Exchange Rates Unchanged-1
EXCHANGE RATES UNCHANGED- Republic of Cuba government-operated
Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to one U.S.
Dollar, for 21 Pesos and purchased the U.S. Dollar for 21 Pesos, as it
has since 15 July 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.
DEPARTMENT OF COMMERCE ENCOURAGES BROAD LICENSE REQUESTS- The
Bureau of Export Administration (BXA) of the United States Department of
Commerce in Washington, D.C., is seeking to simplify the licensing process
for United States-based companies seeking to sell products to entities
associated with the Ministry of Public Health (MINSAP) of the Republic
of Cuba. United States-based companies are being informed by the
BXA that in order to reduce the time involved with preparing multiple licenses,
companies should include in one license request products that the company
would like to sell to entities associated with MINSAP, rather than only
those products about which entities associated with MINSAP have inquired.
In essence, United States-based companies are being encouraged to apply
for a “wish list” of products. Some United States-based companies
have reported that their “wish list” license request has included almost
100 different products.
OFAC ISSUES HEALTHCARE SALES LICENSE IN SEVEN DAYS- In what may
be a new record, the Office of Foreign Assets Control (OFAC) of the United
States Department of the Treasury in Washington, D.C., has processed a
license request in seven days by representatives of a United States-based
healthcare products company to visit the Republic of Cuba for the purpose
of meeting with representatives of entities associated with the Ministry
of Public Health (MINSAP) of the Republic of Cuba. The company reports
that it mailed a letter to the OFAC and expected to wait from two weeks
to thirty days. Normally, upon receipt of a license application,
the OFAC will send to the applicant a form-response indicating that the
application has been received and including a reference number for the
application. The form-response will also state that if the applicant
has not heard from the OFAC within thirty days, that the applicant should
once again contact the OFAC.
CENTER FOR CONSTITUTIONAL RIGHTS REPORTS SUCCESS AGAINST THE OFAC-
The New York City, New York-based, Center for Constitutional Rights, a
not-for-profit legal/educational organization “committed to the creative
use of law as a positive force for social change,” has issued a summary
of its recent interactions with the Office of Foreign Assets Control (OFAC)
of the United States Department of the Treasury in Washington, D.C..
The following is the text (corrected for grammatical clarity only) of their
summary: “The Center for Constitutional Rights has 46 pending penalty cases
with the OFAC. In only 14 cases of the 46 cases has the OFAC followed-up
their ‘Requirement to Furnish Information’ letter with a ‘Notice of Proposed
Penalty’ letter. In 10 cases of the 14 cases, the ‘Notice of Proposed
Penalty’ letters were sent before the Center for Constitutional Rights
began active representation of the individual. In other words, the
OFAC has pursued only four cases out of 46 cases where the OFAC knew that
the Center for Constitutional Rights represented the target of the OFAC
investigation. In each of the 14 cases, the Center for Constitutional
Rights demanded a hearing, and in 13 cases of the 14 cases, the Center
for Constitutional Rights have posed interrogatories to the OFAC.
(Interrogatories and hearings are available to individuals pursuant to
OFAC regulations). The Center for Constitutional Rights has received
no responses to its interrogatories, although it is 30 days to 60 days
beyond the 30-day deadline in all cases. The Center for Constitutional
Rights has received no notice of a hearing in any case, and the Center
for Constitutional Rights has been informed that hearing procedures do
not, in fact, exist.” For additional information, please contact
Mr. Rona Gabor at the Center for Constitutional Rights at telephone number
(212) 614-6464 or by facsimile at (212) 614-6499.
CLINTON ADMINISTRATION MAY GRANT HUMANITARIAN ASSISTANCE- The
Clinton Administration is expected to announce this week that it may participate
as a direct donor in emergency food relief for the Republic of Cuba.
