Foreign Relations of the United States, 1958–1960, Cuba, Volume VI

404. Airgram From the Embassy in Cuba to the Department of State¹

Havana, December 4, 1959.

G–101

Accompanied by DCM I called today on Minister of National Economy Boti. I reviewed principal events in U.S.-Cuban relations since meeting on October 12 with Roa, Boti and Pazos,² noting deterioration that had occurred. I then referred to offer contained in Cuban note of November 13³ to continue negotiations on pending questions (Deptel 732⁴). I asked if Boti disposed to resume these discussions and he indicated assent.

I referred to hostile attitude of Cuban leaders from advent of revolutionary government. He countered with unfriendly attitude of American press toward revolution. I defended our press as perhaps mistaken at times and at others as naturally reacting to anti-American attitudes of Cuban leaders and 26 July press, but nevertheless objective and not directed either by Government or by big business interests. We then proceeded to economic topics.

Boti spoke of very slender exchange reserves of Cuban Government and complained at withdrawal by American banks of normal commercial credits to Cuba amounting to 40–50 million dollars. He said situation required drastic exchange controls and still further controls might be necessary. He said emphatically revolutionary government would not be forced out however by low state of foreign reserves.

Re agrarian reform, I reiterated our concern at provisions for valuation and compensation, particularly in light of financial possibilities of GOC. I suggested that American properties subject to expropriation under law might well come to several hundred million dollars. He said “perhaps”. I referred to our position that prompt, adequate and effective compensation should be made and at his request defined these terms. He said Cuba had never defaulted on its foreign debt yet and indicated he believed it could carry this one. I mentioned also indications of continued arbitrary takeover of property of U.S. citizens. I referred to our memo of October 12⁵ and GOC failure reply. He referred to recent law on expropriation (Law 588 described in despatch 602⁶) and said he thought this might give solution.

I went over briefly present difficult situation of electric light company due to 1) reduction of electric rates which seriously hampered Company’s earning capacity and its credit, 2) failure of Banco Nacional to extend ten million peso credit on terms Company had been led to believe were approved, and 3) failure of Bank to authorize $2 million remittance. Boti said Government’s financial situation less good than when this loan first discussed and Bank did not now have $2 million to spare for Company’s dollar obligations. I asked Minister to tell me frankly Government’s intention regarding Company since from Government’s actions it was hard not to believe that it intended to take over Company. Boti denied such intention and stated if this the case Government would not have considered lending Company 10 million pesos. He stated he had appointment to talk with Company officials tomorrow. (Latter have advised they have appointment with Boti and Oltuski tomorrow.) I left with him Aide-Mémoire as authorized by Deptel 686 but omitting unnumbered last paragraph.⁷

I referred to case of telephone company and to fact that “temporary intervention” had now lasted several months and inquired what Government’s intention was. Boti replied intention was for company to operate this utility, but he declined to predict when intervention would cease. I said high level conversations had been requested by Company from last September and asked whether there was any current consideration by GOC to holding these talks. He said this matter not presently under discussion.

I brought up mining law and asked about Government’s objectives in this field. He said purpose was to eliminate concession holders who were unable or unwilling to work their concessions, and to give financial assistance to new small mining enterprises. I asked intention re Moa and Nicaro. He said case of each mining company had to be worked out separately and that a successful arrangement had recently been concluded with Matahambre Copper Company. (This denied by Company official.) In answer my question, he said he knew nothing about recent action by Government authorities to prevent a shipment from Nicaro but he would investigate.

Re new petroleum law, Boti said Government’s intention was to make petroleum exploitation eventually a Government operation. Government monopoly would not extend, he intimated, to petroleum refining.

I brought up Law 647⁸ giving Labor Ministry authority to intervene any enterprise for various causes related to labor problems. He said this simply confirmed authority inherent in GOC and all Governments to intervene in case of dispute between labor and management.

Boti said if U.S. had worries about present situation, Cuba also had plenty of worries which he would be glad to discuss with me. I assured him I would like to do so at his convenience. I suggested that we could make a lot more progress on pending problems if Cuban leaders would stop treating U.S. Government and U.S. private companies as if they were enemies of Cuba and undeserving of fair and considerate treatment. I referred to my own efforts, which he recognized, to create atmosphere good will and good faith and said I felt these had not been reciprocated.

I do not know how much of this Boti will convey to Castro and others in Government. Our problem of communication is a most difficult one.

Bonsal

1. Source: Department of State, Central Files, 611.37/12–459. Confidential; Limit Distribution. Drafted by Bonsal and Braddock.
2. See Document 367.
3. See Document 392.
4. In telegram 732, December 2, the Department instructed Bonsal, before he returned to the United States for consultations, to approach the Cuban Government with reference to its November 13 note and its implied willingness to discuss questions related to the Agrarian Reform Law. (Department of State, Central Files, 611.37/ 12–259)
5. See Document 367.
6. See footnote 5, Document 367.
7. In telegram 1191 from Havana, November 24, Bonsal provided the text of a memorandum on the situation of the Cuban Electric Company which he proposed to give to the Cuban Government. Telegram 686 to Havana, November 25, approved Bonsal’s proposal and noted that other companies might view this action as a precedent. (Department of State, Central Files, 837.2614/11–2459) The unnumbered last paragraph requested the assistance of the Minister of State “because of the serious damage to credit reputation of the two companies, in which the credit reputation of Cuba itself is also involved”.
8. This law, which was published in the Official Gazette on November 25, was summarized in telegram 1214 from Havana, November 27. (Ibid., 837.19/11–2759)