EXCHANGE RATES UNCHANGED- 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 three weeks ago to 20 Pesos. 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. CADECA 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 CADECA 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 government 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.
OFAC PERMITS TRANSFERS IN U.S. DOLLARS BY CUBAN COMPANIES FOR DIRECT HEALTHCARE PRODUCT IMPORTS- The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., has re-confirmed that Republic of Cuba-based entities may send payments denominated in U.S. Dollars to third country financial institutions on behalf of United States-based companies in receipt of a license from the Bureau of Export Administration (BXA) of the United States Department of Commerce in Washington, D.C., to export (sell) healthcare products directly from the United States to the Republic of Cuba. The OFAC does not permit Republic of Cuba government-operated financial institutions to send funds directly from the Republic of Cuba to the United States, although such authorization has been requested by United States-based companies. In May 1998, the Republic of Cuba began using the System Worldwide Interbanking Financial Telecommunications (SWIFT), through which costs of international currency transactions are reduced and made more timely.
TRADE GROUP ORGANIZING FIRST LICENSED TRADE MISSION TO CUBA- The U.S.-Cuba Trade and Economic Council is assisting one of the largest United States-based trade associations in organizing a trade mission to the Republic of Cuba for representatives from the categories of United States companies currently authorized by the United States government to engage in commerce with entities located within the Republic of Cuba. Each United States company representative would obtain a license (to engage in travel-related expenditures) from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and the trade association would coordinate the visit to the Republic of Cuba. Only representatives of United States companies in the following categories would be permitted to participate as these categories are permitted by the OFAC to conduct commercial transactions within the Republic of Cuba: 1) artwork 2) communications 3) entertainment 4) medical equipment 5) medical instruments 6) medical supplies 7) medicated products 8) medicines 9) publishing 10) telecommunications and 11) travel. During the visit to the Republic of Cuba, each United States company representative would participate in meetings solely relating to identifying current import and/or export opportunities relating to their specific products and/or services. By having individual licensed business travelers visit the Republic of Cuba as a group, the trade association organizing the trade mission expects that participants will be able to obtain group volume savings at airlines (to and from the Republic of Cuba) and group volume savings at hotels (within the Republic of Cuba).
"FULLY HOSTED" TRAVELERS ARE WARNED- Officials at the United States Department of State, officials at the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, officers of the United States Customs Service, and officers of the Immigration and Naturalization Service, have re-confirmed that any individual subject to United States law returning to the United States after visiting the Republic of Cuba on a "fully hosted basis" will be subjected to increased scrutiny under new regulatory guidelines. This is especially true for high profile groups. According to United States government sources, three groups and a number of individuals are having information about their activities compiled for possible civil and/or criminal action(s). Extreme caution should be taken as there is no longer a presumption of innocence, there is now a presumption of guilt and fines will be assessed. The term "fully hosted" means that all expenses within the Republic of Cuba (including travel to and from the Republic of Cuba if using a Republic of Cuba government-operated air carrier, such as Cubana Airlines, or other means of transportation) on behalf of the individual subject to United States law are paid for by an individual or entity not subject to United States law. No direct or indirect payments are permitted. A "fully hosted" traveler may return to the United States with an unlimited amount of informational materials (books, magazines, newspapers, music tapes, etc.) and an unlimited amount of artwork. A "fully hosted" traveler may not return to the United States with any other Republic of Cuba-produced products (such as cigars, rum, coffee, tee-shirts, etc.). The OFAC and the United States Customs Service confirm that "fully hosted" travelers should now expect the following: 1) A letter from an individual or entity not subject to United States law (or a letter from a United States-based law firm) confirming that the individual subject to United States law was "fully hosted" will not be accepted as "proof" that a visit was "fully hosted." 2) The individual subject to United States law will be required to produce receipts for all daily expenses within the Republic of Cuba which demonstrate that all of the expenses were paid by an individual or entity not subject to United States law. 3) At the entry point to the United States, the United States Customs Service may make a photocopy of the passport of the individual subject to United States law. The passport number may be entered in a permanent data base. 4) The individual subject to United States law will be required to submit a signed letter confirming, under penalty of perjury, that all daily expenses incurred within the Republic of Cuba on behalf of the individual subject to United States law were paid for by an individual or entity not subject to United States law. 5) The OFAC may send a letter to the individual subject to United States law requiring additional proof that the visit to the Republic of Cuba was "fully hosted." There are an increasing variety of categories under which individuals subject to United States law can obtain a license from the OFAC to travel to the Republic of Cuba. Information on these categories may be obtained on the Internet at http://www.cubatrade.org at the section "Who Can Travel To The Republic Of Cuba."
