U.S. DOLLAR UNCHANGED IN VALUE AGAINST THE PESO- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to US$1.00, for 21 Pesos and purchased the U.S. Dollar for 21 Pesos since 16 April 2000.  The official international exchange rate of one Peso to one U.S. Dollar, in effect for more than thirty years, remained unchanged.  The government of the Republic of Cuba maintains a fixed exchange rate for its international dealings and a more flexible exchange rate for domestic use.  The government of the Republic of Cuba does not fluctuate the value of the Peso for commercial transactions regardless of any fluctuation with the value of the U.S. Dollar or other currencies on the international market.  The Peso and the U.S. Dollar circulate freely in the Republic of Cuba.
 

CADECA Buy	CADECA Sell	From / To
21	21	16 April 2000 to 28 May 2000
20	21	27 January 2000 to 15 April 2000
21	21	24 December 1999 to 23 January 2000
21	22	2 October 1999 through 23 December 1999
20	22	13 September 1999 to 1 October 1999
20	20	1 September 1999 to 12 September 1999
20	21	13 August 1999 through 31 August 1999
22	22	16 June 1999 to 12 August 1999
22	21	13 April 1999 through 15 June 1999
21	21	15 March 1999 to 12 April 1999
20	21	4 March 1999 to 14 March 1999
21	21	19 February 1999 to 3 March 1999
21	20	13 January 1999 to 18 February 1999

OFAC REQUESTED TO RE-AUTHORIZE DIRECT COMMERCIAL BANK TRANSFERS- United States-based companies have requested that the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C. re-authorize direct correspondent banking services (which would use the S.W.I.F.T. system) between the United States and the Republic of Cuba.  (A) Currently, when a Republic of Cuba-based entity seeks to purchase a product (agricultural, books, magazines, newspapers, music, motion picture, farm, food, informational materials, medical equipment, medical instruments, medical supplies, medicated products, medicines, pharmaceuticals) or pay for a service (air charter services, airline over-flight, exhibitions, money transfer, package delivery, telecommunications, travel services) authorized by the OFAC and/or by the Bureau of Export Administration (BXA) of the Department of Commerce in Washington, D.C., the funds must be transferred to a third-country financial institution from which the United States-based company must then obtain the funds, or cash must be delivered from the Republic of Cuba to the United States.  (B) Currently, when a United States-based entity seeks to purchase a product (artwork, books, magazines, newspapers, music, motion picture, photographs, informational materials) or pay for a service (telecommunications, travel services, airline over-flight, exhibitions) authorized by the OFAC and/or by the Bureau of Export Administration (BXA) of the Department of Commerce in Washington, D.C., the funds must be transferred to a third-country financial institution from which the Republic of Cuba-based entities must then obtain the funds, or cash must be delivered from the United States to the Republic of Cuba.  The required triangular-payment system results in transaction cost increases of 5% to 15%, which, according to United States-based companies, have been significant enough that Republic of Cuba-based entities conclude transactions with non-United States-based suppliers.  Assisting United States-based companies in obtaining funds from Republic of Cuba-based entities on a timely basis would be the Republic of Cuba’s membership in S.W.I.F.T., a global bank-owned cooperative supplying secure messaging services and interface software to 6,766 financial institutions (banks, brokers, investment managers, securities depositories and clearing organizations, and stock exchanges) in 189 countries (including the United States).  The Republic of Cuba joined S.W.I.F.T. in 1990, through Republic of Cuba government-operated National Bank of Cuba after obtaining approval from S.W.I.F.T. for computer software compatible with S.W.I.F.T. as the S.W.I.F.T. ST-2OO computer operating system used at the time was manufactured within the United States.  Banks within the Republic of Cuba connected to S.W.I.F.T. are: Republic of Cuba government-operated Banco Central de Cuba, Republic of Cuba government-operated Banco Financiero Internacional, S.A., Republic of Cuba government-operated Banco Internacional de Comercio S.A., Republic of Cuba government-operated Banco de Credito Y Comercio, Republic of Cuba government-operated Banco Popular de Ahorro, Republic of Cuba government-operated Banco Metropolitano S.A., Republic of Cuba government-operated Banco Nacional de Cuba, and Republic of Cuba government-operated Banco Exterior de Cuba.

RYDER SYSTEM PRESIDENT COMMENTS ON SUBJECT OF TRADE WITH CUBA- Mr. Gregory T. Swienton, President and Chief Operating Officer of Miami, Florida-based Ryder System, Inc. (1999 revenues exceeded US$4 billion), was quoted as saying during a speech in Miami, Florida, that “It seems to me that one of the lessons of history, the reason that this problem still exists, is we don’t have normalized relations with Cuba.  We don’t have trade and commerce with Cuba.”  Members of the Board of Directors of Ryder System, Inc., include Mr. David Fuente, Chairman and Chief Executive Officer of Delray, Florida-based Office Depot, Inc. (1999 revenues exceeded US$10 billion); Mr. Vernon E. Jordan, Jr., Senior Managing Director, New York City, New York-based Lazard Freres & Co. LLC; The Honorable Lynn M. Martin, former United States Secretary of Labor; and Mr. Edward T. Foote II, President of Miami, Florida-based University of Miami.

THE BOEING COMPANY ISSUES MEDIA RELEASE MENTIONING CUBA- A media release on 25 May 2000 by Seattle, Washington-based The Boeing Company (1999 revenues exceeded US$57 billion) reported that Buenos Aires, Argentina-based Lineas Aereas Privadas Argentina (LAPA) had purchased six Boeing 737-7000 aircraft valued at US$270 million.  The media release mentioned that LAPA would soon begin charter flights to the resort area of Varadero (140 kilometers east of the city of Havana) in the Republic of Cuba.

