837.235/7–2952

Position Paper Prepared in the Department of State 1

confidential

A Recommended Position in the Event That Cuba Should Request The Department’s View on the Sale of Sugar Behind the Iron-Curtain

background

As a result of increased plantings and favorable weather conditions, it is anticipated that Cuba’s 1952 sugar crop will be the largest in that nation’s history and that there will be a sugar surplus possibly approaching two million Spanish long tons. The Batista administration is extremely concerned about the effect that this surplus and subsequent possible surpluses can have on the price of sugar and about the repercussions that a fall in price could have on the Cuban economy. In accordance with a plan advanced by representatives of the Cuban sugar industry, the Cuban Government intends to take measures to restrict 1953 sugar production to five million Spanish long tons and to dispose of the surplus remaining from the 1952 crop over a period of five years. There is some dissatisfaction with this plan however, on the part of certain elements in the sugar industry and labor groups who would prefer unrestricted future production and the maintenance of the present level of employment.

Cuban Communists have seized this opportunity to initiate a press campaign in favor of Cuban trade with the Soviet bloc. Stressing the point that restriction of the sugar crop would mean “hunger, misery and ruin for labor and for the country,” the Communists have suggested that Cuba open extensive commercial relations with China, the Soviet Union, and the “People’s Democracies”. Markets in these countries have been depicted in glowing terms by the Communist press.

It is believed that few responsible Cubans will entertain illusions about trade behind the “Iron Curtain”. It appears probable, however, that every possible outlet for Cuban sugar will be explored. In this connection, Cuban representatives may be expected to request the views of the Department regarding the selling by Cuba of sugar behind the “Iron Curtain”.

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problem

What should be the position of the Department of State in the event that Cuban representatives request its views on selling by Cuba of sugar behind the “Iron Curtain”.

factors

Among the factors which should be brought into a consideration of the problem are the following:

(1)
It is the policy, and in the best interest, of the United States to assist Cuba to maintain its economic and political stability and to develop its economy and political system.
(2)
A failure by Cuba to dispose of its surplus sugar crop in an orderly manner and at normal prices could severely threaten both the economic and political stability of Cuba.
(3)
Sugar is not considered a strategic commodity at the present time by the United States or by other nations of the free world. United States policy does not preclude its sale, or that of other items not included on strategic lists, to the U.S.S.R. and to the Eastern European nations comprising the Soviet bloc. Exports to Communist China and to North Korea, however, are not permitted by the United States and by many other members of the United Nations.
(4)
The U.S.S.R. and the Eastern European countries of the Soviet bloc, according to available recent statistics, are in an export position as far as sugar is concerned. Communist China has a relatively small need for sugar imports, and its area has not furnished in the past a normal market for Cuban sugar. It would seem therefore, that the “Iron Curtain” countries do not constitute a market for Cuban sugar under normal circumstances.
(5)
In the light of recent Communist divisive activity in Cuba and elsewhere, however, it would not be unlikely that a Communist country, for purely propagandistic reasons, would make an offer to purchase Cuban sugar. Such an offer probably would not be for a quantity of consequence, but it could have strong propaganda effect. To achieve this, the Communist countries might offer to make payment in dollars—something which the Cubans would probably require. Such payment from Communist China and/or North Korea would almost certainly involve United States banking facilities or Chinese credits in United States banks, either of which would be in contravention of United States Treasury regulations.
(6)
The degree of opposition which the United States could express to Cuba’s trade with Communist China is limited by the fact that United States policy does not call for special pressure against certain Western European countries such as Great Britain to desist in their “normal” trade in non-strategic commodities with Communist China.
(7)
In both the UN and the OAS, Cuba has joined with the United States and the other free nations in measures which, in the former, recommend a strategic embargo against Communist China and North Korea and, in the latter, express agreement to cooperate fully in the adoption of measures of economic defense and security control. The United States would wish Cuba to observe these commitments and, also, to follow with the other nations of the free world as much as [Page 880] possible, the example of the United States in regard to trade behind the “Iron Curtain”.
(8)
The United States is not in a position to offer Cuba any substantial assistance in disposing of the sugar surplus. A Cuban delegation came recently to Washington to discuss with United States officials on an informal basis the situation in Cuba and to outline the measures being taken to relieve it. The delegation requested United States assistance in the intensification of efforts to reach a new International Sugar Agreement. It also asked that the United States Government consider certain additional measures collateral to the stabilization of the sugar market through an international agreement. It appears that the Cubans will have to be given a predominantly negative reply to the latter requests. The United States, however, already has taken a position in favor of a revised international agreement and will continue to support Cuba in international discussions toward this end.

recommendations

In the light of the above factors and the present international situation, it is recommended that the Department adopt the following position:

(1)
If Cuba should request the views of the Department of State in connection with consideration of a Cuban sale of sugar to the Soviet Union or to the Eastern European countries within the Soviet bloc, it is recommended that the Department point out to Cuba that the United States does not embargo the sale of non-strategic items such as sugar to these countries. The Department should then indicate that a decision to sell sugar to those countries is one for Cuba alone to make. It would be implicit in its reply that the Department has no overriding objection to such a sale.
(2)
If views are asked in connection with a possible sale to Communist China or North Korea, it is recommended that the Department remind Cuba that the United States prohibits all exports to that area and that, accordingly, a Cuban sale of sugar to Communist China or to North Korea would not be viewed with favor. This reply should be accompanied by an expression of sympathy for the Cuban problem and of an appreciation for the Cuban inquiry and for past cooperation in denying the benefit of free world production to that area. If Cuba should refer to the United States attitudes regarding the trade in non-strategic commodities of certain Western European countries with Communist China, it can be pointed out that Cuba, unlike those European nations, has never developed a comparable pattern of trade with Communist China, and it is not in a position to plead the necessity of continuing an established trade. If Cuba, however, should indicate that the terms for the sale would involve an exchange of sugar for some strategic commodity which would add materially to the strength of the free world, it should be informed that this factor would be a consideration that might outweigh objections which would otherwise attach to the transaction.

  1. Drafted by Cedric C. Phillip of the Office of Middle American Affairs; cleared with the Offices of Regional American Affairs, East European Affairs, and Chinese Affairs, the Economic Defense Staff, and the Agricultural Products Staff. Forwarded to Deputy Assistant Secretary Mann, Director of the Office of Regional American Affairs Cale, and Director of the Office of Middle American Affairs Rubottom under cover of a memorandum by Mr. Phillip, dated July 29, 1952. The covering memorandum indicates that Mr. Cale and Mr. Rubottom concurred; it also bears the following handwritten notation, initialed by Mr. Mann: “it is a commendable thing to anticipate problems of this kind and if the question is squarely put up to us this will make it possible to reach a conclusion very quickly. But, lawyer-like, I prefer to pass final judgement when the issue is drawn.”