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Austria- Shilling |
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SURPRISING COMMENTS FROM THE CHAIRMAN OF SHERRITT- Mr. Ian W. Delaney, Chairman of the Board of Directors of Toronto, Canada-based, Sherritt International Corporation, recently said to financial analysts in Toronto, Ontario, Canada, that he expects that, within the next twelve months, United States companies will increase their ability to conduct various commercial transactions within the Republic of Cuba. Mr. DeLaney also said that the CA$675 million (approximately US$473 million) worth of convertible debentures issued in December 1996 by Sherritt International Corporation have been "earmarked" for specific investments within the Republic of Cuba. There had been increasing concern within the investment communities, especially in Canada, in other countries, and amongst officials of the government of the Republic of Cuba, as to when the funds would be invested and within what sectors the funds would be invested. According to Mr. Delaney, approximately CA$50 million to CA$100 million has been targeted toward telecommunications, with the remainder being targeted toward "base infrastructure," and sugar, but not tourism (the company already has investments in two hotels). In early 1997, Mr. Delaney said that he expected the CA$675 million to be invested within three to five years. Within the last several weeks, Mr. Delaney said that he expected the CA$675 million to be invested within two years.
FOREIGN INVESTMENT POLICY CHANGE- H.E. Dr. Carlos Lage, a Vice President of the Council of State of the Republic of Cuba, reported that as a result of banking reforms and continued economic recovery during the last eight years, the government would now pursue a strategy of encouraging foreign investment for large development projects, while limiting interest in foreign investment for smaller projects, unless such investments included the introduction of new technologies or new export markets. The Vice President said that Republic of Cuba government-operated banks were now in a position to provide small amounts of capital. The Vice President said that the Republic of Cuba should further develop investment opportunities within other countries. H.E. Ibrahim Ferradaz, Minister for Foreign Investment and Economic Cooperation of the Republic of Cuba, reported that there were currently 317 joint ventures (within the Republic of Cuba and outside of the Republic of Cuba) operating with the participation of Republic of Cuba government-operated companies and that fifteen additional joint venture agreements have been approved and will soon be signed. Since the first joint venture was established in 1988, sixty-three joint ventures had been established and later dissolved for various reasons. Thus, a total of 380 joint ventures have been established since 1988. Minister Farradaz said that the majority of capital for the joint ventures is from Spain, Canada, Italy, France, United Kingdom, and Mexico. Seventy-four percent of the joint ventures are in the tourism sector, light industry sector, basic industry sector, food processing sector, and construction sector. Minister Ferradaz said that there are currently a total of 190 non-Republic of Cuba-based companies with operations within the three Free Trade Zones located in the Republic of Cuba. 140 of the companies are service-related and 50 are manufacturing-related.
FOREIGN ASSISTANCE UPDATE- H.E. Ibrahim Ferradaz, Minister for Foreign Investment and Economic Cooperation of the Republic of Cuba, reported that the Republic of Cuba maintained commercial and economic relations with 138 countries, of which 78 countries had established joint commissions to oversee the commercial and economic relations. Financial assistance to the Republic of Cuba from United Nations-affiliated organizations, such as the United Nations Development Program (UNDP), was US$14.5 million in 1997. The Republic of Cuba reported receiving 992 donations worth US$35.7 million in 1997 from 239 non-governmental organizations located in 20 countries. Minister Farradaz reported that 2,808 Republic of Cuba nationals are currently working in other countries as professionals, technicians, and laborers, for which the government of the Republic of Cuba received US$18 million in 1997.
SOY OIL DONATION- The European Community Humanitarian Office (ECHO) has donated 660,000 liters (1 gallon equals 3.7853 liters) as a portion of a US$9.8 million commitment. Republic of Cuba nationals consume soy-enriched meat products, and children drink soy-enriched milk and soy milk.
USCTEC MEMBERS DONATE MILLIONS OF DOLLARS IN PRODUCTS- Members of the U.S.-Cuba Trade and Economic Council have, since 1994, donated, directly and indirectly, an estimated US$10 million in health care products and food products to the Republic of Cuba. In February 1998, a member of the U.S.-Cuba Trade and Economic Council donated US$25,000.00 in medicines for use in the examination of gastrointestinal (GI) tract diseases, such as colo-rectal cancer. United States-based companies are also authorized, under license, by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and by the Bureau of Export Administration (BXA) of the United States Department of Commerce to sell (including licensed visits to the Republic of Cuba to discuss potential sales) medical equipment, medical instruments, medical supplies, medicated products, and pharmaceuticals to entities within the Republic of Cuba. Since 1992, United States-based companies have not authorized to sell food products to entities within the Republic of Cuba. United States-based companies are authorized, under license, to make donations of food products to entities within the Republic of Cuba.