MEMBERS OF CONGRESS FROM ARKANSAS VISITING CUBA, FORMER SENATOR VISITS- The Honorable Blanche L. Lincoln (D- Arkansas) and The Honorable Marion Berry (D- 1st Arkansas) are visiting the Republic of Cuba from 29 May 2000 to 31 May 2000 with a 16-member delegation including farmers and representatives of the Little Rock, Arkansas-based Arkansas Farm Bureau.  Senator Lincoln is a member of the Committee on Agriculture, Nutrition and Forestry of the United States Senate.  Representative Berry is a member of the Committee on Agriculture of the United States House of Representatives.  Reportedly, The Honorable David Pryor, a former Member of the United States Senate from the State of Arkansas, recently returned from a visit to the Republic of Cuba.  The State of Arkansas is the largest rice-producer of rice in the United States, and a significant producer of poultry and pork.  In 1998, the government of the Republic of Cuba reported 30,940 tons of poultry product imports valued at US$33.8 million.  Total Republic of Cuba rice production, including private farmers and Republic of Cuba government-operated cooperatives, was approximately 275,000 tons in 1999, 207,200 tons in 1998, and 329,900 tons in 1997.  Republic of Cuba nationals consume approximately 600,000 tons of rice on an annual basis.  The Republic of Cuba imports rice primarily from the People’s Republic of China and from Vietnam.  The General Administration of Customs (GAC) of the People’s Republic of China reported that total 1999 rice exports to the Republic of Cuba were 226,933 tons.  The government of Vietnam reported that total 1999 rice exports to the Republic of Cuba were 151,345 tons.  The government of Vietnam and the government of the People’s Republic of China provide the Republic of Cuba with technical assistance for the production of rice within the Republic of Cuba.  In April 2000, the government of Thailand (the world’s largest exporter of rice, 6.6 million tons in 1999) confirmed that a planned 100,000 ton sale of 25% broken rice to Republic of Cuba government-operated Alimport (under the auspice of the Ministry of Foreign Trade of the Republic of Cuba) had been cancelled due to the refusal of Alimport to provide a confirmed Letter of Credit for the purchase.  In February 2000, the government of Thailand reported that 150,000 tons (at a then reported price of approximately US$225.00 per ton) of 25% broken rice would be sold to Alimport with payment terms of 365 days, although all of the rice was expected to be delivered to the Republic of Cuba by the end of 2000.  Alimport may yet purchase some rice from Thailand, perhaps by barter.

CHINA SELLING LOWER QUALITY STETHOSCOPES TO CUBA- The Ministry of Public Health of the Republic of Cuba is importing stethoscopes from the People’s Republic of China government-operated companies at US$1.30 per unit.  According to one United States-based healthcare product company, the type of low quality stethoscopes produced within the People’s Republic of China are not produced within the United States, and one of the lowest cost per unit stethoscopes available for export from the United States to the Republic of Cuba is approximately US$6.00 (manufactured by Kyoto, Japan-based Omron Corporation).  United States companies manufacturing stethoscopes include: St. Paul, Minnesota-based 3M (1999 revenues exceeded US$15 billion); Palo Alto, California-based Hewlett Packard Company (1999 revenues exceeded US$42 billion); and Skaneateles Falls, New York-based Welch Allyn Medical Products (1999 revenues exceeded US$100 million).  Representatives of the Ministry of Public Health of the Republic of Cuba report that they would prefer to purchase stethoscopes from the United States as the quality is superior and delivery time from the People’s Republic of China is six weeks.  Republic of Cuba government-operated MediCuba (under the auspice of the Ministry of Public Health of the Republic of Cuba), which is responsible for the importation of healthcare products for use by Republic of Cuba nationals at hospitals, clinics, pharmacies, etc., reported that total healthcare product imports (purchase) in 1999 were approximately US$25 million, although senior-level representatives of the Ministry of Public Health of the Republic of Cuba have also reported that total healthcare product imports in 1999 were US$42 million.

INCREASING NUMBER OF UNITED STATES CITIES ESTABLISH “SISTER CITY” RELATIONSHIPS- More than thirty cities and towns within the United States have established or are establishing “sister city” relationships with cities and towns within the Republic of Cuba.  In 1993, Mobile, Alabama, established the first “sister city” relationship with the Republic of Cuba since 1959.  H.E. Eusebio Leal, Historian of the City of Havana, has visited Mobile, Alabama.
 

City Or Town Within The United States	City Or Town Within The Republic Of Cuba
Mobile, Alabama	Havana
Pittsburgh, Pennsylvania	Matanzas
Bloomington, Indiana	Santa Clara
Madison, Wisconsin	Camaguey
Tacoma, Washington	Cienfeugos
Oakland, California	Santiago de Cuba
Richmond, California	Regla
Seattle, Washington	To Be Announced
West Hollywood, California	To Be Announced

