CADECA UPDATE- Sources within Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) reported that for the period from when the first office was established in 1995, through the end of 1998, the company engaged in approximately 12,000,000 exchange transactions, 7,000,000 of which were conducted in 1998.  From 1995 through the end of 1998, CEDECA issued 4 billion Pesos in exchange for U.S. Dollars, and 51 million Convertible Pesos (equal to US$1.00) in exchange for Pesos.  As of the end of 1998, CEDECA had 77 offices located throughout the Republic of Cuba. CEDECA reportedly earned US$34 million in fees from transactions (exchanging Pesos for U.S. Dollars) in 1998, with net profits being transferred to the Ministry of Internal Trade of the Republic of Cuba to purchase food products that were sold in processed form at near-market prices (Republic of Cuba government-operated farmers markets are permitted to establish prices within ranges authorized by the government of the Republic of Cuba) to the population.  CADECA expects to have 100 offices in operation throughout the Republic of Cuba by the end of 1999, compared to 49 at the end of 1997, 24 at the end of 1996, and 11 at the end of 1995.

CADECA CREDIT CARD OPERATIONS UPDATE-Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA), reported that the company had expanded credit card operations from providing services exclusively to non-Republic of Cuba nationals.  Services provided by CEDECA already include processing Canada-based Transcard credit cards issued to Republic of Cuba nationals which are used to receive remittances.  CADECA reported that the company controlled 28% of all credit card transactions within the Republic of Cuba where the credit card holder requested and received cash.  As of the end of 1998, CADECA operated 77 offices throughout the Republic of Cuba, of which 53 offices were exclusively used for issuing Pesos in exchange for U.S. Dollars. Twenty-four of the offices, the majority located in the city of Havana, and the remainder located in resort areas and in provincial capitals, issued Pesos in exchange for U.S. Dollars and provided credit card services, cashed travelers checks, and handled non-Republic of Cuba convertible currencies.

MARRIOTT EXECUTIVE JOINS BOARD OF CANADIAN COMPANY DEVELOPING CUBA TOURISM- North Vancouver, British Columbia, Canada-based Leisure Canada Inc. has announced the appointment of Mr. Simon F. Cooper as a member of the Board of Directors.  Mr. Cooper is President of Toronto, Canada-based Marriott Lodging Canada and is Senior Vice President- Lodging, Canada Region for Washington, D.C.-based Marriott International, Inc. (1998 global revenues exceeding US$9 billion).  According to a media release from Leisure Canada, Mr. Cooper “is responsible for overseeing all existing Marriott hotel brands in Canada and for fulfilling Marriott's goal of rapid hotel development….  Mr. Cooper's appointment to the Board will greatly enhance an already dynamic management group that is committed to developing world class resorts in Cuba…. Leisure Canada is honored to have an individual of Mr. Cooper's internationally recognized stature agreeing to join our team and aid us in achieving the opportunities we are afforded in Cuba.”  Undisclosed is whether Mr. Cooper and/or Marriott International has or plans to have a financial interest in Leisure Canada.  According a media release from Leisure Canada, “Mr. Cooper previously served as President and Chief Operating Officer of Toronto, Canada-based Delta Hotels and Resorts and was instrumental in the operations of several hotels in Cuba.  Born in the United Kingdom, Mr. Cooper was educated in within the country and then earned an MBA from the University of Toronto. He began his hospitality career in 1970.  In 1972, he worked for Canadian Pacific Hotels and Resorts.  In 1982, he became Senior Vice President of Operations for Delta Hotels and Resorts.  In 1989, he was promoted to President and Chief Operating Officer of Delta Hotels and Resorts.  In 1998, Mr. Cooper departed Delta Hotels and Resorts to become President of Toronto, Canada-based Marriott Lodging Canada and Senior Vice President- Lodging, Canada Region for Washington, D.C.-based Marriott International, Inc.  He was one of the principal forces behind the creation of the Canadian Tourism Commission (CTC)."  Leisure Canada, through its Wilton Properties subsidiary, plans to invest approximately US$400 million to develop within the Republic of Cuba 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.  Other investors in Leisure Canada include Paris, France-based Societe General and Paris, 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.  In 1997, San Francisco, California-based BancAmerica ROBERTSON STEPHENS Investment Management, an investment banking company with assets of US$2 billion specializing in emerging growth companies, purchased a 26.2% (fully diluted) investment in Leisure Canada.  ROBERTSON STEPHENS Investment Management announced in November 1998 that it was being purchased by a group of investors, which includes the company’s original founders. BancAmerica ROBERTSON STEPHENS is 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).  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].  Leisure Canada, has spoken with at least one United States-based financial public relations company about representation which would expectedly result in an increase in the visibility of Leisure Canada within the United States financial community.  An increasing number of Canada-based companies with Republic of Cuba-related commercial activities are retaining United States-based legal counsel, retaining United States-based consultants, and becoming members of United States-based organizations.  For additional information about Leisure Canada, contact Mr. Graeme Lempriere at telephone (888) 600-8687.

