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REUTERS: FACTBOX-Key political risks to watch in Cuba

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  • Walter Lippmann
    FACTBOX-Key political risks to watch in Cuba Mon Nov 1, 2010 10:24am GMT By Jeff Franks HAVANA Nov 1 (Reuters) - The success or failure of Cuba s economic
    Message 1 of 5 , Nov 1, 2010
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      FACTBOX-Key political risks to watch in Cuba
      Mon Nov 1, 2010 10:24am GMT

      By Jeff Franks

      HAVANA Nov 1 (Reuters) - The success or failure of Cuba's economic reforms will be the key issue to watch in the next year as the government moves to strengthen the economy and ensure survival of the island's communist system once the current aging leadership is gone.

      The cash-strapped government is looking for ways to cut spending while increasing income, and could get long-term help if offshore oil exploration slated to begin in 2011 is successful.

      All this occurs against a backdrop of only slightly tempered hostility with the United States, including an ongoing dispute over a U.S. contractor held by the Cubans on suspicion of spying.

      ECONOMIC CHANGES

      President Raul Castro has taken aim at Cuba's chronic economic problems with plans to slash 500,000 jobs from state payrolls by March while expanding the private sector and encouraging less reliance on the state.

      About 200,000 of those jobs are expected to shift over to employee-run cooperatives that will be created at businesses currently operated by the state. The government also says it will issue 250,000 new licenses for self employment and for the first time, the self-employed will be able to hire workers.

      Self employment was first allowed in communist Cuba during the economic crisis that followed the collapse of the Soviet Union, the island's main ally, in 1991. As of end 2009, there were 143,000 people licensed to work for themselves, and many more doing so illegally.

      The government's bet is that it can create enough jobs quickly enough to absorb the laid-off government workers, most of whom it says were not in productive positions. After the first 500,000 jobs are cut, it plans to slash another 500,000 over the next few years, likely meaning more private sector expansion lies ahead.

      There are many questions surrounding the reforms, which are the biggest since Raul Castro succeeded brother Fidel Castro as president in 2008 and promised economic change.

      Among them are whether the cumbersome government bureaucracy can move quickly to implement the plan and whether the new entrepreneurs will be too handicapped by regulations, taxes and lack of credit to succeed.

      Also, do the planned job cuts present the danger of many people ending up without work and if so, what will the consequences be in a socialist country where people basically have been guaranteed employment for decades?

      But the key question is whether the reforms will accomplish what Castro wants -- more productivity, a stronger economy and, ultimately, the survival of communism, installed after his brother took power in a 1959 revolution. Castro has said maintaining the system is key to protecting national sovereignty and that it must be preserved by future leaders.

      Other reforms have been made, particularly in agriculture, with the same goal in mind. Castro, trying to increase output and reduce dependence on budget-draining food imports, has leased fallow lands to private farmers, decentralized decision-making and given farmers more leeway in producing and selling their products. Despite that, agriculture production was down 7.5 percent in the first half of the year, as farmers complain that they are still too stifled by the state.

      What to watch:

      -- How quickly government moves to implement reforms.

      -- Numbers and performance of the newly self employed.

      -- Effects of government layoffs.

      -- Agricultural production.

      -- Further reforms.

      CASH SQUEEZE, SOURCES OF REVENUE

      Cuba, hit hard by hurricanes in 2008 and by the global financial crisis, has been so short of hard currency that it stopped paying most of its bills and froze Cuban bank accounts of many foreign businesses two years ago.

      The situation has eased, but is not yet resolved.

      To avoid future cash shortages, Castro has cut spending and sought more income for the state, which controls 85 percent of Cuba's economy. He has slashed imports by about 30 percent and will reduce outlays for employees with the planned job cuts. Cuba recently said its budget deficit had diminished.

      Taxes from the newly licensed self-employed are being looked upon as a new source of money, and Cuba is hoping to boost revenues from old standbys like nickel exports, and tourism, two of the island's top hard currency earners.

      The government has said it will allow construction of golf course developments, with the goal of attracting wealthier tourists. The courses will be a small piece of the tourist industry in Cuba, but, given golf's image as the leisure sport of the rich, they are a larger symbol of how far Cuba is prepared to go to improve its economy.

      The government also hopes one day to get more American tourists, should the U.S. ease or eliminate the ban on most travel to Cuba under its 48-year-old trade embargo against the island. Expected Republican gains in the U.S. Congress in the Nov. 2 mid-term congressional elections could weigh against any moves to ease the embargo.

