• The objective of this Blog is to facilitate access to research resources and analyses from all relevant and useful sources, mainly on the economy of Cuba. It includes analyses and observations of the author, Arch Ritter, as well as hyper-links, abstracts, summaries, and commentaries relating to other research works from academic, governmental, media, non-governmental organizations and international institutions.
    Commentary, critique and discussion on any of the postings is most welcome.
    This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' original blog "Generation Y" this is not dedicated to those with names starting with the letter "A". Instead, it draws from Douglas Coupland's novel Generation A which begins with a quotation from Kurt Vonnegut at a University Commencement:
    "... I hereby declare you Generation A, as much as the beginning of a series of astounding triumphs and failures as Adam and Eve were so long ago."

Cuba, home of the world’s oddest property market

Posted on June 22, 2013 by Arch Ritter

Financial Times, June 21, 2013 5:02 pm

By John Arlidge

The country is finally allowing its people to buy and sell homes but property lawyers and agents are still illegal.

It’s only 9am but it’s already 33C on the Malecón, Havana’s corniche, and my brain feels like a conch fritter. I’ve come to meet a man who we will call Rafael – because that’s his name. But that’s the only part of his name he is prepared to reveal. Rafael is an estate agent but he does not want anyone to know it. “Being an estate agent is illegal here,” he says.

If we do agree a price, Rafael will advise me not to buy the penthouse in the normal way. Instead, to avoid tax, I should pay him a nominal amount locally, say 20 per cent, and “deposit the rest in an account in Spain, please”. I must not talk about the true price because, under new laws, anyone caught lying about the price of property goes to prison. Also, I must not reveal the name of the lawyer who does the paperwork because working as a private property lawyer is illegal.

Undercover estate agents? A legal system that is illegal? Jail for lying about house prices – which everyone the world over does? Welcome to the oddest property market in the world. Welcome to Cuba.

Half a century after Fidel Castro’s government expropriated all private property, the sunshine socialist state is up for sale – in part. Raúl Castro, who took over as president from his ailing brother in 2008, has introduced new laws that allow Cubans to buy and sell homes. Billions of dollars in property assets that have been frozen in place and time, unvalued or undervalued, are now up for grabs.

Raúl Castro’s move is the latest – and boldest – step in a slow economic liberalisation programme designed to generate economic growth. Cuba desperately needs new sources of revenue. It is only kept afloat thanks to cheap oil, and other subsidies worth $5bn a year from its ideological ally, Venezuela. The subsidy deal was agreed by Fidel Castro and former Venezuelan president Hugo Chávez, who died in March. If Venezuela’s new president, Nicolás Maduro, renegotiates the agreement – and many analysts say that, with Venezuela’s economy slumping, he has no choice – Cuba will grind to a halt.

After half a century in which they could only swap houses in a creaky, bureaucratic and often corrupt state-run process known as permuta (exchange), which involved finding two properties of roughly equal value and then getting state approval to transfer the title, Cubans are relishing their new-found economic freedomFirst-in-a-lifetime buyer Guillermo Rey stands next to the scruffy portico of a four-bedroom, three-bathroom house in Vedado, Havana’s most high-end, fashionable district. The price, says the owner Rosa Marin, is 350,000 CUC, or convertible pesos, Cuba’s hard currency, which is roughly equivalent in value to the US dollar. She is selling because she wants to move into a smaller property “and buy my daughter a car, a good one, a Lada”.

It is a scene repeated all over Havana. The market is growing so fast that queues form outside the tumbledown offices of Cubisima, a Havana-based property sales website. “Every day we get more people looking to sell and more people looking to buy,” Mayelin Aguilar tells me as she keys the latest listings into her bulky Russian-built desktop computer – so old it still runs Windows 95.

The tree-lined Prado is polka-dotted with estate agents, their listings written in longhand in school exercise books. Their commission? A whopping 5 per cent – if, that is, the buyer pays up. With estate agency not on the approved list of private businesses Cubans can now set up, buyers know agents have no recourse to law, so many simply refuse to pay. “I’m lucky if I get commission for one deal in five,” says one agent.

Some 45,000 homes were sold in 2012, according to Cuba’s National Statistics Office. Observers say informal deals take that number to almost 100,000. Prices range from $10,000 for a small, run-down flat in Old Havana to $500,000 for villas in sought-after districts, such as Siboney and Miramar, and more than $2m for penthouses in modern blocks. The average price last year was just $16,000. The Cuban on the calle is still desperately poor.

This being Cuba, the conditions surrounding home sales are complicated and, occasionally, bonkers. The law says that only Cubans and permanent residents can buy and sell property and they must limit themselves to one main residence and, if they have the money, one holiday home. Raúl Castro does not want Cubans to become property barons.

Nor does he want to encourage armies of foreign investors, especially the many arch-critics of the regime, to descend on Havana and buy it up, block by block. But, thanks to an early flirtation with capitalism 20 years ago, there are a few apartment buildings in Havana where foreigners can buy. The best are in the Atlantic Building, a 25-storey tower on the Malecón, where Rafael shows me the penthouse he says is worth $2.5m. Few want to say so publicly but some are being snapped up by Miami-based Cubans, via local relatives, making it difficult to divine whether the émigré Cuban or the relative is the real buyer. President Barack Obama recently relaxed the restrictions on foreign remittances from Cubans living in the US. Up to $5bn a year now flows into Havana and much of it ends up in bricks and mortar.

Other overseas investors get around the restrictions by giving money to a Cuban friend, or more often, girlfriend, to buy a property – although, when the deal is completed, some swiftly discover that their girlfriend is no longer their girlfriend. “I took a risk and it failed,” sighs one Dutch-born investor, whose $400,000 “home” in the fashionable Kholy western suburbs is now home to his former girlfriend and her extended family who cannot believe their luck – and his naivety.

Tax is troublesome, too. Both sellers and buyers must pay 4 per cent but most disguise the value of deals to reduce the liability. Raúl Castro’s dream of generating much-needed tax revenue from home sales is, so far, a forlorn hope.

But he might have an ace up his linen guayabera shirt – or, rather, 130km down the cracked highway from Havana in Varadero. It is Cuba’s “touristic zone”, a ghetto of white sand and whiter westerners, who sip mojitos and snap up Che Guevara T-shirts without bothering to wonder what Che would make of them splurging their Yankee dollars on a swanky beach holiday.

