536. Memorandum of a Conference, Department of State, Washington, June 27, 19601

SUBJECT

  • Questions Concerning the Program of Economic Pressures against Castro

PARTICIPANTS:

  • The White House
    • Mr. Gordon Gray
    • Mr. James S. Lay, Jr.
  • Treasury Department
    • Secretary Anderson
  • Defense Department
    • Secretary Gates
  • State Department
    • The Secretary
    • Under Secretary Dillon2
    • Under Secretary Merchant
    • Assistant Secretary Mann
    • Assistant Secretary Rubottom
    • Assistant Secretary Smith
    • Mr. Hager, Legal Adviser
    • Mr. Charles Bohlen
    • Mr. Edwin Martin
    • Mr. L.D. Mallory
    • Mr. Robert A. Stevenson
  • Agriculture Department
    • Under Secretary Morse
  • Central Intelligence
    • General Cabell
    • Col. J.C. King

The Secretary opened the meeting by referring to the list of questions which Mr. Gray had prepared (copy attached) with regard to the above subject. Concerning questions (1) and (2), it was the consensus of the group that the President has given his decision and authorization, in his approval of a program for Cuba on March 14 [17], 1960,3 for the institution of economic pressures against the Castro regime. The Secretary then turned to the matter of sugar legislation and suggested that we should consider how far it can be used as (1) a straight political weapon and (2) from the standpoint of economic practicability. He indicated his understanding that the Department of Agriculture [Page 959] feels that 500,000 tons is the biggest possible cut which should be considered, and inquired, should we cut the quota, will we be able to buy an equivalent amount on the world market? Under Secretary Morse said that he was not aware of a final position with regard to the amount of a cut but that in general he would presume that any cut will have to be allocated to quota countries and there is a question whether they can supply the entire amount required. The Secretary observed that this point would seem to require further study before a decision is taken on the amount to be cut. He added that it is difficult to see how we can do very much to affect the Cuban situation with only the sugar legislation.

Secretary Anderson agreed with the Secretary that sugar legislation alone, that is a cut in the quota, would not necessarily correct the Cuban situation. He expressed the view that we are faced with a situation in which a communist country is taking over American properties, and drew an analogy with the situation in Iran where, when Mosadegh took over the Abadan refinery, Great Britain refused to buy the Abadan product and asked the rest of the world to go along, which it did, and in the end to offset the USSR threat it was possible to work out agreement whereby the refinery was purchased by various interested parties including the Government of Iran. He considers that the same crime is taking place in Cuba today only of a far greater magnitude. The fundamental problem in Secretary Anderson’s view is whether the U.S. Government is ready to levy all of the economic measures in its possession to bring pressure against the Castro regime. He thinks one, or two, or three tough steps would be a great mistake unless the U.S. Government is prepared to go all the way. Castro would figure that one tough step or two tough steps would certainly be followed by additional actions, and assuming that Castro is an intelligent man, which we must assume, he will find out ways to solve the problems which are presented by our actions. Unless we go all the way, in six or eight months he can pick up the slack, judging, as we must, that he will receive the cooperation of the USSR. Secretary Anderson asked is it worth the candle to take partial steps. At the same time he expressed his opinion that if we clamp down the screws now we must be prepared to accept sugar rationing and should prepare the American people for this necessity. The President might have to declare a state of emergency under which action could be taken under the Trading with the Enemy Act which would virtually freeze all trade between Cuba and the United States. He inquired if the group feels the time has come to say to the President that we should cut off all economic support to Cuba. He expressed his view that the reaction [Page 960] in Latin America would probably not be serious. On the other hand, it is his opinion that if we are going to nibble we will have all of the bad reaction and none of the good.

The Secretary said that we must consider carefully what we may get as a substitute for Castro and the matter of timing is extremely important. However, he expressed agreement with Secretary Anderson that nibbling is no good; that we should either take actions which will hurt or leave well enough alone. He inquired of General Cabell as to how things are in his area. General Cabell indicated general satisfaction. Secretary Anderson asked General Cabell if he felt that lowering the economic boom on Castro would be helpful. General Cabell indicated that the Castro Government does not appear to be under serious economic pressure at the present time and that concerted economic pressure is indeed necessary. Colonel King voiced his agreement with this view and added that there is increasing fear among the Cuban population which an act like this on the part of the U.S. would tend to assuage. It would give important moral as well as material support to the growing opposition within Cuba.

Mr. Rubottom referred to the Secretary’s statement on sugar legislation which in his opinion well signifies the present attitude toward the Castro regime. As for our awareness of the communist menace, he referred to his own recent statement before the House Subcommittee on Inter-American Affairs.4 He described to the group some of the pending actions which are now being considered, including the fact that draft notes have been prepared indicating the desire of the U.S. Government to terminate the 1902, 1934 and GATT agreements. He expressed agreement that we should plan to throw the economic book at the Cubans and pointed out that a 500,000 ton cut in the sugar quota means in effect no more sugar to the United States this year. He stressed that we must be prepared for the intervention of the oil companies and probably shortly thereafter the take-over of the electric power and telephone companies. He described the importance of getting the Cuban opposition into an active functioning role around the hemisphere in order that not all of the anti-Castro attitude shall be polarized in the United States. He expressed the hope that it perhaps would not be necessary to invoke the Trading with the Enemy Act at this time as he does not feel that it would be helpful, and inquired whether it might not be done quietly as at the time of Suez.

Secretary Anderson said that this might be possible as no direct citation was made to this Act at the time of Suez but that in order to take over Cuban property and block Cuban assets in the United States [Page 961] the legal authority of this Act will be needed. The Department of Commerce would have to set up export controls and various licensing arrangements. He expressed the opinion that the group seemed to be in general agreement that we should take all or none. He urged that time-wise the faster, the better. The Cubans are now in trouble over their petroleum situation, and we should not delay in following up on this situation.