The United Nations World Food Program (UNWFP)issued an emergency appeal on 1 September 1998 for US$20.5
million in food assistance for the Republic of Cuba, of which about 35%
could come from the United States. The United States government traditionally
provides food assistance at the request of the UNWFP. The UNWFP reported
that an El Nino-related drought in the eastern part of the Republic of
Cuba seriously threatened 615,000 of the country’s 11 million residents
with malnutrition and decease. The World Food Program reported that residents
of the Provinces of Las Tunis, Holguin, Santiago, Granma, and Guantanamo,
600 1,000 kilometers east of the city of Havana, would remain at risk
until the May 1999 vegetable and root harvest. The government of
the Republic of Cuba reported damages include the loss of 608,000 tons
of grains valued at US$267 million, 4,040 tons of meat, and 6.2 million
liters of milk. UNWFP assistance is expected to be in the form of
rice, beans, flour, cooking oil, and preserved fish, to be consumed mainly
by children in the area.
DROUGHT CONTINUES DESPITE AUGUST RAINS- The government
of the Republic of Cuba reported that drought continued to
effect large parts of the country despite the normal rainfall registered
in August 1998. The government of the Republic of Cuba reported that
reservoirs were at 45% capacity nationwide, but remained all but dry in
various localities, including a number of reservoirs used for rice production
in the central and western regions of the island. The rain did result
in a resumption of sugar, vegetable, and root planting, across the
country. Republic of Cuba-based agricultural experts said that a
tropical storm or hurricane would be necessary to alleviate existing drought
conditions.
GOVERNMENT DONATES US$2.5 MILLION WORTH OF VACCINES TO CHINA-
The government of the Republic of Cuba reported that it had donated US$2.5
million worth (retail value) of vaccines for hepatitis-B to the government
of the People’s Republic of China.
SWISS COMPANY TO OPERATE FERRY SERVICE BETWEEN CUBA AND MEXICO-
The Mexican Department of Transportation and Communications granted authorization
to Switzerland-based Sanpey Hoil to operate ferry service between Puerto
Morelos, Mexico, and the city of Havana, Republic of Cuba. Sanpey
Hoil had previously received authorization from the Maritime and Port Association
of the Republic of Cuba. The ferry service is expected to begin operations
before the end of 1998, carrying both tourists and cargo. The ferry
will be the first linking the Republic of Cuba with another country since
1959, when there was regular ferry service between the Key West, Florida,
and Havana.
ARGENTINA COMPANY OPERATING BAGGAGE SEALING SERVICE- Argentina-based
Sugal Bags, in conjunction with Republic of Cuba government-operated ECASA,
a subsidiary of the Institute of Civil Aeronautics (IACC) of the Republic
of Cuba that operates airports within the country, has begun operating
a baggage sealing service at the city of Havana’s Jose Marti International
Airport and at the Juan Gomez International Airport in Matanzas, near the
resort area of Varadero, 140 kilometers east of Havana. The economic
association plans to expand its services to other airports located
within the Republic of Cuba, and to travel agencies, hotels, and to non-Republic
of Cuba-based air carriers operating within the Republic of Cuba.
The service costs US$4.00 per piece of luggage.
TOURISM UPDATE- The Ministry of Tourism of the Republic of Cuba
reported 936,400 tourist arrivals from January 1998 through August 1998,
an increase of 18.1% from the same period in 1997. Revenues increased
16.6%, tourism days increased 26.6%, and occupancy increased 8.8%
VARADERO AND CANCUN STRENGTHEN LINKS- Representatives of
the resort area of Varadero, 140 kilometers east of the city of Havana,
and representatives of the resort area of Cancun, Mexico, signed a Sister
Resort-Area agreement designed to increase multi destination tourism and
overall cooperation. Currently, there are 26 weekly flights between
Cancun and the Republic of Cuba, four of which operate to Varadero.
CHINA COMPANIES TO EXPAND PRESENCE- H.E. Noemi Benitez,
Vice Minister for Foreign Investment and Economic Cooperation of the Republic
of Cuba, said that companies within the People’s Republic of China were
increasing their interest toward making investments within the Republic
of Cuba. Vice Minister Benitez said that, since 1997, fifty business
delegations had visited the Republic of Cuba from the People’s Republic
of China. Vice Minister Benitez said that negotiations were in advanced
stages to establish joint ventures to grow rice and to produce cooking
oil, to establish joint ventures in the tourism sector, and projects in
real estate. Vice Minister Benitez said that economic cooperation
agreements were being prepared which would result in the production of
color televisions, veterinary medicines and pharmaceuticals; and to produce
increased corn yields. Vice Minister Benitez said that, until recently,
the commercial relationships between companies within the Republic of Cuba
and the People’s Republic of China had been based upon financial credits,
donations, and technical assistance, rather than primarily market-based
agreements. However, companies within the People’s Republic of China
have established two economic associations within the Republic of Cuba
to produce footwear (beach sandals), and one to operate a Chinese-cuisine
restaurant in the resort of Varadero, 140 kilometers east of the city of
Havana. Four trading companies from the People’s Republic of China
operate within free trade zones located within Republic of Cuba.
