CHAPTER IV. ADVERSE EFFECTS OF THE BLOCKADE ON OTHER SECTORS OF THE CUBAN ECONOMY.
The sugar industry reported losses of 62,100,500 dollars between April 2010 and March 2011.
Due to the impossibility to import the necessary supplies for sugar mills, 13 mills began operations behind schedule for the 2010-2011 sugarcane harvest. As a consequence, raw sugar production fell short by 168,100 tons, which represented 57,700,000 dollars in losses. Having no access to the US market, Cuba is forced to import supplies from far-off producers at higher prices and with longer delivery times.
The Cuban tourism industry reported severe losses as a consequence of the US blockade, which amounted to 1,713,000,000 dollars.
On the basis of studies conducted by US tourism industry companies, it is estimated that the Cuban tourism industry lost 1,668,000,000 dollars in 2010, as a consequence of travel restrictions.
If the blockade did not exist, the Grupo Empresarial de Marinas y Nauticas, Marlin, would have made more than 10,000,000 dollars. With its more than 650 mooring berths, at 75% capacity this company could have approximately 179,000 days of ships docking per year (of an average length of 40 feet). Profits from docking fees alone would amount to 5,000,000 dollars, plus fees from amenities such as water and electricity, security and purser services, fuel, store sales and yacht repair services, among others.
The HAVANATUR office in Canada must pay 1.6% more than other tour operators in that country for credit card transactions, which results in losses of more than 1,000,000 dollars a year. Likewise, from April 2010 to March 2011 the Grupo ITH, a tourism industry supplier, suffered losses of 26,700,000 dollars due to the higher cost of supplies purchased from third countries, excessive interest rates for commercial credits, fluctuation of exchange rates, hard currency purchases and higher shipping costs.
The Civil Aeronautics Sector continues to suffer the consequences of the US blockade. From May 2010 to April 2011 it is estimated that the sector lost 276,506,681 dollars, among other reasons due to the use of less efficient aircrafts, additional expenses for renting planes, the high cost of fuel, spare parts and other supplies, and the inability to meet passenger demand. In this context, and as a consequence of the decision of Shell España to terminate its contract with Cubana de Aviación, the airline had to find a new supplier of fuel abroad, which resulted in losses of around 271,840 dollars.
Also in 2010, Cubana de Aviación attempted to resume online ticket sales, which proved extremely difficult due to the impossibility of using US dollars for transactions and the banks' reluctance to use other currencies, to the detriment of the airline’s positioning on the international market.
The lack of access to the US market to purchase spare parts for fuel supply trucks that operate in the Havana and Varadero airports, and jet fuel and spare parts for Cuban aircrafts, along with the inability to access plane fuelling stations, resulted in an additional 5,700,000 dollars in expenses in 2010.
If Cuban commercial flights to and from Canada could use US airspace, flight time and pollution would be reduced and Cubana de Aviación would save more than 2,026,000 dollars.
In June 2010, Argentina-based Sky Chefs, which had been providing catering services to Cubana de Aviación since 2001, abruptly suspended its services following instructions from its head office in Frankfurt, Germany, in connection with the Helms-Burton Act. In search of a new supplier, Cubana de Aviación turned to Gate Gourmet, another European catering company, but was turned down because the head office of Gate Gourment in Zurich, Switzerland did not approve the contract.
The Information Sciences and Communications sector has been severely damaged by the blockade. In the period in question, losses in this sector are estimated at 7,396,394 dollars.
On October 6, 2010, Twitter acknowledged full responsibility for having blocked text messages sent to this platform from cell phones in Cuba. Likewise, in April 2010, it was announced that Cuban users could not access certain Twitter features because they were in a blacklisted country.
In October 2010, a team from the Las Villas Central University that won an Honourable Mention at the International Collegiate Programming Contest of the Association of Computing Machines (ICPC-ACM) held in China and sponsored by US company IBM was deprived of the prize due to blockade regulations.
The EcoSol Electric Division, which trades in technology for renewable energy sources, has also suffered from the effects of the blockade. Most of these products are controlled by the Eaton Group, a US company that produces single-phase and three-phase systems used in distribution networks. Unable to benefit from direct purchases from the supplier, the EcoSol Electric Division has been forced to turn to third countries for spare parts and training services at higher prices.
Beginning in February 2011, the financial firm Synivere stopped payments for cell phone roaming services owed to the Cuban telecommunications company ETECSA, claiming that its bank could not conduct any transactions with Cuba. As a result, Cuba has been unable to collect 2,600,000 dollars for these services and has endured additional difficulties.
Damages caused to the Light Industry sector because of the blockade implemented by the US government against Cuba amounted to 9,760,200 dollars and 655,900 Cuban pesos.
Production in this industry has a direct impact on the provision of essential products and people’s quality of life.
The 1,494,900 dollars lost by Union Textil could have been used to produce 88,200 care packages for newborns, which represent 52% of the 2011 production plan.
If Union Poligrafica had been able to use the 1,649,700 dollars lost as a result of the blockade, it could have produced 9,200,000 high-quality notebooks, which represent approximately 21% of the national demand for notebooks for the 2010/2011 school year.
As a result of the blockade, Cuban soap manufacturer Union Suchel lost 1,368,600 dollars that could have financed the production of 872.8 tons of bath soap of the Liz brand, equivalent to 6,900,000 bars of soap.
In the period in question, Empresa de Pinturas VITRAL could have produced whitewash and enamel for 24,000 seventy-square-meter houses, if it had the 2,285,800 dollars it lost because of the blockade.