      In a potentially game-changing development, a consortium led by Spanish oil firm Repsol YPF is expected to drill a second exploratory well in Cuba's part of the Gulf of Mexico sometime next year. It previously drilled an offshore well in 2004, but said it did not find oil in commercially viable quantities.

      The drilling rig it will use, which has been under construction in China, will then be passed on to other companies such as Malaysia's state oil firm Petronas and the offshore unit of India's ONGC to explore in the blocks they have leased in Cuban waters.

      The U.S. Geological Survey has estimated Cuba has about 5 billion barrels of oil offshore, but Cuba says it may have 20 billion barrels. A discovery of that magnitude would make Cuba energy independent, and likely an oil exporter, whereas now it depends on imports from its oil-rich socialist ally Venezuela.

      Russia's state oil company Zarubezhneft has said it also plans to begin exploration next year in two blocks adjacent to Cuba's coast.

      What to watch:

      -- Possible U.S. moves to ease its ban on travel to Cuba.

      -- Movement of nickel prices, start of golf course projects.

      -- Repsol's second deepwater exploratory well in Cuba.

      U.S.-CUBA RELATIONS

      Cuba's relations with the United States have dominated events on the island for more than a century. During the last five decades of open hostility, the United States has tried to unseat the Castro brothers through subversion, assassination, coercion and a half-baked invasion. A 48-year-old trade embargo meant to topple the Castros through economic strangulation remains in place despite its lack of success. Cuba has used it to gain international support by casting itself as David versus an overweening Goliath, and at home as a scapegoat for its economic problems.

      Despite some modest changes at the beginning U.S. President Barack Obama's administration, U.S.-Cuba relations have thawed only very slightly and near-term prospects for improvement look dim due to Cuba's detention of American aid contractor Alan Gross since December.

      Gross is being held on suspicion of espionage and providing illegal satellite communications equipment to government opponents, but has not yet been officially charged with a crime. The United States says he was only helping Jewish groups set up Internet access, but Cuba is suspicious because he was working for a U.S. federally-funded program seeking to promote political change on the island.

      The U.S. government says it will take no major initiatives to improve relations with Cuba as long as Gross is held. Cuba may want to hold him until it gets something in exchange, such as the return of five Cuban agents imprisoned in the U.S. or an end to the programs like the one that sent Gross to Cuba.

      The Cuban government is in the process of releasing political prisoners and sending them to Spain to resolve one of its biggest problems with the international community and to get its opponents out of the country.

      The United States and Europe have demanded the release of Cuba's political prisoners for years, but U.S. reaction to the recent releases has so far been guarded.

      The 27-nation European Union instructed its foreign affairs chief to explore an improvement in relations with Cuba, but has maintained its common position requiring progress on human rights and democracy before normalization of ties.

      Meanwhile, Cuba has steadily built relations with other key countries, among them China, Brazil, Russia and Spain. It has a special relationship with top trading partner Venezuela, whose President Hugo Chavez is close to Fidel Castro.

      What to watch:

      -- Fate of Alan Gross.

      -- Continued release of political prisoners.

      -- U.S. and EU reaction to Cuban reforms. (Editing by Anthony Boadle and Kieran Murray)

      =========================================
      WALTER LIPPMANN
      Los Angeles, California
      Editor-in-Chief, CubaNews
      http://groups.yahoo.com/group/CubaNews/
      "Cuba - Un ParaĆ­so bajo el bloqueo"
      =========================================
    • walterlx
      FACTBOX-Key political risks to watch in Cuba Tue Feb 1, 2011 5:20pm GMT By Jeff Franks HAVANA Feb 1 (Reuters) - Reforms aimed at modernizing Cuba s troubled
      Message 2 of 5 , Feb 4, 2011
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        FACTBOX-Key political risks to watch in Cuba
        Tue Feb 1, 2011 5:20pm GMT

        By Jeff Franks

        HAVANA Feb 1 (Reuters) - Reforms aimed at modernizing Cuba's troubled economy will be key as President Raul Castro tries to ensure that the communist system put in place five decades ago survives once its aging leaders are gone.

        The debt-ridden government is short of cash and is looking to reduce its role while maintaining control of an economy with a bigger private sector and less state spending.

        It could get long-term help if offshore oil exploration begins as planned in mid-2011 [ID:nN07233718], although ongoing rocky relations with the United States could interfere.

