U.S. DOLLAR DECREASES IN VALUE AGAINST THE PESO- At the end of last week, Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to US$1.00, for 21 Pesos and purchased the U.S. Dollar for 20 Pesos.  CADECA had sold the Convertible Peso, equal to US$1.00, for 22 Pesos and purchased the U.S. Dollar for 22 Pesos since 16 June 1999.  The official international exchange rate of one Peso to one U.S. Dollar, in effect for more than thirty years, remained unchanged.  The government of the Republic of Cuba maintains a fixed exchange rate for its international dealings and a more flexible exchange rate for domestic use. The government of the Republic of Cuba 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.
 

CADECA Buy	CADECA Sell	From / To
20	21	13 August 1999 through 15 August 1999
22	22	16 June 1999 to 12 August 1999
22	21	13 April 1999 through 15 June 1999
21	21	15 March 1999 to 12 April 1999
20	21	4 March 1999 to 14 March 1999
21	21	19 February 1999 to 3 March 1999
21	20	13 January 1999 to 18 February 1999
21	22	26 November 1998 to 12 January 1999
21	21	15 July 1998 to 25 November 1998
19	21	1 April 1998 to 14 July 1998
20	22	12 March 1998 to 31 March 1998
21	23	11 February 1998 to 11 March 1998
23	23	August 1997 to 10 February 1998

UNITED STATES SENATORS VISIT- The Honorable Tom Daschle (D- South Dakota) and The Honorable Byron L. Dorgan (D- North Dakota) visited the Republic of Cuba from 13 August 1999 to 15 August 1999.  Senator Daschle is the Minority Leader of the United States Senate.  Senators Daschle and Dorgan traveled to the Republic of Cuba on a United States government aircraft. Senator Dorgan is a member of the Subcommittee on Agriculture, Rural Development, and Related Agencies of the Committee on Appropriations of the United States Senate and is a member of the Commerce, Science, and Transportation Committee of the United States Senate.  The Senators met with H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, from 6:30 p.m. on 14 August 1999 to 2:30 a.m. on 15 August 1999.  The Senators met other officials of the government of the Republic of Cuba, including H.E. Dr. Carlos Dotres, Minister of Public Health of the Republic of Cuba, and reportedly discussed preparations for the U.S. Healthcare Exhibition to be held in the city of Havana from 25 January 2000 to 29 January 2000.  The U.S. Healthcare Exhibition has been licensed by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C.  Participants in the U.S. Medical/Healthcare Exhibition will include United States-based companies and their subsidiaries that manufacture, distribute, market, and retail, health care sector informational materials, medical equipment, medical instruments, medical supplies, medicated products, medicines, and pharmaceuticals.  For information regarding participation, sponsorship, and costs, please contact PWN Exhibicon International L.L.C. at telephone (203) 222-8660 or facsimile telephone (203) 222-8335.

OFAC INCREASES PER DIEM IN CUBA 6.16%, FROM US$183.00 TO US$195.00- The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C, has increased the Per Diem allowance for employees of the United States government visiting the Republic of Cuba to US$195.00 (US$113.00 for lodging and US$82.00 for meals) from US$183.00 (US$102.00 for lodging and US$81.00 for meals), representing an increase of US$12.00 per day, or 6.16% from the Per Diem rate in effect from 1 December 1996.  An increase in the Per Diem reflects an evaluation by the United States Department of State that prices within the Republic of Cuba have increased.  Per Diem rates within the Republic of Cuba are based upon the Per Diem Rate For Foreign Areas issued by the Office of Allowances (202-663-1121) within the Office of Operations of the Bureau of Administration of the Under Secretary of Management of the United States Department of State in Washington, D.C.  Per Diem values for travel to the city of Havana from 1995 through August 1999:
 

Effective Date	Lodging	Meals & Incidentals	Total Per Diem	% Increase From Previous Year
1 June 1999 to Present	US$113.00	US$82.00	US$195.00	6.16%
1 June 1999 to 1 December 1996	US$102.00	US$81.00	US$183.00	15.85%
1 December 1996 to 1 November 1995	US$90.00	US$64.00	US$154.00	-0-

Individuals (non-employees of the United States government) subject to United States law traveling to the Republic of Cuba under a general license from the OFAC or a specific license from the OFAC were permitted to spend US$100.00 per day (no distinction with respect to lodging and meals) from 1985 through May 1999.  Since May 1999, individuals subject to United States law traveling to the Republic of Cuba under a general license from the OFAC or a specific license from the OFAC have been permitted to spend at parity with representatives of the United States government traveling to the Republic of Cuba on official business.

