837.51 Cooperation Program/231: Airgram
The Ambassador in Cuba (Braden) to the Secretary of State
[Received June 12—8 a.m.]
A–1233. As I advised the Department in my telegram No. 545 of June 3, 8 p.m.,5 President-elect Grau requested that work under the Export-Import Bank Credit be suspended pending his inquiry into the situation. I am confidentially informed that Vice President-elect Raúl de Cardenas has been making this investigation for Grau. Cardenas at first favored suspension, if not cancellation, of the entire credit but when he learned that only two million dollars had been spent up to the present, that only a total of three million had been borrowed under the credit, that payment had been made only for work which had been carried out according to specifications, and that the bulk of the work remained to be done, he apparently changed his opinion; he, of course, immediately saw the benefit which could accrue to the Grau administration by continuing the work after inauguration on October 10.
All this is further confirmation of the unfortunate result of the decision, reached when García Montes was in Washington, not to cancel the credit at that time but to wait until after the election. We are now placed in the position that if we cancel at this time we shall appear to be giving both Grau and Batista a slap in the face.
On the other hand, it is growing increasingly clear that little or no work will be accomplished by the Commission between now and October. Montoulieu, I am informed, does not expect to continue under Grau as President of the Commission and there is reliable information to the effect that he wishes to sever all connections with Government work and to seek private employment. Thus, he is not now in the position to take the strong measures—such as legal action leading to the cancellation of contracts which have not properly been carried out—necessary to the proper functioning of the Commission.
President Batista has not yet been informed of the receipt of the draft amendatory agreement mentioned in my airgram No. 1173 of May 31, 12 noon, but Montoulieu and García Montes have requested an audience of the President which they expect to take place within the next few days. It is difficult to see how Batista can give a satisfactorily comprehensive reply to this proposal in view of the election of the Opposition candidate. We are, therefore, faced with the probability that this whole matter will limp along until a considerable period after the new administration has taken over.
I strongly recommend against cancellation at the present time unless it is done on the written request of President Batista and with the [Page 979] written approval of President-elect Grau. Without these two documents on hand for publication at the time of cancellation, we should undoubtedly be criticized for mixing in internal affairs of Cuba and for taking action prejudicial to the incoming administration. In any event, no action should be taken without prior consultation with this Embassy.
I likewise request that no further projects be approved by the Bank until the entire situation has been clarified. There would appear to be no justification for our approving projects which in all probability will not be carried out under the control of the Bank.
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