        ECONOMIC REFORMS

        Castro has begun slashing 500,000 jobs from state payrolls in a process that was supposed to conclude by March, but looks likely to take longer.

        About 200,000 of those jobs are expected to shift over to employee-run cooperatives converted from businesses now operated by the state or rental arrangements for such things as taxis.

        The government also has begun issuing 250,000 new licenses for self employment and for the first time, the self-employed are able to hire workers.

        At least 75,000 permits have been granted so far, and new small businesses selling food, pirated DVDs or other items have begun popping up. [ID:nN25272243]

        Self-employment was allowed in communist Cuba after the 1991 collapse of the Soviet Union, the island's main ally. In 2009, there were 143,000 licensed self-employed, and many more illegal ones.

        The government now hopes to create jobs quickly enough to absorb the laid-off government workers. After the first 500,000 jobs are cut, it plans to slash another 500,000 in the next few years, with more private sector expansion likely to come.

        In April, the ruling Communist Party will hold its first Congress since 1997 to ratify the reforms, many of which are already in action. Cubans are now debating them at forums across the island. [ID:nN09241030]

        Raul Castro, who succeeded his brother Fidel Castro as president in 2008, has said the reforms are critical to maintaining the communist system installed after the 1959 revolution. But it is unclear whether they will increase productivity and strengthen the economy as he hopes.

        Many Cubans are interested in working for themselves but are concerned that regulations, taxes and lack of credit will kill their businesses. [ID:nN25269725]

        Also, there are worries that planned job cuts may lead to social problems in a country where people basically have been guaranteed employment for decades. [ID:nN06122809]

        Castro has made other reforms, particularly in agriculture where he wants to raise output to cut dependence on budget-draining food imports. But food production has declined as farmers complain they are still too stifled by the state.

        What to watch:

        -- The numbers and performance of the newly self employed.

        -- The effects of government layoffs.

        -- Agricultural production.

        CASH PROBLEMS

        Cuba, drained of cash by hurricanes in 2008 and by the global financial crisis, defaulted on payments and froze foreign business bank accounts two years ago. [ID:nN02159253]

        The situation has eased but is not yet resolved [ID:nN24211495] and Castro has cut spending, slashed imports by a third and sought more state income to avert future cash shortages.

        Cuba is hoping to collect taxes from the newly self-employed and boost revenues from old standbys like nickel exports and tourism, two of its top hard currency earners.

        The government has said it will allow construction of golf course developments, with the goal of attracting wealthier tourists. [ID:nN04118234]

        U.S. President Barack Obama recently eased prohibitions on U.S. travel to Cuba [ID:nN14205232], but most Americans still cannot visit due to a trade embargo imposed since 1962.

        What to watch:

        -- Nickel prices, start of golf course projects.

        -- Efforts to tax self-employed.

        OIL PLANS

        Havana has big hopes for future oil development and is anxiously waiting for a consortium led by Spanish oil firm Repsol YPF to drill an exploratory well in Cuba's part of the Gulf of Mexico in 2011. The rig contracted by Repsol is expected to arrive in Cuban waters in late June or early July.

        U.S. Congressman Vern Buchanan of Florida has introduced legislation that would authorize punitive action against companies who drill in offshore Cuba, saying exploration there poses environmental dangers. U.S. oil companies are forbidden by the trade embargo from operating in Cuba. [ID:nN24203352]

        Other companies such as Malaysia's state-owned Petronas -- in partnership with Russian firm Gazprom Neft -- and a unit of India's ONGC plan to use the same Chinese-built rig to drill in their offshore Cuban leases. Russian state oil company Zarubezhneft said it would explore in two blocks off Cuba's coast in 2011 but is looking for partners. [ID:nN03329371]

        Cuba, which depends heavily on imports from its oil-rich socialist ally Venezuela, says it may have 20 billion barrels of oil in its waters, although the U.S. Geological Survey has estimated 5 billion barrels of oil.

        A unit of China National Petroleum Corp is set to begin a $6 billion upgrade of Cuba's Cienfuegos refinery, with financing mostly by China's Eximbank, backed by Venezuelan oil. [ID:nN22266891]

        What to watch:

        -- Repsol's exploratory well in Cuban waters.

        -- Fate of U.S. legislation on Cuba drilling.

        -- China's growing presence in Cuba's energy sector.