PUERTO RICAN CEMENT COMPANY LOOKS TO RETURN TO CUBA- San Juan, Puerto Rico-based Puerto Rican Cement Company (1998 revenues US$148.4 million), the largest cement producer within Puerto Rico, said that the company expects to re-enter the Republic of Cuba market when permitted by the United States government.  Puerto Rican Cement Company has three principal subsidiaries: cement, ready-mix concrete, and paper bag and polypropylene bag.  Founded in 1938, the company is controlled (32%) by the family of Mr. Antonio Luis Ferre, who serves as chairman. Mr. Ferre’s family operated a cement plant in the Republic of Cuba in the 1950’s. Baltimore, Maryland-based T. Rowe Price Associates controls 9.4% of the outstanding shares in the company. As of 18 February 1999, the market value of Puerto Rican Cement Company was US$172.1 million.

TELEPHONE SERVICES MAY BE SUSPENDED- The Cuban National Telecommunications Company (ETECSA), a joint venture created by the Ministry of Communications of the Republic of Cuba within which The Netherlands-based Stet International, a subsidiary of Rome, Italy-based Telecom Italia, has a 29% investment, reported that the company would suspend direct dial telephone service agreements with New York City, New York-based AT&T Corporation; Washington, D.C.-based MCI Worldcom; Jackson, Mississippi-based LDDS Communications; Miami, Florida-based IDB Communications; and Tulsa, Oklahoma-based Wiltel unless US$19 million in combined payments due from these companies for the last three months of 1998 and which were due to be paid to ETECSA on 31 January 1999, are not made by 12:01 a.m. on 24 February 1999.  AT&T, MCI, WilTel, LDDS, and IDB, have been withholding payments due to having received writs of garnishment pending appeal of a lawsuit seeking to use the funds to collect damages (US$187.6 million) awarded in 1997 by a United States Federal Court in Miami, Florida, against the government of the Republic of Cuba in conjunction with a lawsuit commenced by relatives of three individuals subject to United States law of Cuban descent who were killed as a result of a shoot down by aircraft operated by pilots under the direction of the Revolutionary Armed Forces of the Republic of Cuba in February 1996.  ETECSA said agreements with Kansas City, Kansas-based Sprint International and San Juan, Puerto Rico-based Telefonica Larga Distancia of Puerto Rico (TLDI) would not be suspended, as they were current on payments.  Sprint is the provider of the Republic of Cuba’s Internet connections with other countries, and TLDI does limited Republic of Cuba transactions. Approximately 135 million minutes worth of telephone calls were placed between the United States and the Republic of Cuba in 1998, with approximately 90% of the telephone calls being placed from the United States to the Republic of Cuba.  Direct dial telephone services were re-authorized by the Cuban Democracy Act signed into law by President George Bush in 1992.  Direct dial telephone services were implemented in 1994.  ETECSA received approximately US$85 million (including the US$19 million not yet received) in 1998 as its approximately 45% share of the revenues generated from United States-origin telephone calls, which average in cost from USS$.60 to US$1.00 per minute.

600 STUDENTS FROM THE UNITED STATES VISIT- The “Semester at Sea” passenger cruise ship sponsored by the University of Pittsburgh, Pennsylvania, carrying 600 university students from the United States, arrived at the Port of Havana, Republic of Cuba, on 19 February 1999 for a three-day visit.  The Republic of Cuba is the first destination on a 100-day semester cruise that includes Brazil, South Africa, Kenya, India, Malaysia, Vietnam, Hong Kong, the People’s Republic of China, and Japan.  This is reportedly the largest number of students from the United States to visit the Republic of Cuba with authorization from the United States government since 1959.

