U.S. DOLLAR STRENGTHENS AGAINST PESO- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) purchased the U.S. Dollar for 21 Pesos and sold the U.S. Dollar for 22 Pesos, compared to purchasing the U.S. Dollar for 21 Pesos and selling the U.S. Dollar for 21 Pesos from 15 July 1998 through 25 November 1998. Republic of Cuba-based economists said that there were two primary reasons for the increase in the value of the U.S. Dollar: 1) this year’s poor economic performance, with the Gross Domestic Product (GDP) expected to increase no more than 1% and 2) the government of the Republic of Cuba requires U.S. Dollars to make payments for imports and make interest payments before 31 December 1998. CADECA purchased the U.S. Dollar for 19 Pesos and sold the U.S. Dollar for 21 Pesos from 1 April 1998 to 14 July 1998. CADECA 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 purchased the U.S. Dollar for 24 Pesos and sold the U.S. Dollar for 24 Pesos in August 1996. 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.
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 28
November 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.
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SENATOR DODD AND REPRESENTATIVE LEE VISITING CUBA- The Honorable Senator Christopher J. Dodd (D-Connecticut) is visiting the Republic of Cuba during the week of 30 November 1998 to 6 December 1998. The Honorable Barbara Lee (D-Oakland, California) will visit the Republic of Cuba during the week of 30 November 1998 to 6 December 1998.
IMMIGRATION DISCUSSIONS TO BE HELD- Immigration discussions between the Republic of Cuba and the United States will be held on 4 December 1998 in the city of Havana. Since the Republic of Cuba and the United States signed an immigration agreement in 1994, the discussions have been held twice a year, alternating between the cities of Havana and New York City, New York. The respective delegations will be led by H.E. Ricardo Alarcon, President of the National Assembly of People’s Power of the Republic of Cuba and The Honorable John R. Hamilton, Deputy Assistant Secretary of State for Central America, Caribbean, and Cuba.
AFTER ABUSE, DIPLOMATIC COMMUNITY SEEKS TO RETAIN 33% RETAIL SALES DISCOUNT- Diplomats residing within the Republic of Cuba have petitioned the Ministry of Foreign Affairs of the Republic of Cuba to intervene on their behalf with Republic of Cuba government-operated Cubalse S.A., which is responsible for leasing housing, providing residential services, and which operates retail stores. Cubalse S.A. plans to eliminate a 33% discount for diplomats (including individuals subject to United States law who work within the United States Interests Section) at the city of Havana’s main supermarket, which is located in the exclusive district of Miramar. Personnel from embassies representing some Asian countries and some African countries have been purchasing substantial quantities of beverages, detergents, cooking oil, and other products at the supermarket and then reselling the products in the Republic of Cuba’s “black market” for profit- with such sales often taking place in the parking lot of the supermarket. Diplomats who are not involved in such reselling, have suggest that the government of the Republic of Cuba be more diligent toward the diplomats who abuse the discount privilege, rather than targeting the entire diplomatic community.
MOET CHANDON CHAMPAGNE SALES- Mr. Bertrand Steip, Export Director of Epernay, France-based Moet Chandon, the world’s largest manufacturer Champagne, reported that the company sold 6,000 bottles to the Republic of Cuba in 1997. Moet Chandon produced approximately 34 million bottles of champagne in 1997, of which 80% was exported, with 600,000 bottles exported to Caribbean Sea-area countries.
PAINTINGS BY CUBAN ARTISTS BRING HIGH PRICES- New York City-based Christie’s reported that several paintings by Republic of Cuba nationals were sold for amounts exceeding their pre-auction estimates. “Nativite” by Mr. Wilfredo Lam sold for US$882,500.00; “La Hebra” by Mr. Mariano Rodriguez sold for US$354,500.00; and “Sin Titulo” by Mrs. Amelia Pelaez sold for US$310,500.00.