The transportation sector has not escaped the direct and extraterritorial effects of the US blockade, with losses totalling 244,583,000 dollars a year, mainly in the land and sea transportation sectors because of travel restrictions on US citizens, merchant and cruise ships to Cuba, and merchant and cruise ships from other countries that touch Cuban ports.
Cuba’s classification as a “risk country” due to the US blockade brought about a 40 to 50% increase in prices, and an increase in interest rates, which resulted in additional expenses of 39,000,000 dollars in purchases in this sector.
As ships that dock in Cuba run the risk of being blacklisted, profits from hiring Cuban personnel on foreign ships, even those from third countries, continues to suffer damages. In addition, Cuba cannot benefit from cruise ship taxes for passengers, crew members, and operational costs.
The blockade hinders the hiring of qualified Cuban personnel in the maritime sector since these professionals cannot be hired to work on yachts, cruise ships or merchant ships; as a result, Cuba loses 10,188,000 dollars a year.
The main cruise line companies in the world, CARNIVAL. ROYAL CARIBBEAN, STAR CRUISES, NCL (Norwegian Cruise Line), MSC and COSTA, operate with US capital. Although all of them sail the Caribbean Sea, they cannot hire Cubans to staff the crews because the cruise ships call at ports in the United States and Puerto Rico. Third-country owned cruise lines, such as BARCLAY, CGA-CGM, Hapag Lloyds cannot hire Cubans either because they also call at US ports.
Among losses in the exportation of goods and services for the marine repair industry is the cancellation of a 1,188,000 CUC (Cuban Convertible Currency) contract for the repair of the FOUR MOON Ship at a Cuban shipyard.
The impact of the US blockade on the Iron and Steel Industry was greater than last year with losses totalling 106,226,500 dollars as a result of increased import costs (47,225,058 dollars), the inability to access US technology (18,184,000 dollars), additional inventory expenses (13,668,000 dollars) and the increased cost of transportation (8,918,939 dollars).
The Grupo industrial de bienes de capital GBK, which produces metal structures, facilities, containers, furniture and equipment for a number of industries, suffered losses of 835,440 dollars, a sum which could have been used to purchase 710 tons of steel sheets to produce numerous industrial and household items, or 178,000 semi-finished grinding wheels to produce abrasives, a fundamental raw material used in the iron and steel industry.
The Grupo de Bienes de Consumo (GBC) invested 27,775,980 dollars to manufacture kb-4 laminar flows, stationary bicycles, wheelchairs, autoclaves, fume extraction hoods, fans, stoves, household refrigerators, molds, press tools, restaurant steam tables, and sanitary and construction fittings. If it would have had access to raw materials and other manufacturing components sold on the US market, the same quantity of products would have cost a total of 22,307,380 dollars, and the company would have saved 5,468,600 dollars. With the money saved, the company could have manufactured twice as many household refrigerators, that is, 60,000 instead of 30,000, for use by an equal number of households.
Commercial prohibitions and restrictions stemming from the blockade imposed on Cuba by the United States have continued to severely undermine the home repair and construction programs undertaken in the country. Between April 2010 and March 2011, it is estimated that damages in the sector ascended to 22,547,634 dollars.
On the basis of the average per-unit cost of different household repair and construction activities, it is estimated that at least one of the following could not be undertaken as a result of this:
The repair of 16,400 homes, at an average per-unit cost of 1,375 dollars.
Maintenance work for 27,330 homes, at an average per-unit cost of 825 dollars.
The construction of 1,132 new type-1 homes, at an average per-unit cost of 7,200 dollars.
The construction of 1,466 new type-3 homes, at an average per-unit cost of 5,049 dollars.
Cuba’s Basic Industry sector also suffered considerable damages, calculated at over 82,600,000 dollars, mainly due to the prohibition on exporting nickel to the United States and purchasing supplies and technology from US manufacturers.
The natural market for Cuban nickel is the United States, a country that in 2010 imported some 144,000 tons of raw nickel, chiefly from Canada, Russia, Norway and Australia. Keeping in mind the United States’ geographical proximity, Cuba could have exported more than 30,000 tons of nickel to this country each year. At the average international market price for 2010, these nickel exports represent more than 654,000,000 dollars.
Similarly, the United States continues to be one of the largest cobalt consumers in the world. In 2010 it imported some 11,000 tons of this metal from far-off producers, such as Norway, Russia and China, among other countries. Because of its geographical proximity, Cuba would be an ideal cobalt supplier that could sell the United States some 2,500 tons a year. At the average international price for 2010, this represents more than 98,500,000 dollars in Cobalt sales that are currently being denied to the island as a result of the blockade.
In the oil sector, the delivery of two balancers scheduled for June 2010 at a cost of 272,449.48 Euros to the Ñico Lopez and Hermanos Díaz oil refineries (in Havana and Santiago de Cuba, respectively) was cancelled after it was determined that several components of these units were manufactured in the United States. This forced Cuba to look for alternative suppliers, delaying the delivery some nine months and causing considerable economic damages.
The US government has also pressured oil companies that offer goods or services to Cuba or that have declared an interest in negotiating oil industry contracts with the country. This pressure has included sanctions against executives and their relatives, and has caused many companies interested in doing business with Cuba to leave the country, causing considerable economic damages.
The aforementioned clearly demonstrates that the United States’ blockade against Cuba has a direct and diverse impact on all of the country’s economic sectors, and that it is one of the main obstacles Cuba faces in its economic and social development.