“This is where the £1.5m villas will be. And, over here, right next to an 18-hole golf course, is where the country club will be,” says Andrew Macdonald, striding across the scrub in canary yellow shorts. The Scots-born entrepreneur runs Esencia, an Anglo-Cuban firm, that wants to build Cuba’s first new golf course since the revolution, with 800 homes available for foreigners to buy.

He has signed up some big names to build the $350m development at Carbonera, near Varadero. Sir Terence Conran will design the homes. Adrian Zecha, founder of Aman resorts, is in charge of the country-club-cum-hotel and spa. Golf champion Tony Jacklin will help design the golf course. “Cuba is the top emerging tourism market in the Caribbean by a mile, and it’s in the top five emerging markets globally,” Macdonald says. “It’s a long slog getting stuff done but the potential is huge.”

“Slog” hardly does justice to the tortuous process he has had to undergo to get this far, and which has cost him $3m on feasibility studies. He began negotiations in 2006 and each year the government has said it will approve the venture. But each year then becomes next year. Manuel Marrero, Cuba’s minister of tourism, says the deal has finally been approved in cabinet but Macdonald still does not have the formal sign-off he craves.

Ministers may not like it but they know the only way to balance the books is to encourage the local market

If and when Macdonald, 47, does get the formal go-ahead, it will mark the end of Cuba’s bunker mentality when it comes to golf. Fidel Castro declared golf “incompatible with the glorious revolution” and ordered Cuba’s courses to be put to less “bourgeois” use. Today, one of them lies abandoned just outside Havana; another is a military special forces training ground; and a third forms the rolling lawns of a city’s arts school.

Macdonald wants to build 150 colonial-style oceanfront villas and 670 apartments. Prices for the apartments will start from $2,700 per sq metre and range from 75-140 sq metres. The villas will cost $3,750 per sq metre and range from 350-600 sq metres. Six-hundred investors have registered an interest, Macdonald says. Buyers will have what passes for freehold title under Cuba’s nascent property laws, and will be able to rent out their property.

 Artist’s Depiction of Esencia Housing Project Proposal

Cuba has retained the original Spanish, pre-revolutionary land registry and Macdonald says it shows that no overseas parties have a claim on the land at Carbonera. Tens of thousands of exiled Cubans, who left the country after the revolution, still claim rights over properties. On a bluff just along the coast from Carbonera stands the DuPont villa, the former vacation home of the wealthy US chemicals family. It is now a government-run guest house.

Investing in Cuba is only for the most steely-nerved. Not only is there the vexed question of potential claims on properties from exiled Cubans, the Cuban government has a long, ignominious history of first encouraging and then choking off economic liberalisation. It relaxed restrictions on home sales 15 years ago, only to reverse the policy a few years later.

This time, however, observers say Raúl Castro, who is more pragmatic and less ideological than his older brother, is unlikely to do a U-turn. One western business leader, who has set up a financial services consultancy in Havana, says: “Cuba is bankrupt. Ministers may not like it but they know the only way to balance the books is to encourage the local market and to allow overseas investors to build homes and golf courses and maybe eventually buy villas in Havana.”

That would be good news for Rafael. The more the market expands, the sooner he hopes the government will legalise his profession. “That way,” he smiles, “the next time you come into Cuba, I can tell you my name.”

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Cuba’s Economic System: Reform or Change?

Posted on June 21, 2013 by Arch Ritter

 

Fernando Ravsberg, June 20, 2013 HAVANA TIMES

Marino Murillo, Vice-Chairman of Cuba’s Council of Ministers and architect of the island’s recent economic reforms, has urged the country to aim for growth by eliminating “all of the obstacles that the current economic model places in the way of the development of the productive forces.”

The problem is that the greatest obstacle could be the model itself, which is based on relations of production that hinder the country’s economic development, slow down changes, interfere with reforms and bring about discontent among the population.

By implementing this socialist model, which dates back to Stalin’s time, Cuba obtained the same results seen in all other countries which copied it: agricultural production crises, industrial stagnation, shortages and a disaffected citizenry.

Marino Murillo, Vice-Chairman of Cuba’s Council of Ministers

Murillo invoked socialism’s theoretical forefathers, who said that the new, socialist society would need to nationalize only the “fundamental means of production”, a prescription that wasn’t exactly followed by a model which placed even junk food stands in State hands.

To be at all effective, every economic change essayed in the country today, no matter how small, invariably demands a whole series of subsequent reforms. And it is precisely there where the model, and its defenders, prevent the reform from becoming effective or yielding its best results.

Though the Cuban government’s official discourse itself is calling for a “rejuvenation” of the country’s model, the fact of the matter is that it will be next to impossible to fit a new piece into this jigsaw puzzle without altering the pieces around it, without producing a domino-effect that will ultimately change the entire pattern.

Though the Cuban government’s official discourse itself is calling for a “rejuvenation” of the country’s model, the fact of the matter is that it will be next to impossible to fit a new piece into this jigsaw puzzle without altering the pieces around it, without producing a domino-effect that will ultimately change the entire pattern.

The government runs into these obstacles every time it attempts to move one of the pieces of the puzzle. When it decided to hand over State-controlled lands to the peasants, officials invoked Cuba’s “current legislation” to forbid farmers to set up their homes in farm areas.

Such absurd restrictions discouraged many and pushed others to quit the food production sector altogether and devote themselves to securing construction materials illegally, so as to be able to build a home elsewhere, far from prying looks.

Massive and hugely inefficient, the agricultural sector may well be the very paradigm of bureaucratic mismanagement, but it is far from being its only expression in the country. Cuba’s import system is a true bureaucratic gem, in which producers are those with the least say in official decisions.

A Cuban factory wishing to import a piece of equipment from abroad is required to approach the importing company assigned to it by the State. Technically speaking, this “importer” does not actually import anything – it merely puts out a bid among foreign companies with offices in Cuba.

Employees from these companies are the ones who travel to the manufacturing country, purchase the equipment and bring it back to Cuba. Under the country’s current model, the manager of a Cuban factory is expressly forbidden from contacting the foreign export company directly.

Thus, the person who makes the order is an office clerk who knows little or nothing about what the company needs and who, in the best of scenarios, will opt for the cheapest piece of equipment available, something which often leads to serious production problems later.

The status quo relations of production continue to find support in Cuba, from the defenders of “Real Socialism.” Ironically, or not surprisingly, most of them are isolated from the reality of this socialist system, enjoying government perks that compensate for the “small inconveniences” of everyday life.

