523. Memorandum of a Telephone Conversation Between the Assistant Secretary of State for Inter-American Affairs (Rubottom) and the Assistant Secretary of State for Economic Affairs (Mann), Washington, May 31, 19601
Mr. Mann telephoned Mr. Rubottom to inquire about the Cuban-Russian oil deal which he planned to discuss with Secretary Anderson at Mr. Dillon’s request.
Mr. Rubottom said, first, there is a backlog of payments; however, this seems to be resolved to some extent in terms of U.S. companies principally. They have been instructed by the National Bank, by letter from Guevara, to purchase crude that would be delivered by the Soviets and run through their refineries. We have talked to them along the lines that this was a decision they would have to make, but that we would not have any objection to their turning the Cubans down on this if they felt they could. They are keeping an eye on each other. There is the problem of precedence which has been established in other places, such as Guinea, India, maybe Uruguay and Brazil.
Mr. Rubottom said he had the impression in recent weeks in talking to many of the oil people that they are pretty soft on this now. They discussed the angle of how this would affect the Venezuelans. They would probably react to it. Mr. Rubottom said that Perez Alfonso’s statement2 was very understanding and sympathetic to this. He had said “we will sell crude elsewhere; we do not have anything to worry about.” That did not jibe very much with the tough position on the part of the companies.
In the same week Mr. Rubottom said he talked to Crossland, Derby and Pipkin of the Texas Co., and people from Standard who were down here on this matter, as well as Proudfit,3 and they were all tough-minded. Since that time Crossland and Derby went down and [Page 931]got some money on their backlog. They have a 90-day agreement and a letter from Guevara which said that the deal was off because they have not responded favorably to it.
Mr. Mann asked what we should do about it—let the companies decide what is best in their own interests? Mr. Rubottom replied he did not think we should tell them to go ahead and do it; on the other hand it would be worse to tell them not to do it. Mr. Mann agreed.
Mr. Rubottom said the meeting with Secretary Anderson this morning may have to do with a letter which came over to Dillon from Anderson enclosing a memorandum4 prepared by a committee headed by Lucius Clay. In that memorandum it was agreed we ought to get a tax on sugar to take care of the expropriated companies down there.
Mr. Mann said if we were to go all out to get Castro it would obviously be what we would do. What would the effect be in the other Latin American countries? He said we have to maintain a steady pressure and keep our motives well disguised in this business.
Mr. Rubottom said he thought the ground was paved for us to go ahead. The pressure can be a little more out in the open. We are at the point of having to cut back on the sugar legislation and are prepared to use this power. He said he would like to get the legislation through first and could see no reason why we shouldn’t move ahead hard and fast through bilateral approaches to them under GATT or other agreement procedures called for, in view of the unilateral action the Cubans have taken.
Mr. Mann said perhaps he should get something started in his shop. Mr. Rubottom indicated that the people in Mr. Mann’s shop are bound legalistically on this thing and we sometimes have a lot of trouble with them. Mr. Mann suggested starting seriously to consider the abolition of the tariff preference, to which Mr. Rubottom indicated this would be fine with him. Mr. Mann said he would get them started on it.