ECONOMIC EYE ON CUBA©

ECONOMIC EYE ON CUBA© Index


27 April 1998 to 3 May 1998


Pressure On The Peso
National Bank of Cuba Exchange Rates
Sheraton Hotel Has Casa Del Habano
Delta Air Lines Code Sharing Partner Aeropostal To Begin Cuba Flights
Delta Airlines And United Airlines Alliance Has 94% Of Cuba Routes
Continental Airlines And Northwest Airlines Alliance Has Cuba In Common
MediCuba Seeks To Purchase Pharmaceuticals
United States Interests Section Shows Amistad In Havana
Rent Titanic Video For US$.25 In Havana
US$15 Million Florescent Light Bulb Agreement
Trade With Japan Update
Live Lobsters To China
New Merchant Ships Purchased From Europe And Asia
US$2.6 Million Chilean Soy Milk Venture
Packaging Factory Uses Sugar Cane Byproduct
Germany's Touristik To Begin Flights And Cruise Operations
French Companies Announce New Ventures
US$25 Million Joint French/UK Hotel Venture
France Trade Update
French Cooperation Minister Visits
Argentina Reports 1997-1998 Corn And Wheat Sales To Cuba
New President Of American Jewish Congress Meets President Castro
Monthly Food Price Check
Updated Speaking Schedule




PRESSURE ON THE PESO- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to one U.S. Dollar, for 21 Pesos and purchased the U.S. Dollar for 19 Pesos, as it has since 1 April 1998. The U.S. Dollar on the informal market increased from as low as 18 Pesos two weeks ago to 20 Pesos. Customers were few at the CADECA offices, preferring to use the informal market. CADECA had purchased the U.S. Dollar for 20 Pesos and sold the U.S. Dollar for 22 Pesos from 12 March 1998 to 31 March 1998. CEDECA purchased the U.S. Dollar for 21 Pesos and sold the U.S. Dollar for 23 Pesos from 11 February 1998 to 11 March 1998. CADECA purchased and sold the U.S. Dollar for 23 Pesos from August 1997 through 10 February 1998. CADECA began April 1997 purchasing the U.S. Dollar for 26 Pesos and selling the U.S. Dollar for 26 Pesos. In April 1995, the U.S. Dollar could be purchased on the unofficial market for 40 Pesos, as CEDECA did not yet exist. The official international exchange rate of one Peso to one U.S. Dollar, in effect for more than thirty years, remained unchanged. The government maintains a fixed exchange rate for its international dealings and a more flexible exchange rate for domestic use. The Peso and the U.S. Dollar circulate freely in the Republic of Cuba.

NATIONAL BANK OF CUBA EXCHANGE RATES- The following are the biweekly official exchange rates between the Republic of Cuba Convertible Peso, equal to one U.S. Dollar, and selected international currencies as of 1 May 1998. The National Bank of the Republic of Cuba cautions that these rates do not necessarily reflect the exchange rates at all Republic of Cuba government-operated banks as each bank is authorized to establish its own exchange rates.

Country and Currency
Austria- Shilling
Denmark- Krone
Norway- Krone
Sweden- Krona
Australia- Dollar
Canada- Dollar
United States- Dollar
Portugal- Escudo
The Netherlands- Guilder
Belgium- Franc
France- Franc
Switzerland- Franc
United Kingdom- Pound Sterling
Italy- Lira
Germany- Mark
Finland- Markka
Spain- Peseta
Mexico- Peso
Japan- Yen
Rate of Exchange
.0791
.1459
.1339
.1287
.6511
.6968
1.000
.00054
.4947
.0270
.1660
.6672
1.6643
.0563
.5563
.1832
.0066
.1120
.7566