SHERRITT INCREASINGLY UNLIKELY TO INVEST IN NEW LARGE PROJECTS IN CUBA- Toronto, Canada-based Sherritt International Corporation (1999 revenues CA$372.3 million, approximately US$261 million) continues to shift resources away from investment opportunities within the Republic of Cuba and lessen available resources for investment opportunities within the Republic of Cuba.  On 26 May 2000, Mr. Ian W. Delaney, Chairman of Sherritt International Corporation, said that the company had “no immediate investment plans, so we’ll just return the cash to shareholders.”  In April 2000, Sherritt International Corporation retired US$17.5 million (CA$25 million) of the remaining previously issued 6% convertible unsecured subordinated debentures in the amount of CA$675 million (approximately US$475 million) issued in December 1996.  In May 2000, Sherritt International Corporation announced that the company would continue to retire, on a quarterly basis in US$17.5 million (CA$25 million) increments, remaining portions of the previously-issued 6% convertible unsecured subordinated debentures issued in December 1996.  In May 2000, Sherritt International Corporation announced that the company would commence a quarterly dividend policy after previous statements indicating that such a policy would not be considered.  Sherritt International Corporation is the third-largest investor within the Republic of Cuba, having investments in the nickel, oil, gas, electricity generation, communications, tourism, and agricultural sectors.  [The largest investor in the Republic of Cuba is Madrid, Spain-based Altadis (Alliance Tabac Distribution) which established a joint venture in December 1999 with the purchase (a partial debt-for-equity swap) of 50% of Republic of Cuba government-operated Habanos S.A., the exclusive worldwide marketer of Republic of Cuba-produced tobacco and cigar products, for a reported US$500 million.  Financial terms of the joint venture agreement have not been reported, nor was mention made of any provision for more than US$100 million Habanos S.A. reportedly owes Altadis.  Thus, the actual funds distributed and to be distributed to Habanos S.A. as consideration for its 50% interest in the newly established joint venture is uncertain.  Mr. Oscar Basulto, President of Habanos S.A., was quoted by the Financial Times newspaper in May 2000 as saying that the company “wouldn’t have hooked up if we didn’t need the money…”  The second-largest investor within the Republic of Cuba is Brussels, Belgium-based Stet International, a subsidiary of Rome, Italy-based Telecom Italia.  Stet International purchased a 29.29% interest (for approximately US$300 million) in Empresa de Telecomunicaciones de Cuba S.A. (ETECSA), the joint venture with the Ministry of Communications of the Republic of Cuba that operates the Republic of Cuba’s telephone services.]
 

	Sherritt International Corporation Revenues From The Republic of Cuba 1997-1999
Year	Total Revenues (Approximate US$)	% Of Total Revenues From Republic Of Cuba Operations
1999	US$260,642,200.00	27%
1998	US$219,012,500.00	16%
1997	US$244,603,800.80	11%
1996	US$199,849,300.00	53%
	Sherritt International Corporation Assets Within The Republic of Cuba 1997-1999
Year	Total Assets (Approximate US$)	% Of Total Assets Within The Republic Of Cuba
1999	US$940,068,500.00	24%
1998	US$905,154,600.00	22%
1997	US$931,354,900.00	17%
1996	US$959,965,300.00	22%

On 11 April 2000, Sherritt International Corporation repurchased through an issuer bid CA$25 million (approximately US$17.5 million) of CA$675 million (approximately US$475 million) in 6% coupon per CA$1,000.00 (approximately US$700.00) principal, and interest (payable semi-annually), 10-year (due on 15 December 2006) convertible subordinated debentures which were issued in December 1996 primarily for investments within the Republic of Cuba.  The debenture can be converted into restricted voting shares.  The company reported that the reasons were 1) that the company no longer required all of the funds raised and 2) that holders of the convertible subordinated debentures were unlikely to convert to non-voting shares in the company.  Sherritt International Corporation reported that the company’s “strong current earnings and successful business operations in Cuba mean that all of the corporation’s near-term investment objectives and financial obligations can be met from current and projected cash flow.”  According to Canada-based financial services industry executives, a primary goal of Sherritt International Corporation in retiring the 6% convertible unsecured subordinated debentures is to target short-sellers of the company’s stock.  In January 2000, short-sellers hold 12 million shares in Sherritt International Corporation; and on 25 May 2000 short-sellers held 7 million shares in Sherritt International Corporation.

According to a 4 November 1997 report issued by Toronto, Canada-based Midland Walwyn (a subsidiary of New York City, New York-based Merrill Lynch & Co., Inc., 1999 assets managed exceeding US$500 billion), “[t]he convertible debentures may outperform the common shares if Sherritt is slow to invest meaningful amounts of cash in Cuba, because the debentures pay interest.”

In 1999, Sherritt International Corporation announced the purchase of 9% of the outstanding shares of Perth, Australia-based Anaconda Nickel Limited, a public company.  The value of the transaction was reported as US$34.4 million.  Sherritt International Corporation is likely to increase its percentage of ownership in Anaconda Nickel Limited.

In 1999, Sherritt International Corporation reportedly considered a “spin off” of Republic of Cuba-focused operations into a separate company so that Sherritt International Corporation could re-focus approximately US$360 million remaining from the December 1996 convertible subordinated debenture offering toward investments within Canada and in other countries, such as Australia, Africa, and the United States.

In February 1998, Mr. W. Delaney, Chairman of Sherritt International Corporation, said that the CA$675 million would be fully invested within the Republic of Cuba within two years.

In February 1997, Mr. W. Delaney, Chairman of Sherritt International Corporation, said that the CA$675 million would be fully invested within the Republic of Cuba in three years to five years.

Mr. Ian W. Delaney, Chairman of Sherritt International Corporation, said that the CA$675 million was expected to be used for base infrastructure, telecommunications, and sugar, but not for tourism within the Republic of Cuba.  However, the company subsequently made a 25% indirect interest in a hotel located in the resort area of Varadero (140 kilometers east of the city of Havana) and a 12.5% indirect interest in a hotel in Havana.  Both hotels are managed by Palma de Mallorca, Spain-based Grupo Sol Melia.

