261. Memorandum From the Director of the Office of Middle American Affairs (Newbegin) to the Deputy Assistant Secretary of State for Inter-American Affairs (Sparks)1

SUBJECT

  • Political Aspects of Cuban Sugar Problem.

By despatch dated February 21, 1955,2 Embassy Habana has described the possible political consequences, in Cuba, of a reduction in that country’s participation in the U.S. sugar market. The Embassy’s arguments, supplemented by some from this office, are edited and summarized below.

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(1)
A significant reduction in Cuba’s percentage participation in the U.S. sugar market would result in ill will against our country in general and against our Government in particular.
(2)
It might prejudice the ample cooperation Cuba has given us in the international field, such as in the matter of the Nicaro Nickel operations3 or in international organizations.
(3)
It might adversely affect the treatment accorded by Cuba to American business interests and cause Cuban importers to seek to buy more from European markets.
(4)
It would seriously weaken the Batista government by undermining popular confidence, which is already far from complete, by correspondingly strengthening the opposition, and by increasing the already considerable economic discontent in Cuba.
(5)
By weakening the Batista Government, it would render it more vulnerable to revolution and to communist penetration, more susceptible to graft and more likely to engage in unsound fiscal policies.
(6)
It would strengthen the hand of the 25,000 active communists in Cuba and perhaps permit them to regain the ascendency they formerly had in the labor movement and the substantial penetration they once achieved in the Government. Batista, already chary, for political reasons, of giving serious offense to the communists, might treat them with greater deference if he could not lead from a position of strength.
(7)
By fomenting unrest, a cut in Cuba’s share of the U.S. sugar market might strengthen revolutionary elements (already strong enough to carry out periodic acts of violence) to an extent which might enable them to overthrow the Government. Leaving aside the destructive nature of armed revolution, the downfall of the Batista Government would almost certainly spell continued political instability for Cuba. If Batista could not hold the country together in the face of economic adversity, there is little likelihood that anyone else could. Moreover, it would be hard to find any other Cuban political figure whose stewardship would be as likely as Batista’s to serve the best interests of the United States.
(8)
It would retard the substantial ($350,000,000) economic development program the Batista Government is carrying out.
(9)
It would aggravate the already severe unemployment problem in Cuba (500,000 unemployed at all times and close to a million out of work or only employed part time in the “dead season”).
(10)
Finally, it could undermine the whole Cuban economy and, by decreasing Government revenue and private capital, prevent [Page 798]needed diversification. One-third of Cuba’s national income is derived from sugar and two-thirds of it is generated, directly or indirectly, by the sugar industry.
  1. Source: Department of State, Central Files, 837.2351/2–2155. Limited Official Use. Drafted by William B. Connett of the Office of Middle American Affairs.
  2. Not printed. (Ibid.)
  3. Reference is to the U.S. Government-owned nickel plant at Nicaro, Cuba; see Document 296.