SHERATON HOTEL HAS CASA DEL HABANO- The 798-room Sheraton Hong Kong Hotel & Towers on Nathan Road in Kowloon now has a Casa del Habano retail cigar store. Phoenix, Arizona-based, Starwood Hotels & Resorts Worldwide owns ITT Sheraton Corporation. The Sheraton Hong Kong Hotel & Towers is a "partially-owned" property, meaning that ITT Sheraton Corporation is one of the owners. The inauguration ceremony was attended by H.E. Jose A. Guerra Menchero, Ambassador of the Republic of Cuba to Hong Kong, and Mr. David Tang, Honorary Consul in Hong Kong of the People's Republic of China, owner of a prominent retail department store chain, and the exclusive distributor in Hong Kong of Republic of Cuba-produced cigars. There are now fifty Casa del Habano retail stores throughout the world. Earlier this year, the Ministry of Tourism of the Republic of Cuba established an office in the Hilton Hotel located in Izmir, Turkey. The Hilton Hotel in Izmir is managed by Hilton International, which is not affiliated with United States-based Hilton Hotels Corporation.

DELTA AIR LINES CODE SHARE PARTNER AEROPOSTAL TO BEGIN CUBA FLIGHTS- Aeropostal, the largest domestic and international airline headquartered in Venezuela, will commence Caracas-Havana-Caracas flights in May 1998. Since April 1998, Aeropostal has operated a code-sharing agreement with Atlanta, Georgia-based Delta Air Lines. In an article appearing in the 6 April 1998 issue of the Atlanta Business Chronicle, Mr. E. Todd Clay, a spokesperson for Delta Air Lines, said that when commercial service to the Republic of Cuba is again authorized, the company will, "like other Caribbean and Latin American countries, . . . look at the opportunities there." Since 1962, Delta Air Lines has had route authorities from the following cities: Havana to Houston, Los Angeles, New Orleans, San Francisco, and San Juan.

DELTA AIR LINES AND UNITED AIRLINES ALLIANCE HAS 94% OF CUBA ROUTES- The marketing agreement (code-sharing and frequent flyer programs) announced on 30 April 1998 between Atlanta, Georgia-based Delta Air Lines (1997 revenues US$13 billion) and Elk Grove Township, Illinois-based United Airlines (the nation's largest air carrier, 1997 revenues US$16 billion), will control an estimated 35% of the domestic United States air travel market and establish a relationship between two airlines that have existing route authorities between the United States and the Republic of Cuba. Since 1962, Delta Air Lines and United Air Lines have had route authorities from the following cities: Delta- Havana to Houston, Los Angeles, New Orleans, San Francisco, and San Juan; and United- Havana to Miami, Key West, Baltimore, Boston, Dallas, Houston, Los Angeles, New Orleans, New York, Newark, Philadelphia, San Francisco, San Juan, St. Croix, St. Thomas, and Washington, D.C.; and Camaguey to Miami, Baltimore, Boston, Dallas, Houston, Los Angeles, New Orleans, New York, Newark, Philadelphia, San Francisco, San Juan, St. Croix, St. Thomas, and Washington, D.C.. The Delta Air Lines/United Airlines alliance will control 36 of the 38, or 94% of the existing route authorities.

CONTINENTAL AIRLINES AND NORTHWEST AIRLINES ALLIANCE HAS CUBA IN COMMON- In April 1998, Houston, Texas-based Continental Airlines (1997 revenues US$6 billion) and St. Paul, Minnesota-based Northwest Airlines (1997 revenues US$9 billion) announced a marketing agreement (code-sharing and frequent flyer programs) which will control an estimated 20% of the domestic United States travel market and provide Northwest Airlines with access to Continental Airlines' existing route authority between the United States and the Republic of Cuba. Since 1962, Continental Airlines has had route authorities from the following cities: Havana to Fort Lauderdale, West Palm Beach. The Continental Airlines/Northwest Airlines alliance will control 2 of the 38, or 6% of the existing route authorities.

