U.S. DOLLAR UNCHANGED AGAINST THE PESO- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to US$1.00, for 22 Pesos and purchased the U.S. Dollar for 21 Pesos since 2 October 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
21	22	2 October 1999 through 10 October 1999
20	22	13 September 1999 to 1 October 1999
20	20	1 September 1999 to 12 September 1999
20	21	13 August 1999 through 31 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

U.S. INTERESTS SECTION TO HOST RECEPTION FOR U.S. HEALTHCARE EXHIBITION PARTICIPANTS- The Honorable Vicki Huddleston, Chief of the United States Interests Section in the city of Havana, Republic of Cuba, will host a reception and briefing on 24 January 2000 at her official residence for exhibitors participating in the U.S. Healthcare Exhibition.  Approximately forty-five United States-based companies have thus far reserved exhibition space at the event.  Decatur, Illinois-based Archer Daniels Midland Company (1998 revenues exceeded US$14 billion) is the exclusive vitamin/food sponsor of the U.S. Healthcare Exhibition being held at the PAPEXPO exhibition center in the city of Havana, Republic of Cuba, from 25 January 2000 to 29 January 2000.  Archer Daniels Midland Company (ADM) is the world’s largest producer of natural vitamin E and also produces vitamin C, lecithin (a source of choline which plays an important role in the function of the brain’s neurotransmitters), Isoflavones (a natural component of soybeans), phytosterols, and many other products.  Other categories of sponsorships include: Pharmaceutical, Medical Equipment, Travel, Air Carrier, and Air Freight.  The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., has licensed Westport, Connecticut-based PWN Exhibicon International L.L.C., to arrange and to hold an exhibition within the Republic of Cuba to promote the sale of United States-produced healthcare products.  Additional information may be obtained on the Internet at http://www.pwnexhibicon.com or by telephone (203) 222-8660 or by facsimile telephone (203) 222-8335.

J.P. MORGAN & CO. ADVISES BOTH TABACALERA S.A. AND SEITA S.A. IN MERGER- New York City, New York-based J.P. Morgan & Co. Incorporated (1998 assets exceeded US$200 billion) through Madrid, Spain-based J.P. Morgan Espana S.A. and Paris, France-based J.P. Morgan & Cie S.A., is serving as the advisor to both Madrid, Spain-based Tabacalera S.A. and to Paris, France-based Seita S.A. for their announced merger, valued at US$3.3 billion.  An increasing number of United States-based financial institutions are being retained as advisors in transactions within which at least one of the parties involved has substantial commercial interests with Republic of Cuba government-operated entities.  Tabacalera S.A. and Seita S.A. are, respectively 1) the two largest purchasers of Republic of Cuba-produced cigars, 40% of the 126 million Republic of Cuba-produced cigars reportedly exported in 1998 2) the two largest sources of financing for Republic of Cuba-produced tobacco, approximately US$50 million (US$40 million from Tabacalera S.A. and US$10 million from Seita S.A.) for the 1998-1999 tobacco harvest and 3) the two largest purchasers of Republic of Cuba-produced tobacco leaf, almost all of the 13,000 tons exported.  The newly-formed company, Altadis (Alliance Tabac Distribution), will have a market value of approximately US$7.2 billion and annual revenues of approximately US$11.8 billion, and will become the world’s largest cigar manufacturer, with 24.7% (3 billion units) of the global market.  The government of Spain holds a 3.2% share in Tabacalera S.A.  In 1999, Seita S.A. purchased Fort Lauderdale, Florida-based Consolidated Cigar Holdings, Inc., which produces non-Republic of Cuba-produced cigar brands Montecristo and H. Upmann, and the brands Dunhill and Dutch Masters, among others.  Seita S.A. ownership of Consolidated Cigar Holdings Inc., positioned the company to become the distributor within the United States for Republic of Cuba-produced cigar brands Montecristo, H. Upmann, and Por Larranaga.  Altadis will reportedly control 36% of the United States cigar market (47% of mass produced cigars and small cigars, and 20% of premium cigars).  Seita S.A. has long held the exclusive distribution rights within France for Republic of Cuba-produced cigars.  Tabacalera S.A. and Seita S.A. import Republic of Cuba-produced tobacco to produce mini-cigars (less than 3 grams) under the brand names Montecristo, Cohiba, Partagas, La Gloria Cubana, and H. Upmann for sale in countries on the European continent.  Tabacalera S.A., signed a marketing agreement in May 1999 with Republic of Cuba government-operated Habanos S.A. (the exclusive worldwide marketer of Republic of Cuba-produced cigar products) to market mini-cigars throughout countries in Europe.  Habanos S.A. is to supply the tobacco to produce Partagas brand mini-cigars, La Gloria Cubana brand mini-cigars, and H. Upmann brand mini-cigars in Spain.  In April 1999, Seita S.A., Habanos S.A., and the Union of Agricultural Companies of the Republic of Cuba, established a joint venture, MiniCohiba S.A., to produce Cohiba brand mini-cigars in the Republic of Cuba for export.  MiniCohiba S.A., with an initial reported capitalization of US$5 million, is expected to be operational by 2000 and produce 8 million Cohiba brand mini-cigars during the first twelve months of production, with annual production eventually reaching 25 million units.  In December 1998, Cannery Islands-based CITA (a subsidiary of Tabacalera S.A.), Habanos S.A., and the Union of Agricultural Companies of the Republic of Cuba, established a joint venture, Compania de Tobacos Islanos, to produce mini-cigars in the Republic of Cuba.  CITA is reportedly investing US$2 million and production is expected to begin by the end of 1999.