1997 bilateral trade was US$330 million, an increase of 23% from 1996.
The government of the Republic of Cuba recently announced that nickel plus
cobalt would soon replace raw sugar as the country’s largest export to
the People’s Republic of China.
JAPANESE COMPANIES FINALIZE DEBT AGREEMENT- Representatives
of Japan-based companies and representatives of the Central Bank of the
Republic of Cuba, signed an agreement on 1 September 1998 in Tokyo,
Japan, to restructure US$750 million in commercial debt. The
agreement, first initialed on 17 March 1998, includes 10-year to 15-year
grace periods and payments through 2017. The agreement does not include
the Republic of Cuba’s US$500 million government-to-government debt to
Japan. The agreement is expected to lead to a gradual increase
in Republic of Cuba-Japan bilateral trade and investment. The signing
of the agreement was a part of a week of activities in the Republic of
Cuba celebrating 100 years since the first Japanese citizens arrived in
the Republic of Cuba. The debt agreement between Japan and the Republic
of Cuba is of significant interest of other creditors, particularly among
those members of the European Union (EU), and from the government of Argentina,
which is owed more than US$2 billion. The government of France has
reported some progress in bilateral debt talks. Japanese government
sources and Republic of Cuba government sources said that trade and investment
would now increase, but cautioned not to expect any spectacular increase
at least until the actual payments began. Bilateral trade had averaged
approximately US$140 million during the last several years through 1997,
mainly in Republic of Cuba exports of shell fish and commodities
(such as coffee) to Japan. Japanese investment within the Republic
of Cuba is minimal, confined to Tokyo, Japan-based Casio Electronics assembly
(watches) ventures. Tokyo, Japan-based Sanyo Corporation has announced
plans to establish a network of service centers within the Republic of
Cuba to support the sales of its products. Republic of Cuba government
and commercial debt defaults began in the early 1980's.
The government suspended all principal and interest payments in 1986.
Official negotiations with the Paris Club were suspended in 1989.
The Republic of Cuba is not a member of the International Monetary
Fund (IMF), World Bank, or any other international lending institutions.
The government of the Republic of Cuba resumed informal contacts with the
Paris Club in 1994, although there have been no formal negotiations, with
the government of the Republic of Cuba preferring to negotiate with each
individual creditor. The Central Bank of the Republic of Cuba reported
that the country’s official long term foreign debt was US$10.014 billion
as of June 1998, of which US$6 billion was estimated to be owed governments
and international lending organizations, and the remainder owed to private
banks and to individual companies. The Central Bank of the Republic
of Cuba reported that the foreign debt had declined slightly from US$10.5
billion in 1996, due to a stronger United States Dollar. The United
States government does not permit non-United States companies nor governments
to use the United States Dollar in commercial transactions with Republic
of Cuba government-operated entities. Approximately 25% of the Republic
of Cuba’s foreign debt is reported to be in currencies other than the United
States Dollar: 17% in Japanese Yen, 24% German Marks, and most of the remainder
in EU-member currencies. The Central Bank of the Republic of Cuba
recently reported that 79.4% of the foreign debt was principal and the
remainder was interest. 12.6% of the foreign debt was owed Japan,
19.8% owed to France, 12.6% owed to Argentina, 10.3% owed to Spain, 8.4%
owed to the United Kingdom, 4.4% owed to Switzerland, 3.9% owed to Mexico,
3.9% owed to Italy, and 25% to other countries. The convertible currency
foreign debt does not include debt to the former U.S.S.R. and other former
socialist countries, the People’s Republic of China, North Korea, and Vietnam.