ACCOR S.A. EXPANDS HOTEL MANAGEMENT OPERATIONS- Evry Cedex, France-based Accor S.A., the world’s fourth-largest hospitality company, is now managing and marketing the Jagua Hotel (145 rooms) in Cienfuegos, 254 kilometers Southeast of the city of Havana; and the Bucanero Hotel (200 rooms) and Casa Granda Hotel (58 rooms), both located in the city of Santiago de Cuba, 860 kilometers east of Havana.  Accor S.A. will also soon manage and market the 100-room Venus Hotel, adjoining the Casa Granda Hotel.  Accor already manages and markets the Sevilla Hotel (190 rooms) in Havana, and the Quatro Palmas Hotel (312 rooms) at the resort area of Varadero, 140 kilometers east of Havana.  All of the hotels managed and marketed by Accor S.A. are owned by Republic of Cuba government-operated Gran Caribe.  In June 1998, Gran Caribe signed an agreement Accor S.A. and Porto, Portugal-based Grupo Amorim to renovate, manage, and market eight additional hotels.  Grupo Amorim is reportedly providing financing for the construction of the hotels, but has no role in management or marketing.  In October 1998, Mr. Americo Amorim, Chairman of Grupo Amorim, which reportedly already had a financial interest in ten hotels within the Republic of Cuba, reported that his company planned to construct an additional thirty hotels within the Republic of Cuba by 2003.  Mr. Amorim is also the Chairman of Corticeira Amorim, the world’s largest cork producer and exporter; controls Telecel-Comunicacoes Pessoais S.A., the second-largest mobile telephone operator in Portugal; and is one of the founders of Banco Comercial Portugues S.A., the largest publicly-owned bank in Portugal.  Accor S.A. will also manage the Hotel Taino III, currently under construction in Varadero, and a seventh hotel under construction on the north central key of Cayo Coco, 508 kilometers east of Havana.  Accor S.A. signed a separate agreement earlier in 1998 to construct, manage, and market properties with a combined 1,300 rooms on the north central key of Cayo Coco.  Accor S.A. and Minneapolis, Minnesota-based Carlson Companies (1998 revenues US$20 billion) are partners in Carlson-Wagonlit Travel, the second-largest travel network in the world with 4,100 locations in 125 countries.

HAVANATUR UPDATE- Havanatur S.A., a subsidiary of Republic of Cuba government-operated Cimex S.A., the largest conglomerate within the Republic of Cuba, reported that the company operated sixty-five travel agency offices located within countries in Europe and within countries in The Americas, compared to sixty total offices in 1997.  Havanatur S.A., which is the largest tour operator within the Republic of Cuba, reported that the company provided services to 273,297 tourists visiting the Republic of Cuba in 1998, an increase of 10% from 1997, but less than the 18% overall increase in tourist arrivals reported by the Ministry of Tourism of the Republic of Cuba, compared to 1997.  Executives of Havanatur S.A. had planned for an increase of 20%.  The executives reported that increasingly integrated competition (travel reservation-transportation-hotel), poor packaging, poor marketing, the lack of technology, and the lack of training were the primary reasons for the less than expected performance.

JOSE MARTI INTERNATIONAL AIRPORT UNEXPECTEDLY CLOSED FOR REPAIRS- The city of Havana’s Jose Marti International Airport was closed for repairs to its only runway from 6:00 p.m. to 6:00 a.m. each day from 15 February 1999 to 20 February 1999.  Airport workers reported that 50% of the work had been completed, with the airport expected to be closed again during the evenings later during the month of February 1999 or early during the month of March 1999 to complete the repairs.  Thousands of travelers were required to check-in five hours before departure and then transported by bus to the Varadero International Airport, 140 kilometers east of Havana.  Arriving flights were also diverted to Varadero International Airport, with passengers then transported by bus to Havana.  No explanation has been provided as to how potholes and cracks had developed in the runway.

PUBLIC AND PRIVATE FINANCING FROM THE UNITED KINGDOM COULD REACH US$200 MILLION- Mr. William White, Representative of the United Kingdom government-operated Commonwealth Development Corporation (CDC), said that the CDC would manage up to US$100 million in credits to the Republic of Cuba by the end of 1999, and, perhaps, up to US$200 million in credits in the near future, mainly provided through a joint venture, Caribbean Finance Investments (Carifin), which was established between the CDC and Republic of Cuba government-operated New Bank Group.  Mr. White reported that Carifin currently had US$5 million in capital, a US$15 million line of credit from the CDC, and various private sector lines of credit, including a line of credit from the London, United Kingdom-based Barclays Bank plc expected to reach US$20 million this year.  Mr. White explained that Carifin had focused upon providing short term credits and other types of short term financing, while serving as the banking agent of the CDC in the administration of medium term loans, currently worth more than US$20 million.  Mr. White said that the CDC had recently made a second investment within in the Republic of Cuba, providing 30% of the US$15 million in capital to a joint venture with Paris, France-based Pansea and Republic of Cuba government-operated Cubanacan S.A. to construct eight small luxury hotels.  He said that the CDC had also provided US$30 million in medium term credits to various Republic of Cuba government-operated companies in 1998, mainly to purchase technology.  Mr. White said that 1999 plans included increasing Carifin’s portfolio to US$100 million and seeking investments in various sectors including sugar, energy, real estate, mining, and tourism.  He said that the CDC was evaluating making loans for durations of seven to ten years and valued at US$30 million to US$50 million.