MAYORS OF KNOXVILLE, BALTIMORE, AND CHARLESTON VISIT HAVANA- The Honorable Victor Ashe, Mayor of Knoxville, Tennessee; The Honorable Kurt Schmoke, Mayor of Baltimore, Maryland; and The Honorable Joseph Riley, Mayor of Charleston, South Carolina; along with Ms. Camille Jones Strachan, Vice Chairman of the Washington, D.C.-based National Trust for Historic Preservation, visited the city of Havana, Republic of Cuba from 4 October 1999 to 6 October 1999.  The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., issued a license for the visit, the purpose of which was to review historic preservation projects.

VENEZUELA PURCHASING VACCINES AND MEDICAL EQUIPMENT- The Ministry of Health of Venezuela announced it would purchase 37,000 doses of a Republic of Cuba-manufactured Hepatitis B vaccine and an unspecified number of Republic of Cuba-manufactured SUMA blood testing machines in 1999, with additional healthcare product purchases in 2000.  Republic of Cuba government-operated Isocomer S.A. has a contract to export Republic of Cuba-manufactured radiation equipment to the Ministry of Health of Venezuela, and has signed a Letter of Intent to export Republic of Cuba-manufactured radio-pharmaceuticals.  The Ministry of Health of Venezuela is expected to increase purchases of Republic of Cuba-manufactured healthcare products as H.E. Hugo Chavez, President of Venezuela, implements changes in the healthcare sector.  Bilateral trade in 1998 between the Republic of Cuba and Venezuela was reported to be US$400 million, almost exclusively in petroleum-related exports from Venezuela to the Republic of Cuba.

CUBALUB NEGOTIATING JOINT VENTURE AGREEMENT- Republic of Cuba government-operated Cubalub, a subsidiary of the Ministry of Basic Industry of the Republic of Cuba, reported that the company is negotiating a joint venture agreement with an unnamed non-Republic of Cuba-based company to increase (for domestic use and for export) the production of lubricants and other products.  Cubalub produces and markets a reported 165 lubricants, additives, and other petroleum-based products.  Cubalub reported that the company would produce 85,000 tons of lubricants and other petroleum-based products in 1999, thus providing for a reported 80% of the U.S. Dollar retail lubricant and petroleum-based product market within the Republic of Cuba and a reported 100% of the Peso retail lubricant and petroleum-based product market within the Republic of Cuba.  Cubalub reported that the company produced approximately 81,000 tons of lubricants and other petroleum-based products in 1966.  Cubalub reported that non-Republic of Cuba-based companies (primarily Swindon, Wiltshire, United Kingdom-based Burmah Castrol PLC) would sell 12,000 tons of lubricants and other petroleum-based products within the Republic of Cuba in 1999.