MEDICUBA SEEKS TO PURCHASE PHARMACEUTICALS- MediCuba, the importing and exporting entity under the auspices of the Ministry of Public Health of the Republic of Cuba, is seeking to purchase the following pharmaceutical products. According to MediCuba, the list represents approximately four (4) months of requirements. To submit a bid to supply the following products, provide 1) Terms of purchase according to "INCOTERMS 1990 FCA/CIP or FOB/CIF" 2) Terms of Payment- irrevocable letter of credit, etc. and 3) Shipping port/airport including method and place of delivery. Please contact Lic. Alina Castillo, Product Manager- Pharmaceuticals Division, MediCuba, Maximo Gomez No. 1, Havana, Republic of Cuba. Telephone number: 011 53 7 62 39 75 or 011 53 7 62 40 61. Facsimile telephone number is 011 53 7 33 8516 or 62 39 83.

Product/Specification
Methotrexate 50 mg inj.
L-Asparaginase 5000 UI inj.
Bleomicym Sulphate 15 mg inj.
Ciclophosphamide 50 mg bottle x 50 grag
Cisplatin 10 mg inj. vial
Diethylstilbestrol Phosphate 115 mg tablets x 60
5-Flourouracil Cream tube x 25 gr
Melhpalam 2 mg bottle x 25 tablets
Mustine Hydrochloride 10 mg/5ml inj. box x 10 ampuls
Pocarbazine Hydrochloride 50 mg x 50 cap
Rubidomycin 20 mg vial x 4 ml
Thioguanine 40 mg tablets x 25 n
Vinblastine 5 mg inj. Vial x 5 ml
Vincristine Sulphate 5 mg vial
Ondansetron 4 mg IV ampuls
Ondansetrin 4 mg tablets x 10
Ondansetron 8 mg IV ampuls
Cyclosporin 100 mg/ml solution x 50 ml
Unit
Vial
Vial
Vial
Bottle
Vial
Bottle
Tube
Bottle
Box
Bottle
Vial
Bottle
Vial
Vial
Ampuls
Bottle
Ampuls
Bottle
Quantity
6,000
1,200
4,500
5,000
10,000
300
1,500
800
100
300
1,000
60
1,000
4,000
500
500
250
600


UNITED STATES INTERESTS SECTION SHOWS AMISTAD IN HAVANA- On 29 April 1998, the Republic of Cuba government-operated Prensa Latina News Agency, published a story that began with the words "Thanks to the United States Interests Section in Havana . . . " The occasion was the screening of the motion picture Amistad. California-based DreamWorks SKG had provided the motion picture to United States diplomatic missions. This was the first time in more than thirty-five years that the Republic of Cuba government-operated Cuban Institute of Art and Cinematography (ICAIC) and the United States Interests Section held a jointly-sponsored cultural event. The screening for 500 invited Republic of Cuba nationals was at the Charlie Chaplin Theater in the city of Havana.

ENT TITANIC VIDEO FOR US$.25 IN HAVANA- An estimated 300,000 Republic of Cuba nationals in the city of Havana have paid 5 Pesos (US$.25) to rent unauthorized VHS video tapes to view the motion picture Titanic. The 5 Peso fee entitles the user to retain the VHS video tape for twenty-four hours, during which time most viewers make additional copies of the VHS video tape for further distribution. The original VHS video tape was made from using a recorder during a screening of the motion picture at a theater in the United States.

US$15 MILLION FLORESCENT LIGHT BULB AGREEMENT- The Imexon, a joint venture established between companies in Canada and Colombia, has reported that it has a contract to supply the Republic of Cuba with 3,000,000 florescent light bulbs worth US$15,750,000.00, of which 250,000 have already been delivered. The cost of each florescent light bulb is US$5.25.

TRADE WITH JAPAN UPDATE- The government of the Republic of Cuba reported that bilateral trade with Japan was US$150 million in 1997. The Republic of Cuba exports sugar, coffee, seafood, and citrus and imports spare parts, medical products, and construction equipment.

