Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

HA–8. Record of a Meeting¹

Washington, September 14, 1958

Meeting—September 14, 1958—Economic Program for Haiti

PARTICIPANTS

• State Department: Messrs. Rubottom (ARA); Snow (ARA); Wieland (CMA); Warner (CMA); Conover (REA); Post (REA); and Favell (KD)
• Development Loan Fund: Mr. Rayan
• Treasury Department: Mr. Harley
• ICA: Mr. Atwood
• Export-Import Bank: Messrs. Kimball and Dennison

Mr. Rubottom opened the meeting by pointing out that the economic situation in Haiti has shown no significant improvement and that a new look was necessary. He said that we should consider obtaining, in cooperation with President Duvalier, greater responsibility in economic affairs. Since the Duvalier government was freely elected and the best prospect we could see ahead, Mr. Rubottom was convinced that we should make efforts to intensify our cooperation. He believed that Duvalier wants to work with us and that we should try to convince him that we do likewise. Mr. Rubottom raised with Mr. Atwood the need for experienced ICA personnel at the top level to deal with the Haitian government in overall economic planning and implementation. Mr. Rubottom said that Messrs. Waugh, Dillon and McIntosh recognized the importance of completion of the construction work at the Artibonite Valley and that we should consider having the DLF supply the funds for this purpose. In addition, he said we should continue our grant food program there and indicated that perhaps a greater account could be shipped. Mr. Atwood stated that the problem was one of getting adequate distribution of foodstuffs.

Mr. Rubottom pointed out that it was a matter of high priority to set up an inter-agency committee to study the Haitian economic problem, Mr. Snow agreed.

Mr. Rubottom then mentioned that a Marine Corps training mission was expected to go to Haiti shortly to train the Army.

Mr. Atwood agreed that ICA experience showed that there was a need for proper advisors to the GOH. He mentioned in this connection the need for a Klein-Saks type mission² and referred to Prescott Carter as a possibility. Such a mission might strengthen the Haitians and still be outside the USOM mission. He asked whether the Artibonite cost survey had been completed. Mr. Kimball replied that this had not been done.

Mr. Harley queried whether the Haitians would be willing to accept outside advisors. Mr. Rubottom replied that we would use the “carrot and stick” approach.

Mr. Wieland pointed out that there were two forces struggling within the Haitian government; one-pro-American and the other anti-American. The latter headed by Blanchet, were attempting to sabotage relations with the United States. As things are now, it looks as though the pro-American force might win and they need our help, especially when Duvalier is leaning in their direction.

Mr. Atwood mentioned that the situation seems to be similar to the one in Bolivia. Mr. Wieland said what was needed was a concrete programs to present to Duvalier. Mr. Harley asked what was the “carrot” that we intended to use. Mr. Atwood mentioned that the IMF, Artibonite financing, and technical assistance could be used as the “carrot”.

Mr. Dennison doubted whether the Haitians could stand any more debt burden since they were again in default with the Eximbank. The Eximbank, he said, did not want to put any more money into Haiti to complete the Artibonite project.

Mr. Rubottom said that he thought that we could work out a successful program. Mr. Pollack mentioned that there existed a Haitian nationalization program and he thought that we should use our influence to see that it was to our benefit. Mr. Snow elaborated on the electric power problem and the attitude of the Haitian toward the Island Light and Power Company. Mr. Dennison said he understood that Marc Charles and Arthur Bonhomme wanted to nationalize the Power Company.

The Artibonite, Mr. Wieland said, was the immediate problem facing us and all efforts should be made to put it into production. Mr. Atwood mentioned that the Eximbank held $300,000 of ICA money, part of which could be used for the costing of the remainder of the work on the project. Mr. Snow believed that the Artibonite should be completed and that full consideration should be given to private power in developing the water resources. Messrs. Snow, Conover, Dennison and Warner agreed that the cost survey should be initiated immediately.

Mr. Rubottom then reviewed the sense of the meeting as followed:

(1) That the cost survey be top priority.

(2) That ICA and State would look into the problem of economic consultants for the GOM.

(3) That the Haitians be informed of the adverse aspects of nationalization of the power industry, without trying to sell them on any specific private power measures.

(4) That the DLF then take up the financing of the Artibonite project completion.³

Mr. Kimball said that the cost survey would come to about $15,000.

1. Source: Department of State, ARA Special Assistant’s Files, Lot 60 D 371, “Haiti.” Confidential. Drafted by Post on October 13.
2. The United States firm, Klein-Saks, Inc., provided financial and economic counseling to several Latin American governments. In December 1958, the Haitian government contracted the services of Klein & Saks, Inc. and Lehman Brothers, Inc. Documentation concerning the negotiations of these contracts and subsequent discussions between Department of State officials and representatives of the two firms is in file 838.00.
3. On September 23, Samuel C. Waugh, President of the Export-Import Bank, advised the Department of State in a letter to Assistant Secretary Rubottom that the Haitian government was in default to the Bank for the sum of $500,000 in connection with the Artibonite loan and for the sum of $25,000 in connection with an additional loan. Waugh added: “It is our option that no assistance by other governmental agencies should be given to Haiti unless it maintains its debt payments to this Bank. Even though assistance may be coming from other agencies, we are strongly of the opinion that the sanctity of obligations should be preserved and such a concept impressed upon the Haitians. If a debtor is to be relieved of debt payments while receiving aid, it would create a harmful precedent for the loaning activities of this government.” (103–XMB/9–2358)