In the worst cases, these “intermediating State importers” are bribed by foreign companies so that they will purchase obsolete or poor-quality equipment. In recent weeks, Cuban courts tried hundreds of State employees implicated in these types of “deals”.

These are the “relations of production” which keep equipment in Cuban factories paralyzed for months, waiting for the needed spare parts, while State importers take all the time in the world to decide what to purchase.

Most Cubans I know support the changes that have been implemented thus far and want these to make headway quickly and effectively. It is hard to come by anyone who feels nostalgia for the old model, which proved more efficient in establishing restrictions than in satisfying the material needs of the population.

But these relations of production continue to find support in Cuba, from the defenders of “Real Socialism.” Ironically, or not surprisingly, most of them are isolated from the reality of this socialist system, enjoying government perks that compensate for the “small inconveniences” of everyday life.

During a recent debate, a Cuban journalist suggested that these officials catch a city bus from time to time, so as to immerse themselves in everyday reality. When they told me of this, I recalled the old anarchist graffiti which warned us that “those who do not live the way they think end up thinking the way they live.”

Fernando Ravsberg

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Toronto Businessman Sarkis Yacoubian sentenced to 9 years in Cuba on corruption charges

Posted on June 20, 2013 by Arch Ritter

Toronto man sentenced to 9 years in Cuba on corruption charges

thestar.com/ By: Julian Sher Investigative News reporter, Published on Wed Jun 19 2013

For almost two years as he sat in a Havana prison awaiting trial on corruption charges, North York businessman Sarkis Yacoubian held out hope that by collaborating with the Cuban authorities and fingering a wide web of foreign and domestic corporate intrigue, he would get some leniency.

“They are going to bring down my sentence, provided that I go along with them,” he had told the Star in a series of exclusive jailhouse phone interviews.

But that didn’t happen.

Three weeks after he was put on trial in late May, Yacoubian finally got word he has been sentenced to nine years in jail.

Sarkis Yacoubian

“We were shocked,” said Krikor Yacoubian, Sarkis’ brother in Toronto. “We were anticipating less with the collaboration, but they did not budge much.”

Krikor says his jailed brother was stunned when he first heard the news from his Cuban lawyer.

“He was silent for awhile, for a good minute,” he said. “Not tearful or angry. He said, ‘OK let’s go to the next step.’”

That next step, the family says, will be a protracted battle to try to get the 53-year-old Yacoubian transferred to Canada to serve out his sentence here.

“To my knowledge it is the first time that any Canadian businessman has been sentenced for corruption,” said John Kirk, a professor at Dalhousie University’s Department of Spanish and Latin American Studies who has written several books on Cuba.

“Clearly this is intended to send a message to Cubans and foreign investors alike,” he said. “Several deputy ministers in Cuba and dozens of bureaucrats have also received heavy sentences.”

Yacoubian’s cousin and business associate, a Lebanese citizen named Krikor Bayassalian, was sentenced to four years as a co-defendant, the family says.

The details of the key Canadian connection to Cuba’s widening corruption scandals were revealed last month in a joint investigation by the Toronto Star and El Nuevo Herald, the Spanish-language affiliate of the Miami Herald.

Arrested in July 2011 and detained without charges, Yacoubian – a McGill MBA graduate who operated a $30 million transport and trading company called Tri-Star Caribbean — was formally accused in April of bribery, tax evasion and “activities damaging to the economy.”

Yacoubian disputed many of the specifics of the case but he said he decided to cooperate with the Cubans, exposing what he called the “black forces” of corruption and naming more than a dozen foreign companies and executives.

“I told everything and I told how these schemes were done,” he told the Star. “It was just eating me alive. Maybe in my conscience I wanted my company to be brought down so that I could tell once for all things that are going on.”

In September 2011, Cuban authorities arrested a second GTA man –73-year-old Cy Tokmakjian, whose $80 million Tokmakjian Group company is one of the largest foreign operations in Cuba.

His family told the Star he has still not been charged.

Krikor Yacoubian says the family has decided not to appeal his brother’s sentence but to immediately start the lengthy legal and diplomatic manoeuvres to get Sarkis transferred to Canada under a prisoner transfer treaty Canada signed with Cuba in 1999.

“I don’t want my brother to rot in Cuba,” said Krikor Yacoubian.

 

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Jorge Piñón: ¿Un futuro petrolero para Cuba?

Posted on June 19, 2013 by Arch Ritter

Lenier Conzalez Mederos y Roberto Veiga Gonzalex entevistaron a Jorge Piñón , un cubanoamericano, que salió de la Isla como parte de la Operación Peter Pan, y tantos años después sigue hablando en primera persona cuando se refiere a Cuba. Se desempeñó como presidente para América Latina de la empresa petrolera AMOCO Oil, y  actualmente es investigador del Centro de Política Internacional en Energía y  Medioambiente de la Universidad de Austin (Texas). La entrevista tuvo lugar en el hotel  Meliá Habana, Cuba.

Here is the original interview:   Espacio Laical Entrevista a Jorge Pinon, June 2013

The original is at the web site of  Espacio Laical.

Camilo Cienfuegos Refinery

Jorge Piñón

 

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“Political Science”: When Will Cuban Universities Join the World?

Posted on June 17, 2013 by Arch Ritter

By Arch Ritter

 In 1993, the Faculty of Economics at the University of Havana decided that it had to incorporate mainstream economics into its curriculum because “Soviet” or “central planning” style economics had virtually disappeared following the break-up of the Soviet Union and the Soviet Bloc. After some discussions with the International Development Research Center (IDRC) in Ottawa, a Masters in Economics Program commenced operation at the University of Havana principally for young Cuban professors of Economics plus others. The program was financed by IDRC and then the Canadian International Development Agency and had the support of the United Nations Economic Commission for Latin America and the Caribbean. It included Canadian and Latin American Professors with senior Cuban professors acting as counterparts.

The program ran from 1994 to 2000, and helped to “jump-start” the introduction of conventional economics into Cuban Universities. It contributed to the changing climate of opinion that has resulted in the new approach to economic policy adopted by President Raul Castro.  I am happy to say that it was my Economics Department here at Carleton University that offered its MA in collaboration with the University of Havana. A description of this Master’s Program in Economics offered at the University of Havana from 1994 to 2000 can be found here.

In contrast, the teaching of Political Science – or “Government” to use the Harvard label – in Cuban Universities appears to be virtually non-existent or else locked in a Soviet-era time-warp at this time. As far as I can determine from perusing the web sites of Cuban Universities, little has changed in this regard since about 1990.