        U.S.-CUBA RELATIONS

        U.S.-Cuba relations have thawed slightly under Obama, but prospects for further improvement are hindered by Cuba's detention of U.S. aid contractor Alan Gross. [ID:nN24221723]

        Gross has been jailed since December 2009 on suspicion of espionage and providing illegal satellite communications equipment to government opponents.

        Washington says he was merely helping Jewish groups set up Internet access but Cuba is suspicious because he was working for a U.S. program promoting political change on the island.

        A U.S. official recently expressed cautious optimism that Gross will be tried, then freed. [ID:nN13112064]

        The Cuban government is in the process of releasing political prisoners and sending them to Spain to resolve one of its biggest problems with the international community and to get its opponents out of the country. [ID:nN2223242]

        While U.S. reaction has been guarded, the European Union has instructed its foreign affairs chief to explore improved relations with Cuba.

        Cuba has steadily built relations with other key countries, among them China, Brazil, Russia and Spain. It has a special relationship with top trading partner Venezuela, whose President Hugo Chavez is close to Fidel Castro and agreed in November to extend economic cooperation for another 10 years.

        What to watch:

        -- Fate of Alan Gross.

        -- Continued release of political prisoners.

        -- U.S. and EU reaction to Cuban reforms.

        (Editing by Kieran Murray)
      • walterlx
        FACTBOX-Key political risks to watch in Cuba By Jeff Franks HAVANA, Oct 3 (Reuters) - Cuba shut down its once-powerful sugar ministry and has begun a major
        Message 3 of 5 , Oct 5, 2011
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          FACTBOX-Key political risks to watch in Cuba
          By Jeff Franks

          HAVANA, Oct 3 (Reuters) - Cuba shut down its once-powerful sugar ministry and has begun a major reorganization of government as it moves ahead with reforms aimed at ensuring the survival of socialism once the current aging leaders are gone.

          New regulations will allow Cubans to more freely buy and sell cars for the first time since the 1959 revolution, although some restrictions remain. [nS1E78R10O]

          The health of Venezuelan President Hugo Chavez, Cuba's top ally and economic partner, remains a worry as he battles an undisclosed type of cancer, for which he is being treated on the communist island.

          A drilling rig contracted by Spanish company Repsol YPF is expected to arrive in Cuba in a few weeks to begin exploration for oil in the Caribbean country's part of the Gulf of Mexico.

          ECONOMIC REFORM

          Cuba will replace its sugar ministry with a state holding company after years of declining sugar output that hit bottom in 2009 with the worst harvest in a century. [nS1E78S0AG]

          New energy and mining ministries will be created and other ministries eliminated in a broad reorganization to be completed by Dec. 31. Most state companies are controlled by ministries and lose money, but will be made independent in hopes of improving their performance. [nS1E78T0I8]

          Cuban media reports say there are now 333,000 people working in the self-employed sector, the growth of which is being encouraged because the cash-strapped government wants to slash a million jobs from its payrolls. The goal is to have a third -- up from 15 percent in 2010 -- of Cuba's work force of 5.2 million working in the "non-state" sector by 2015.

          Cuban media said many state-owned small service businesses will be leased to employees starting this month to run essentially as private businesses, an extension of an experiment begun last year with barber shops and beauty salons.

          Still to be announced are reforms, promised by President Raul Castro, that will liberalize the sale of homes and loosen restrictive travel and immigration rules. [ID:nN1E7701VN]

          Castro is trying to raise agricultural output by handing out idle plots for planting and other measures. Food production is up this year, but still below 2005 levels and farmers are complaining that reforms are slow in coming. [nS1E78R08J]

          Two Canadian trading companies are under investigation as part of Castro's campaign to crack down on corruption that he says is a drag on the economy. [nS1E78F16C]

          What to watch:

          -- The pace and final version of reforms.

          -- The numbers and performance of the newly self-employed.

          -- Agricultural production.

          FINANCIAL HEALTH

          Cuba still is recovering from a liquidity crisis that led to a default on payments and freezing of foreign business bank accounts. [ID:nN24211495] President Castro said the bank accounts issue will be resolved by year's end, but many companies say they are still owed money.

          The government has said tax payments from the self-employed have increased revenues, while its top hard currency earners -- tourism and nickel exports -- have improved.

          Castro said Cuba's economy should grow 2.9 percent this year, up from 2.1 percent in 2010, but warned that global economic problems could darken the picture.