In 1996, Sherritt International Corporation represented that the proceeds from the 1996 convertible subordinated debenture offering would be directed primarily to opportunities within the Republic of Cuba and, to a far lesser extent, to opportunities within other countries.  Mr. Ian W. DeLaney, Chairman of Sherritt International Corporation, speaking at the company’s 1999 annual shareholders meeting, said that the company would look to make investments in countries other than the Republic of Cuba because “there’s a limit to the rate of which you can invest in Cuba that’s limited by their infrastructure.”  In speaking about the overall performance of the company with respect to share price, Mr. DeLaney said, “We would not want to leave anyone with the impression that this has been a satisfactory investment.  It has not.”  Mr. Delaney had previously said that the CA$675 million was expected to be used for base infrastructure, telecommunications, and sugar, but not for tourism within the Republic of Cuba.

Within the “RISKS and UNCERTAINTIES” section of the recently-published 1999 Annual Report of Sherritt International Corporation, the company wrote that a “significant portion of the assets in which the Corporation has an indirect interest are located in Cuba.  The Cuban Government’s future policies relating to foreign investors and foreign exchange payments could be affected by the political environment and economic pressure resulting from its limited access to foreign exchange.  The Corporation is entitled to the benefit of certain assurances received from the Government of Cuba and certain agencies of the Government of Cuba that protect it from adverse changes in law, although such changes remain beyond the control of the Corporation an the effect of any such changes cannot be accurately predicted.”

SHERRITT CHAIRMAN ON BOARD OF DYNATEC CORPORATION- Mr. Ian W. DeLaney, Chairman of Toronto, Canada-based Sherritt International Corporation (1999 revenues approximately US$261 million) is a member of the Board of Directors of Richmond Hill, Canada-based Dynatec Corporation (1999 revenues approximately US$83.6 million).  Dynatec Corporation provides a broad range of professional services and contract operating expertise, principally to mineral exploration, mining, and refining companies in North America and other countries.  The company has an office in Salt Lake City, Utah, projects in Nevada and Louisiana, and is providing equipment to a project in Alaska.  Dynatec Corporation manufactures and markets Reed shotcrete and pumping equipment, Vac Air industrial vacuum systems, Omnex radio remote controls, and the Cryderman shaft mucker.

UPDATE ON GRUPO SOL MELIA OPERATIONS IN CUBA- The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., permits individuals subject to United States law to directly or indirectly control shares in Palma de Mallorca, Spain-based Grupo Sol Melia (1999 revenues of approximately US$650 million), which owns, leases, manages, or franchises 262 properties (68,799 rooms) in 25 countries, including the management and/or equity in 14 properties with a combined 4,759 rooms located within the Republic of Cuba.  Individuals subject to United States law hold approximately 16% of the publicly traded shares of Grupo Sol Melia.  The OFAC authorizes companies subject to United States law to have non-controlling investments in third country companies that have commercial activities within the Republic of Cuba provided that the investments do not result in control in fact of the third country company and provided that a majority of the revenues of the third country company are not produced from commercial activities within the Republic of Cuba. [OFAC 4 March 1994].
 

Grupo Sol Melia intends to have an additional five properties (2,274 rooms) operating within the Republic of Cuba within the next two years.  Two of the additional five properties are expected to be operational by the end of 2000.  Grupo Sol Melia expects to have a total of 28 properties within the Republic of Cuba by 2004.

Grupo Sol Melia reported that the company’s 14 properties located within the Republic of Cuba received approximately 300,000 visitors in 1999 out of the 1,602,781 total visitors to the Republic of Cuba in 1999.  The company expects to receive approximately 500,000 visitors in 2000 out of an estimated 1.8 million total visitors to the Republic of Cuba in 2000.

Grupo Sol Melia reported that, in 1998, the company derived approximately 11.8% of its gross revenues from Republic of Cuba-related operations.  In 1998, the percentage of Grupo Sol Melia’s total assets located within the Republic of Cuba was less than 2%.

Grupo Sol Melia has reported contradictory information regarding management fees from properties within the Republic of Cuba as a percentage of total revenues of the company: A) operations of the company within the Republic of Cuba, in terms of management fees earned, represented 1.36% (1,500 million Pesetas) of the total worldwide management fees (110.000 million Pesetas) received by Grupo Sol Melia in 1999 and B) operations of the company within the Republic of Cuba, in terms of management fees earned, represented approximately 6% to 7% (approximately 7,500 million Pesetas) of the total worldwide management fees (110.000 million Pesetas) received by Grupo Sol Melia in 1999.

Grupo Sol Melia reports that in 1999 the company had no assets within the Republic of Cuba.  The company had equity in two properties within the Republic of Cuba, one located in the resort area of Varadero (140 kilometers east of the city of Havana) and the other located in Havana.  Toronto, Canada-based Sherritt International Corporation has a 25% indirect interest in the hotel in Varadero and a 12.5% indirect interest in a hotel in Havana.  Both hotels are managed by Gupo Sol Melia.  The equity in the two properties would seem to have been 1) sold or transferred to an entity non affiliated with Grupo Sol Melia, possibly to Republic of Cuba government-operated Cubanacan S.A. for additional management contract considerations or 2) sold or transferred to the Escarrer family of Palma de Mallorca, Spain, which controls approximately 65% of Grupo Sol Melia.