LIVE LOBSTER TO CHINA- Restaurants in the People's Republic of China have begun purchasing live lobster from the Republic of Cuba. Japan already imports lobster from the Republic of Cuba. Republic of Cuba government-operated Pescavila, located in Ciego de Avila Province, 423 kilometers east of the city of Havana, reported that in 1998 it would export 70 tons (with a potential of 100 tons) of live lobster at US$15,000.00 per ton to the People's Republic of China. The provincial government of Ciego de Avila plans to spend US$3 million to increase its fishing boat fleet from four to thirty. The Republic of Cuba earned more than US$100 million in 1997 from the export of 10,000 tons of live and processed lobster to countries in Europe and Asia, and to Canada.

NEW MERCHANT SHIPS PURCHASED FROM EUROPE AND ASIA- The Ministry of Fishing Industry of the Republic of Cuba reported that it had replaced twelve of its ships and tankers with newer, though pre-owned, ships and tankers purchased from companies located in Europe and in Asia. The goal is to increase the merchant fleet to at least 1,000,000 tons dead weight.

US$2.6 MILLION CHILEAN SOY MILK VENTURE- An economic association between Republic of Cuba government-operated Rio-Zaza S.A. and Chile-based Ingelco has installed equipment worth US$2.6 million for the production and packaging of evaporated soy milk, yogurts, falvored beverages, and other products at a factory in Sancti Spiritus Province. Ingelco already has an economic association within the Republic of Cuba that produces and packages fruit juices.

PACKAGING FACTORY USES SUGAR CANE BYPRODUCT- Cubaenvase, a Republic of Cuba-based joint venture with Spain-based capital, is producing boxes made of bagasse for use in packaging fruit. Located in Las Tunas Province, 662 kilometers east of the city of Havana, the Maximo Gomez Bagasse Board Factory is near the Jesus Mendez Sugar Mill.

GERMANY'S TOURISTIK TO BEGIN FLIGHTS AND CRUISE OPERATIONS- Germany-based FTI Touristik reported that it would commence in May 1998 four flights per week from Germany to the resort area of Varadero, 140 kilometers east of the city of Havana. FTI Touristik also reported that it would commence in November 1998 the operation of a passenger cruise ship to various ports within the Republic of Cuba. Republic of Cuba government-operated Rumbos S.A. will be coordinating the activities of the estimated 40,000 FTI Touristik clients.

FRENCH COMPANIES ANNOUNCE NEW VENTURES- Mr. Jean Desgeorge, Vice President of the French National Business Council, reported that his organization's 36-company, 24 April 1998 to 2 May 1998 visit to the Republic of Cuba was a "spectacular success." The delegation included: Accor, Alcatel, Alsthom, Peugeot, Bruxelles Lambert France Bank, Paribes Bank, BCEN Eurobank, Babcock & Wilcox, BDC International, Davexport, Electricite de France, Freshfields, GEC Alstho, Gemco International, Gilles Bouyer, Louis Dreyfus, Societe Comerciales de Potasse et de L'Azote, Spie Enertans, AZ Industrie, Banque Nacional de Paris, Bull S.A., Chamber of Comerce et Industeis de Paris, Ciec Engineering, Cimesa Groupe Soletanche, Bachy Clifford Chance, Cofreca, Enterprise Jean Michel Jarre, Hopital Action Service, Nugue, Omnium Traitement et Vaorisation, Pansea Hotels and Resorts, SAE International, Thomson CSF, and SEREC. Babcock & Wilcox announced the establishment of a US$10 million joint venture, Babcock Caribe S.A., with the Ministry of Steel, Mechanical, and Electronic Industry (SEME) of the Republic of Cuba, to market and install boilers and boiler plants. Thomson Electronics is negotiating an agreement worth potentially US$50 million with the Ministry of Communications of the Republic of Cuba and with the Institute of Civil Aviation (IACC) of the Republic of Cuba to modernize transmitters, replace and upgrade air traffic control equipment, and other projects. Societe Commerciale des Potasses et de L'Azote (a chemical company) is establishing a joint venture to produce PVC windows for the tourism industry. Mr. Desgeorges said that additional agreements would be announced soon in the areas of finance, services, construction, culture, and information technology.

