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

No. 1324

Sir: I have the honor to report that the outstanding recent developments in the Cuban sugar situation have been the announcement that crop sale negotiations are to be resumed, and an intensified dissatisfaction with the Cuban Government policy regarding the sugar industry.

Crop Sale Negotiations: Dr. Seiglie, head of the Cuban commission left Habana on March 21 for preliminary discussions in Washington pending the arrival on March 25 or 26 of Dr. Mañas and Sr. Santiesteban to resume the negotiations. Senator Casanova and Sr. Godoy will not arrive until several days later.

Upon leaving the Palace after receiving his final instructions, Dr. Seiglie reportedly stated that Cuba will receive 200 million dollars [Page 779] less for its 1946 crop by selling at the price of 3.675 cents to the United States, and 6.95 cents to other countries, than it could have obtained at the world market price of 8 cents. Senator Casanova stated earlier that Cuba could have made 2 billion dollars more during the First and Second World Wars if it had sold its sugar at world market prices, but instead Cuba proved its great cooperation with the United States by foregoing handsome profits. He added that 50 percent of Cuba’s sugar mills are now mortgaged by bonds, 30 percent are under the Moratorium Law and only 20 percent are free of debt. Eighty percent of the mills need modernization and repair which obviously should be done during prosperous times. (Cuba is making a great play of high “world market” prices which it helped to create recently by doling out limited quantities to South American countries, although this gives little indication as to what price could have been obtained had the entire crop been offered.)

Press comment states that the recent United States CPA order limiting the use of cane beverage alcohol will cost Cuba 10 million dollars.

The Cuban Government’s recent sales of 250,000 tons to other countries are encouraging speculation on the possibility of forcing the United Kingdom to deal directly with Cuba rather than globally through the Commodity Credit Corporation. Manuel San Martín, Director of the Office of Price Regulation and Supply, confidentially stated to the Embassy that he is recommending to the President that the crop sale contract should prohibit the resale by CCC to other countries. The objective is to obtain concessions from the United Kingdom, not only in the purchase of Cuban cigars and alcohol, but also to obtain the release to Cuba of Brazilian rice allocated to the United Kingdom. The Embassy feels that this threat is not serious.

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Respectfully yours,

For the Ambassador:
Paul G. Minneman

Agricultural Attaché