GRAIN IMPORT UPDATE- Republic of Cuba wheat imports from the
French port of Rouen between 1 August 1998 and 26 August 1998 were 49,282
tons.
CITRUS PRODUCTION UPDATE- The Victoria de Jiron citrus
orchard reported that it would produce 380,000 tons of fruit during the
1998 1999 harvest (July July), of which most would be exported as juice,
concentrate, and extract. The 1998 1999 plan seemed to confirm speculation
that there was a decline in 1997 1998 citrus production, a rumor not reported
by Republic of Cuba government-operated media. The orchard produced
a record 440,000 tons of fruit during the 1996 1997 harvest. The
orchard, founded thirty two years ago, is the Republic of Cuba’s largest,
accounting for more than 40% of fresh fruit, juice, and extract exports.
The government of the Republic of Cuba has not reported total 1997 1998
citrus production, which was 690,000 tons in 1996 1997, and 585,000 tons
in 1995 1996. The Republic of Cuba was the world’s top citrus exporter,
producing one million tons of fruit in 1988 1989, 800,000 tons of which
was exported to the former U.S.S.R. and former socialist countries. The citrus
industry had been gradually recovering from the impact of the collapse
of the former U.S.S.R., in part due to joint ventures established with
companies from Chile, Greece, and Israel. The agreements were short
term, and with the exception of Israel-based Grupo BM, the agreements with
the companies from Chile and Greece are reported to have not been renewed.
Republic of Cuba citrus products are exported to European Union (EU)-member
countries, the Middle East, and South America.
LIGHT INDUSTRY REPORTS GROWTH OF 16%- H.E. Jesus Perez Othon,
Minister of Light Industry of the Republic of Cuba, reported January 1998
through June 1998 revenue increases of 16%, compared to the same period
in 1997. He said that revenues would be 517 million Pesos, compared
to 456 million Pesos in 1997. Minister Perez said that revenues from
Republic of Cuba government-operated U.S. Dollar retail stores would exceed
US$100 million in 1998, compared to US$70 million in 1997, and US$40 million
in 1996. The Ministry of Light Industry of the Republic of Cuba reported
sales to the country’s tourism industry of US$15 million in 1997, a decrease
from more than US$20 million in 1996. Exports were reported
to be US$4 million in 1997, compared to the US$17.3 million planned for
1997 and to the approximate US$9 million registered in 1996. Minister
Othon provided no information as to sales to the country’s tourism industry
thus far in 1998 or regarding exports thus far in 1998. The Ministry
of Light Industry of the Republic of Cuba reported that at the beginning
of 1998 there were 80,000 Republic of Cuba nationals employed in the sector,
of whom more than 10% worked within six joint ventures and twenty-four
economic associations. Minister Othon said that the sector would
produce 300 new products in 1998, similar to the number of new products
produced in 1997.
CENTRAL BANK PRESIDENT EXPECTS 3% GDP INCREASE- H.E. Francisco
Soberon, Minister President of the Central Bank of the Republic of Cuba,
said that 1) the Gross Domestic Product (GDP) would increase approximately
3% in 1998, 2) inflation would increase more than 2% in 1998, 3) (officially-reported)
unemployment would remain at 7% in 1998 [unofficially, unemployment and
under-employment is estimated to be at least 30%), and 4) the United States
Dollar would exchange on the domestic market at 19 Pesos to 21 Pesos.
Minister Soberon, in an interview with Rome, Italy-based ANSA News Agency,
said that external financing remained the most serious problem facing the
economy, which continued to operate on short term, high interest rate loans.
CENTRAL BANK PRESIDENT SAYS REFORMS WILL CONTINUE- H.E. Francisco
Soberon, Minister President of the Central Bank of the Republic of Cuba,
said that economic reforms would continue, but in a manner that avoided
the type of crisis now effecting Asia, Russia, and other emerging
markets. “The reform process is permanent, but gradual, to
avoid falling into chaos,” he told Rome, Italy-based ANSA News Agency.