INDEX OF LIVING COSTS FOR U.S. GOVERNMENT EMPLOYEES RESIDING IN CUBA- The Office of Allowances (202-663-1121; http://www.state.gov) within the Office of Operations of the Bureau of Administration of the Under Secretary of Management of the United States Department of State in Washington, D.C., provides an Index of Living Costs Abroad and Hardship Differentials for employees of the United States government residing in the Republic of Cuba.  The Republic of Cuba is considered a “Hardship Post” thus entitling employees of the United States government to receive a 20% “Hardship Differential” increase in salary.  Some other postings which also have a 20% “Hardship Differential” include: Ho Chi Minh City, Vietnam; Islamabad, Pakistan; Jeddah, Saudi Arabia; Kiev, Ukraine; Kathmandu, Nepal; Calcutta, India; and Georgetown, Guyana.
 

Exchange Rate (1)

Local (2)

U.S. Government (3)

Country and City	Survey Date	Currency	Number Per U.S. Dollar	Relative	Index	Relative	Index
Cuba: Havana	January 1998	U.S. Dollar	US$1.00	124 (4)	131 (4)	116	12

   
(1) The exchange rates shown are those used to calculate the indexes. They are usually the rates available to American citizens during the survey month. Current exchange rates may differ from the rates shown.  Interim indexes adjusted for new exchange rates are not published.  (2) The local relative and local index measure living costs for private American citizens.  The local relative is a comparison of the prices of goods and services at the foreign post and in Washington, D.C., with the price ratios weighted by the pattern of expenditure in Washington, D.C. Consequently, the local relative is a comparison of price levels at the post and in Washington, D.C., but not necessarily a comparison of the cost of living abroad.  The local index is a comparison of prices at the foreign post and in Washington, D.C., with the price ratios weighted by the expenditure pattern of American employees living at the foreign post.  It is, thereby, a measure of the cost of living for Americans at the foreign post compared with the cost of living in Washington, D.C.  This is the index most appropriate for use by business firms and other private organizations to establish cost of living allowance for their American employees stationed abroad.  (3) The U.S. Government relative and index include prices of goods imported to the post and price advantages available only to U.S. Government employees.  The U.S. Government relative is a comparison of price levels but not necessarily of living costs abroad because the expenditure weights reflect only the Washington, D.C. expenditure pattern.  The U.S. Government index reflects Federal employee foreign expenditure patterns and is used to compute foreign post allowances for Federal employees.  (4) Local relative and local index comparisons include prices in hard currency or diplomatic stores.

FIVE OF EUROPE’S LARGEST COMPANIES HAVE COMMERCIAL INTERESTS IN CUBA- Five of the largest companies on the European continent have commercial interests in the Republic of Cuba.  1) Stuttgart, Germany-based DaimlerChrysler AG, through its subsidiary Mercedes-Benz AG, has both investment interests and commercial interests in the Republic of Cuba. 2) Munich, Germany-based Siemens AG has supplied machinery to Republic of Cuba government-operated companies for more than ten years.  3) Turin, Italy-based Fiat S.p.A., is a major supplier of vehicles to Republic of Cuba government-operated companies (vehicle rentals).  4) Vevey, Switzerland-based Nestle S.A., has been working with the Republic of Cuba to develop the confection industry and has investments in mineral water and beverage, and Nestle products are available at Republic of Cuba government-operated U.S. Dollar retail stores and within the tourism industry.  5) London, United Kingdom-based Unilever PLC, has a joint venture with Republic of Cuba government-operated Suchel S.A. to produce personal care products.