TOURISM UPDATE- The Ministry of Tourism of the Republic of Cuba reported 1.145 million tourist arrivals through October 1998, an increase of 19.7% from the same period in 1997. The Ministry of Tourism of the Republic of Cuba reported that tourism arrivals were expected to reach 1.4 million for 1998 and that gross direct and indirect revenues would be US$1.9 billion (above the announced projection of US$1.8 billion, but below original projections of US$2.0 billion), compared with 1.18 million tourism arrivals in 1997 and gross direct and indirect revenues of US$1.56 billion in 1997. In 1997, the leading sources of tourists were reported to be Canada (174,574), Italy (155,655), Spain (117,953), Germany (114,256), France (81,311), United Kingdom (50,869), and Mexico (49,910). Tourist days were 8.324 million, an increase of 29% from the same period in 1997 and occupancy was 62.4%, an increase of 9.5% from the same period in 1997.
CRUISE SHIPS ARRIVALS UPDATE- The 1,000-passenger Aida from Germany docked in the city of Santiago de Cuba, 850 kilometers east of the city of Havana, on 25 November 1998. The Ministry of Tourism of the Republic of Cuba reported that eight cruise ships were expected during the 1998-1999 season, four of which will have fixed itineraries that include various ports within the Republic of Cuba, and two of which will have the ships berthed at the Port of Havana. The two ships to be berthed at the Port of Havana are the 650-passenger Triton, with mainly France-based tourists, which arrives in Havana on 2 December 1998, and the 520-passenger Italian Prima which arrives on 4 December 1998 in Havana. The 1,000-passenger Sundream from the United Kingdom arrives on 10 December 1998 and will visit biweekly through March 1999. Visiting the Republic of Cuba with no established itinerary will be the Edinburgh Castle, the Black Watch, the Princess Denaey, and the Club Med II. From 1995 until 1998, Genoa, Italy-based Costa Crociere operated the Costa Playa and a subsidiary of Costa Crociere renovated and managed the passenger ship facility at the Port of Havana. In 1997, Fort Lauderdale, Florida-based Carnival Cruise Lines purchased Costa Crociere, a transfer of ownership which required [based upon regulations administered by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury] Carnival Cruise Lines to cease both the operation of the Costa Playa to the Republic of Cuba and the management of the passenger ship facility.
MERIDIEN GESTION S.A. PLANNING CUBA OPERATIONS- North Vancouver,
British Colombia, Canada-based Leisure Canada and Paris, France-based Meridien
Gestion SA, which manages Forte Hotels and Le Meridien Hotels & Resorts,
have signed a Letter of Intent. The Letter of Intent, if implemented,
will permit Meridien Gestion S.A. (which manages approximately 500 properties
worldwide) to manage and, perhaps, have an equity interest in, five hotels
with a combined 1,000 rooms. The Letter of Intent states that the
initially-agreed three hotels will be in operation within 30 months of
a final signed agreement between Meridien Gestion and Leisure Canada, which
is expected to be signed by 31 December 1998. The hotels would be
a part of the previously-announced property development by Leisure Canada.
Leisure Canada, through its wholly-owned Wilton Properties subsidiary,
plans to invest approximately US$400 million to develop hotels, marinas,
golf courses, equestrian riding centers, cruise ship facilities, tennis
courts, convention centers, health spas, retail facilities, and eco-tourism
facilities in conjunction with Republic of Cuba government-operated Gran
Caribe S.A., one of the three largest Republic of Cuba government-operated
tourism companies. Recently, Leisure Canada and Gleneagles, Scotland,
United Kingdom-based Gleneagles Golf Developments announced an agreement
which is expected to result in the design, development, construction, and
management of two 18-hole championship golf courses located within Leisure
Canada’s 5.5 square kilometer property at Jibacoa, 40 kilometers east of
the city of Havana. Construction is expected to begin during the
second half of 1999. Paris, France-based Accor S.A., the world's
fourth largest hotel chain, manages and markets the city of Havana's Sevilla
Hotel; Cuatro Palmes Hotel, located in the resort area of Varadero, 140
kilometers east of Havana; Jagua Hotel in Cienfuegos, 254 kilometers east
of Havana; and 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. Accor and Minneapolis, Minnesota-based
Carlson Companies (1997 revenues US$12 billion from subsidiaries Radisson
Hotels Worldwide, T.G.I. Friday’s restaurants, Radisson Seven Seas Cruises,
etc.) are partners in Carlson-Wagonlit Travel, the second-largest travel
network in the world with more than 4,100 locations in 125 countries.