ADDITIONAL OPPORTUNITIES FOR UNITED STATES TELECOMMUNICATIONS COMPANIES- Since November 1994 when direct-dial long distance telephone services were re-established between the United States and the Republic of Cuba under provisions of the Cuban Democracy Act signed into law by President George Bush in October 1992, annual gross revenues to United States-based long distance telephone service companies have increased from US$10.3 million prior to 1993 to a projected US$160 million in 1998. United States law requires that per minute charges be shared on a 50-50 basis between United States-based long distance telephone service companies and the government of the Republic of Cuba based upon a maximum of US$1.20 per minute cost from which the government of the Republic of Cuba can be paid. United States-based long distance telephone service companies have charged above the US$1.20 per minute cost to some United States-based customers, particularly commercial users, thus retaining a larger share of the per minute overall revenues. The majority of the long distance traffic between the United States and the Republic of Cuba, approximately 65%, at an average per minute cost of US$.74 per minute, is residential use by individuals of Cuban descent speaking with their relatives who reside within the Republic of Cuba. United States-based long distance telephone service companies reported that the average per minute costs are above US$1.20 per minute, reflecting a higher (and increasing) volume of commercial users paying approximately US$1.60 per minute. To date, only the "first-tier" long distance telephone service companies (AT&T, AT&T de Puerto Rico, MCI, Sprint, WilTel, LDDS) have been approved by the government of the Republic of Cuba to provide services, despite a continuing and increasing interest by "second-tier" companies (such as resellers) to directly enter the market. Mr. Enrique J. Lopez, President of AKL Group, a Coral Gables, Florida-based telecommunications consulting company, reports that "the 'first-tier' United States long distance carriers have not fully-exercised what is defined as "telecommunications" under the Cuban Democracy Act. They have only provide long distance services, with limited provisioning of other services. These other services include providing to Cuba video conferencing equipment, tele-conferencing equipment, and data services equipment (Sprint is the only company currently doing this as AT&T was not interested). This has not served the best interests of Cuba. The Cuban government will be able to discuss these issues when the service-provider agreements with the 'first-tier' companies are up for review and possible renewal later in 1998. The 'second-tier' carriers should be aggressively pursuing the Cuban market, especially since the 'first-tier' carriers have self-limited existing opportunities. When dealing with the 'second-tier' carriers, Cuba will gain a new perspective on the difference that business is conducted, one that fosters creativity and the provision of cost-effective, technologically-driven telecommunications services. 'Second-tier' companies are well-financed and supported by the United States financial community, thus providing these smaller companies with an ability to proactively respond more quickly to the changing Cuba market." For additional information, AKL Group at telephone (305) 567-0084 or by facsimile at (305) 567-0085.
MORE UNITED STATES TELECOMMUNICATIONS COMPANIES MENTION CUBA IN MARKETING- Irving, Texas-based Canmax, Inc. (1997 revenues US$12.5 million) will be marketing 60,000 prepaid long distance telephone calling cards through 3,300 convenience stores and petroleum retailers, including 7-Eleven Stores. Canmax is a developer and supplier of point-of-sale software and services for the convenience store and retail petroleum industry, as well as, a marketer of general telecommunications products and services. Each prepaid long distance telephone calling card will permit domestic long distance telephone calls and international telephone calls to Mexico, Colombia, Cuba, Haiti, and Jamaica. Canmax purchases minutes from WorldCom, MCI, and other companies that have existing service licenses from the Federal Communications Commission (FCC) and agreements with the government of the Republic of Cuba to provide long distance telephone service. Americatel, a Miami, Florida-based company that offers discounted long distance international service recently announced that residential users of its service would receive a rate of US$.74 per minute for telephone calls from the United States to the Republic of Cuba. Numerous resellers of long distance international telephone service advertise that the Republic of Cuba is one of the countries available to customers.
EXCITE ESTABLISHES PARTNERSHIP WITH TELECOM ITALIA- Palo Alto, California-based Internet service provider Excite, Inc., has established a partnership with Rome, Italy-based Telecom Italia to develop enhanced search, E-mail, and online communication capabilities. A subsidiary of Telecom Italia, Stet International, has a 29% interest in ETECSA, the Republic of Cuba government-controlled telecommunications company.
