837.5018/6–2444: Airgram
The Ambassador in Cuba ( Braden ) to the Secretary of State
[Received June 27—8 a.m.]
A–1362. The situation with respect to Cuban price control (reference Department’s instruction No. 3280 of June 619) has become most serious and complete breakdown appears imminent.
Dr. Carlos Diago, Acting Director of the ORPA, on June 22 submitted his resignation to the President. This action although specifically a protest against the method used in making certain import duty exemptions (see Embassy’s A–1361, June 2422) was motivated in general by Diago’s conviction that effective price control was impossible without Government support. The President has not yet acted on the resignation. Although not considered a strong director, Diago [Page 937] is believed to be honest and sincere and therefore his resignation is a significant indication of the trend of affairs. Other responsible officials also are considering resignation because they are not permitted to work effectively.
Simultaneously, the Supreme Court decision declaring unconstitutional Articles 12, 17, and 18 of Decree-Law No. 5 (reported in Embassy’s A–1352 of June 2323) presumably has removed the authority of the OKPA to penalize violation of its price and rationing regulations. This fact today is becoming generally known and it is reported that courts are refusing to proceed with ORPA cases. This may mean the entire collapse of price control and rationing measures unless the Cuban Government can hastily establish other authority, which appears unlikely. The upward spiral of prices, already serious, is expected to intensify greatly next week, particularly for foodstuffs.
To complete the above evidences of collapse, ORPA officials confidentially report that several ORPA price resolutions, established to carry out their price commitments under the Cuban-United States stabilization understanding, are now being reviewed by the Prime Minister and will be annulled by the Economic War Board. Subjection of ORPA resolutions to such review would end all pretense of price control.