During the 1960’s and early 1970’s, the University of Havana’s School of Political Sciences  (Escuela de Ciencias Políticas) was active at the Faculty of Humanities (Facultad de Humanidades)  This School was created in 1961 after the triumph of the Revolution as part of the University Reform (Reforma Universitaria). But during the decade of 1970 to 1980 the School was closed. Some of its activities were then assumed by the recently created “Ñico López” Party School (Escuela del Partido “Ñico López”), affiliated with the Cuban Communist Party, outside the University campus and with no relation to the University. The main purpose of the “Ñico López  Party School was and still is the formation of Party cadres.

Universidad de la Habana

One outstanding research center affiliated with the Communist Party namely the Centro de Estudios sobre sobre América (CEA) apparently got out of control and was effectively terminated. (See Haroldo Dilla’s commentary on the death of CEA in Cubaencuentro:  ¿Qué pasó con el Centro de Estudios sobre América?)

In 2013, one searches in vain for Departments of “Political Science” in Cuba. There are or have been University and Party Centers for the study of international relations such as the Instituto Superior de Relaciones Internacionales ((ISRI) and the  Centro de Estudios Hemisféricos y Sobre Estados Unidos(CEHSEU, formerly CESEU). But there seems to be a total absence of what one might identify as Political Science or “Government” in any part of the Universities. The closest the University of Havana seems to come to political science appears to be in the Filosofía Marxista Leninista program of the faculty of Ciencias Sociales y Humanísticas. This program seems to be totally removed from an objective analysis of how political systems actually operate in Cuba or anywhere else.  Not surprisingly, this program has a clear ideological orientation, as suggested by the first suggested type of employment for its graduates cited below, (though I suspect that the graduates would be increasingly unemployable with the exception of a handful of future professors teaching the same stuff):

“El filósofo tiene además una actuación especial en el trabajo político e ideológico, en tanto puede mostrar cauces metodológicos: holísticos, dialécticos, heurísticos, hermenéuticos, etc., desde perspectivas epistemológicas amplias, dialécticas y transformadoras, que permiten para acceder con profundidad a los dominios de la ciencia, al arte y a la vida cotidiana. Igualmente su actuación contribuye a develar nuevos horizontes epistemológicos, axiológicos y comunicativos, en la medida que, con sentido cultural, dialéctico, complejo y sistémico somete a crítica los momentos débiles de la racionalidad moderna y muestra la esencia de los nuevos paradigmas contemporáneos desde un enfoque marxista creador. En fin, su modo de actuación leninista creadora.”

Where are courses on Cuba’s actual political system, comparative politics, political theory, political philosophy, local politics and political sociology, not to mention the innumerable more specialized topics that one commonly finds in the course program of a Political Science department? (See Harvard’s extensive offerings here.)  

Universidad de Oriente, Santiago de Cuba

In the mid-1990s two Cuban professors, Miriam Gras and Gloria Leon of the University of Havana attempted to set up a network of researchers in Comparative Politics. For their efforts – and also for speaking out on political issues – they were fired from the University.

There are of course talented and widely recognized intellectuals both within and outside the universities who analyze US-Cuban relations and some aspects of international relations. But it is difficult to identify professors from Cuba’s universities who are courageous enough to “push the envelope” and to analyze Cuba’s political system seriously, directly and openly, or to adopt mainstream or conventional political science approaches in their work. The serious analyses of Cuba’s own political system and its functioning are the work mainly of off-shore analysts, either recent émigrés such as Haroldo Dilla Alfonso, Cuban-Americans such as Jorge Dominguez and Marifeli Perez-Stable and many others, or non-Cubans such as Vegard Bye of Norway – also among many others. To find critical analysis of Cuban politics within Cuba, one has to go to independent publications such as Espacio Laical linked to the Catholic Church in Havana and a couple of blogs such as SinEvasion, by Miriam Celaya.

Why is such political analysis essentially off-limits in Cuban universities? You can guess the answer.

One consequence of the absence of the discipline of Political Science in Cuba is that we have only a vague idea of how Cuba’s government actually functions. Who within the Politbureau and Central Committee of the party actually makes decisions? To what extent and how do pressures from the mass organizations actually affect decision-making, or is the flow of influence always from top to bottom rather than the reverse? What role do the large conglomerate enterprises that straddle the internationalized dollar economy and the peso economy play in the process of policy-formulation? Is the National Assembly simply an empty shell that unanimously passes prodigious amounts of legislation in exceedingly short periods of time – as appears to be the case?  One is left with a feeling that the real political system is one of black boxes within black boxes linked in various ways by invisible wires and tubes.

One hopes that Cuba’s universities soon will establish formal Departments of Political Science and that the academic staff will undertake real scientific analysis of Cuba’s political system.  

University of Havana, Faculty of Law in the background

University of Havana circa 1955

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Cuba Defends its Coastline

Posted on June 13, 2013 by Arch Ritter

By ANDREA RODRIGUEZ,  Associated Press Jun 12, 2:49 PM EDT

CAYO COCO, Cuba (AP) — After Cuban scientists studied the effects of climate change on this island’s 3,500 miles (5,630 kilometers) of coastline, their discoveries were so alarming that officials didn’t share the results with the public to avoid causing panic.

The scientists projected that rising sea levels would seriously damage 122 Cuban towns or even wipe them off the map. Beaches would be submerged, they found, while freshwater sources would be tainted and croplands rendered infertile. In all, seawater would penetrate up to 1.2 miles (2 kilometers) inland in low-lying areas, as oceans rose nearly three feet (85 centimeters) by 2100.

Climate change may be a matter of political debate on Capitol Hill, but for low-lying Cuba, those frightening calculations have spurred systemic action. Cuba’s government has changed course on decades of haphazard coastal development, which threatens sand dunes and mangrove swamps that provide the best natural protection against rising seas.

In recent months, inspectors and demolition crews have begun fanning out across the island with plans to raze thousands of houses, restaurants, hotels and improvised docks in a race to restore much of the coast to something approaching its natural state.

“The government … realized that for an island like Cuba, long and thin, protecting the coasts is a matter of national security,” said Jorge Alvarez, director of Cuba’s government-run Center for Environmental Control and Inspection.

At the same time, Cuba has had to take into account the needs of families living in endangered homes and a $2.5 billion-a-year tourism industry that is its No. 1 source of foreign income.

It’s a predicament challenging the entire Caribbean, where resorts and private homes often have popped up in many places without any forethought. Enforcement of planning and environmental laws is also often spotty.

