Putin held talks with Cuban President Fidel Castro in Havana Dec. 14-15. He is the first Russian leader to visit Cuba since President Mikhail Gorbachev of the former Soviet Union visited in 1991. The primary purpose of Putin's visit was to re-establish Russian economic presence in Cuba, particularly in retrieving some benefit from Soviet-era investments and projects such as in the energy and nickel industries. After the Soviet disengagement in Cuba in the 1990s, Soviet and Eastern European cooperation was replaced with capital from Spain, Canada, Mexico, Italy, and other nations. Few areas are left in the Cuban economy where Russian capital can easily enter the economy. Arriving in Havana, Putin made it clear he had not come to revive the old Cold War relationship. Where the Soviet Union subsidized Cuba by as much as 20% of its annual GDP, Putin came with "warm feelings," but little else. Since Gorbachev cut subsides in 1991, bilateral trade, then worth US$3.6 billion per year, has dropped to US$1 billion. "We decided we will build a relationship between our countries based upon the warm feelings and high-level relations that already exist," Putin said. During the visit, a Cuban-Russian intergovernmental commission negotiated several economic agreements that promise joint ventures, but little concrete progress was made on any of the issues most important to Putin. Russia's co-chair of the commission, Sergei Shoigu, said the talks in Havana proceeded "with difficulty." "It is now important to identify those guidelines laid down in the Soviet era that we shall follow in our cooperation and those that no longer appear promising either to us or to the Cubans," said Shoigu. "We would like the interests of Russia, its enterprises and regions, to be taken into consideration as much as possible." In the 1980s, the Soviets helped build a nickel-ore processing plant in Las Camariocas in eastern Holguin province, but it was left unfinished when the Soviets pulled out of Cuba. Now a Russian firm, Norilsk Nickel, is interested in completing construction of the plant, and Putin came to Havana with a commitment from the company to invest US$300 million. The proposal would have Norilsk take all the plant's production, crediting some of it to Cuba's debt with Russia. Cuban officials turned down the offer. Shoigu reported no progress on Russian entry into Cuba's promising oil industry either. But with most of the 90 oil- extraction concessions yet to be distributed, he said Russia had a good chance of entering the field. The two sides agreed on a contract for delivering 3,000 VAZ cars to Cuba and made another agreement on a joint venture to build diesel equipment for use in the sugar industry. They also signed a trade agreement for the period 2001-2005 covering the exchange of Cuban sugar, rum, medicines, and medical equipment for Russian oil, machinery, and chemicals. Cuba cancels plans to finish building nuclear plant One of the Soviet-era projects of interest to the Russians was the nuclear generating plant at Juragua near Cienfuegos in southcentral Cuba. The plant has been a costly failure. Construction was begun with Soviet help in 1976 but halted in 1992 after the collapse of the Soviet Union. The US has repeatedly warned that the plant posed an environmental threat to the southeastern US and took steps to block international funding of its completion (see EcoCentral, 1997-05-01, 1997-12-11). In remarks to the media, Putin said, "Our Cuban friends are not showing any interest in continuing the construction of this plant." An alternative proposal was for a joint project for generating plants near Havana. "We are thinking of the need for some compensation if a decision is made to discontinue building the nuclear plant," he said. After Putin's departure, Castro said that, instead of finishing the nuclear plant, Cuba's electrical-energy policy would be based on domestic oil production. A gas-powered plant, already operating, was built in a joint venture with Sherritt International of Canada. Though he did not rule out nuclear energy in the future, Castro said it was faster and cheaper to stick to fossil fuels. Another major Russian concern is to pin Cuba down to a definite debt-repayment schedule. Russia inherited Cuba's debts to the Soviet Union, and they are variously estimated at between US$11 billion and US$27 billion. While Cuba does not accept the Russian estimate of US$27 billion, it does not entirely repudiate the debt either. Cuba argues that the Soviet abandonment of its support in 1991 caused damages to the Cuban economy that were greater than the value of the debt. Thus, it is not clear what figure the Cuba government is willing to accept. Putin wants to write off part of the debt and negotiate the rest through the Paris Club, but a Cuban official said that was "not acceptable." The two leaders