          Long-awaited golf course developments, aimed at attracting wealthier tourists, remain on hold. [ID:nN04118234]

          The first American tourists to visit Cuba under more flexible travel rules put in place by U.S. President Barack Obama began arriving in August. Some experts say as many as 100,000 additional Americans could come in under the new rules this year. [ID:nN1E77F13C]

          What to watch:

          -- Resolution of bank account access for foreign businesses.

          -- Effects of global economic problems.

          -- The growth of American travel to Cuba.

          OIL PLANS

          A Chinese-built drilling rig, the Scarabeo 9, is expected to arrive in Cuban waters by Nov. 1, where it will be used in the first major exploration of Cuba's part of the Gulf of Mexico. [ID:nN1E77P03U] Malaysia's Petronas, in partnership with Russia's Gazprom Neft, will get the rig after Repsol to drill in their offshore Cuban leases.

          Thirty-four members of the U.S. Congress, led by Cuban-born U.S. Rep. Ileana Ros-Lehtinen of Florida, asked Repsol in a letter to drop its plans, warning it could face prosecution for violating U.S. laws. [nS1E78R1P9] Repsol responded that it is breaking no laws. [nL5E7KU118]

          U.S. oil companies are forbidden from operating in Cuba by a long-standing U.S. trade embargo.

          Cuba depends on imports from its oil-rich ally Venezuela, but says it may have 20 billion barrels of oil offshore. The U.S. Geological Survey has estimated 5 billion barrels.

          China has signed an agreement to play a major role in increasing Cuban oil production and [ID:nN08140650] its state oil company is said to be considering leasing exploration blocks in Cuban waters. [ID:nN1E76C1S6] China has also committed to negotiations of contracts for a $6 billion expansion of Cuba's Cienfuegos refinery and a liquefied natural gas project. [ID:nN22266891]

          What to watch:

          -- Arrival of drilling rig.

          -- Results of Repsol's exploratory well.

          -- U.S. pressure to stop the drilling.

          -- China's growing involvement in Cuban oil development.

          FOREIGN RELATIONS

          A major concern for Cuba is the health of Chavez, who provides 114,000 barrels of oil a day and investment to Cuba.

          He has been undergoing chemotherapy in Cuba and said he expects a full recovery, but his death or departure from office would be a big blow to the island. Chavez is very close to former leader Fidel Castro, who is 85 and increasingly frail.

          U.S.-Cuba relations, which thawed briefly under Obama, have been frozen by the imprisonment of U.S. aid contractor Alan Gross. [ID:nN24221723] He is serving a 15-year sentence for providing Internet gear to Cuban groups under a U.S. program promoting Cuban political change. [ID:nN12265306]

          Former New Mexico Gov. Bill Richardson, a veteran diplomatic troubleshooter, visited Cuba in September to try to negotiate Gross' release, but left empty-handed and on bad terms with the Cuban government. [nS1E78C252]

          Cuba is angry that five Cuban agents have been jailed in the United States since 1998, and has given no indications that Gross will be released early.

          What to watch:

          -- Health of Chavez.

          -- Continued imprisonment of Alan Gross. (Additional reporting by Marc Frank; Editing by Kieran Murray)
        • bellaestevez@earthlink.net
          Is true that the death of President Chavez could be a mayor blow to the Cuban Revolution, BUT we can t forget there is another country stronger than
          Message 4 of 5 , Oct 5, 2011
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            Is true that the death of President Chavez could be a mayor blow to the Cuban Revolution, BUT we can't forget there is another country stronger than Venezuela, Brazil, who may be the substitute if in fact there is no other member of Chavez' Party that may be elected President of Venezuela.

            We must remember the Venezuelan opposition to President Chavez is made of, regarding their leaders, from the most corrupt political parties from recent past.

            On the other hand today there is a tendency from the Latin American countries to unite in several fields in order to defend themselves from their natural enemy, the US empire.

            I left for the end of this writing the proven fact that the Cuban people have had worse times, like the disappearance of the Soviet Union and other European countries, with whom it had almost 90% of their business and the revolution has survived and become stronger than ever.