LG ELECTRONICS SALES EXCEED US$11 MILLION DURING FIRST HALF OF 1999- Seoul, South Korea-based LG Electronics Group reported that sales of refrigerators, washing machines, air conditioners, and televisions within the Republic of Cuba exceeded US$11 million from 1 January 1999 through June 1999.  Total 1999 sales are expected to be US$25 million.  LG Electronics Group recently introduced Champ brand products within the Republic of Cuba, including the first High Definition Television (HDTV) to be sold within the Republic of Cuba.  Various brands of LG Electronics Group refrigerators, washing machines, and air conditioners are assembled within the Republic of Cuba in association with Republic of Cuba government-operated Copextel S.A., a company affiliated with the Ministry of Steel, Mechanical, and Electronics Industry of the Republic of Cuba (SIME).  Champ brand 20-inch televisions are expected to be assembled within the Republic of Cuba in association with Republic of Cuba government-operated Empresa Industria Electronica (EIE), a company affiliated with SIME.  The televisions are to be sold in Republic of Cuba government-operated U.S. Dollar retail stores, to the tourism sector (hotels), and for export.  EIE also assembles watches, calculators, and other products for Tokyo, Japan-based Casio Computer Company, Limited.

GOVERNMENT REVERSES TELEVISION COMMERCIAL POLICY- H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, announced that commercials would be now be banned from broadcasts of sporting events.  He said that the broadcast of commercials during the recent Pan American Games held in Winnipeg, Canada, had stained the most emotional and patriotic moments and were “in the purest capitalist style of consumer societies.”  The government of the Republic of Cuba has been a vocal opponent of the commercialization of international amateur sports.  However,
Tele-Rebelde, one of the two Republic of Cuba government-operated television stations within the Republic of Cuba, provided more than 120 hours of coverage of the recent Pan American Games, earning substantial revenues from commercials.  Republic of Cuba government-operated media have sold commercial advertising opportunities with increasing frequency during the last five years.  The television coverage of the Pan American Games included brief commercial messages at the bottom of the television screen every twenty minutes, and full screen commercials at the end of each day’s programming.  Sponsors of the commercials included: 1) Hollywood brand cigarettes manufactured by BrasCuba, a joint venture with Brazil-based Souza Cruz, a subsidiary of London, United Kingdom-based British American Tobacco plc 2) Ciego Montero mineral water and Ciego Montero flavored beverages produced by Cubagua, a joint venture with Milan, Italy-based San Pellegrino SPA 3) Pepsodent tooth paste and Rexona personal hygiene products, produced by Suchel Lever, a joint venture with London, United Kingdom-based Unilever PLC 4) Natural Dent tooth paste and Blue Moon, Eros, and Coral Negro deodorants, colognes, and perfumes produced by Suchel Camacho, a joint venture with Spain-based Camacho S.A. 5) Seoul, South Korea-based LG Electronics Inc 6) Tokyo, Japan-based Mitsubishi Motors Corporation, sponsored by Panama City, Panama-based Motores Internacional S.A. 7) Canada-based General Vision 8) Osaka, Japan-based SANYO Electric Co., Ltd. 9) Amsterdam, The Netherlands-based Royal Philips Electronics and 10) Osaka, Japan-based Daihatsu Motor Co., Ltd., sponsored by Toronto, Canada-based SunSet International.

GERMANY’S TEX-COLOR NEGOTIATING PAINT PRODUCTION JOINT VENTURE- Erfurt, Germany-based Tex-Color gmbh & CoKG, which produces outdoor paints, floor coatings, roof coatings, and dyes, is negotiating a joint venture agreement to produce paint within the Republic of Cuba for both the domestic market and for export to countries within the Caribbean Sea-area.  Mr. Romeo Storari, a Vice President of Tex-Color gmbh & CoKG, reported that the joint venture agreement should be signed by November 1999.  Republic of Cuba government-operated Empresa de Pinturas Cubanas recently announced that the company was negotiating a joint venture agreement with an unidentified company to construct a factory within the Republic of Cuba that would be capable of producing at least 20 million liters of paint annually.  Republic of Cuba government-operated U.S. Dollar retail stores currently market paints imported from more than fifty non-Republic of Cuba-based companies.  Mr. Ovidio Barrera Becerra, Director of Empresa de Pinturas Cubanas, said that three factories within the Republic of Cuba currently produce 25% of the paint sold at the Republic of Cuba government-operated U.S. Dollar retail stores.  Empresa de Pinturas Cubanas reports that an additional 20 million liters of paint was imported in 1998, presumably sold to Republic of Cuba government-operated U.S. Dollar retail stores, to joint ventures, to economic associations, and to other Republic of Cuba-based entities.  Empresa de Pinturas Cubanas also has two small economic associations with Spain-based companies.