With its coastal towns and cities, the Caribbean is one of the regions most at risk from a changing climate. Hundreds of villages are threatened by rising seas, and more frequent and stronger hurricanes have devastated agriculture in Haiti and elsewhere.

At Risk: Cayo Coco (above) and Maria la Gorda, Pinar del Rio, (below)

In Cuba, the report predicted sea levels would rise nearly three feet by century’s end.

“Different countries are vulnerable depending on a number of factors, the coastline and what coastal development looks like,” said Dan Whittle, Cuba program director for the New York-based nonprofit Environmental Defense Fund. He said the Cuban study’s numbers seem consistent with other scientists’ forecasts for the region. The Associated Press was given exclusive access to the report, but not permitted to keep a copy.

Cuba’s preparations were on clear display on a recent morning tour of Guanabo, a popular getaway for Havana residents known for its soft sand and gentle waves 15 miles (25 kilometers) east of the capital.

Where a military barracks had been demolished, a reintroduced sand-stabilizing creeper vine known as beach morning glory is reasserting itself on the dunes, one lavender blossom at a time.

The demolition nearby of a former swimming school was halted due to the lack of planning, with the building’s rubble left as it lay. Now inspectors have to figure out how to fix the mess without doing further environmental damage.

Alvarez said the government has learned from such early mistakes and is proceeding more cautiously. Officials also are also considering engineering solutions, and even determining whether it would be better to simply leave some buildings alone.

For three decades Guanabo resident Felix Rodriguez has lived the dream of any traveler to the Caribbean: waking up with waves softly lapping at the sand just steps away, a salty breeze blowing through the window and seagulls cawing as they glide through the crisp blue sky. Now that paradise may be no more.

“The sea has been creeping ever closer,” said Rodriguez, a 63-year-old retiree, pointing to the water line steps from his apartment building. “Thirty years ago it was 30 meters (33 yards) farther out.”

“We’d all like to live next to the sea, but it’s dangerous … very dangerous,” Rodriguez said. “When a hurricane comes, everyone here will just disappear.”

Cuban officials agree, and have notified him and 11 other families in the building that they will be relocated, though no date has been set. Rodriguez and several other residents said they didn’t mind, given the danger.

Since 2000, Cuba has had a coastal protection law on the books that prohibits construction on top of sand and mandates a 130-foot-wide (40-meter) buffer zone from dunes. Structures that predate the measure have been granted a stay of execution, but are not to be maintained and ultimately will be torn down once they’re uninhabitable.

Serious enforcement only began in earnest in recent months, as officials came armed with the risk assessment.

Some 10,000 sanctions and fines have been handed down for illegal development, according to Alvarez. Demolitions have so far been limited to vacation rentals, hotel annexes, social clubs, military installations and other public buildings rather than private homes.

“Less strict measures have been taken with the people,” Alvarez said, acknowledging that relocating communities is tough in a country with a critical lack of adequate housing.

One flashpoint is the powdery-white-sand resort of Varadero, a two-hour’s drive east of the capital, where lucrative hotels attract hundreds of thousands of visitors each year from Canada, Europe and Latin America.

Some 900 coastal structures have been contributing to an average of about 4 feet (1.2 meters) of annual coastline erosion, according to geologist Adan Zuniga of Cuba’s Center for Coastal Ecosystems Research, a government body. Building solid structures on top of dunes makes them more vulnerable to the waves.

“These are violent processes of erosion,” Zuniga said about regional development. “In many places the beaches are receding 16 feet (5 meters) a year.”

Varadero symbolizes Cuba’s dilemma: Tearing down seaside restaurants, picturesque pools and air-conditioned hotels threatens millions of dollars in yearly tourism revenue, but allowing them to stay puts at risk the very beaches that were the draws in the first place.

Cuban officials have tried to get around that choice by replenishing lost sand in Varadero, with plans to do the same next year at the Cayo Coco resort. But beach replenishment is an expensive remedy that Cuba can little afford to carry out nationwide. Zuniga said it costs $3 to $8 per cubic meter, and a single beach might contain up to 1 million cubic meters of sand.

The measure will still be necessary at Cayo Coco although the resort was developed with environmental mitigations such as keeping hotels behind the tree line and running a hydraulic system that keeps water circulating properly in an inland lagoon.

There are no publicly available figures on how many structures have been or will be razed across Cuba. Alvarez and Zuniga said officials are evaluating problem buildings on a case-by-case basis, taking into account the needs of local economic development.

They say nothing is off-limits; even the emblematic Hotel Internacional, a four-story resort built in 1950 as a sibling to the Fontainebleau in Miami, has been doomed to demolition in Varadero at an unspecified date.

Other installations are gradually being moved inland, and government officials are applying stricter oversight on new construction, they said. In May, authorities unveiled the near-completed Hotel Melia Marina Varadero and yacht club, which lies at a safe remove from the sea.

Cuba’s Communist government wields a unique advantage, one no other country in the region claims: The government and its subsidiaries control the island’s entire hotel stock, sometimes teaming with minority foreign partners on management. Cuba’s military-run Gaviota Group alone controls more than three-dozen major hotels.

So when the government makes up its mind to tear down a hotel, it can do so without having to worry about fighting a lengthy court battle against a displaced owner.

On top of that, oversight of the coastal initiative happens at the highest level possible: Cuba’s ruling Council of State, headed by President Raul Castro.

“He is leading this battle,” Alvarez said of Castro.

Whittle said the island can learn some things from Costa Rica, where significant swaths of coastal and inland terrain have been protected even as tourism flourishes. For Cuba, there’s a lot riding on striking the right balance.

“Will Cuba become a sustainable destination like Costa Rica?” Whittle asked. “Or will it go the way of Cancun and much of the rest of the Caribbean that has essentially sacrificed natural areas, marine and coastal ecosystems for economic development in the short run?”

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Cuban Blogger, ​Elaine Díaz, Reveres Fidel but Pushes for Reform

Posted on June 12, 2013 by Arch Ritter

The New York Times By NATALIE KITROEFF June 11, 2013, 2:42 pm

Elaine Díaz

Elaine Díaz may be the most important Cuban dissident you’ve never heard of. But that is perhaps because she doesn’t even call herself a dissident.

 

Ms. Díaz is a leader of a group of Cubans who are opening a new avenue for criticism in a country that, for the last 50 years, has offered its citizens only two options: with us or against us. Ms. Díaz insists that there is a third way. “Cuba has a lot to change,” Ms. Díaz said during a visit to New York last week, “but I don’t think you need to destroy the system to create something new.”