Another Canada-based company, Thunder Bay, Ontario, Canada-based Cuban
Canadian Resorts International has announced plans to develop during the
next ten years 2,614 beachfront residential units within the Republic of
Cuba for purchase as timeshare units or as condominium units. The
estimated US$250 million joint venture, Cuban Club Resorts S.A. (CCR),
is with Republic of Cuba government-operated Gran Caribe. A subsidiary
San Francisco, California-based BankAmerica Corporation (which recently
merged with Charlotte, North Carolina-based NationsBank Corporation, the
new entity having combined assets of US$572 billion), which is now being
sold, has a 26.2% (fully diluted) investment in Leisure Canada. San
Francisco, California-based BancAmerica ROBERTSON STEPHENS, an investment
banking company with assets of US$2 billion specializing in emerging growth
companies, purchased its shares in Leisure Canada in 1997. Other
investors in Leisure Canada include France-based Societe General and France-based
LCF Rothschild. Leisure Canada reports no current revenues from operations
within the Republic of Cuba, but expects that within the next two years
more than 51% of its revenues will be from operations within the Republic
of Cuba. Leisure Canada also has a 20% interest in Saskatchewan,
Canada-based Points North Digital Technologies, which, in turn, owns Mississauga,
Canada-based TravelPlus, one of the three largest travel agencies (more
than 200 locations) within Canada, and Dallas, Texas-based International
Tours, with 1,100 locations throughout the United States. The
Office of Foreign Assets Control (OFAC) of the United States Department
of the Treasury in Washington, D.C. 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].
HOTEL JOINT VENTURE WITH ITALIAN INVESTORS- Republic of Cuba
government-operated Horizontes S.A. and unidentified investors from Italy
have established a joint venture, TosCuba S.A., to construct hotels within
the Republic of Cuba. Construction of the first hotel, the 4-star
Hotel Maria Aguilar to be located in the colonial town of Trinidad, 200
kilometers southeast of the city of Havana, will begin in early 1999 at
a cost of US$9 million and 8 million Pesos.
CUBACEL PLANS US$10 MILLION EXPANSION- Mr. Rafael Galindo Mier, Chief Executive Officer of Cubacel S.A. reported that the company would invest US$10 million to expand coverage, mainly in new resort areas of the Republic of Cuba. He said that plans include an additional 1,500 users per year, mainly among resident non-Republic of Cuba nationals, visiting non-Republic of Cuba nationals, and tourists. Mr. Galindo said that Cubacel, which is the exclusive provider of cellular telephone service throughout the Republic of Cuba, currently had 94 employees, 4,000 users, and generated revenues of US$200,000 per month. In February 1998, Cubacel reported that it had approximately 1,800 subscribers who signed one-year contracts. The monthly fee is US$40.00 and per minute local usage is US$.40 peak and is US$.30 off-peak. Long distance rates range from approximately US$2.45 per minute to US$6.00 per minute, in addition to local per minute usage charges. The average monthly customer invoice is US$500.00. Toronto, Canada-based Sherritt International Corporation, the largest foreign investor within the Republic of Cuba, announced in February 1998 that it had acquired a 37.5% interest in Empresa de Telefonos Celulares de Cuba S.A. (Cubacel) for approximately US$38,250,000.00. Established in 1991, Cubacel is a joint venture cellular telephone operation between Mexico-based Telecommunications Internacionales de Mexico (TIMSA) and Panama-based, Republic of Cuba government-operated, UTISA, a company that also is 1) the Republic of Cuba-based representative of DHL, the