PARIS NATIONAL BANK TO ESTABLISH OFFICE- Paris, France-based Paris National Bank will establish an office in the city of Havana in 1999.  Mr. Dominique Simon, Economic Attaché at the Embassy of France in the Republic of Cuba, reported that the decision was based upon an increasing quantity of commercial transactions within the Republic of Cuba by France-based companies and the increasing quantity of investments within the Republic of Cuba by France-based companies.  Paris, France-based Societe General has an office in Havana.  The government of France plans to make available to the government of the Republic of Cuba with US$200 million in trade credits thus far in 1999, compared to US$185 million in trade credits provided in 1998, and US$160 million in trade credits provided in 1997.  Bilateral trade between France and the Republic of Cuba was reported to be US$330 million in 1998, compared to bilateral trade of US$298 million in 1997, 80% of which were exports of France-produced products (primarily bulk food commodities and machinery) to the Republic of Cuba.  Non-Republic of Cuba-based financial institutions are permitted by the government of the Republic of Cuba to establish representation offices to assist non-Republic of Cuba-based clients, but are currently prohibited from accepting deposits and conducting traditional client activities, although this prohibition is expected to be removed in the near future.  There are currently thirteen foreign financial institutions with representation offices in the Republic of Cuba.

GUATEMALA BANK EXPECTED TO ESTABLISH OFFICE; COMMERCIAL EXPANSION- Guatemala City, Guatemala-based Credito Hipotecario Nacional de Guatemala is expected to establish a representation office in the Republic of Cuba.  Non-Republic of Cuba-based financial institutions are permitted by the government of the Republic of Cuba to establish representation offices to assist non-Republic of Cuba-based clients, but are currently prohibited from accepting deposits and conducting traditional client activities, although this prohibition is expected to be removed in the near future.  There are currently thirteen foreign financial institutions with representation offices in the Republic of Cuba.  H.E. Alvaro Alzu, President of Guatemala, who visited the Republic of Cuba from 4 October 1999 to 6 October 1999 accompanied by forty-five representatives of Guatemala-based companies, announced that tourism companies in Guatemala and Republic of Cuba government-operated Havanatur (a subsidiary of Republic of Cuba government-operated Cimex Corporacion) would jointly market “Playa y Maya,” a multi-destination tourism package designed to attract tourists to beaches in the Republic of Cuba and Inca ruins in Guatemala.  President Alzu also presided at the signing of various agreements, including a maritime shipping accord.  Bilateral trade between Guatemala and the Republic of Cuba is expected to be approximately US$10 million in 1999.  Guatemala reestablished diplomatic relations with the Republic of Cuba in January 1998, after a 37-year hiatus and have since signed a preferential trade agreement, an Investment Protection and Promotion Agreement, and reestablished direct airline service.

GERMANY COMPANY OBTAINS LOCOMOTIVE ENGINE CONTRACT- Munich, Germany-based Motoren und Turbinen Union Munchen GmbH (MTU) has obtained a contract to replace the engines in at least five locomotives (former U.S.S.R.-built TU-7 and former Czechoslovakia-built TEM-ZTK) for the Ministry of Sugar (MINAZ) of the Republic of Cuba.  MTU will begin installing the new engines, built by Stuttgart, Germany-based Mercedes-Benz AG (a subsidiary of Stuttgart, Germany-based DaimlerChrysler AG), in 2000.  MTU reported that the company expected to obtain additional engine replacement contracts.  MTU also has a contract to replace the engines in ferries used between Batabano, Havana Province, and the Isla de la Juventud, approximately 50 kilometers off the Southern coast of the Republic of Cuba.  MTU is represented in the Republic of Cuba by MCV Commercial S.A., (a Republic of Cuba-based joint venture established in 1995 by Cairo, Egypt-based Mr. Karim Ghabbour, whose family-owned companies have dealings with Mercedes-Benz AG).  In 1999, MCV Comercial expects gross revenues (vehicle sales, bus sales, engine replacement of heavy equipment, service, etc.) of approximately US$45 million, compared with gross revenues of approximately US$35 million in 1998.