            Jose M. Estevez
            =======================================

            -----Original Message-----

            From: walterlx

            Sent: Oct 5, 2011 12:12 PM

            To: CubaNews@yahoogroups.com

            Subject: [CubaNews] REUTERS: FACTBOX-Key political risks to watch in
            Cuba

            FACTBOX-Key political risks to watch in Cuba

            By Jeff Franks

            HAVANA, Oct 3 (Reuters) - Cuba shut down its once-powerful sugar
            ministry and has begun a major reorganization of government as it
            moves ahead with reforms aimed at ensuring the survival of socialism
            once the current aging leaders are gone.

            New regulations will allow Cubans to more freely buy and sell cars
            for the first time since the 1959 revolution, although some
            restrictions remain. [nS1E78R10O]

            The health of Venezuelan President Hugo Chavez, Cuba's top ally and
            economic partner, remains a worry as he battles an undisclosed type
            of cancer, for which he is being treated on the communist island.

            A drilling rig contracted by Spanish company Repsol YPF is expected
            to arrive in Cuba in a few weeks to begin exploration for oil in the
            Caribbean country's part of the Gulf of Mexico.

            ECONOMIC REFORM

            Cuba will replace its sugar ministry with a state holding company
            after years of declining sugar output that hit bottom in 2009 with
            the worst harvest in a century. [nS1E78S0AG]

            New energy and mining ministries will be created and other ministries
            eliminated in a broad reorganization to be completed by Dec. 31. Most
            state companies are controlled by ministries and lose money, but will
            be made independent in hopes of improving their performance.
            [nS1E78T0I8]

            Cuban media reports say there are now 333,000 people working in the
            self-employed sector, the growth of which is being encouraged because
            the cash-strapped government wants to slash a million jobs from its
            payrolls. The goal is to have a third -- up from 15 percent in 2010
            -- of Cuba's work force of 5.2 million working in the
            "non-state" sector by 2015.

            Cuban media said many state-owned small service businesses will be
            leased to employees starting this month to run essentially as private
            businesses, an extension of an experiment begun last year with barber
            shops and beauty salons.

            Still to be announced are reforms, promised by President Raul Castro,
            that will liberalize the sale of homes and loosen restrictive travel
            and immigration rules. [ID:nN1E7701VN]

            Castro is trying to raise agricultural output by handing out idle
            plots for planting and other measures. Food production is up this
            year, but still below 2005 levels and farmers are complaining that
            reforms are slow in coming. [nS1E78R08J]

            Two Canadian trading companies are under investigation as part of
            Castro's campaign to crack down on corruption that he says is a drag
            on the economy. [nS1E78F16C]

            What to watch:

            -- The pace and final version of reforms.

            -- The numbers and performance of the newly self-employed.

            -- Agricultural production.

            FINANCIAL HEALTH

            Cuba still is recovering from a liquidity crisis that led to a
            default on payments and freezing of foreign business bank accounts.
            [ID:nN24211495] President Castro said the bank accounts issue will be
            resolved by year's end, but many companies say they are still owed
            money.

            The government has said tax payments from the self-employed have
            increased revenues, while its top hard currency earners -- tourism
            and nickel exports -- have improved.

            Castro said Cuba's economy should grow 2.9 percent this year, up from
            2.1 percent in 2010, but warned that global economic problems could
            darken the picture.

            Long-awaited golf course developments, aimed at attracting wealthier
            tourists, remain on hold. [ID:nN04118234]

            The first American tourists to visit Cuba under more flexible travel
            rules put in place by U.S. President Barack Obama began arriving in
            August. Some experts say as many as 100,000 additional Americans
            could come in under the new rules this year. [ID:nN1E77F13C]

            What to watch:

            -- Resolution of bank account access for foreign businesses.

            -- Effects of global economic problems.

            -- The growth of American travel to Cuba.

            OIL PLANS

            A Chinese-built drilling rig, the Scarabeo 9, is expected to arrive
            in Cuban waters by Nov. 1, where it will be used in the first major
            exploration of Cuba's part of the Gulf of Mexico.
            [ID:nN1E77P03U] Malaysia's Petronas, in partnership with
            Russia's Gazprom Neft, will get the rig after Repsol to drill in
            their offshore Cuban leases.

            Thirty-four members of the U.S. Congress, led by Cuban-born U.S. Rep.
            Ileana Ros-Lehtinen of Florida, asked Repsol in a letter to drop its
            plans, warning it could face prosecution for violating U.S. laws.
            [nS1E78R1P9] Repsol responded that it is breaking no laws.
            [nL5E7KU118]

            U.S. oil companies are forbidden from operating in Cuba by a
            long-standing U.S. trade embargo.