CHINA PROVIDING US$200 MILLION TO FINANCE TELECOMMUNICATIONS EQUIPMENT PURCHASES- From 27 May 2000 to 30 May 2000, H.E. Wu Jichuan, Minister of Information of the People’s Republic of China, visited the Republic of Cuba.  He visited the Seventh Informatic International Fair 2000 where the joint venture, Gran Caiman Telecommunications S.A., had the largest presence including displays of digital switching equipment, telephones, and engineering designs.  Minister Wu announced that the government of the People’s Republic of China would provide US$200 million in financing to Republic of Cuba government-operated Empresa de Telecommicaciones de Cuba S.A. (ETECSA) to be used for the purchase of telecommunications equipment from People’s Republic of China-based companies and, presumably, Gran Caiman Telecommunications S.A.    Not stated was whether the new US$200 million in financing was for new purchases or to assist with purchases remaining from a November 1998 contract for the purchase of US$300 million in equipment from People’s Republic of China government-operated Great Dragon Telecom Co., Ltd.  In December 1999, Great Dragon Telecom Co., Ltd., and Republic of Cuba government-operated Empresa Productora de Tecnica Electronica (Copextel), a subsidiary of the Ministry of Information and Communications of the Republic of Cuba, established Gran Caiman Telecommunications S.A., to produce telephones and telecommunications equipment within the Republic of Cuba for use by ETECSA and for export to countries in The Americas.  The second-largest investor within the Republic of Cuba is Brussels, Belgium-based Stet International, a subsidiary of Rome, Italy-based Telecom Italia.  Stet International has a 29.29% interest (purchased for approximately US$300 million) in ETECSA, the joint venture with the Ministry of Communications of the Republic of Cuba that operates the Republic of Cuba’s telephone services.
 

From 10 May 2000 to 13 May 2000, H.E. Xiang Huaicheng, Minister of Finance of the People’s Republic of China, visited the Republic of Cuba.  The government of the People’s Republic of China provides the government of the Republic of Cuba with trade credits for imports, loans, and grants (food, healthcare, and education).  People’s Republic of China government-operated companies are participating in joint ventures and economic associations in the areas of telecommunications, agriculture, tourism, pharmaceuticals, residential cooling systems, and light industry.

From 1997 through 1999, People’s Republic of China government-operated Great Dragon Telecom Co., Ltd., installed a digital telecommunications system, donated by the government of the People’s Republic of China, on the Isla de la Juventud (150 kilometers south of the city of Havana).

In November 1998, People’s Republic of China government-operated Great Dragon Telecom Co., Ltd., signed a contract valued at US$300 million to supply telecommunications equipment to the Republic of Cuba.

During the last six years, ETECSA has placed into operation fifty digital switching stations and a countrywide microwave digital switching system.

In July 1998, H.E. Dr. Carlos Lage, a Vice President of the Council of State and Executive Secretary of the Council of Ministers of the Republic of Cuba, reported that US$900 million would be invested through the year 2004 to upgrade telecommunications within the Republic of Cuba, specifically focusing upon: 1) digitalization of the telecommunications system in all major cities within the Republic of Cuba 2) increase in the number of telephones per resident from 3 units per 100 citizens to 9 units per 100 citizens and 3) the installation of 50,000 public telephones.  Vice President Lage reported at the Seventh Informatic International Fair 2000 that 1) there were currently 3.5 telephone lines to 4 telephone lines per 100 citizens of the Republic of Cuba, of which 40% were using digital switching equipment 2) by 2004 there would be 1.64 million operational telephone lines and 3) by 2004 there would be more than 10 telephone lines per 100 citizens, of which 92% in the city of Havana and 78% in other areas of the Republic of Cuba would be using digital switching equipment.  The Republic of Cuba has 11 million citizens.

NEW ZEALAND COMPANIES EXPORTING COMMUNICATIONS EQUIPMENT AND FOOD TO CUBA- Christchurch, New Zealand-based Tait Communications Ltd (1999 revenues approximately US$75 million) has exported trunk-radio systems to the Republic of Cuba.  Tait Communications Ltd has a sales office in Houston, Texas, and has a Latin American Sales office in Miami, Florida.  Republic of Cuba government-operated Alimport (under the auspice of the Ministry of Foreign Trade of the Republic of Cuba) purchases powdered milk and cheese from New Zealand-based companies.  A Wellington, New Zealand-based company is importing un-roasted coffee beans from the Republic of Cuba.  New Zealand-based companies import sugar, sugar-based products (molasses), honey, tobacco products, and seafood products from the Republic of Cuba.  Bilateral trade between the Republic of Cuba and New Zealand was reported as US$29,125,000.00 in 1998, with exports from New Zealand accounting for approximately 95% of total bilateral trade.

FRANCE COMPANIES COMMENCE US$6 MILLION TUNNEL REPAIR- A consortium of Republic of Cuba government-operated companies and France-based companies commenced repair of the Havana Bay Tunnel on 20 May 2000.  Companies involved in the reported US$6 million project include: Paris, France-based Devexport (affiliated with the government of France and which specializes in obtaining supplies for large construction and investment projects) is coordinating importation of technology and materials for the project; Etde (a subsidiary of Paris, France-based Bouygues S.A., a construction, telecommunications, and media conglomerate) is coordinating electrical, ventilation, and high technology systems; Saclay, France-based Etandex (a general contractor) is managing the general construction activities; and Paris, France-based Simecsol (an engineering company) is managing the actual repairs and is the France-based companies’ liaison with Republic of Cuba government-operated companies.  The Havana Bay Tunnel was constructed in 1955 and 1956 by France-based Grands Travaux de Marseilles.  The Havana Bay Tunnel is expected to be partially closed for twelve months.  Some of the France-based companies involved in the Havana Bay Tunnel project have other commercial dealings within the Republic of Cuba:
 

In 1999, Bouygues Batiments, a subsidiary of Bouygues SA, reported that the company had signed an US$84 million contract with the Revolutionary Armed Forces of the Republic of Cuba-operated Gaviota S.A. to construct two five-star hotels (with a total of 992 rooms) at the resort area of Varadero, 140 kilometers east of the city of Havana.