CHINESE ECONOMIC RESTRUCTURING OFFICIAL VISITS- H.E. Wu Jie, State Commissioner for Economic Restructuring of the People's Republic of China, considered the second-in-command of the Chinese government's economic restructuring program, led an unpublicized delegation visiting the Republic of Cuba from 8 February 1998 to 17 February 1998. Commissioner Wu met with H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, and with H.E. General Raul Castro Ruz, First Vice President of the Council of State of the Republic of Cuba and Minister of Defense of the Republic of Cuba, among others.
LEBANESE FINANCE MINISTER SIGNS FIRST TAX TREATY- H.E. Fouat Cimiora, Minister of Finance of Lebanon, arrived in the Republic of Cuba on 17 February 1998 for a seven-day visit. He is expected to sign a treaty eliminating double taxation on 23 February 1998. Minister Cimiora will meet with various ministers and visit tobacco plantations. Companies from Lebanon have been increasing their presence within the Republic of Cuba during the last several years, especially in the area of finance. Fransabank SAL has a representative office. A Lebanon-based company recently became an exclusive distributor for Republic of Cuba-produced cigars. Sources within the government of the Republic of Cuba report that Lebanon is viewed as a gateway to new sources of capital from Middle East-area countries, as well as, new markets for sugar, oil, tourism, and tobacco.
ENERGY SAVINGS PROGRAM UPDATE- Representatives of the Committees for the Defense of the Revolution of the Republic of Cuba, Federation of Cuban Women of the Republic of Cuba, and the National Electric Union of the Republic of Cuba, continue work toward their goal of replacing 1,000,000,000 inefficient light bulbs and rubber refrigerator door seals. The florescent light bulbs, costing a reported US$5.00 per unit and being imported from Canada-based Imexcom Group, are being made available through a ration system for the Peso equivalent of less than one U.S. Dollar. To date, more than 33,000 new florescent light bulbs have been installed in homes in the city of Havana. The government of the Republic of Cuba reported that 200,000 of an expected 800,000 rubber seals for refrigerator doors had arrived, presumably from Ukraine. The energy savings program, which includes charging Republic of Cuba-based companies U.S. Dollars for the energy they consume, is expected to save 340,000 tons of fuel annually, equal to US$37 million. The energy savings plan, if successful, will reduce an expected 5% annual increase in consumption to 2%, thus eliminating an estimated US$200 million in new generating capacity. Republic of Cuba energy consumption is 55% to 60% commercial and 35% to 40% is residential.
IMPACT OF LOWER INTERNATIONAL OIL PRICES- Republic of Cuba-based economists reported that the 21% reduction in the international price of a barrel of oil during the last five months could be worth US$200 million to the Republic of Cuba in 1998. As of 18 February 1998 the international price of one barrel of oil was approximately US$16.26 compared with approximately US$23.00 per barrel on 18 February 1997. In 1996-1997, estimates are that the Republic of Cuba produced an average of 29,600 barrels of mainly poor quality, high sulfur content crude oil, used mainly to produce energy, and imported an average of 120,000 barrels per day of various quality combustibles and lubricants. The government of the Republic of Cuba reported that the country consumed 260,000 barrels of oil per day in 1990. The energy import savings may offset an increase in prices for imported bulk food commodities (powered milk, soy, cooking oil, poultry, rice, wheat, etc.), decrease in prices for some exports (nickel, citrus, gold, silver, etc.), and anticipated costs of a disastrous sugar harvest (low production, high financing costs, level prices, etc.).
NATURAL GAS CONTAINERS FOR VEHICLES- Fornovo Gas, an Italy-based company which specializes in alternative uses for natural gas, has donated 132 containers for use in natural gas-operated vehicles. A Republic of Cuba-based project, Jarugas, expects that increasing the number of vehicles using natural gas will save the Ministry of Transportation of the Republic of Cuba US$1 million annually in energy costs.