            Cuba depends on imports from its oil-rich ally Venezuela, but says it
            may have 20 billion barrels of oil offshore. The U.S. Geological
            Survey has estimated 5 billion barrels.

            China has signed an agreement to play a major role in increasing
            Cuban oil production and [ID:nN08140650] its state oil company is
            said to be considering leasing exploration blocks in Cuban waters.
            [ID:nN1E76C1S6] China has also committed to negotiations of contracts
            for a $6 billion expansion of Cuba's Cienfuegos refinery and a
            liquefied natural gas project. [ID:nN22266891]

            What to watch:

            -- Arrival of drilling rig.

            -- Results of Repsol's exploratory well.

            -- U.S. pressure to stop the drilling.

            -- China's growing involvement in Cuban oil development.

            FOREIGN RELATIONS

            A major concern for Cuba is the health of Chavez, who provides
            114,000 barrels of oil a day and investment to Cuba.

            He has been undergoing chemotherapy in Cuba and said he expects a
            full recovery, but his death or departure from office would be a big
            blow to the island. Chavez is very close to former leader Fidel
            Castro, who is 85 and increasingly frail.

            U.S.-Cuba relations, which thawed briefly under Obama, have been
            frozen by the imprisonment of U.S. aid contractor Alan Gross.
            [ID:nN24221723] He is serving a 15-year sentence for providing
            Internet gear to Cuban groups under a U.S. program promoting Cuban
            political change. [ID:nN12265306]

            Former New Mexico Gov. Bill Richardson, a veteran diplomatic
            troubleshooter, visited Cuba in September to try to negotiate
            Gross' release, but left empty-handed and on bad terms with the
            Cuban government. [nS1E78C252]

            Cuba is angry that five Cuban agents have been jailed in the United
            States since 1998, and has given no indications that Gross will be
            released early.

            What to watch:

            -- Health of Chavez.

            -- Continued imprisonment of Alan Gross. (Additional reporting by
            Marc Frank; Editing by Kieran Murray)

            This email was cleaned by emailStripper, available for free from
            http://www.papercut.biz/emailStripper.htm
          • walterlx
            FACTBOX-Key political risks to watch in Cuba Wed Jan 4, 2012 3:03pm GMT By Jeff Franks HAVANA Jan 4 (Reuters) - Cuba has opened more of its retail services to
            Message 5 of 5 , Jan 4, 2012
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              FACTBOX-Key political risks to watch in Cuba
              Wed Jan 4, 2012 3:03pm GMT

              By Jeff Franks

              HAVANA Jan 4 (Reuters) - Cuba has opened more of its retail services to the private sector and liberalized land lease terms so farmers can rent more state land and keep it in the family as reforms aimed at fortifying the socialist system for the future continue.

              The Caribbean island's self-employed sector has continued to grow and Cuba's long-delayed hope of exploring for oil offshore is close to becoming a reality as a Chinese-built drilling rig is expected to reach Cuban waters this month.

              If oil is found, it will take at least three to five years to produce, but eventually should reduce or eliminate reliance on oil imports from Venezuela, whose President Hugo Chavez, the island's top ally and economic partner, had surgery for cancer last year.

              ECONOMIC REFORM

              The government said it would allow Cubans to operate various service businesses such as appliance and watch repair, locksmith and carpentry shops, just as it has done the past year with 1,500 state barbershops and beauty salons. [ID:nN1E7BPOOL]

              They will pay a monthly fee for the government-owned space, buy supplies, pay taxes and charge what the market will bear in another step away from the doctrinaire communism imposed after the 1959 revolution.

              Government officials said there are now more than 357,000 people working in the self-employed sector, the growth of which is being encouraged because the cash-strapped government wants to slash a million jobs from its payrolls and encourage more private initiative. It has temporarily lowered taxes and begun providing credits to the new entrepreneurs.

              No figures have been released but government insiders said in October that just under 150,000 people had lost their jobs as the government pushes toward its goal of having up to 40 percent of the island workforce of 5.2 million in non-state jobs by 2015.

              Economy Minister Adel Yzquierdo Rodriguez told the National Assembly in late December that 170,000 state jobs would be cut in 2012 and as many as 240,000 new non-state jobs added.

              The Cuban state owns 70 percent of the land on the island and, according to figures given at the National Assembly, has leased almost 3.5 million acres (1.4 million hectares) to 150,000 private farmers since 2008 with the goal of increasing agricultural production so it can reduce budget-draining food imports. About 70 percent of the leased land was said to be under cultivation.