50% INCREASE IN OIL AND GAS PRODUCTION PLANNED IN 2000- H.E. Dr. Carlos Lage, a Vice President of the Council of State of the Republic of Cuba, reported that oil production and gas production in 2000 would exceed the equivalent of 3 million tons of oil, approximately 50% more than the 2 million tons of oil and 500 million cubic meters of natural gas expected to be produced in 1999.  Republic of Cuba-produced fuels are expected to generate (for power generation, not vehicles) 70% of the usage in 2000, compared to an expected 50% in 1999, and approximately 30% in 1998.  Republic of Cuba oil imports were approximately 6 million tons in 1998 and are expected to remain at that level for 1999. Increased oil production and gas production is expected to be along the northwest coast of the Republic of Cuba where Toronto, Canada-based Sherritt International Corporation and other non-Republic of Cuba-based companies, in partnership with Republic of Cuba government-operated Cuba Petroleo (CUPET), are drilling wells with new extraction technology.  Oil produced at fields in Matanzas Province (120 kilometers east of the city of Havana) and Havana Province (northwest of the capital), have an extremely high sulfur content and is used only in modified power, cement, and other industrial plants.  Natural gas production (also with Sherritt International Corporation and other non-Republic of Cuba-based companies) is designed to primarily generate electricity and provide cooking fuel (with London, United Kingdom-based Trafigura Limited).  Companies from Canada, France, Sweden, Spain, Brazil and other countries have explored or are exploring for oil and gas in 20 of 45 available blocks on shore and off shore.  The companies include: Oil for Development Cuba; Perperco; Caribbean Oil Exploration; Alturas Resources Bahamas; Macdonald Oil International; Genoil Merchant Banking-Intra Group Restricted; Sherritt International (Cuba) Oil and Gas; Cubacan Exploration; Taurus Petroleum A.B.; and Braspetro Oil Services Company Brasoil.  The blocks do not include 59 recently made available in the Republic of Cuba’s Gulf of Mexico waters, adjacent to oil producing areas of the United Sates, Mexico, Venezuela, and Brazil.  For 1999, the Republic of Cuba is expected to import an average of 110,000 barrels of oil per day to 120,000 barrels of oil a day, or 40,150,000 barrels of oil to 43,800,000 barrels of oil on an annual basis.  In 1998, the Republic of Cuba reportedly imported an average of 120,000 to 130,000 barrels of oil per day, or 43,800,000 to 47,450,000 barrels of oil on an annual basis, or approximately 6 million tons (44,400,000 barrels) of oil on an annual basis.   The Republic of Cuba reportedly imported approximately 85% of its fuels in 1997, with total consumption reported at 8.23 million tons (one ton equivalent to 6.3 barrels).