did not resolve the debt issue, but Putin promised to offer a repayment agreement under the best possible terms for Cuba. Meanwhile, Putin agreed to reopen an existing loan arrangement worked out in 1993. Russian Deputy Finance Minister Vladimir Chernukhin said Cuba could draw on the US$50 million credit line until the end of 2001 provided it makes a scheduled US$12.3 million payment on the balance of its obligation this year. Lourdes center to continue Castro and Putin visited the electronic intelligence station at Lourdes, near Havana, which is run by Russian technicians. Russia pays US$200 million in goods as annual rent for the Lourdes station, used to track US missile launches, monitor US compliance with test-ban treaties, and communicate with Russian embassies in Latin America. Anti-Castro hard-liners in Congress have tried to force Russia to abandon the station, calling it a potential center for cyber warfare against the US (see CubaSource, 2000-06-09). Russian sources say the station is no longer of strategic importance because of advances in intelligence-gathering technology. A Kremlin official said that for intelligence purposes, Cuba was no longer irreplaceable. In other agreements, Russia will supply Cuba with equipment for its sugar industry and provide technical assistance in railways and air-traffic control. Also signed were agreements on a variety of commercial, legal, scientific, and health matters. [Sources: Associated Press, Itar/Tass, 12/14/00, 12/15/00; Notimex, 12/13/00, 12/15/00; Inter Press Service, 12/15/00; World Data Service, (Cuba), The Times (London), 12/16/00; The New York Times, 12/15/00, 12/16/00, 12/17/00; Spanish News Service EFE, 12/14/00, 12/16/00, 12/18/00, 12/19/00; Reuters, BBC, 12/19/00; BBC, 01/05/01] ********************* ECONOMY ********************* CUBA ADMITTED TO AFRICA, CARIBBEAN, PACIFIC GROUP On Dec. 15, 2000, Cuba became a full member of the Africa, Caribbean, and Pacific (ACP) group, which receives trade and aid benefits from the European Union (EU) through a series of accords. Cuba refuses to accede to EU rules for receiving benefits and will not participate in the accords. The group's general secretariat announced the decision in Brussels during a meeting of ACP trade ministers. Cuba has had observer status in the ACP since 1998. On the verge of admission in April 2000, Cuba withdrew its application after the EU members supported a UN Human Rights Commission resolution condemning Cuba for its human rights record (see CubaSource, 2000-05-10). In August, Cuba renewed its interest in membership. The ACP secretariat said it had waived the requirement that Cuba would have to sign the most recent ACP-EU agreement adopted at Cotonou, Benin Republic, last June. Cuban Ambassador to the EU Rene Juan Mujica said Cuba was willing to accept the ACP-EU agreements provided the EU withdrew conditions set on human rights and democracy. He referred to the political conditions adopted by the EU in 1996 as "pretexts" for not providing an agreement based on cooperation. Cuba's position is that the EU has cooperation agreements with many other countries that have questionable human rights records. "Nor is the European Union perfect," said Mujica. Membership without inclusion in the agreement means that Cuba finds itself in a special ACP category, blocked from taking advantage of the trade privileges conferred by Cotonou but otherwise considered a member in good standing. ACP secretary general Jean-Robert Goulongana supported Cuba's objections to EU requirements. He said that for other members the EU had set only economic and legal conditions. Goulongana said Cuba's inclusion in ACP was important since, without it, the representation of the Caribbean was incomplete. He stressed the value for ACP countries of Cuba's inclusion and put less stress on the EU half of the cooperation agreement. Increasingly, the ACP has moved to define itself as an organization seeking advancement for its members, most of which are poor countries, and moved away from the era when ACP was essentially a group of ex-colonies looking for trade favors from Europe. Sources reported that the secretariat is planning to develop a common position on trade to present at the December 2001 ministerial meeting of the World Trade Organization (WTO). ACP members want a greater voice in WTO decision making, especially as it affects developing nations. [Sources: World Data Service, (Cuba), Xinhua, 12/14/00; Panafrican News Agency, 12/15/00; Notimex, 12/21/00] END ================================================================= NY Transfer News Collective * A Service of Blythe Systems Since 1985 - Information for the Rest of Us 339 Lafayette St., New York, NY 10012 http://www.blythe.org e-mail: nyt@blythe.org ================================================================= pvtcamer-02.11.01-09:11:32-7747