              Food output was up in 2011, but still below 2005 levels, so starting this month, in response to farmer suggestions, the amount of land they can rent has been quintupled to 165 acres (67 hectares) and leases extended from 10 years up to 25.

              The leases can be renewed and passed on to family members and farmers can build homes on the land. [ID:nN1E7BH02Q]

              President Raul Castro told the National Assembly that Cuba still expected to spend $1.7 billion on food imports in 2012.

              He also emphasized the importance of an ongoing crackdown on corruption, which already has shuttered three foreign firms and brought the arrest of top executives at Tecnotex, a company run by the Cuban military.

              Cubans had hoped Castro would announce reforms making it easier for them to travel abroad, but he said only that changes would be made gradually.

              The Cuban Communist Party and the government passed a series of reform plans this year that would move all business administration out of the ministries and grant newly formed holding companies more authority to make day-to-day decisions and control a percentage of their profits.

              Cubans are now allowed, for the first time in decades, to buy and sell homes and used cars. As of the end of November, 6,009 cars had changed hands and 301 homes had been sold, officials said.

              What to watch:

              - The pace of reforms and their consequences.

              - The development of small businesses.

              - The shedding of business management by the ministries.

              FINANCIAL HEALTH

              Castro said the economy grew 2.7 percent in 2011 and was expected to reach 3.4 percent in 2012.

              Cuba said it would end 2011 with a record 2.7 million tourists for the year and a 9 percent increase in tourism revenues over the $2.1 billion in 2010. Tourism is a top hard currency earner for the island.

              Reserves at the Bank for International Settlements stood at $5.649 billion in June, double what they were three years ago.

              Cuba is heavily indebted and still recovering from a liquidity crisis that led to a default on payments and freezing of foreign business bank accounts in 2009. [ID:nN24211495]

              Castro told the National Assembly that accounts for foreign suppliers to Cuba had been unfrozen and steps taken to prevent the problem from happening again.

              Hopes that reforms would bring more foreign investment have yet to materialize with no significant new ventures this year.

              Long-awaited golf course developments, aimed at attracting wealthier tourists, remain on hold. [ID:nN04118234]

              What to watch:

              - Resolution of outstanding short-term debt

              - Signs of increased interest in foreign investment.

              OIL PLANS

              A Chinese-built drilling rig, the Scarabeo 9, was in Trinidad and Tobago in early January and expected to reach Cuba later in the month. It will be used in the first major exploration of Cuba's part of the Gulf of Mexico. [ID:nN1E77P03U] Spain's Repsol YPF and its partners will get the rig first, followed by Malaysia's Petronas and its partner, Russia's Gazprom Neft.

              The project has drawn opposition in the U.S. Congress [ID:nS1E78R1P9], but, to allay safety concerns, Repsol will let the United States inspect the rig. [ID:nN1E79H1XN] [ID:nN1E7BJ077] U.S. companies are forbidden from operating in Cuba by the U.S. trade embargo.

              Cuba depends on imports from its oil-rich ally Venezuela, but says it may have 20 billion barrels of oil offshore. The U.S. Geological Survey has estimated 5 billion barrels.

              What to watch:

              - U.S. inspection of drilling rig.

              - Results of Repsol's exploratory well.

              - U.S. pressure to stop the drilling.

              FOREIGN RELATIONS

              A planned Papal visit in March [ID:nL6E7NC3I6] and improved ties with Brazil are bright spots even as it faces a more hostile Spanish government elected in November.

              A major concern for Cuba is the health of Chavez, whose government provides 114,000 barrels of oil a day and investment to Cuba. He underwent chemotherapy in Cuba and has declared himself cancer free [ID:nN1E79J13X], but experts say it is too soon to tell. If he were unable to continue in office, it would be a big blow to Cuba.

              U.S.-Cuba relations, which thawed briefly under President Barack Obama, have been frozen by the imprisonment of U.S. aid contractor Alan Gross. [ID:nN1E7AT2CK] He is serving a 15-year sentence for providing Internet gear to Cuban groups under a U.S. program promoting Cuban political change.

              Cuba is angry that five Cuban agents have been jailed in the United States since 1998, and has given no indications that Gross will be released early. [ID:nN1E7BR0BZ] (Additional reporting by Marc Frank; Editing by Kieran Murray)
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