RUSSIA SEEKS INCREASED TRADE- H.E. Ricardo Cabrisas, Minister of Foreign Trade of the Republic of Cuba, and H.E. Serguei Shoygu, Minister of Civil Defense of the Russian Federation, concluded their two-day meeting of the Russian-Cuban Intergovernmental Commission on Trade, Economic, Scientific, and Technical Cooperation, on 20 February 1998. Minister Shoygu, who arrived in the city of Havana with a delegation of seventy officials and business executives, signed a protocol which would extend approximately US$350 million in credits offered to the Republic of Cuba in 1991-1992, but no information was made available regarding the actual amount of any remaining credits. Minister Shoygu said that the government of the Russian Federation and the government of the Republic of Cuba would seek to find financing to complete the construction of a nuclear power plant in Cienfeugos Province, a nickel processing facility, oil refinery, and other projects; and that the Russian Federation would seek to increase its purchases of pharmaceuticals and citrus products. Russian Federation-Republic of Cuba bilateral trade was reported to be approximately US$300 million in 1997 and reported to be approximately US$485 million in 1996.
CIVIL AVIATION UPDATE- The Abel Santamaria International Airport, located in Santa Clara, 270 kilometers east of the city of Havana, has reopened after twelve years. Santa Clara is the site of the Che Guevara mausoleum and there is tourism resort development in the keys off the northern coast. A new international US$50 million terminal at the city of Havana's Jose Marti International Airport is scheduled to be completed in March 1998. H.E. General Rogelio Acevedo, Minister-President of the Civil Aeronautics Institute (IACC) of the Republic of Cuba said that once the new terminal is completed, Republic of Cuba airports will be able to handle a combined 5.2 million passengers annually, a 100% increase from March 1997. Mr. Luis Ibanez, Director of the Jose Marti International Airport, reported that the airport serviced an average of 87 flights per day in 1997, a total of 1.4 million passengers in 1997, and 60% of all passengers traveling by air to, from, and within, the Republic of Cuba in 1997.
CUBANA AIRLINES RESPONDS (PARTLY) TO COMPLAINTS- Cubana Airlines, responding to continuing complaints from passengers unable to obtain twenty-four-hour-per-day and seven-days-per-week updated arrival, departure, and other flight information, has established an office, open six days per week, to handle questions. The new office operates Monday through Friday from 8:30 a.m. to 4:00 p.m. and Saturday from 8:30 a.m. to 12:30 p.m. The telephone number is 33 44 46, 33 44 47, 33 44 48, and 33 44 49. Cubana Airlines is expected to expand both the hours of operation and the days of operation in the near future.
PRESIDENT OF PANAMA VISITS- His Excellency Ernesto Perez Balladares, President of Panama, arrived in the city of Havana for a four-day private visit. President Perez was greeted at the Jose Marti International Airport by H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba.
FOREIGN MINISTER ATTENDS ACS MEETING IN GUATEMALA- H.E. Roberto Robaina, Minister of Foreign Affairs of the Republic of Cuba, arrived in Guatemala on 22 February 1998 to attend a meeting of the Association of Caribbean States, of which the Republic of Cuba serves as Vice President. On 27 January 1998, the government of Guatemala resumed diplomatic relations with the Republic of Cuba, which had been suspended since 1961.
UNITED STATES CONGRESSIONAL STAFFS VISIT- Staff members from the offices of United States Senator Richard Luger (R-Indiana), United States Senator John Warner (R-Virginia), United States Senator Craig Thomas (R-Wyoming), United States Senator John Kyl (R-Arizona), United States Representative John Porter (R-Illinois), and United States Representative David Dreier (R-California) visited the Republic of Cuba for six days during which they met with H.E. Ricardo Alarcon, President of the National Assembly of People's Power of the Republic of Cuba, and others.
UNITED STATES CITIZEN PAYS US$25,000.00 FOR HUMIDOR AT GALA IN HAVANA- Mr. Gary Arzt, an individual subject to United States law, paid US$25,000.00 for a humidor manufactured in France from Spanish cedar wood and framed in silver with a cover depicting a 1910 cigar factory scene, at the 20 February 1998 Habanos S.A.-sponsored gala event to inaugurate the Trinidad brand cigar. The gala was held at the Havana Libre Tryp Hotel in the city of Havana.