In 1999, Paris, France-based Babcock Enterprise and the Republic of Cuba government-operated Empresa Fabrica de Calderas, a subsidiary of the Ministry of Sugar of the Republic of Cuba, established the first joint venture within the sugar industry, Babcock Caribe S.A., to produce boilers and other industrial machinery for use within the sugar industry, the tourism industry, and for export. Gross revenues are projected to be US$20 million during the first year of operation.

In 1996, Devexport and France-based Babcock & Gemco, reported that they had each signed contracts to upgrade the Antonio Maceo thermo-electric power plant located in Santiago de Cuba (850 kilometers east of Havana), the second-largest city in the Republic of Cuba.

NEW BUSINESS ANNOUNCED FOR COMPANIES FROM FRANCE- A delegation of executives in the banking sector, insurance sector, engineering sector, construction sector, and manufacturing sector visited the Republic of Cuba from 22 May 2000 to 27 May 2000.  Mr. Jean Dominique Camolli, President of the Mouvement des Enterprises de France, and leader of the delegation, reported that France-based companies, including thirty-eight companies already involved in joint ventures with Republic of Cuba government-operated companies, had invested a combined US$68 million since 1990 within the Republic of Cuba.  New projects include:
 

Paris France-based Colas (a public works company) signed a letter of intent with the Ministry of Transportation of the Republic of Cuba to establish a joint venture to maintain highways in the Republic of Cuba.

Paris, France based Davexport (affiliated with the government of France and which specializes in obtaining supplies for large construction and investment projects) concluded negotiations to repair (and provide US$3 million for the project) the railway connecting the city of Havana and city of Santiago de Cuba (860 kilometers east of Havana).

Paris, France-based Davexport (affiliated with the government of France and which specializes in obtaining supplies for large construction and investment projects) will supply forty-two refurbished Transeurope Express railway coaches to the Ministry of Transportation of the Republic of Cuba.

Paris, France-based Davexport (affiliated with the government of France and which specializes in obtaining supplies for large construction and investment projects) signed a letter of intent with Republic of Cuba government-operated Nickel Union of the Republic of Cuba to modernize (at a reported cost of US$20 million) transportation systems between nickel mines and processing facilities.

Paris, France-based Alstrom (an energy and transportation company) reported that the company was completing terms for a contact valued at US$20 million to upgrade and adapt a thermo-electric plant in Matanzas Province (120 kilometers east of Havana), and participate with other companies in the completion and operation of an oil refinery located in Cienfuegos (250 kilometers southeast of Havana).  Venezuela government-operated Petroleos de Venezuela (PDVSA), Republic of Cuba government-operated CubaPetroleo (CUPET), and Swindon, Wiltshire, United Kingdom-based Burmah Castrol PLC, reported that they would invest in 2001 more than US$100 million to complete, renovate, and operate the oil refinery (annual capacity of approximately 21 million barrels) located in Cienfeugos, which is expected to produce gasoline, diesel fuel, jet fuel, and lubricants for the Republic of Cuba market and export to Caribbean Sea-area countries.  Construction of the oil refinery located at Cienfeugos ceased in 1991 when funding from the then-U.S.S.R. was withdrawn.

FRANCE GRAIN EXPORT UPDATE- In February 2000, the government of France reported that it would extend trade credits (primarily for wheat and flour) valued at up to US$180 million to the government of the Republic of Cuba in 2000.  The value of the 1999 trade credits was US$200 million; the value of 1998 trade credits was US$185 million; and the value of 1997 trade credits was US$160 million.  In 1999, the Republic of Cuba imported 714,000 tons of grains (primarily wheat and flour) from France, representing approximately 70% of the grains imported by the government of the Republic of Cuba.  Grains exported from France to the Republic of Cuba in 1999 were valued at US$133 million, a decrease reflected, in part, by an estimated 5.13% decline in the value of 1999 bilateral trade.
 

Year	Grains Exports From France	Total Exports From  France To Cuba	Total Exports From  Cuba To France
1999	US$133 million	US$244 million	US$52 million
1998	US$114 million	US$259 million	US$53 million
1997	US$112 million	US$216 million	US$48 million
1996	US$123 million	US$193 million	US$50 million

GERMANY SIGNS DEBT RESTRUCTURING AGREEMENT- As expected, the government of the Republic of Cuba and the government of Germany ended a decade-old disagreement as to the value of 830 million in Convertible Ruble debt to the former German Democratic Republic.  The debt restructuring agreement, valued at 230 million Marks (US$115 million), including all short-term, medium-term, and long-term government-to-government debt (not private sector debt), and payable over twenty-one years, was signed on 23 May 2000, and reportedly eliminates most, and perhaps all, of the Convertible Ruble debt.  The government of Germany expects to resume providing credit guarantees for exports to the Republic of Cub by Germany-based companies once the government of the Republic of Cuba has made the first payment (within a few months) under terms of the debt restructuring agreement.  H.E. Heidemarie Wieczorek, Minister of Cooperation and Development of Germany, visited the Republic of Cuba from 19 May 2000 to 22 May 2000.  Her visit was the first by a ministerial-level representative of the Federal Republic of Germany to the Republic of Cuba in more than forty years. In December 1999, the government of Germany reported that development assistance valued at US$5.5 million would be provided to the government of the Republic of Cuba over a ten year period, with US$1.5 million being provided in 2000.  This was the first official development assistance provided by the Federal Republic of Germany before or after reunification with the German Democratic Republic.  The first development assistance project is a three-year anti-drought program located in eastern portions of the Republic of Cuba.  H.E. Dr. Carlos Lage, a Vice President of the Council of State and Executive Secretary of the Council of Ministers of the Republic of Cuba, visited Germany in March 2000, where he signed a letter of intent to restructure the Republic of Cuba’s debt with Germany by August 2000.  H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, has been invited to attend the July 2000 opening of the 2000 Universal Exposition in Hanover, Germany.
 