 

That’s a convenient view, because that system is paying her salary.

 

A professor of journalism at the University of Havana, a public institution, Ms. Díaz is an employee of the state. That has not stopped her from writing publicly and with disarming directness about the challenges of daily life in Cuba on her blog, La Polémica Digital, for the last five years. She is young, progressive and fiercely loyal to the Cuban government. But she says she is also determined to reform a socialist system that no longer works as well as it used to for the common man.

 

The delicacy of that relationship is not lost on Ms. Díaz. “I’ve been scared that maybe I’d write something that would be interpreted the wrong way,” she said, “and that I would be punished, or lose my job.”

 

She has managed to set herself apart in an increasingly cluttered Cuban blogosphere, earning respect for her thorough reporting and simple, moving prose. Last year she traveled abroad for a meeting of global bloggers in Nairobi, and last month she arrived in the United States for the annual Latin American Studies Association conference in Washington.

 

So far, Ms. Díaz said, she hasn’t heard a peep from the authorities about her writing. Indeed, the government has been surprisingly tolerant of Ms. Díaz and her colleagues – loosely affiliated under the moniker Bloggers Cuba – a fact that some experts attribute to the group’s willingness to self-censor.

 

Ted Henken, an expert on social media in Cuba, called these younger bloggers “silent dissidents,” adding, “Their big problem is that they’re constantly biting their tongue.”

 

Cuba’s more famous and far more radical critic, Yoani Sánchez, shares that view. When Ms. Díaz abruptly took a leave from her blog last August, Ms. Sánchez speculated that she had been forced off the keyboard by a government that had lost patience with her.

 

Ms. Sánchez, taking a jab at Ms. Díaz’s ties to the government, called her the “official Cuban blogger” and wrote that “Elaine Díaz has transgressed the limits of criticism permissible” for an employee of the state. Ms. Díaz insists that she stopped writing only to focus more intently on her teaching, and she has since resumed the blog.

 

But Ms. Díaz does acknowledge that there are taboo subjects, like the state of education or health care, that she is hesitant to discuss casually. “If I go to a dirty hospital, I’m not going to write about it,” she said, “because I have a commitment to the system.” Universal health care and free education are seen as the revolution’s most significant success stories, which makes it imperative to keep them intact, even as they quickly become well-worn myths.

 

In fact, for government loyalists like Ms. Díaz, it seems that, as you get closer to the core of the communist narrative holding Cuba together, the space for genuine debate shrinks. Rattling off a series of topics that she would be careful about touching, Ms. Díaz paused before the kicker: “Fidel Castro, for example, is sacred to us,” she said in an almost reverent tone. “At least in the world that I move around in, there’s a respect and historical gratitude” toward him.

 

“He’s a figure that, when you launch into criticism, it’s very difficult,” she added.

 

That approach may be more cautious than the tack taken by Ms. Sánchez and more extreme elements of the opposition, but that doesn’t mean it should be discounted. “It’s as important or more important when people who consider themselves believers express criticism because they can’t be as easily disqualified as people on the out and out, in the opposition,” said Mr. Henken, the expert on Cuba’s Internet. “Yoani is the acerbic agnostic, whereas Elaine is the critical believer,” he added.

 

Even the United States government is taking notice. Last month, Conrad Tribble, the deputy chief of the United States Interests Section in Havana, Washington’s diplomatic outpost in Cuba, made an unannounced visit to a public meeting of what The Associated Press called “Cuba’s pro-government Twitteratti.”

 

A brief video clip of the encounter posted on Crónicas de Cuba, the journalist Jorge Legañoa Alonso’s blog, showed Mr. Tribble, sporting a fuchsia Hawaiian shirt, saying he had come to talk with the group about things that the United States and Cuba share — “baseball, music, et cetera” — and on issues in dispute.

 

Video of an American diplomat interacting with Cuba’s “Twitteratti” in Havana last month, posted on YouTube by Jorge Legañoa Alonso, a journalist and blogger.

 

His presence was an olive branch in a diplomatic relationship where engagement on both sides has consisted mainly of covert operations and official bluster. It was also a sign of the growing influence of this corps of young bloggers, whom the State Department wants to cultivate a relationship with, despite their pro-Castro bent.

 

Ms. Díaz, who could not make the meeting but has interacted with Mr. Tribble on Twitter this year, said she appreciated the gesture.

 

@conradtribble Espero tengan la oportunidad de rectificar estos casos que limitan la libertad de intercambio académico entre ambas naciones

 

— Elaine Díaz (@elainediaz2003) 8 Apr 13

 

“He didn’t go there to make a speech or convince anyone, or try to impose anything,” she said. “He’s welcome. Any steps toward a closer engagement between the United States and Cuba, even if they’re small, are good.”

 

Ms. Díaz would know. In the two weeks she has spent in the United States, she said, “there have been moments that have changed my life, and have nearly made me cry.”

 

She recalled arriving at the Miami airport and being handed a cellphone by a stranger who saw that she was lost. Or a man in New York City who walked her to her host’s house when she was lost in a sea of apartment buildings in Washington Heights.

 

“I had the impression that in the United States, no one cares what you have to say, no one will talk to you, everyone is absorbed in their own world,” she said, adding that the image of “a very individualistic culture, it’s not what I’ve found.”

When she returns to Cuba in a week, Ms. Díaz said she would write about the experience on her blog. For now, she’s enjoying her stay in enemy territory.

 

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Remittances Drive the Cuban Economy

Posted on June 11, 2013 by Arch Ritter

By Emilio Morales and Joseph L. Scarpaci, Miami (The Havana Consulting Group).— Fidel Castro’s government reluctantly accepted remittances from abroad in 1993 when it realized it needed access to hard currency to survive.

It was a devastating ideological blow at the beginning of the so-called ‘Special Period in a Time of Peace’ because it revealed that the Cuban exile community had become a lifeline for the island. Suddenly, U.S. dollars started inundating the island and would never leave. Both the Cuban society and the exile community were startled by this bold move.

The former Cuban leader probably never imagined that the forced opening up to dollars was going to become the most efficient driver in the economy over the last 20 years. Not a single Cuban economist foresaw that outcome. Today, remittances reach 62% of Cuban households, sustain about 90% of the retail market, and provide tens of thousands of jobs.

