- The Washington Times - Wednesday, October 11, 2006

MIAMI

Cuba is anxious to revive its once mighty sugar industry and, with the help of foreign investors, become a global player in the fast-growing ethanol fuel sector, according to Cuba analysts and energy specialists.

It has been decades since the communist island stood alone at the top of the list of the world’s biggest sugar producers, but Cuban officials reportedly are adamant about reviving sugar, the country’s No. 1 export until the collapse of the Soviet Union in the late 1980s.

One Cuba analyst with close ties to the country’s sugar ministry noted that Cuban officials were seeking overseas assistance in reviving the industry, though they acknowledged that will be difficult because of the country’s chronic lack of revenue and resources.

Brazil is now king among the world’s sugar producers, and its decades-long ethanol program is the envy of Cuba and every other country hoping to capitalize on the alternative-fuel craze prompted by the jump in gasoline prices.

Cuba, however, is woefully behind the times in terms of sugar cane planting and production.

The island is producing a fraction of the sugar it did just 30 years ago. During the 1970s, Cuba was producing about 8 million tons of sugar a year. The Caribbean nation will likely produce just 1.3 million tons of sugar this growing season, according to forecasts.

Analysts attribute the dramatic decrease in production to the end of Soviet-era sugar subsidies and Cuba’s failure to maintain its sugar processing plants over the years.

“For centuries it was the backbone of the Cuban economy,” said Kirby Jones, president of the U.S.-Cuba Trade Association, a group of American businesses interested in ending the U.S. economic embargo on Cuba and restoring normal trade relations with the island nation.

Soon after the flow of money from Moscow stopped, global sugar prices dropped to 4 cents per pound and Cuba could no longer generate the revenue necessary to maintain production. “It just wasn’t economically viable anymore,” Mr. Jones said.

Now, with sugar commanding prices between 13 cents and 14 cents per pound, Cuba is looking for investors to help get the industry back on track. Spain is reportedly interested, as is China, already a partner with Cuba in its efforts to develop off-shore oil fields.

In response to the growing global demand for the commodity, Havana created a Cuban business society called ZERUS, which is charged with supervising investment projects in Cuba’s sugar sector.

ZERUS Director Jose Rivera Ortiz said in an recent interview with Cuban business magazine Opciones that Cuba’s Ministry of Foreign Investment has already approved the group’s initiative to revive the sugar industry — with an eye on ethanol.

“To the Cuban government, sugar is their El Dorado,” said Larry Birns, director of the Council on Hemispheric Affairs, a Washington think tank focused on Latin America. But Mr. Birns expressed skepticism about Cuba’s chances of resurrecting the long-neglected industry.

“The inefficiency of the system for the last 15-20 years has decreased production significantly,” said Jorge Pinon, an energy specialist who teaches at the University of Miami’s Institute for Cuban and Cuban-American Affairs.

According to Mr. Pinon’s estimates, Cuba needs $4.4 billion in foreign investment in its sugar ethanol industry over the next five years just to get the program started.

That won’t happen overnight and certainly not without the financial help of foreign investment, he said.

“If Cuba can get the foreign investment it needs, then that’s a different story; but right now it’s just wishful thinking,” Mr. Pinon said.

The only real solution to jumpstarting Cuba’s ethanol ambitions, some analysts say, would be an end to President Fidel Castro’s 47-year regime coupled with the cessation of the U.S. embargo.

By that study’s calculations, sugar would become Cuba’s No. 1 source of revenue once production levels return to 1970s levels — far surpassing the $2 billion Cuba now earns from tourism.

That’s a big if, of course, but one Cuba enthusiasts are adamant about pursuing.

“The question of the re-emergence of Cuban sugar is not if it will happen, but when,” said Mr. Jones of the U.S.-Cuba Trade Association, coupling his prediction with a call to restore normal trade relations between the United States and Cuba.

“There is a real choice to be made in the next few years [about ending the embargo],” Mr. Jones added. “Hopefully, by then, the lawmakers will come to their senses.”

Not everyone shares Mr. Jones’ enthusiam for free trade with Cuba, however.

“I don’t see that any justification should be made [to soften the embargo] for the agricultural or energy industry as part of our longstanding policy when it comes to Cuba,” said Tomas Bilbao, executive director of the Cuba Study Group, a Miami group of mainly Cuban-American businessmen who say they are committed to a “free and democratic” Cuba.

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