FRANCE ANNOUNCES US$60.5 MILLION IN TRANSPORTATION AGREEMENTS- The Honorable Jean Claude Gayssot, Minister of Transportation, Machinery, and Lodging of France, announced agreements worth US$60.5 million in urban transportation, railways, civil aviation, and ports, during his four-day visit to the Republic of Cuba. The agreements include: A) US$1.5 million sale of used buses manufactured by France-based Renault, including spare parts B) US$$35 million sale of used locomotives, rail cars, and other railroad equipment C) sale of four 40-seat ATR 42-300 aircraft to Republic of Cuba government-operated Aerocaribbean Airlines and the Revolutionary Armed Forces of the Republic of Cuba-operated Aerogaviota Airlines D) US$24 million agreement for the repair of the Havana Bay Tunnel, the Island's longest E) the repair of thirteen light houses by France-based Geismar F) the supply of railway maintenance equipment and G) training of Republic of Cuba nationals in port, urban transportation, and railway equipment maintenance. Minister Gayssot said that the terms for the sale of the buses and aircraft had been agreed to, while the terms of the other agreements were being finalized, but that he expected no difficulties in completing the negotiations. A sister port agreement between the city of Santiago de Cuba and the French city of Marsella was signed which Minister Gayssot termed strategic, given the port of Santiago de Cuba's proximity to Panama Canal shipping lines and other Caribbean Sea-area countries. A joint delegation from the French International Development Agency and the Fund for Aid and Cooperation will soon visit the Republic of Cuba.
FRENCH MINISTER REPORTS CUBA'S WILLINGNESS TO NEGOTIATE DEBT- The Honorable Jean Claude Gayssot, Minister of Transportation, Machinery, and Lodging of France, reported that H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, had indicated a willingness to resolve the island's US$500 million foreign debt with France. He said that the Republic of Cuba's recent resolution of commercial debt to Japan served as a possible model to resolve the commercial debt to France-based companies. [In March 1998 the Republic of Cuba renegotiated commercial debt owed Japan-based companies. The Republic of Cuba owes a total of approximately $10 billion in commercial and non-commercial debt. The agreement with Japan requires that the Republic of Cuba repay US$750 million to 180 Japan-based companies over 25 years period, with an ample grace period]. "It's very important that during my meetings with President Castro, Vice President Dr. Carlos Lage, and the head of the central bank [H.E. Minister-President Francisco Soberon], there was a recognition of the debt and need to find an adequate solution," said Minister Gayssot. He said that there were no difficulties with US$1 million in short term debt (payable by the end of 1999) owed to France by the Republic of Cuba. This debt is believed to be in the form of trade credits extended to the Republic of Cuba by the government of France. "The question of the long term debt is more complicated. This country's current financial problems can't be ignored, but there is a real interest in finding an adequate solution, as they recently did with the Japanese," he said. Minister Gayssot announced H.E. Dr. Carlos Lage, a Vice President of the Council of State of the Republic of Cuba, would visit France later this year, in part to continue debt discussions. Republic of Cuba debt defaults began in the early 1980's, with the country suspending all principal and interest payments on its foreign debt in 1986. Official discussions with the Paris Club ceased in 1989, although informal discussions resumed in 1994. The government of the Republic of Cuba seems to be, at this time, pursuing individual agreements with creditors as opposed to a general agreement amongst all creditors. The Republic of Cuba is not a member of the International Monetary Fund (IMF), World Bank, or other international lending institutions.
FRANCE'S ACCOR AND PORTUGAL'S AMORIM TO REFURBISH EIGHT HOTELS- Republic of Cuba government-operated Gran Caribe signed an agreement with Evry Cedex, France-based Accor S.A. Hotels and Porto, Portugal-based Amorim Corporation (a large industrial company) to renovate, manage, and market eight hotels. Accor, the world's fourth largest hotel chain, reported that it would continue to manage and market the city of Havana's Sevilla Hotel and the Cuatro Palmes Hotel, located in the resort area of Varadero, 140 kilometers east of Havana, while adding the Jagua Hotel in Cienfuegos, 254 kilometers east of Havana, and the Casa Grande Hotel (the most popular business hotel), Venus Hotel, and Bucanero Hotel in Santiago de Cuba, 861 kilometers east of Havana. Accor will also manage the Hotel Taino III, currently under construction in Varadero, and an eighth hotel under construction on the north central key of Cayo Coco, 508 kilometers east of Havana. By 1999, Accor will manage 1,310 rooms throughout the Republic of Cuba. Accor signed a separate agreement earlier in 1998 to construct 1,300 rooms on the north central key of Cayo Coco. Amorim and Accor will jointly grant a US$25 million credit to upgrade and complete construction of the hotels. Accor and Minneapolis, Minnesota-based Carlson Companies (1997 revenues US$12 billion) are partners in Carlson-Wagonlit Travel, the second-largest travel network in the world with more than 4,100 locations in 125 countries.