SUCHEL-TROPICAL EXPECTS SALES OF US$12 MILLION IN 1999- Suchel-Tropical, a joint venture between the Union of Republic of Cuba cosmetics producers, Republic of Cuba government-operated Suchel S.A., and Tel Aviv, Israeli-based entrepreneur Mr. Arie Sharon, reported that monthly sales would average US$1 million in 1999.  Suchel-Tropical was established in 1993 and produces 140 products.  Suchel-Tropical reported exports of more than US$100,000.00 to Panama in 1999.  Suchel-Tropical sales were reported to be US$7.94 million in 1997 and US$9.47 million in 1998.

PROBANCA FINANCIAL SERVICES RECEIVES LICENSE- The Central Bank of the Republic of Cuba has granted a license to Madrid, Spain-based Probanca, Servicios Financieros, S.A., a subsidiary of Buenos Aires, Argentina-based Banco de la Provincia de Buenos Aires (Bapro), to establish offices in the Republic of Cuba.  Banco de la Provincia de Buenos Aires has an office in New York City, New York.  Babro has a 50% interest in Probanca Servicios Financieres, which specializes in investment and trade.  Sources within the government of Argentina report that Bapro has a longstanding relationship with Republic of Cuba government-operated Banco Financiero Internacional, S.A. (BFI); and that Bapro provided the largest share of financial services for Argentina-based, Republic of Cuba-related commercial activity.  According to sources within the government of Argentina, the interest by Bapro in establishing an office within the Republic of Cuba reflects market development efforts due to a continuing decrease in exports from Argentina to Brazil, but does not reflect a movement on the issue of resolving the Republic of Cuba’s approximately US$1.2 billion debt to Argentina.  Argentina reported that 1998 bilateral trade with the Republic of Cuba was US$70 million, a decrease from more than US$130 million reported in 1997.  Bilateral trade consists almost entirely of exports from Argentina to the Republic of Cuba.

GERMANY’S LTI EXPANDING HOTEL OPERATIONS- Germany-based LTI hospitality company plans to increase the number of hotels within the Republic of Cuba that the company manages and/or has equity in, from four to seven.  Ms. Susanna Roth, LTI’s Republic of Cuba-based Director of Sales, reported that the company’s four hotels within the Republic of Cuba continued to out perform its forty-two other hotels located in fourteen countries.  Mr. Roth said that the Bellacosta hotel and the Tuxpan hotel, both located at the resort area of Varadero, 140 kilometers east of the city of Havana, reported gross revenues of more than US$15 million thus far in 1999.  Two other hotels, the Corales and the Carisol, are located in Santiago de Cuba, 850 kilometers east of Havana. The Costa Verde Beach Hotel, located in Holguin, 800 kilometers east of Havana, is scheduled to open in September 1999; with additional hotels scheduled to open in Havana, and a third hotel in Varadero during the next three years.

US$14 MILLION HAVANA HOTEL PLANNED- Panama City, Panama-based Arquitel S.A., and Republic of Cuba government-operated Compania Fiduciaria S.A., announced the formation of a 50%-50% joint venture to construct a US$14 million, 4-star, 200-room hotel on the ruins of the Trocha Hotel (built in the 1880’s), located in the central Vedado district of the city of Havana.  The hotel will include time-share units.  Arquitel S.A. reported that the company was negotiating an association agreement with the Republic of Cuba government-operated Cubanacan S.A.

OIL AND GAS PRODUCTION UPDATE- Oil production within the Republic of Cuba was reported to be a record 38,000 barrels per day (bpd), compared with 33,000 bpd in August 1998. Republic of Cuba government-operated Cuba Petroleo (Cupet) said production was expected to exceed 40,000 bpd in the coming weeks, and that total 1999 oil production would be 13.2 million barrels, or 2 million tons, almost all of which has an extremely high sulfur content and can be used only in modified power, cement, and other industrial plants.  Approximately 450 million cubic meters of gas, equivalent to 450,000 tons of Republic of Cuba-produced heavy crude oil, is to be used primarily to generate electricity.  Combined 1999 oil and 1999 gas production will reportedly represent between 28% to more than 30% of the Republic of Cuba’s total fuel consumption.  Cupet reported that it imported 85% of required fuels in 1997, with total consumption reported at 8.23 million tons.  Republic of Cuba-produced fuels will reportedly generate 42% of total electricity requirements in 1999, compared with less than 30% of total electricity requirements in 1998, and 20% of total electricity requirements in 1997.