MEXICAN BEERS ENTER MARKET- Mexico-based Alfa-Caribe, an export/import company, announced that the company would export Mexican beer brand XX and Mexican beer brand Sol to the Republic of Cuba.  The company expects to export at least 25,000 cases per month for the two brands combined.  Alfa-Caribe also exports Pepsi-Cola to the Republic of Cuba.  Pepsi-Cola is produced by Purchase, New York-based PepsiCo, Inc., (1998 revenues exceeding US$22 billion).

NEW ZEALAND ESTABLISHES DIPLOMATIC RELATIONS- The Government of New Zealand and the government of the Republic of Cuba have established full diplomatic relations. According to the Ministry of Foreign Affairs of the Republic of Cuba, the government now has full diplomatic relations with 167 countries, consular relations with 2 countries, and Interests Sections with 2 countries (including with the United States).  Bilateral trade relations between New Zealand the Republic of Cuba are limited, with the Republic of Cuba importing a reported US$16 million in dairy products in 1995 and a reported US$20 million in dairy products in 1996.

RICE PRODUCTION UPDATE- 1998 Republic of Cuba government-produced rice production was 87,000 tons, compared to the 185,000 tons planned.  H.E. Eduardo Chao Trujillo, Vice Minister of Agriculture of the Republic of Cuba, reported that the 1998 drought and disease were problems. Republic of Cuba nationals consume an estimated 500,000 tons of rice annually.  The government of the Republic of Cuba initiated a production program in 1995 to eventually substitute 450,000 tons of rice imports.  The program was financed by non-Republic of Cuba-based financial institutions and non-Republic of Cuba-based companies with the agreements including repayment at interest rates several percentage points above the prevailing Libor interest rate, in addition to a percentage of the savings resulting from the difference between the cost of domestic production and the cost of imports.  The Ministry of Agriculture of the Republic of Cuba reported that Republic of Cuba government-operated production increased from 80,000 tons in 1995 to 140,000 tons in 1996 and to 160,000 tons in 1997.  The results of 1998 are expected to virtually eliminate the viability of financing agreements, while increasing the necessity for joint ventures.  The first rice production joint venture, Taichi, S.A., with People’s Republic of China-based Xintian Corporation, was established in January 1999 with a goal of producing 25,000 tons of rice annually.  Xintian Corporation reportedly committed US$12 million in capital to the joint venture, while the government of the Republic of Cuba will provide more than 20,000 acres of land and buildings.

OIL EXPLORATION UPDATE- In October 1998, London, United Kingdom-based Premier Oil plc ceased oil exploration activities of two blocks contracted on a risk basis within the Republic of Cuba as test wells had not yielded expected results.  Montreal, Quebec, Canada-based Pebercan Corporation reported the discovery of oil at its Canasi 1 well, located 70 kilometers east of the city of Havana, at block 7.  Pebercan Corporation is controlled by France-based investors including Mr. Gerard Bourgoin and, reportedly, the actor Mr. Gerard Depardieu.  Mr. Gerard Bourgoin is the President of the French Entrepreneurs and Business Federation and is the Chairman of Bourgoin Group, France’s largest poultry producer (and exporter to the Republic of Cuba).  Pebercan Corporation reported that the new oil well is expected to produce 1,500 barrels of oil per day.  Total domestic oil production within the Republic of Cuba is currently 35,000 barrels of oil per day.  The new oil well is located in an area known to produce extremely heavy crude, with a high sulfur content, usable only for specially-converted thermo-electric plants and cement plants.  The 2,556-meter well was drilled in partnership with Canada-based Mayrel & Prom, and with Toronto, Canada-based Sherritt International Corporation as the operator.  Pebercan Corporation reported that preliminary analyses and testing indicated significant oil accumulation.  This oil well, and future oil wells, developed by Pebercan Corporation will be exploited on a 50%-50% basis with Republic of Cuba government-operated Cubapetroleo S.A. (Cupet).  Republic of Cuba-based and non-Republic of Cuba-based oil sector experts confirm that substantial amounts of medium quality oil to high quality oil exist beneath the Republic of Cuba and in the territorial waters of the Republic of Cuba. However, despite more than five years of active exploration for oil, there have been no substantial discoveries of oil reported. Ten non-Republic of Cuba-based oil exploration companies are reported to have the exploration rights to 22 of 45 available blocks, before Premier the Premier Oil plc ceased activity in October 1998.