SPAIN SEEKS INCREASED INVESTMENT OPPORTUNITIES- H.E. Josep Pique, Minister of Industry and Energy of Spain, led a delegation of fifty-three executives, which, for the first time, included a number of Spain's most visible public and private industrial corporations, on an exploratory visit to the Republic of Cuba from 21 June 1998 to 25 June 1998 during which a bilateral mining and energy cooperation agreement was signed. The delegation included senior-level executives from Tabacalera S.A. (tobacco, cigars, food and beverages), Iberia (civil aviation), Endesa (power generation), Gas Natural, Renfe (transportation), Telefonica (telecommunications), Iberdrola (technology), Azucarera Ebro (agrobusiness), and Sol Melia (tourism). Dragados Industries signed an agreement with the Ministry of Steel, Mechanical, Electronic Industry of the Republic of Cuba to construct off-shore oil platforms. The Union Fenosa signed an agreement with the Republic of Cuba government-operated National Power Company to establish a joint venture to supply information and technology to upgrade power plants. Tecnicas Reunidas signed an agreement with the Ministry of Basic Industry of the Republic of Cuba to improve oil extraction from existing wells. Minister Pique reported that other Spain-based companies, including the Endesa and Iberdrola energy companies, and the Azucarera Ebro agricultural products company, were negotiating significant investments. Minister Pique reported that Spain was the Republic of Cuba's most important trading partner and had the largest number of joint ventures operating within the Republic of Cuba, with most concentrated in the tourism and light industrial sectors, and involving mainly small and medium-sized Spain-based companies. Bilateral trade was US$590 in 1997, with Spain exporting US$470 million worth of products to the Republic of Cuba and the Republic of Cuba importing US$120 million worth of products from Spain. The estimate of the total value of announced investments within the Republic of Cuba by Spain-based companies since 1990 is US$350 million, while the total value of committed/delivered investments within the Republic of Cuba by Spain-based companies since 1990 is approximately US$100 million. The total estimated value of foreign investment projects by Spain-based companies with entities within the Republic of Cuba currently being negotiated is US$600 million.
ADDITIONAL CANADIAN INVESTMENT MAY EXCEED US$1 BILLION- H.E. Keith Christie, Ambassador of Canada to the Republic of Cuba, reported that Canadian companies were negotiating joint ventures that could result in more than US$1 billion in new capital entering the Republic of Cuba during the next two years. Toronto, Canada-based Sherritt International Corporation, for example, already the largest single foreign investor (tourism, agriculture, oil, gas, energy) within the Republic of Cuba, has raised approximately US$500 million during the last two years for investments within the Republic of Cuba. The total value of announced investments within the Republic of Cuba by Canada-based companies since 1990 is US$1.341 billion while the total value of committed/delivered investment within the Republic of Cuba by Canada-based companies since 1990 is US$600 million. Ambassador Christie reported that total value of delivered investment within the Republic of Cuba by Canada-based companies is US$200 million.
ITALIAN COMPANY TO CONSTRUCT REFRIGERATION EQUIPMENT- Italy-based Technoblock S.p.a., and the Ministry of Steel, Mechanical, and Electronic Industry of the Republic of Cuba have established an economic association to construct industrial refrigeration equipment, using Technoblock's "monoblock technology." Since 1995, Technoblock has sold 300 refrigeration facilities to Republic of Cuba government-operated entities. Plans call for production of 350 units on an annual basis.
