CubaSource January 12, 2001

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.

RUSSIAN PRESIDENT VLADIMIR PUTIN VISITS CUBA
   * Cuba cancels plans to finish building nuclear plant

     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.

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.

-------------------------------------------------------------
*********************
   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 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
*********************

     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.

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.

     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.

     One of the Soviet-era projects of interest to the
Russians was the nuclear generating plant at Juragua near
Cienfuegos in southcentral Cuba.

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
*********************

     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.

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.

     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