RUSSIAN FEDERATION TRADE UPDATE- Sources within the Russian Federation reported that, for the first time in several years, the terms of an oil for sugar barter agreement between the government of the Republic of Cuba and the government of the Russian Federation are being fulfilled.  The agreement requires the exchange of 3 million tons of oil for one million tons of sugar, and an additional 800,000 tons of oil in lieu of U.S. Dollars for “security agreements” such as the use by the government of the Russian Federation of a global intelligence-gathering listening post located at Lourdes near the city of Havana.  The Russian Federation reportedly exported 809,625 tons of oil (538,762 in consideration for the oil for sugar barter agreement and 270,863 tons in consideration for “security agreements”) to the Republic of Cuba in August 1999.  For the period July 1999 to September 1999, the agreements require Russian Federation-based companies to export 1.6 million tons of oil.  Oil exports from the Russian Federation for the period October 1999 to December 1999 are to be 583,000 tons (including 200,000 tons not shipped during the period July 1999 to September 1999).  Oil exports to the Republic of Cuba are being coordinated by Moscow, Russian Federation-based Alfa-Eco, a subsidiary of the Alpha Group, which is a division of Moscow, Russian Federation-based OAO Tyumen Oil Company.  All of the oil exported under the agreements was sold in Europe, at least some of which reportedly through Paris, France-based TOTALFINA.  Various oil companies (choosing various oil trading companies) were involved with exporting oil included in the “security agreements.”  A May 1999 Economic Cooperation Agreement between the government of the Russian Federation and the government of the Republic of Cuba included a renewed oil for sugar barter agreement, “security agreements,” and the delivery of a then-delayed US$25 million loan used to preserve development projects underway in 1991 when the former U.S.S.R. collapsed.  The Russian Federation plans to accept Republic of Cuba-produced pharmaceuticals as payment, or at least as partial payment, of the loan.  Other projects continually discussed include: a maritime joint venture with ports in the Republic of Cuba and vessels from the Russian Federation; the establishment of an agricultural repair facility; and nickel plus cobalt production/marketing agreements with Russian Federation-based RAO Norilsk Nickel.  The Ministry of Foreign Trade of the Russian Federation has reported various bilateral trade figures: 1) US$604.7 million in total bilateral trade in 1998, compared to approximately US$804.7 million in 1997 and 2) US$636 million in 1997.  Oil for sugar barter agreements accounted for 80% of 1998 trade, with 840,000 tons of oil being exchanged for 1.5 million tons of sugar.  Lower 1998 oil exports compared to sugar imports were due to the Republic of Cuba’s partial fulfillment of previously unfulfilled sugar exports from 1996-97.  The Republic of Cuba also exports to the Russian Federation cigars, rum, citrus, and pharmaceuticals.  The Russian Federation exports to the Republic of Cuba transportation equipment, spare parts, machinery, electrical equipment, fertilizer, and other products.

MONTHLY FOOD PRICE CHECK- The following is the monthly free-market price check for the cities of Havana, Camaguey, and Santiago de Cuba, 500 kilometers and 850 Kilometers east of Havana, respectively.  This Monthly Food Price Check compares end of August 1998 prices with end of September 1999 prices.  The government of the Republic of Cuba has reported that the average monthly wage is approximately 230 Pesos (versus 217 Pesos in January 1999, 214 Pesos in 1998, and 203 Pesos in 1997).  In September 1999, the Ministry of Labor and Social Security of the Republic of Cuba reported that more than 1.5 million nationals (out of a workforce of 4,500,000) were receiving U.S. Dollar bonuses and U.S. Dollar-related bonuses, of which 334,000 workers received U.S. Dollar cash bonuses and the remainder received the right to purchase certain products sold for U.S. Dollars through certificates or receive free certain products sold for U.S. Dollars.  In July 1998, the Ministry of Finances and Prices of the Republic of Cuba reported that 1,100,000 Republic of Cuba nationals (out of a workforce of approximately 4,500,000), or 24%, were receiving U.S. Dollar or U.S. Dollar-related bonuses equal to 1 to 7 times their monthly wage.  In July 1997, approximately 1,300,000 workers (out of a then reported workforce of approximately 4,200,000), or 30%, were reported to have received U.S. Dollar or U.S. Dollar-related bonuses equal to 1 to 7 times their monthly wage.  Republic of Cuba-based analysts and non-Republic of Cuba-based analysts estimate that 35% of Republic of Cuba nationals have access to U.S. Dollars, although the percentage with access to U.S. Dollars is highest in the city of Havana, where approximately 20% of the island’s 11 million citizens reside.  The government of the Republic of Cuba reports that approximately 56% of Republic of Cuba nationals have access to United States Dollars.  All Cubans receive a limited subsidized monthly food ration (which generally provides nutrition for approximately two weeks), free health care and education, and pay no more than 10% of their wage for housing.  Workers, with the exception of the self-employed all receive various forms of social security coverage.  KEY: LB- per pound.  U- Per unit.  ( )- End of August 1998 price.  NA- not available. SSB-soda-sized bottle.  S- Soft.  H- Hard.  B- Bunch.  All prices are in Cuban Pesos.
 