GOLD, CHROME, AND COPPER MINING UPDATE- The Ministry of Basic Industry of the Republic of Cuba reported that in 1998 it exported 326.4 kilograms of gold, earning gross revenues of US$1.7 million; and exported 32,000 tons of chrome; 3,200 tons of chrome concentrate; and 1,500 tons of copper.

SHIPPING LINE ESTABLISHED- Republic of Cuba government-operated Base de Operationes de Exportaciones para el Caribe (Boexcar), has been established in the city of Santiago de Cuba, 860 kilometers east of the city of Havana.  The new shipping company, operating under the auspice of the Ministry of Fishing of the Republic of Cuba, has two small refrigerated cargo vessels, a 500-meter dock with loading cranes and unloading cranes, a refrigerated warehouse, and a fish processing plant.  Boexcar plans to transport Republic of Cuba-produced products, in particular fish, to Caribbean Sea-area countries and to Caribbean Basin-area countries.  For Boexcar to be profitable, the company will need to seek transportation for imports to the Republic of Cuba from Caribbean Sea-area countries and Caribbean Basin-area countries, which have not been substantial in recent years.  The governments of Caribbean Sea-area countries and Caribbean Basin-area countries have said that a lack of inter-island shipping has been a primary obstacle toward an increase in bilateral trade.

MEMBERS OF CONGRESSIONAL BLACK CAUSUS VISIT- Members of the Congressional Black Caucus visited the Republic of Cuba from 18 February 1999 to 22 February 1999.  The group included The Honorable Maxine Waters (D-California), The Honorable Barbara Lee (D-California), The Honorable Sheila Jackson-Lee (D- Texas), The Honorable Earl Hilliard (D-Alabama), The Honorable Julia Carson (D-Indiana), and The Honorable Gregory Meeks (D-New York).

FOREIGN MINISTER TO VISIT THREE COUNTRIES IN ASIA- H.E. Roberto Robaina, Minister of Foreign Affairs of the Republic of Cuba, will visit Japan, People’s Republic of China, and Vietnam from 22 February 1999 through 5 March 1999.  Other countries reportedly may be added to the schedule.
 
 

23 February 1999- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, has been invited to give a presentation at the two-day Latin American Health Care Reform: Pursuing Opportunities in the New Era of Market Opening conference at the Hyatt Regency in Coral Gables, Florida, on Tuesday, 23 February 1999 at 9:00 a.m.  The topic of the presentation is “Developing Product Sales To Cuba: How Realistic A Possibility?”  For additional information about the conference, contact New York City, New York-based Latin American Information Services, Inc., at telephone (212) 765-5520 and facsimile telephone (212) 765-2927.

15 March 1999- Mr. John S. Kavulich II, President of the U.S-Cuba Trade and Economic Council, has been invited to give a presentation at The Cuba Conference with Updates On The Reconstruction Of Central America, the Caribbean, and Colombia at the Center for Strategic and International Studies in Washington, D.C., on 15 March 1999.  The conference is being sponsored by Washington, D.C.-based The Center For Reconstruction & Development, a division of Washington, D.C.-based Equity International, Inc.  For additional information about the conference, contact telephone (202) 429-2024, facsimile telephone (202) 775-5921, and Internet: http://www.rec-dev.com

18 March 1999- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, is tentatively-scheduled to give a presentation at “Cuba Sommet ‘99” at the Chateau Frontenac Hotel in Quebec City, Quebec, Canada, on 18 March 1999 and 19 March 1999.  The conference is being sponsored by the Chamber of Commerce and Industry of Metropolitan Quebec and the International Trade Center of Eastern Quebec.  For additional information about the conference, contact telephone (418) 694-0226, facsimile telephone (418) 694-2286, and Internet: http://simnet.gmc.ulaval.ca/cuba99