US$25 MILLION JOINT FRENCH/UK HOTEL VENTURE- Republic of Cuba government-operated Cubanacan S.A. and France-based Panesea Hotels and Resorts have announced a joint venture to construct eight small luxury hotels in Cayo Coco, Havana, Santiago de Cuba, and other areas. Mr. Roberto Molinari, co-owner of Pansea Hotels and Resorts said that the properties would cater to the highest level of the tourism market- which has to date not been developed within the Republic of Cuba. The value of the joint venture is US$25 million. United Kingdom-based Commonwealth Development Corporation (CDC) is a partner in the joint venture.

FRANCE TRADE UPDATE- The Embassy of France in the Republic of Cuba reported that there are 50 France-based companies operating within the Republic of Cuba, of which 22 had joint ventures and economic associations; and France-based companies have announced/committed/delivered investments since 1990 of an estimated US$100 million. Bilateral trade in 1997 was approximately US$300 million, compared with US$263.4 million in 1996.

FRENCH COOPERATION MINISTER VISITS- H.E. Charles Josselin, Minister of Cooperation of France, arrived in the Republic of Cuba on 3 May 1998 for a three-day visit.

ARGENTINA REPORTS 1997-1998 CORN AND WHEAT SALES TO CUBA- The government of Argentina reported that it had sold 20,000 tons of corn to the Republic of Cuba in 1997/1998 and had sold 150,000 tons of corn to the Republic of Cuba in 1996/1997. The government of Argentina reported that it had sold no wheat to the Republic of Cuba in 1997/1998 and had sold 200,000 tons of wheat to the Republic of Cuba in 1996-1997.

NEW PRESIDENT OF AMERICAN JEWISH CONGRESS MEETS PRESIDENT CASTRO- Mr. Jack Rosen, who served as the Chairman of the Board of Trustees of the American Jewish Congress, and is now the President of the organization, met with H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, in April 1998 during a visit to the island.