1999 bilateral trade was approximately US$103 million (US$76 million in exports and US$27 million in imports), an increase of approximately 3% from 1998 bilateral trade.

In 1999, Germany became the second-largest source of tourists to the Republic of Cuba.  The Ministry of Tourism of the Republic of Cuba reported that 1,602,781 tourists visited the Republic of Cuba in 1999 of which 182,159 were from Germany.  In 1998, the number of German nationals visiting the Republic of Cuba was 148,987.

Hamburg, Germany-based Dresdner Bank Lateinamerika AG (a subsidiary of Frankfurt, Germany-based Dresdner Bank AG), reported that an office was expected to be established this year in the city of Havana, Republic of Cuba.  Dresdner Bank Lateinamerika AG will be the first Germany-based financial institution to establish a representative office within the Republic of Cuba.

The government of Germany reported that no Germany-based company had direct investment within the Republic of Cuba from 1990 through 1997, but reported US$2.5 million in capital outflow to the Republic of Cuba in 1998-1999, which was direct investment within the tourism sector and light industry sector.

MCV Comercial S.A. (a Republic of Cuba-based joint venture established in 1995 by Cairo, Egypt-based Mr. Karim Ghabbour, whose family-owned companies have dealings with Mercedes-Benz AG), recently displayed the first of a planned 1,400 urban buses and unspecified number of light trucks assembled within the Republic of Cuba for use within the Republic of Cuba and for export to Caribbean Sea-area countries. The engines are being supplied by Stuttgart, Germany-based Mercedes-Benz AG (a subsidiary of Stuttgart, Germany-based DaimlerChrysler AG), the chassis are being supplied by Mercedes-Benz of Brazil.

Capital from Germany has been invested in a joint venture oxygen facility located at a Republic of Cuba government-operated steel mill.

Republic of Cuba government-operated Cubamar S.A. and Italy-based Havana Group s.r.l., have a joint venture, Campatour S.A., to provide recreational camping to the Republic of Cuba. Italy-based Havana Group s.r.l. will assemble and provide camping vehicles (reported to cost a total of US$700,000.00) by June 2000 using motors and chassis purchased from Stuttgart, Germany-based Daimler-Benz AG.

Munich, Germany-based Motoren und Turbinen Union Munchen GmbH (MTU) has a contract to replace the engines in at least five locomotives (former U.S.S.R.-built TU-7 and former Czechoslovakia-built TEM-ZTK) for the Ministry of Sugar (MINAZ) of the Republic of Cuba. MTU will begin installing the new engines, built by Stuttgart, Germany-based Mercedes-Benz AG (a subsidiary of Stuttgart, Germany-based DaimlerChrysler AG), in 2000. MTU reported that the company expected to obtain additional engine replacement contracts. MTU also has a contract to replace the engines in ferries used between Batabano, Havana Province, and the Isla de la Juventud, approximately 50 kilometers off the Southern coast of the Republic of Cuba.

Munich, Germany-based Siemens AG has supplied machinery to Republic of Cuba government-operated companies for more than ten years.

Erfurt, Germany-based Tex-Color gmbh & CoKG, which produces outdoor paints, floor coatings, roof coatings, and dyes, is negotiating a joint venture agreement to produce paint within the Republic of Cuba for both the domestic market and for export to countries within the Caribbean Sea-area.

Frankfurt, Germany-based Flughafan Franfurt/Main AG (FAG) with 1998 revenues of 2.376 billion Marks (US$1.31 billion), announced that the company had signed a Letter of Intent with the Institute of Civil Aviation (IACC) of the Republic of Cuba to construct a US$20 million air cargo terminal at the city of Havana’s Jose Marti International airport. Financing is expected to be secured from Germany-based sources.

Germany-based Bremer Pharma has a US$4 million contract for various inputs (veterinary medicines, insecticides, etc.) to be used in poultry production.

Dusseldorf, Germany-based LTI- International Hotels plans to increase the number of hotels within the Republic of Cuba that the company manages and/or has equity in, from four to seven.