Money sent from overseas far exceeds the value of the once powerful sugar industry which, in 1993, began a huge decline from which it has not recovered. Remittances in 2013 surpass net profits from tourism, nickel, and medical products manufactured by the Cuban biotech industry.

Table 1. Remittances versus Other Sources of Hard Currency in Cuba, 2012 (in millions of US dollars)

No.

Source

2012

1

Remittances received in cash

$2,605.12

2

In-kind remittances

$2,500.00

3

Total remittances

$5,105.12

4

Tourism revenues

$2,613.30

5

Nickel exports

$1,413.00

6

Pharmaceutical exports

$500.00

7

Sugar exports

$391.30

Data sources: Calculated by The Havana Consulting Group, based on their data and open-source statistics published by the Oficina Nacional de Estadísticas e Información (ONEI), Havana.

The table above shows that remittances ($5.1 billion) outstrip the leading four sectors of the Cuban economy combined ($4.9 billion). Moreover, the figures for items 4 through 7 do not take into account expenses incurred in generating those gross revenues (i.e., costs of processing sugar, manufacturing drugs, food imports, etc.). Sending remittances does not cost the Cuban government money, but it circulates throughout he economy and supports most Cubans in some way.

White House Policies Trigger Growth in Remittances

Barack Obama’s arrival in the White House has directly influenced the increase in money being sent to Cuba. In the past four years, $1 billion USD of remittances have infused the Cuban economy.

Cash remittances in 2012 reached a record $2.61 billion USD; a 13.5% increase over 2011.

In other words, cash remittances outweigh government salaries by 3 to 1. The current monthly mean salary according to ONEI (the official government statistics agency) is 445 Cuban pesos, or the equivalent of just under $19 USD. Today, the economically active work force is 5.01 million workers, of which about 80% (4.08 million) draw state paychecks, whereas the balance is self-employed, agricultural, or cooperative workers.

If we use the official exchange rates that one Cuban convertible peso (CUC) equals 24 pesos (CUP) or one US dollar, the annual payout for state workers is three times less than the volume of money that Cuban émigrés send to family back home. Include in-kind remittance contributions (gifts, appliances, clothing, etc., brought to Cuba during visits), and the ratio leaps to 5.5 to 1.

Behind this growth in sending money to Cuba is the opening up of travel to Cuba as well as eliminating restrictions on sending money there. In 2012, just over a half a million Cubans residing abroad visited Cuba, making them the second largest tourist group in the island’s market; only Canadians (1.1 million visits) surpass them.

Out-migration from Cuba –about 47,000 annually on average over the past decade or nearly a half million émigrés—is also a contributing factor because those who have most recently left the island are the ones most inclined to send money back home. That was not the pattern with the original exile community in the 1960s; sending dollars to the island was forbidden back then.

We also need to acknowledge that several reforms introduced by the Cuban government in the past three years have encouraged remittances. This cash infusion helps to start home restaurants (paladares), B&Bs, car rentals, and more recently the buying and selling of private cars and real-estate. These businesses are aided by the 1.6 million cell phones in use today –available to the general public only since 2007—of which 70% are paid for by Cubans living off the island.

Never at a loss to encourage remittances, the Cuban government announced just last month the opening of 118 Internet stations that charge very high hourly rates. The new cyber cafés will initially cluster in the tourist poles across the island and the provincial-capital cities.

At the present, then, the role the Cuban diaspora plays in developing the island’s economy has never been greater, despite the restrictions on how and where money can be invested. However, the short term is unlikely to witness a greater influx of capital beyond the diaspora’s giving. Witness the failures in recent offshore gas and oil oil drillings that have come up ‘dry’ and the political and economic crisis in post-Chávez Venezuela is mired. This may create a broader space for the exiles to have a more direct hand in rebuilding the country.

Like it or not, Cuban exiles carry economic clout on the island. They have a lot of skin in the game; some of it is economic, and a lot of it is love of family. Their role in shaping the lives of many will be transformative in years to come, and on both shorelines that straddle the Florida Straits.

Last Updated (Tuesday, 11 June 2013 04:20)

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The Economist: “A tale of politics, corruption and golf”

Posted on May 31, 2013 by Arch Ritter

 

May 25th 2013 | HAVANA |THE ECONOMIST

AFTER the 1959 revolution Fidel Castro declared that golf was a “bourgeois” hobby, unsuitable for communists. Most of the island’s courses were built on, and no new ones have been developed since. But the government has just given the go-ahead to a new golf resort, in what it claims is “the start of a whole new policy to increase the presence of golf in Cuba”. In the same week it pressed ahead with the prosecutions of several foreign businessmen for corruption. The developments, which seem to be linked, show how Cuba is changing its attitude to business.

The $350m Carbonera Club, near the beach resort of Varadero, is to be developed by Esencia, a British company. A few days before the project was approved, Esencia had staged a golf tournament which was won by Mr Castro’s son Antonio. The development will include residential properties available for purchase by foreigners. Other big tourism projects are under way. The government has given the go-ahead to the construction of a 1,300 berth marina, also in Varadero, which would be the largest in the Caribbean. The island’s airports are to be upgraded too, with help from Brazil’s development bank.

Raúl Castro, Fidel’s brother, has slowly begun to open Cuba’s economy since becoming president in 2008. Cubans may now buy homes and cars, and small businesses such as restaurants and bars have proliferated. But Raúl has been at pains to stress that his intention is to “update” Cuba’s socialist model, rather than reintroduce full-blown capitalism. Perhaps to make that clear, foreign businessmen on the island have had a particularly hard time under his watch. Several have been held without charge for almost two years, ostensibly for corrupt practices. Now, in a move which could be a precursor to their release, they are about to go on trial.

Sarkis Yacoubian, a Canadian of Armenian origin who ran a transport and trading company, will probably be first in court. In July 2011 state security officers raided his office and took him to Havana’s notorious detention centre, Villa Marista, where he apparently admitted paying bribes to state employees (all of whom, from labourers to managers, earn about $20 a month). Some officials were slipped a few ten-dollar notes, or a dinner. At least one was given $50,000.

Mr Yacoubian’s confession soon triggered further arrests. In September 2011 authorities detained his business partner turned rival, Cy Tokmakjian, a fellow Canadian-Armenian. His company, Tokmakjian, had the lucrative sole concession to import Hyundai vehicles to Cuba, and also supplied heavy machinery to the nickel industry.

A month later Amado Fahkre, a managing partner of Coral Capital, a British fund with property and art investments on the island, was arrested. The following year Coral’s chief operating officer, Stephen Purvis, was taken into custody, too. Many other foreign investors fled following the crackdown. Those who stayed complained that it had become much harder to meet Cuban officials.