“There are plenty of examples of what happens when reforms outpace
objective conditions,” he continued. Minister Soberon said that the
policy of the Central Bank of the Republic of Cuba would be to maintain
“a healthy economy that doesn't experience abrupt increases or decreases,
but a gradual improvement like that over the last few years.”
PRESIDENT CASTRO MEETS PRESIDENT OF BRAZIL- H.E. Dr. Fidel Castro
Ruz, President of the Republic of Cuba, made a one-day official visit to
Brazil from 6 September 1998 to 7 September 1998. In the capital city of Brasilia, President
Castro met with H.E. Fernando Henrique Cardoso, President of Brazil.
MONTHLY FOOD PRICE CHECK- The following is the monthly free-market
price check for the cities of Havana, Camaguey, and Santiago de Cuba, 500 and 850 Kilometers
east of the capital, respectively. This Monthly Food Price Check compares end of August
1998 prices with end of August 1997 prices. The average monthly wage is
214 Pesos (versus 203 Pesos in 1997). 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. Various senior-level Republic
of Cuba government officials continue to confirm, however, that more than
1,400,000 workers (out of a workforce approximately of 4,500,000), or 31%,
receive 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%,
received U.S. Dollar or U.S. Dollar-related bonuses equal to 1 to 7 times
their monthly wage]. An estimated 35% of Republic of Cuba nationals
have access to U.S. Dollars, although the percentage with access to U.S.
Dollars is highest in Havana, where approximately 20% of the island’s 11
million citizens reside. All Cubans receive a limited subsidized
monthly food ration (which generally does not cover needs for one month),
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. ( )-August 1997 price. NA-not available. BSB-beer-sized bottle.
S-Soft. H-Hard. All prices are in Cuban Pesos.
on a base of 1,983 more tourism rooms than the same period in 1997.
The Ministry of Tourism of the Republic of Cuba said that it foresaw no
difficulties in reaching its 1998 goal of 1.4 million tourists, producing
gross direct and indirect revenues of US$1.75 billion (previous estimates
have been as high as US$2 billion), compared to 1.18 million
tourists producing gross direct and indirect revenues of US$1.56 billion
in 1997. Canada leads tourism providers with 143,817 (an increase
of 29.9% from 1997), followed by Italy with 108,368 (an increase of 7.9%
from 1997), Germany with 76,206 (an increase of 58% from 1997), and Spain
with 73,433 (an increase of 20.1% from 1997).
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70TH ANNIVERSARY OF “LA GUANTANAMERA” SONG- The song, “La Guantanamera,” the song about a beautiful woman from Guantanamo Province, 905 kilometers southeast of the city of Havana, written by Mr. Joseito Fernandez in 1928, celebrated its 70th anniversary this past weekend.
UPDATED SPEAKING SCHEDULE
From 29 October 1998 to 31 October 1998, Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, will be a guest of The Stanley Foundation (headquartered in Muscatine, Iowa) at its “Cuba and the United States: Approaches to Engagement” at the 39th Strategy for Peace Conference at the Airlie Center near Warrington, Virginia. The conference will bring together approximately fifty experts from the public and private sectors from the United States and from the Republic of Cuba.
On 11 November 1998, Mr. John S. Kavulich II, President of the U.S.-Cuba
Trade and Economic Council, will appear at the annual College Music
Journal (CMJ) Music Marathon-Musicfest & Filmfest at the Millennium
Hotel in New York City as a panelist for a discussion entitled “Whirled
Music: The Cuban Experience.” The CMJ Music Marathon- Musicfest &
Filmfest is the world’s largest and longest running new music convention
and festival featuring panels, workshops, and 1,000 musicians performing
at more than 60 venues in and around New York City. The projected
attendance is 8,000.
ANNUAL MEMBER LUNCHEON UPDATE The annual member luncheon of the U.S.-Cuba Trade and Economic Council
is being tentatively-scheduled for September 1998 or October 1998 in New
York City. Guest speakers being considered are a grouping of the
Chairmen, Presidents, and Chief Executive Officers of non-United States-based
healthcare companies which export to, import from, have joint ventures
with, or have economic associations with, the Republic of Cuba. If
members have suggestions, please contact the U.S.-Cuba Trade and Economic
Council.
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