CHROME PRODUCTION UPDATE- Chrome production within the Republic of Cuban will be a record 50,000 tons in 1999, according to Republic of Cuba government-operated Cromo-Moa S.A., the Republic of Cuba’s only chrome producer.  Approximately 95% of the unrefined metal is exported to companies in Europe and to companies in The Americas.  Mr. Juan Jose Brunet, Director of Cromo-Moa S.A., reported that there was less supply than demand for chrome, which is mined at Moa, in Holguin Province, 850 kilometers east of the city of Havana.  Chrome mining, with financing from sources within the United Kingdom, has increased in recent years from 30,000 tons in 1995, 37,000 tons in 1996, 44,000 tons in 1997, and nearly 40,000 tons in 1998, of which 32,000 tons of chrome and 3,200 tons of chrome concentrate were exported.  Cromo-Moa S.A. reports that the company has the capacity to produce 100,000 tons of chrome annually.

NORTHEN ORION REPORTS ON MANTUA COPPER PROJECT- Vancouver, Canada-based Northern Orion Explorations Ltd. (Toronto Stock Exchange, Vancouver Stock Exchange) has announced the completion of an internal pre-feasibility study to evaluate the potential for using a ferric leach, SX/EW recovery process on the Mantua copper project within the Republic of Cuba.  A partial text of a media release from Northern Orion Explorations Ltd. is as follows: Use of this process could result in significantly reduced capital and operating costs versus the previously proposed pressure oxidation process.  Resources of 11 million tons grading 2.09% copper have been estimated, for a contained 230,000 tons of copper.  Within this resource, assuming a long-term copper price of US$0.85 and a cut-off of 0.7% copper, is a proven & probable reserve of 7.5 million tons grading 2.75% copper, containing 206,000 tons of copper. Both the reserve & resource estimates have been independently audited.  Using the ferric leach process, the ore is leached in vessels operating under mild pressures (5 atmospheres of oxygen) and temperatures (90 degrees C), liberating the copper and generating the acid required for copper leaching.  The solution is then fed to a standard SX/EW circuit for copper recovery.  Overall copper recovery is projected at 88%.  This is the same recovery process successfully used at the recently completed Mt. Gordon (Gunpowder) mine in Australia.  The ferric leach process has been thoroughly tested on Mantua ore at a pilot plant scale in Vancouver utilizing the same facilities as used for the feasibility work on Mt. Gordon.  Direct capital costs are estimated at US$48.4 million, including contingencies and owners costs, but excluding costs of financing.  The Mantua copper project will also require working capital of approximately US$6 million.  Operating costs, including all costs through to delivery of copper cathode to market, but excluding financing costs, have been estimated at US$0.44 per pound of copper.  Annual production of approximately 18,000 tons of copper is projected during a 10-year project life.  Capital and operating costs have been reviewed by Bateman Engineering of South Africa, which engineered and constructed the Mt. Gordon (Gunpowder) mine in Australia.  Northern Orion Explorations Ltd. is evaluating the results of this pre-feasibility study in conjunction with its partner, Republic of Cuba government-operated Geominera SA, under the auspice of the Ministry of Basic Industry of the Republic of Cuba.  The next step would be to arrange financing of approximately US$1.3 million to initiate and to complete a final feasibility study focused on confirmatory piloting of the ferric leach process, combined with further refining the capital and operating cost estimates.  Northern Orion Explorations Ltd. is evaluating potential alternate sources of funding to initiate and to complete the final feasibility study. Northern Orion Explorations Ltd. is focused on the exploration and development copper projects in the Americas.  The company has one of the largest undeveloped resource bases in a junior company, with net attributable resources of 8.5 billion pounds of copper and 5.5 million ounces of gold.