MONTHLY FOOD PRICE CHECK- The following is the monthly free-market price check for the cities of Havana, Camaguey, and Santiago de Cuba, 500 and 850 Kilometers east of the capital, respectively. This Monthly Food Price Check compares prices with April 1997. The average monthly wage is 214 Pesos (versus 203 Pesos in 1997), although more than 1,400,000 workers (out of a workforce approximately of 4,500,000), or 31%, receive U.S. Dollar or U.S. Dollar-related bonuses equal to 1 to 7 times their monthly wage. [In February 1997, approximately 1,300,000 workers (out of a then reported workforce of approximately 4,200,000), or 30%, received U.S. Dollar or U.S. Dollar-related bonuses equal to 1 to 7 times their monthly wage]. An estimated 35% of Republic of Cuba nationals have access to U.S. Dollars, although the percentage with access to U.S. Dollars is highest in Havana, where approximately 20% of the island's population resides. All Cubans receive a limited subsidized monthly food ration (which generally does not cover needs for one month), free health care and education, and pay no more than 10% of their wage for housing. Workers, with the exception of the self-employed all receive various forms of social security coverage. KEY: LB-per pound. U-Per unit. ( )-April 1997 price. NA-not available. BSB-beer-sized bottle. S-Soft. H-Hard. All prices are in Cuban Pesos.
Food Product
Rice (LB)
Black Beans (LB)
Pork (LB)
Cooking Fat (LB)
Lamb (Boned)
Ham (Boned)
Garlic (U)
Onion (LB)
Tomato (LB)
Lettuce (Bunch)
Cabbage (U)
Cucumber (LB)
Carrots (LB)
Malanga (LB)
Yucca (LB)
Sweet Potato (LB)
Squash (LB)
Tomato Sauce (BSB)
Limes (U)
Oranges (U)
Tangerines (U)
Grapefruit (U)
Pineapple (U)
Papaya (LB)
Banana Fruit (U)
Banana Cooking-S (U)
Banana Cooking-H (U)
Chicken (LB)
String Beans (Bunch)
Peanuts (LB)
Corn Meal (LB)
Havana
4-5 (5)
7-89 (7)
25 (25)
20 (20)
25 (25)
50 (60)
.80-1.20 (.50-1)
4-6 (3-4)
4-6 (2-4)
5 (5)
3-4 (5)
.5-3 (2)
3-4 (5)
3-4 (4)
1.5-2 (1.5)
1.20 (1)
1.5-2 (2)
10 (10)
.50-1 (.50-1)
.50-1 (.50)
.50-1 (.50)
NA (NA)
6-10 (5-20)
2-3 (3)
.50-1 (.50-1)
2-3 (3-4)
.50-1 (.50-1)
NA (NA)
4 (5)
10 (12)
3 (6)
Camaguey
3.50 (5)
5.50 (9)
15 (21-22)
16 (20)
12 (15)
30 (40)
1-1.20 (.50)
1.5-2 (5)
2 (1.5)
1.5 (2)
2 (3)
.80-1 (2)
2 (3)
4-5 (4)
1 (1)
1 (1)
.80 (1)
9 (7)
.20 (.15)
.20 (.25)
NA (.20)
NA (1)
4-5 (3-6)
1.5 (1.5)
.50-.80 (.50-1)
1-2 (1-2)
.20 (.25)
NA (NA)
3 (3)
6 (9)
3.6 (3)
Santiago de Cuba
6 (8)
7 (8)
17 (18)
18 (18)
16 (15)
30 (30)
.50-1.5 (.33-1)
2.5-3 (3)
2-3 (2.5)
1 (3) small
3-4 (2-3)
1 (1.5)
2 (2)
3.50-4 (4)
1 (1)
1 (1.3)
1 (1.5)
10 (8)
.20 (.15)
.33 (.15)
.20 (.25)
NA (NA)
6-8 (2-10)
1 (1)
.50 (.50)
1.5-3.0 (1-2)
.15 (.15)
NA (NA)
2 (2)
10 (8)
3 (3.5)


UPDATED SPEAKING SCHEDULE

7 May 1998- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, is scheduled to appear before the Subcommittee on Trade of the Committee on Ways and Means of the United States House of Representatives in Washington, D.C. The Honorable Philip M. Crane (R-Illinois), Chairman of the Subcommittee on Trade, is presiding at the hearing, the focus of which is "to examine: (1) U.S. economic and trade policy toward Cuba and the impact of the U.S. embargo on the Cuban people, (2) the prospects for future economic relations in light of the Pope's recent visit, (3) the status of humanitarian assistance extended to the Cuban people, and (4) how U.S.-Cuba policy, particularly the Helms-Burton legislation, has affected relations with U.S. trading partners." The text of the statement by Mr. Kavulich will be available on the Internet the day of the hearing at http://www.house.gov/ways_means and http://www.cubatrade.org

13 May 1998- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, is scheduled to appear at the "Trade with the Americas" conference sponsored by the World Trade Center Association Los Angeles-Long Beach. For information telephone (562) 495-7070.

29 May 1998- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, is scheduled to appear at a luncheon sponsored by The Cuban Studies Institute at Tulane University in New Orleans, Louisiana, and in cooperation with the World Trade Center of New Orleans, Whitney National Bank, City of New Orleans Office of International Relations, Gulf Coast International Hispanic Chamber of Commerce, Louisiana Department of Economic Development, Louisiana International Trade Center, Louisiana International Trade Commission, and Traffic and Transportation Club. For information telephone: 504-862-8000 extension 2601.



ECONOMIC EYE ON CUBA© is published each Monday for members of the U.S.-Cuba Trade and Economic Council, the largest nonpartisan business organization within the United States focusing upon the Republic of Cuba. The organization is a private, not-for-profit corporation which does not take positions with respect to United States-Republic of Cuba political relations. All rights reserved. Material may not be reproduced without written permission.


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