international air courier service, and 2) markets two-way radios and pagers (voice and tone) within the Republic of Cuba. A wholly-owned subsidiary of Sherritt International Corporation, Sherritt International Communications, Inc., purchased 75% of the shares of TIMSA thereby giving Sherritt International Communications, Inc., a 37.5% share of Cubacel. Cubacel has a twenty-year exclusive contract to provide both analog and digital cellular service within the 800 MHZ band throughout the Republic of Cuba. Cubacel has services in the a) city of Havana, b) city of Villa Clara, 270 kilometers east of Havana, c) city of Cienfeugos, 250 kilometers southwest of Havana, d) resort area of Varadero, 140 kilometers east of Havana, e) on the highway between Havana and Varadero, f) city of Matanzas, 100 kilometers east of Havana, g) city of Santiago de Cuba, 750 kilometers east of Havana, and h) city of Moa, 900 kilometers east of Havana, where there is substantial nickel plus cobalt mining in which Sherritt International Corporation has a joint venture.
CUBAN COMPANIES SEEK CANADIAN HIGH TECH PARTNERS FOR “SILICON ISLAND”- A delegation of representatives from Republic of Cuba government-operated information technology (especially in the healthcare field) companies visited Canada from 23 November 1998 to 29 November 1998. The delegation visited the cities of Montreal, Ottawa, and Toronto to promote the concept of a “Silicon Island,” an initiative which is being supported by the government of the Republic of Cuba and by the government of Canada. Reportedly, approximately forty Republic of Cuba government-operated companies and twelve Canada-based companies are discussing possible high technology-based partnerships and investment opportunities.
CUBAN MARITIME INDUSTRY SEEKING PARTNERS AND FINANCING- Republic of Cuba government-operated Association Navieras de Cuba, and United Kingdom-based MTT Network LTD and United Kingdom-based S.E.G. Global Advisors are sponsoring “Cuba-Maritime ‘98” from 30 November 1998 to 3 December 1998 in the city of Havana. The conference’s purpose is to identify partners and financing for shipping, fishing, ports, real estate, cruise ship tourism, and aquatic tourism. The Association Navieras de Cuba consists of thirteen Republic of Cuba government-operated companies, six of which control the Republic of Cuba’s shipping, with a fleet of 87 ships (total dead weight of 300,000 tons). One hundred representatives of non-Republic of Cuba-based companies in the shipping and financial sectors are expected to attend “Cuba-Maritime ‘98.”
OIL PRODUCTION UPDATE- Oil production within the Republic of Cuba reached 1.5 million tons, exceeding a previous record of 1.46 million tons established in 1996. The Ministry of Basic Industry of the Republic of Cuba reported that production would be 1.6 million tons by the end of 1998, approximately three times the 526,800 tons produced in 1991. Oil production was 1.45 million tons in 1997. Most Republic of Cuba-produced crude oil is extremely heavy, used only in modified power and cement plants. The Republic of Cuba imported approximately 85% of its fuel in 1997, with total consumption reported at 8.23 million tons. Twelve non-Republic of Cuba-based companies are exploring for oil within (offshore and onshore) in the Republic of Cuba. The Republic of Cuba, with the assistance of non-Republic of Cuba-based companies, has begun to capture natural gas that was previously burned-off. The Ministry of Basic Industry of the Republic of Cuba reported that 100 million cubic meters of gas would be used this year for domestic cooking and power generation.
GRAIN IMPORT UPDATE- Republic of Cuba wheat imports from the French port of Rouen between 1 November 1998 and 18 November 1998 were 27,500 tons.