PARIS CLUB MULTILATERAL DEBT RESTRUCTURING FORMAL AGREEMENT UNLIKELY- The establishment of formal multilateral discussions between the government of the Republic of Cuba and the Paris Club of creditor nations are stationary, and may not move substantially forward in the short-term, if at all.  The Central Bank (CB) of the Republic of Cuba reported foreign debt (not including debt to the former U.S.S.R., former U.S.S.R.-dominated countries, Vietnam, or the People’s Republic of China) of approximately US$11 billion as of December 1999.  The government of the Republic of Cuba prefers to negotiate unilateral debt restructuring agreements because the government of the Republic of Cuba believes that the repayment terms obtained from unilateral debt restructuring agreements will be more advantageous than would a Paris Club negotiated multilateral debt restructuring agreement.  If the government of the Republic of Cuba is unable to meet the terms of a particular unilateral debt restructuring agreement, there would not necessarily be multilateral ramifications, as there most certainly would be if repayment terms were not met for a Paris Club negotiated multilateral debt restructuring agreement.  With individual governments continuing to seek export opportunities, likely is a continuation of the ability of the government of the Republic of Cuba to place nominal attention to the Paris Club of creditor nations.  The Republic of Cuba is not a member of the International Monetary Fund, World Bank, or other international lending organization, so the Paris Club has been handling the island’s debt.  Debt defaults by the government of the Republic of Cuba began in the early 1980’s, with all principal payments and interest payments suspended in 1986.  Formal discussions with the Paris Club of creditor nations were suspended in 1989; informal discussion resumed in 1994; the Paris Club of creditor nations established a Technical Committee on Cuba in 1998, excluding the United States.  Mr. Francis Meyer, Chairman of the Paris Club of creditor nations, led a delegation to the Republic of Cuba in September 1999, where an agreement was reached to resume technical discussions.  Due to lack of repayment of its government-to-government debt and private sector debt, the government of the Republic of Cuba has been required to rely primarily on short-term credits with annual interest rates as high as 22%.  The government of the Republic of Cuba has renegotiated some of its smaller government debt with countries in The Americas; in 1999 renegotiated US$750 million in commercial debt with Japan-based companies; and restructure approximately US$500 million in short-term debt with seven countries, including Japan, Italy, Germany, Portugal, and the United Kingdom.  The Central Bank (CB) of the Republic of Cuba reported in 1999 that 79.6% of the US$11.2 billion foreign debt was principle, the remainder interest, and that US$8.8 billion was past due.  The CB reported that 55.7% of the debt was official debt, 24% owed bank and other financial institutions, and 15% owed private companies. The CB reported that 18.5% of the debt was owed Japan, 14% was owed to Argentina, 10.8% was owed to Spain, 10.4% was owed to France, 10% was owed to the United Kingdom, and the remainder owed to other countries.

GOVERNMENT CONFIRMS INTENTION TO PURCHASE ALL UNSOLD CONDOMINIUM UNITS- Officially confirming previously-implemented policy, H.E. Marta Lomas, Minister for Foreign Investment and Economic Cooperation of the Republic of Cuba, reported that Republic of Cuba government-operated Cubalse S.A. and Republic of Cuba-government-operated Corporacion Cimex will seek to purchase all remaining available condominium units from the seventeen joint venture condominium development companies (the first established in 1997) within which they have 50% interests.  Minister Lomas said that the autonomy of the seventeen joint ventures, which have contracts for periods of ten years to fifteen years to construct approximately 2,300 condominium units (of which 31 units have been constructed, sold, and occupied), would be respected.  The condominium units are being sold with purchasers paying in installments until are completed.  Cubalse S.A. and Corporacion Cimex S.A. will rent the condominiums to non-Republic of Cuba nationals.  At current market prices, Cubalse S.A. and Corporacion Cimex S.A. would need obtain approximately US$175 million to purchase the 50% share they do not now own of each of the approximately 2,300 condominiums.  However, the total number of the 2,300 condominium units that have been sold or reserved has not been made public, so the actual amount of funds need be obtained by Corporacion Cimex S.A. and Cubalse S.A. may be less than the approximately US$175 million, or more depending upon market prices per unit.  An existing five-month moratorium on the establishment of new real estate joint ventures is to continue indefinitely, and the real estate sector is being reviewed.  As of the end of 1999, the government of the Republic of Cuba reported approximately fifty real estate projects were under consideration.

REAL-ESTATE INVESTMENT LAW UNLIKELY- Despite having been considered for three years, H.E. Marta Lomas, Minister for Foreign Investment and Economic Cooperation of the Republic of Cuba, indicated that the enactment of real-estate law is unlikely and that real-estate activities would continued to be governed by the 1995 Foreign Investment Act (Law No. 77), which authorized real estate joint ventures for the first time in the Republic of Cuba, and broad regulations governing the sector.  The planned real-estate law succumbed to prolonged debate over regulations governing 1) owner's rights (non- Republic of Cuba nationals), including rights to transfer property, in case of marriage, for example, to Republic of Cuba nationals (who are currently prohibited from purchasing the condominiums) 2) concerns about owners having unimpeded authorization (multiple entry visas, etc.) to visit the Republic of Cuba and 3) concerns about access to condominiums by Republic of Cuba nationals.  Republic of Cuba nationals, 70% of whom own their dwellings, are only permitted to trade homes, though U.S. Dollars and/or Republic of Cuba Pesos is usually exchanged on an unofficial basis.  Republic of Cuba law prohibits citizens from selling apartments and homes to non-Republic of Cuba nationals, or renting them to anyone but tourists.  Non-Republic of Cuba-based company representatives or other temporary residents must rent residences from Republic of Cuba government-operated Cubalse S.A., or purchase or rent from joint venture condominium development companies.

CHINA RICE EXPORT UPDATE- The General Administration of Customs (GAC) of the government of the People’s Republic of China reported that 14,320 tons of rice was exported to the Republic of Cuba in April.  The GAC reported that total 1999 rice exports to the Republic of Cuba were 226,933 tons.
 

2000 Rice Exports To The Republic Of Cuba From The People’s Republic Of China

Month	Rice Exports In Tons
April 2000	14,320
March 2000	13,125
February 2000	15,400
January 2000	15,100
Total	57,945

WHEAT IMPORT UPDATE- The Republic of Cuba imported 70,697 tons of wheat between 1 May and 24 May 2000 from the port of Rouen, France.
 

Total Imports of Wheat (in tons)	Reporting Period
70,697	1 May 2000 to 24 May 2000
30,000	1 March 2000 to 25 March 2000
26,800	February 2000
100,000	January 2000
474,925	1 March 1999 through 30 November 1999
447,000	July 1998 through March 1999
256,000	July 1997 through March 1998