Foreign Relations of the United States: Diplomatic Papers, 1944, The American Republics, Volume VII

811.516 Export-Import Bank/984: Airgram

The Ambassador in Cuba ( Braden ) to the Secretary of State

Habana , May 31, 1944—noon.
[Received June 1—6 p.m.]

A–1173. Embassy has been informed in strictest confidence that Oscar García Montes has received a draft amendatory agreement⁹⁸ from the Export-Import Bank under which the agreement of April 8, 1942 for the $25 million line of credit would be cancelled. Draft amendatory agreement appears to have been drafted under date of May 4, 1944 but apparently reached García Montes only on or about May 27. Embassy has received no information on this subject from the Department or from the Export-Import Bank.

Embassy informed that García Montes surprised and upset by this development although he now admits to Montoulieu⁹⁹ that possibility of cancellation after forthcoming elections was discussed in Washington and he was asked to draft such an amendatory agreement. (Department will recall from my despatch No. 7103 [7013] of May 26¹ that Montoulieu apparently had no knowledge of possible cancellation of the credit unless and until the reorganized Commission might fail to carry out its duties in an adequate manner.)

García Montes, so far as the Embassy is informed, prepared no written report on his conversations with the Export-Import Bank and the Department in Washington. It would appear from the Department’s instruction No. 3115 of April 19¹ that no written protocol or memorandum was initialed by the Bank and García Montes setting forth the results of these conversations. As a result there would seem to be room for the misunderstanding which appears to have developed between Washington and Habana with regard to possible cancellation after the elections. García Montes admits that he has done nothing toward the preparation of a draft amendatory agreement but he thought, as the Bank since his visit had approved auxiliary roads projects in the amount of $1,400,000, that his view had prevailed and that cancellation was no longer a possibility.

I regret that I have not been kept adequately informed with regard to these developments and particularly that I was not given an opportunity to see the draft amendatory agreement before it was sent to García Montes. As I have pointed out in my previous communications to the Department, I feel that cancellation should have taken place when García Montes was in Washington. I feel that the postponement of such cancellation until after the Cuban elections might very well be interpreted as interference by us in internal affairs of this country and I earnestly request that no further action on this matter be taken without full consultation with this Embassy.

While the draft amendatory agreement provides for cancellation of the credit it also contains a number of paragraphs setting forth the procedure which shall be followed by the Cuban Government and the Commission after the Bank ceases to have any part in the various projects. The draft agreement, for example, provides that the Commission “will retain the services of a qualified engineer or an engineering firm to act as Consulting Engineer”, a provision which can hardly be applicable if the Cuban Government is to take over full authority and responsibility. It would appear unlikely that the Cuban Government will think itself obliged to sign with the Bank undertakings restricting the action of the Government after the Bank ceases to be a party to the agreement.

The Embassy understands that a brief reply has already been sent by the Commission to the letter received by García Montes.² This reply, it is understood, states that the matter must be discussed with President Batista, who cannot be consulted until after the elections. In other words, the Commission feels that the reply to a proposal of this nature must come from the President of the Republic.

The Embassy understands that it is the present feeling of the Commission that three courses of action are possible:

(1) As Dr. Saladrigas,³ if elected, intends to visit Washington, he might undertake (if he and President Batista agree to such a course) to approach the Export-Import Bank while in Washington, reminding the Bank that the original agreement was entered into while he was Prime Minister and requesting the Bank to continue the credit as originally planned.

(2) The Bank might be requested to carry out the projects which have already been approved, amounting to some eleven million dollars. This would avoid the considerable embarrassment which would be caused the Commission if it now had to tell the various contractors that the Bank is no longer a party to the agreement under which the contracts were let. The consulting engineers are of the opinion that the vast majority of the contractors would cancel their contracts if the Bank ceased to be a party to the agreement.

(3) The present members of the Commission are inclined to believe that, if cancellation actually takes place, the Commission would cease to exist and that the work contemplated under the agreement would be transferred to the Ministry of Public Works.

Braden

98. Not printed; it was prepared in the Export-Import Bank along lines suggested by García Montes while he was in Washington. A copy was forwarded to him through the Cuban Embassy on May 15, but copy to State Department was inadvertently delayed until June 2.
99. Eduardo Montoulieu, Minister of Finance.
1. Not printed.
1. Not printed.
2. Reference here is to García Montes’ cabled reply of May 29 to letter from LeBaron dated May 15 enclosing Draft Amendatory Agreement addressed in care of the Cuban Embassy in Washington; neither printed.
3. Carlos Saladrigas, Administration candidate for the Presidency.