|
Year 1992 1993 1994 1995 1996 1997 1998 |
Total Countries Represented 0 11 17 29 32 38 38 |
Total Participants 20 136 221 333 425 545 778 |
Republic of Cuba Government- Operated Companies 20 102 185 260 280 341 496 |
Non-Cuba Companies 0 34 36 73 145 204 282 |
CARIBBEAN TRADE AT $1.3 BILLION- H.E. Ricardo Cabrisas, Minister of Foreign Trade of the Republic of Cuba, reported that bilateral trade between the Republic of Cuba and Caribbean basin-area countries (those which border the Caribbean Sea including Mexico and Venezuela) was $1.335 billion in 1997, representing 20% of the Republic of Cuba's total foreign trade in 1997, compared to less than US$1 billion in 1996. Minister Cabrisas reported that 1997 bilateral trade was US$450 million with the Caribbean Sea-area countries, 3 times what it was a few years ago. Minister Cabrisas reported that preferential trade agreement negotiations were taking place with the Caribbean Economic Community (CARICOM). Minister Cabrisas reported that there were twelve joint ventures between companies within Caribbean Sea-area companies and Republic of Cuba government-operated companies.
CARICOM CONFIRMS STRONGER RELATIONS- Mr. Edwin Carrington, General Secretary of the Caribbean Economic Community (CARICOM), reported that the organization was satisfied with the Republic of Cuba's interest in Caribbean integration and the full development of its international relations. Mr. Byron Blake, Secretary of Regional Trade and Economic Integration of CARICOM, reported that the organization had no objections to the government of the Republic of Cuba becoming a member of the organization.
INCREASED PANAMA PRESENCE EXPECTED- Mr. Ricardo Aleman, General Manager of Panama's Colon Free Trade Zone, said Republic of Cuba government-operated companies would increase their use of the Colon Free Trade Zone for importing products from Latin America and exporting products to Latin America. According to statistics provided by the government of Panama, the Republic of Cuba imported US$100 million in products from the Colon Free Trade Zone in 1997, with a significant portion of this value in vehicles.
PRESIDENT CASTRO PLANS CARIBBEAN TOUR- H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, will visit Grenada in late July 1998 or early August 1998, said H.E. Keith Mitchell, Prime Minister of Grenada. President Castro will visit the Dominican Republic in August 1998 to attend a meeting of representatives of the Caribbean Community, and, perhaps, Barbados.
MINSAP SEEKING NEW BUSINESS- Sources at the Ministry of Public Health (MINSAP) of the Republic of Cuba report that 80 delegations (including 30 Health Ministers) attended the Health Ministers Meeting of Non-Aligned Nations from 25 June 1998 to 26 June 1998 in the city of Havana. The sources said that many of the meetings focused on technical cooperation and the sale of Republic of Cuba-produced medical equipment and Republic of Cuba-produced pharmaceuticals.
PRESIDENT OF COLOMBIA VISITS- The Honorable Ernesto Samper, President of Colombia, visited the Republic of Cuba from 25 June 1998 to 27 June 1998. He visited the city of Havana in conjunction with the Health Ministers Meeting of Non-Aligned Nations.
CELEBRITIES VISITING- Mr. Robert Plant, lead singer of the United Kingdom-based rock group Led Zeppelin, visited the Republic of Cuba 17 June 1998 to 24 June 1998. Mr. Plant is not subject to United States law. The U.S.-Cuba Trade and Economic Council assisted with the coordination of Mr. Plant's visit to the Republic of Cuba. Mr. Plant stayed at the Melia Las Americas in the resort area of Varadero, 140 kilometers east of the city of Havana, and at the Hotel Santa Isabel in Havana. From 22 June 1998 to 25 June 1998, Mr. Jack Nicholson, the actor, visited the Republic of Cuba at the invitation of the Republic of Cuba government-operated Institute of Art and Film (ICAIC). Like Mr. Plant, Mr. Nicholson stayed at the Hotel Santa Isabel. Mr. Nicholson is subject to United States law. Individuals subject to United States law who are in the motion picture industry may visit the Republic of Cuba, under a specific license (or "fully hosted" under a general license) from the Office of Foreign Assets Control (OFAC), to film documentaries, to attend film festivals, and to discuss importation and exportation of motion picture products.
MIGRATION DISCUSSIONS IN NEW YORK CITY- The government of the United States and the government of the Republic of Cuba will conduct their bi-annual meeting to discuss migration issues in New York City from 29 June 1998 to 30 June 1998.
CORRECTION
There was an error In the 8 June 1998 to 14 June 1998 issue of the ECONOMIC EYE ON CUBA© under the item "CUBAN REFRIGERATOR TO COMPETE WITH IMPORTS." LG Electronics was mistakenly referred to as formerly being Seoul, South Korea-based Samsung. LG Electronics, which a subsidiary of Seoul, South Korea-based LG Group, was formerly Lucky Goldstar. Our apologies.
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