The Ambassador in Cuba (Norweb)84 to the Secretary of State
[Received August 29.]
Sir: As the cessation of hostilities in the Pacific has either brought about or will bring about many new factors in connection with the Cuban-American sugar negotiations, I have the honor to submit the following comments with regard thereto.
The war terminated from six months to a year sooner than most people, including the Cuban sugar producers, thought would be the case, and the time when sugar production should again be equal to [Page 938] or in excess of the world demand is therefore much nearer than they had expected. The intelligent elements in the sugar industry are consequently more and more interested in long-range stability rather than in transitory price considerations and will doubtless make every effort to obtain some assurance (of a more definite nature than that contained in the notes exchanged at the time the Supplementary Trade Agreement of December 23, 1941 was signed)85 regarding the future position of Cuban sugar in the United States market. It is doubtful that they will be satisfied with a continuation of the status which Cuba has been enjoying under the Sugar Act of 1937 and it is probable that, in order further to improve their position, they will hold up to us in no uncertain terms the cooperation they gave us in sugar matters during the war.
The farsighted elements in Cuba are all the more impressed with the need for security rather than passing price considerations as they realize full well that if sugar prices continue to rise, production in other areas now producing sugar on a small or medium scale will be further stimulated, thereby aggravating the problem with which they will be confronted when the time of reckoning comes. They therefore will likely be glad to accept a price equal to that paid Puerto Rico (less, of course, the United States import duty and the benefit payments under the Sugar Act), in accordance with the offer we made them in June, provided, however, we agree to purchase three crops and are able to give them some assurance as to Cuba’s longer-term position in the United States market.
On the other hand, there are some who will be vociferous in demanding that sugar be restored to a free-market basis and that sugar prices be permitted to seek their own level. The more experienced sugar men will doubtless realize how shortsighted such a move would be, but it is nevertheless conceivable that we might be faced with that possibility if we adopt what the Cubans consider an inflexible attitude during the negotiations, however sound we may think our position to be. Should such an eventuality come to pass, the immediate result would be a skyrocketing of sugar prices to possibly several times their present level. The effects of this would be deplorable from the viewpoint of our efforts to hold the line on prices in the United States, and the necessarily brief ensuing “Dance of the Millions” would eventually be followed by the same bitter aftermath [Page 939] which Cuba experienced upon the termination of the First World War.
While, from a theoretical point of view, the United States’ trading position should be improved by the cessation of hostilities, this is in fact not true, owing to pragmatic considerations. We still need sugar desperately and it appears to be a vain hope to expect much relief during 1946 and possibly during a part of 1947 from any source other than Cuba. Our practical position, moreover, has been weakened in that we can no longer hold up to Cuba, as we have in the past, the necessity of doing this or that as a contribution to the mutual war effort. The Cubans are, of course, fully aware of this and they have seen us remove all sorts of controls at home. Moreover, even though the Cubans assured us last June that we would get their sugar “regardless”, they might now hold that this offer was based only on the war emergency and that they are therefore no longer bound by it.
The most important consideration, however, is a political one. Cuba, so to speak, is still our problem. We have responsibilities here which we cannot and should not avoid. We must still view the sugar negotiations in the proper political perspective. A great deal can be done with the Cubans by suasion. They reserve to themselves (in their peculiar psychology which is seasoned with the unique character of Cuban post-independence history) the right to become very annoyed with the United States, but do not grant us the same privilege. If we could deal with Cuba on this sugar matter as we would with a more distant and less closely associated country, or if we could deal with it as we would with a domestic problem, the solution would be infinitely easier. It is manifest, however, that this is impossible. Thus, one of the greatest weaknesses in our trading position springs from political considerations.
In summary, while there are some factors which might lead one to believe that the cessation of hostilities has strengthened our trading position, there remain most of the basic practical factors which existed during the war, plus certain new factors which actually strengthen the Cuban position. The Embassy is sanguine, however, that by careful, frank and friendly discussion the problem can be ironed out equitably in a spirit of mutual trust and confidence. Nevertheless, unless we play our cards carefully, a most disorderly negotiation is likely to result, to the detriment of all concerned.
It is extremely difficult, under the circumstances, to make any definite recommendations. Cuba, as previously mentioned, wants above all long-range security for its sugar in the United States, and the minimum for which it would probably settle with any good grace is [Page 940] the sale of three crops. Anything less favorable from Cuba’s point of view might not be acceptable and should negotiations be broken off a chaotic world market for the next year or two would result, probably followed by a difficult political and economic situation for Cuba once the boom has spent itself. Therefore, before resuming negotiations and in order to facilitate their successful conclusion, every effort should be made to obtain the authority necessary to give Cuba the desired assurances regarding its future position in the United States sugar market or to purchase several crops at the Puerto Rican price. Moreover, negotiations should not be resumed until the Puerto Rican price question has been definitely settled.
The negotiations would be further facilitated if they are conducted in Washington and if the amounts of domestic consumption and free sugars reserved to Cuba could be made as liberal as possible. This is a very important consideration. It would make the Cubans more inclined to accept a reasonable price for the sugar sold to us and would have the added advantage of enabling Cuba to supply larger quantities of sugar to the other countries of the Western Hemisphere and thereby discourage increased production in marginal and sub-marginal areas. We must take into account the sugar needs of Cuba’s American Republic neighbors.
- E. Henry Norweb presented his credentials as Ambassador to Cuba on July 24, 1945.↩
- For text of this second supplementary agreement and exchange of notes between the United States and Cuba respecting reciprocal trade, see Department of State Executive Agreement Series No. 229, or 55 Stat. (pt. 2) 1449. For related documentation, see Foreign Relations, 1941, vol. vii, pp. 196 ff.↩