CIGAR EXPORT UPDATE- Mr. Francisco Linares, President of Republic of Cuba government-operated Habanos S.A., the exclusive marking representative of Republic of Cuba-produced cigars, reported that new brands will continue to be created and that the Republic of Cuba will seek to become the world's second-largest exporter of cigars (160 million cigars in 1998 earning revenues of US$240 million). Mr. Linares said that the Republic of Cuba exported 103.5 million in 1997, while the Dominican Republic exported 250 million in 1997, and Honduras exported 120 million cigars in 1997. Mr. Manuel Garcia, Vice President of Habanos S.A., reported that in 1997, the Republic of Cuba exported 36 million cigars to Spain, 12 million cigars to France, 5.6 million cigars to the United Kingdom, 5 million cigars to Canada, 4.7 million cigars to Sweden, 3.4 million cigars to Germany, 2.9 million cigars to The Netherlands, 2.8 million cigars to Mexico, 2.2 million cigars to various countries within Latin America, 10 million cigars to various countries within the Middle East and in Africa, and that 10 million cigars were purchased within the Republic of Cuba. There are currently 45 Casa de Habano franchised retail stores in various countries, with another twenty-five new Casa de Habano franchised retail stores expected to be in operation by the end of 1998. Mr. Linares said that Habanos S.A. is investing US$200,000.00 to purchase new equipment to produce a more counterfeit-proof "seals of authenticity" for Republic of Cuba-produced cigars.
SUPERMODELS AND ACTORS ARRIVE IN HAVANA- Professional models, Ms. Naomi Campbell and Ms. Kate Moss, are visiting the Republic of Cuba for the purpose of being photographed for an Italy-based company. The two women were at the Hotel Nacional de Cuba in the city of Havana. The actor, Mr. Leonardo DiCaprio, currently appearing in the motion picture, Titanic, is visiting the Republic of Cuba with a delegation whose purpose is to transport a donation of medicines valued at US$250,000.00. The actor, Mr. Matt Dillon, visited the Republic of Cuba to attend a gala dinner to inaugurate the commercial sale of the Trinidad brand cigar, held at the Havana Libre-Tryp Hotel in the city of Havana.
AGRICULTURE CONFERENCE IN WASHINGTON, D.C.- A one-day conference is being held on Tuesday, 31 March 1998, at The Cosmos Club in Washington, D.C., sponsored by the International Agricultural Trade and Development Center (IATDC) at the University of Florida at Gainsville, Florida, and the University of Havana's Center for Research on the International Economy, and co-sponsored by Washington, D.C.-based, National Center for Food and Agricultural Policy. The conference, "The Role of the Agricultural Sector in Cuba's Integration into the Global Economy and its Future Economic Structures: Implications for Florida and United States Agriculture" includes discussions about five commodity sub-sectors: sugar, citrus, vegetables, tropical fruits, and fisheries. These five sub-sectors were identified after four years of joint research as "the most likely candidates for trade and/or investment." The IATDC has operated a comprehensive research project within the Republic of Cuba since 1993, supported with a grant from the John D. and Catherine T. MacArthur Foundation. For information contact telephone (352) 392-5930 or facsimile telephone (352) 392-9734.
USCTEC SPEAKING SCHEDULE- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, has been confirmed to participate at the following events: 4 March 1998 to 6 March 1998- London, United Kingdom, speaking to various private groups and meetings with executives of non-United States-based companies. 11 March 1998- "United States Trade with Cuba in a Post-Embargo Era," Washington International Trade Association (telephone: 202-293-4193). 19 March 1998 to 21 March 1998- "A Dialogue with Cuba," Center for Latin American Studies at the University of California at Berkeley (telephone: 510-642-6456). Tentative: May 1998- Tulane University, New Orleans, Louisiana, one-day presentation at The Cuban Studies Institute (telephone: 504-862-8000 extension 2601).
Clarification
The following is a clarification for the Equity In Three Hotels For Sale item appearing in the 9 February 1998 to 15 February 1998 issue of the ECONOMIC EYE ON CUBA©. CIHSA, a Spain-based corporation, has a 50% share in the Melia Varadero, a 50% share in the Sol Club Palmeras, and a 50% share in the Melia Las Americas. The remaining 50% share in the Melia Varadero, 50% share in the Sol Club Palmeras, and 50% share in the Melia Las Americas is held by Republic of Cuba government-operated Cubanacan S.A.. The ownership of CIHSA is as follows: Sol Melia S.A. (33.5%), Mr. Enrique Martinon, a Spain-based investor (50.5%), and a Barcelona-based corporation controlled by two individuals (16%). The Barcelona-based corporation is seeking to sell its 16% share of CIHSA for US$7 million. The Barcelona-based corporation reports that the purchaser can expect a minimum annual rate of return of 15% on the investment.
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