Food Product	Havana	Camaguey	Santiago de Cuba
Rice (LB)	5 (5)	3.5 (3.5-4)	5 (6)
Black Beans (LB)	10 (12-13)	9 (10)	10 (9)
Pork (LB)	25 (25)	15 (14)	15 (16)
Cooking Fat (LB)	15 (15)	15 (15)	15 (15)
Lamb (LB)	25 (25)	14 (12)	14 (14)
Ham (LB) boned	35 (45)	29 (30)	30 (30)
Garlic (U)	1.5-2 (2)	1-2 (1-2)	1-2 (2)
Onion (LB)	10 (12)	8 (10)	12 (8)
Tomato (LB)	20 (12-15)	NA (NA)	10 (6)
Lettuce (B)	5 (5)	NA (NA)	2 (NA)
Cabbage (U)	5 (4)	3 (NA)	NA (3)
Cucumber (LB)	2 (2-2.5)	4 (1)	1.5 (1.5)
Carrots (LB)	4 (3-4)	3 (3)	5 (5)
Malanga (LB)	4 (3-4)	3 (3)	5 (5)
Yucca (LB)	2 (1.5-2)	1 (1)	1 (1)
Sweet Potato (LB)	1.5 (1)	1 (1.2-1.4)	1.2 (1.3)
Squash (LB)	2 (2)	1.2 (1.2)	1 (1.5)
Tomato Sauce (BSB)	10 (10)	8 (10)	10 (10)
Limes (U)	.50-1 (.50-1)	.10 (.10)	.10 (.10)
Oranges (U)	.50-1 (1)	.33 (.33)	.33 (.25)
Tangerines (U)	1 (NA)	.25 (NA)	.5 (NA)
Grapefruit (U)	1 (NA)	.25 (NA)	.5 (NA)
Pineapple (U)	5-20 (10-15)	5-10 (4-10)	3-10 (2-10)
Papaya (LB)	4 (4)	1.5 (1.2)	1 (1)
Banana (U) Fruit	.50-1 (.50-1)	.50-.60 (.50-1.5)	.50-1 (.50)
Banana (U) Soft Cooking	2-5 (2-5)	1-1.5 (1-2)	1-2 (2-3)
Banana (U) Hard Cooking	.50 (.50-1)	.33 (.25-.30)	.15 (.15)
String Beans (B)	5 (4)	4 (2)	2 (4)
Peanuts (LB)	8 (8)	6 (8)	8 (10)
Corn Meal (LB)	5 (3)	3.5 (3-4)	3 (4)

 

Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, has accepted an invitation from Ronan, Montana-based Travel Learning Conferences, Inc., to speak at the annual Nonprofits in Travel Conference (NPTC) at the Omni Shoreham Hotel in Washington, D.C., on 10 February 2000.  The NPTC is “the premiere national forum for nonprofit organizations offering life-long learning through educational travel programs.  The mission of these organizations is educational, and they use travel revenue to subsidize their non-travel programs, provide educational outreach, and maintain strong and loyal connections with members/alumni.”  For additional information, please access www.nptc2000.com on the Internet or contact Ms. Sara Swan, Program Coordinator, at telephone: (406) 676-2255 or facsimile: (406) 676-8524 or e-mail: tlc@ronan.net