By announcing the new golf investments at the same time as ending the legal limbo of the jailed foreigners, Raúl may be signalling that once again the island is open for business. The trials and the more relaxed attitude to investment are part of the same process, says one Western diplomat: “After two years of indecision, something is happening.”

Something has to. Cuba’s economy has long been propped up by Venezuela, which provides most of Cuba’s oil in return for tens of thousands of Cuban doctors and security advisers. Nicolás Maduro, Venezuela’s new president, has pledged loyalty to Cuba. But his narrow, disputed election victory last month, and Venezuela’s nosediving economy, mean that Cuba needs other options. Much as Fidel may disapprove, it seems that the sport of stockbrokers is part of the plan.

A Game for Revolutionaries?

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Cuban oil hopes sputter as Russians give up for now on well

Posted on May 31, 2013 by Arch Ritter

By Jeff Franks

Original Here: Cuban Oil Hopes Sputter…

HAVANA, May 29 (Reuters) – Russian state-owned oil company Zarubezhneft said this week it was giving up for now on a problem-plagued exploration well off Cuba’s north-central coast, which brings to an end the communist-led island’s only active project in its search for offshore oil fields.

The news was not all bad because the company said it would return to the same spot next year. But it was another blow to Cuba’s hopes for energy independence, which have acquired new urgency with the March death of Venezuelan President Hugo Chavez, the communist-led island’s top ally and benefactor.

The Russians’ plan to drill 6,500 meters (21,325 feet) below the sea floor and hopefully find oil appears to have been derailed by the same issue that others have encountered in Cuban waters – difficult geology – as well as problems with its rig, the Songa Mercur, which at one point lost its blowout preventer.

The Songa Mercur Drilling Platform

“Taking into consideration geological complications, Zarubezhneft and (Cuban state oil company) Cubapetroleo have jointly decided to make changes in the initial drilling program by dividing it into two stages,” the company told Reuters this week.

“The second stage of exploration work on Block L is due to be launched in 2014,” it said, declining to comment further. The well, begun five months ago, was in shallow water about 200 miles (320 km) east of Havana, near the popular tourist destination Cayo Santa Maria.

The premature end of the Zarubezhneft well was not totally unexpected because Songa Offshore, owner of the Songa Mercur, earlier said the rig would leave by June 1 for a project in Southeast Asia. It had originally been scheduled to stay in Cuba until July 1.

There was a Russian press report that the rig would come back for another attempt by Zarubezhneft, but Songa Offshore Chairman Jens Wilhelmsen told Reuters the report was “completely without foundation.”

“We have not any agreement that Mercur will return and we have not received any inquiries from Zarubezhneft that they want it back,” he said. “So I can just deny that Mercur will return.”

BACK TO SQUARE ONE

All of which means that Cuba is back to square one in its quest to tap into fields off its northern coast that it says may hold 20 billion barrels of oil. The U.S. Geological Survey has estimated a more modest 4.6 billion barrels.

In the last year, Spain’s Repsol SA, Malaysia’s Petronas and Venezuela’s PDVSA sank wells in waters more than a mile deep off Cuba’s northern and western coasts. They all came up dry, and encountered a thick layer of dense rock difficult to drill through.

The Caribbean island’s hopes now lie with projects under consideration that may or may not come to fruition and are likely at least a year or more away if they do. Should oil be found, it would take another three to five years to put it into production, experts say.

Time is of the essence for Cuba because, under a generous deal made with Chavez, it gets 110,000 barrels per day, or two-thirds of its oil, from Venezuela in exchange for the services of more than 40,000 Cubans, most of them doctors and other medical personnel.

Chavez’s successor, President Nicolas Maduro, vowed during a recent visit to Havana to keep the oil flowing, but he faces mounting economic problems and political pressure from opponents to stop shipping oil to Cuba.

Repsol, which also drilled an unsuccessful well in deep water near Havana in 2004, pulled out of Cuba, but some of the other oil partners are still around.

Petronas is continuing to conduct seismic studies in the four blocks it leases with Russian partner Gazprom and is considering another well, as is Venezuela’s PDVSA, which has four blocks at Cuba’s western tip, industry and diplomatic sources said.

A unit of India’s Oil and Natural Gas Corp, which had a share of the Repsol wells, has two offshore blocks of its own and has been looking for a partner to drill a well.

GARDENS OF THE QUEEN

In a development that is potentially both interesting and controversial, Norway’s Statoil ASA, which also partnered with Repsol, appears to be looking at possibilities on Cuba’s mostly unexplored Caribbean side.

A Cubapetroleo map on display at a recent geosciences conference in Havana indicated that as of last November, Cuba was in negotiations with the Norwegian oil giant to lease three large blocks along the central and southeastern coast, between the archipelago of the Gardens of the Queen and the coast in the Gulf of Ana Maria and the Gulf of Guacanayabo.

Statoil does not comment on pending projects, but industry sources said it may just be sniffing around as it does all over the world looking for oil prospects and that its level of interest remains to be seen. The company has not mentioned Cuba in its drilling plans for the next two years.

It is likely also mindful of the sensitivity and potential dangers of drilling near the Garden of the Queens, which is regarded as one of the world’s most pristine coral reefs and whose preservation as such has become a cause for international environmental groups.

The same Cubapetroleo map showed that a Brazilian firm, Synergy Corp, was in negotiations for a near-shore block on Cuba’s north coast that state-owned Petrobras abandoned two years ago, citing poor prospects.

Attempts to reach Synergy for comment were unsuccessful.

A number of factors are working against Cuba’s oil hopes, among them the political and logistical difficulties imposed by the long-standing U.S. trade embargo against the island.

The embargo makes it difficult to find rigs that do not violate its limitations on the use of U.S. technology in Cuba and, according to experts, adds an estimated 20 percent to costs because everything in the project has to be shipped in from distant, non-U.S. sources.

There is also Cuba’s history of failed wells, which makes it hard to compete for the oil industry’s interest in a world where there are many other areas with proven oil reserves.

“It is very difficult today with other opportunities out there for a major oil company to justify going to Cuba and spending what will certainly be over $100 million in areas where it is yet to be proven they have recoverable reserves,” said Jorge Pinon, an expert on Cuban oil at the Center for Energy and Environmental Policy at the University of Texas in Austin.

“It is going to be extremely challenging (for Cuba),” he said.

S
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