SUGAR HARVEST UPDATE- The Republic of Cuba’s 1998-1999 sugar harvest began on 25 November 1998 with one sugar mill in operation. The Ministry of Sugar of the Republic of Cuba reported that 110 to 120 of a total of 156 mills would operate during the harvest (November to June) with most of the mills operating in January 1999. The Republic of Cuba produced an average 7.5 million tons of raw sugar from 1987-1991, and an average of 4 million tons during the last 5 harvests. The recently-completed 1998-1998 harvest was approximately 3.2 million tons of raw sugar. Non-Republic of Cuba-based sugar industry experts and traders report that the Republic of Cuba’s sugar cane yields and operational productivity are well below international norms, for example, a third of Australia’s, which has far fewer sugar mills and produces more raw sugar than does the Republic of Cuba. In order to promote efficiency, quantity, and quality, the Ministry of Sugar of the Republic of Cuba doubled prices paid to sugar cane growers by Republic of Cuba government-operated sugar mills for sugar cane beginning with this harvest, and has indexed the prices paid for sugar cane to the quality of the sugar cane produced. Farmers planted 1,000,000 acres of sugar cane in 1997, and are expected to sow a similar quantity of acreage through 2002, completely replanting the island’s plantations with new cane varieties. The Republic of Cuba government-operated National Information Agency (NIA) reported that the decision by H.E. General Rosales Del Toro, Minister of Sugar of the Republic of Cuba, not to cut young sugar cane during the 1997-1998 harvest would result in 20% to 30% more sugar cane for the 1998-1999 harvest, with the exception of drought-stricken portions of eastern Republic of Cuba. Traditionally, the decision to cut young sugar cane was taken at the highest levels of the government of the Republic of Cuba with a goal of increasing immediate production, regardless of medium-term or long-term consequences. Reportedly, the additional sugar cane and improved productivity could ( although under current conditions is unlikely) to result in a 1998-1998 harvest between 3.5 million tons of raw sugar to 3.8 million tons of raw sugar.
UNNAMED PLAGUE DESTROYING RICE CROP- The government of the Republic
of Cuba said that it was adopting emergency measures to deal with an unnamed
plague reportedly attacking rice crops throughout the country. This
year’s rice crop has already suffered serious losses due to drought and
Hurricane Georges. Mr. Miguel Rodriguez Mayea, Director of the Republic
of Cuba government-operated National Union of Rice Companies of the Republic
of Cuba, announced earlier this year plans for the production of 225,000
tons of rice, an increase of 20% from the reported crop in 1996-1997.
He said that non-Republic of Cuba government-operated production would
be a minimum of 150,000 tons. In 1995, when Republic of Cuba government-operated
rice production was 80,000 tons (non-Republic of Cuba government-operated
production was 50,000 tons and imports were 450,000 tons), the government
of the Republic of Cuba began a national program, with financing from non-Republic
of Cuba-based financial institutions and non-Republic of Cuba-based companies,
to increase overall rice production. Financing agreements included
interest payments of two to four points above the international Libor rate,
in addition to a percentage of the savings obtained from the cost of the
increased domestic production compared to the cost of importing similar
quantities of rice. Since 1995, Republic of Cuba rice imports have
continued to decrease as the government has determined that limited financial
resources are required elsewhere.
The guest speaker will be Mr. David G.P. Allan, Chairman of Mississauga, Ontario, Canada-based York Medical, Inc. York Medical was created in 1994 to bring together Canadian experts in pharmaceutical licensing, regulatory and clinical affairs, and marketing with the Republic of Cuba-based life-sciences establishment.
The annual member luncheon of the U.S.-Cuba Trade and Economic Council is scheduled for 8 December 1998 at 12:30 p.m. at The “21” Club in New York City.
The luncheon is complimentary for members of the U.S.-Cuba
Trade and Economic Council. Please telephone as soon as possible
(212) 246-1444 to confirm your participation.