The Secretary inquired of Mr. Hager as to his views on the legality of the proposed invocation of the Trading with the Enemy Act. Mr. Hager said that we can certainly take the actions described by the Secretary of the Treasury under the authority of this Act, but he is not very optimistic about any possibility of concealing the fact that we are acting under this authority. With reference to Mr. Rubottom’s idea that we should proceed with notification to the Cuban Government that we desire to cancel our bilateral trade agreements, he observed that the agreement of 1902 requires a year’s notice and that of 1934 six months notice—that obviously these agreements cannot be gotten out of the way quickly. Mr. Rubottom remarked that, nevertheless, these agreements do have importance as a facade and in his opinion the U.S. Government should not appear to be in a position of tearing them up as if they were scraps of paper. It is important that the U.S. Government maintain its dignity and that any action which it may take should not be as a result of a stampede or panic; it should be, rather, a relentless, firm pressure, a steady turning of the screw, in a spirit of lamentation and sorrow rather than anger. Secretary Anderson said that he agrees that we should try to use economic bullets rather than real ones. However, he expressed his strong feeling that the President ought very soon to make a positive statement that, should Cuba sign a mutual security agreement with the USSR the Government of the United States would view such an act as a threat to the safety of the western hemisphere. In his view this would lay a clear course for a harder policy line should the Cubans proceed with such a step despite this warning. The Secretary expressed the thought that such a statement should be based on some bigger doctrine or broader base than the mere signing of a mutual security agreement. Secretary Gates remarked that he had received an intelligence report that morning that there is a possibility that Raul Castro will proceed from Prague to Moscow to negotiate a mutual security agreement to be announced on July 26.

Mr. Rubottom observed that should we proceed at this time with unilateral intervention it would turn the clock back 27 years. In his view the group should recognize that it would cause incalculable loss in the hemisphere, he referred to a recent conversation with former [Page 962] Assistant Secretary Henry Holland5 who was emphatic in his view that the U.S. Government should avoid as far as possible being cast in the role of aggressor against Cuba—that should this happen it will set back the U.S. in its Latin American policy and hurt our investments in Venezuela and elsewhere in the hemisphere. As to Secretary Anderson’s query whether we shall permit the Cubans to take American properties and sit here and take it, he observed that the Department has worked for over a year to set up Castro for a knock-out and would regret very much should we be stampeded at this time. Secretary Anderson queried whether Mr. Rubottom is of the opinion that Castro is, indeed, in the process of falling on his face. He added that his guess is that time is completely on Castro’s side. If the U.S. lets Castro announce USSR support, will this not give him important strength both domestically and in the hemisphere? The Secretary observed that should Castro do this it might rather aid us in making a good case with the rest of the countries of the hemisphere. Mr. Gray observed that, is there not a question as to what we might say privately in the OAS and what we must say now publicly? Secretary Anderson added, and what do we say now to the Europeans?

Mr. Rubottom stated that our European allies are pretty well convinced of the correctness of the U.S. position vis-à-vis Castro. They have cooperated reasonably well on our arms policy and the British have been cooperating very well in the current oil situation. Secretary Gates asked Mr. Rubottom what his reaction would be if Castro comes back from the USSR and announces a mutual security agreement or some form of agreement permitting Russian bases in Cuba. In his own view he had heretofore considered that such a step might be on the whole good in that it would clearly delineate Castro’s position before the eyes of the world and the hemisphere. However, more recently he has begun to wonder and to try to assess what the impact might be. Mr. Rubottom said that he agreed with Secretary Gates that such action by Castro would be yet another step down the lane which was begun with the Mikoyan visit and now followed by the announcement of the Khrushchev visit and Castro’s visit to Moscow. Such acts tear the mask from Castro’s face and show him for the commie stooge that he is. If this clear communist course which Castro has set does not unite the hemisphere and the Cuban opposition, if we are not successful in our efforts to educate and persuade hemispheric opinion, then we may very probably have to do the job ourselves but at great cost. Secretary Anderson inquired whether in Mr. Rubottom’s opinion the U.S. Government could get OAS support. Mr. Rubottom thinks not. The Secretary expressed his agreement with Secretary Anderson that [Page 963] he considers OAS support for joint action against Cuba very doubtful and that, should the U.S. ask for it and not get it, the OAS might be busted up higher than a kite. Secretary Anderson added that in case of failure some of our friends in the OAS would not just get kicked out of office; some might very well get shot as a result of this gambit. He feels that the issue must be considered on the basis of doing it ourselves (at the possible risk of a set-back of 27 years of effort) or to get behind a group which is trying to overthrow Castro and seek at the same time support from the OAS.

General Cabell observed that we have two things (1) the Governments and (2) the people. The Governments know the danger of Castro and his revolution but fear to stand up and be counted in public. The people remain impressed by Castro’s apparent success and have not yet been disillusioned. Mr. Rubottom observed, however, that there is a change now taking place among the lower classes as well. He agreed, nevertheless, that the position of Government leaders is weak in many cases and cited the instance of the Peruvian Foreign [Prime] Minister Beltran, who had the nerve to tell the Secretary and the President6 of the Castro danger and then found himself in the embarrassing position of having to admit that he did not know of the Peruvian invitation extended to the Cuban President Dorticos until the day before Dorticos was due to arrive in Peru.

Mr. Rubottom recommended that we move ahead on controls step by step, increasing the pressure steadily. Secretary Anderson returned to his argument that blocking Cuban assets would be a very powerful weapon. The Secretary inquired of him as to what assets there might be. Secretary Anderson said that there are not many physical or cash assets in the form of bank accounts since the Cuban Government has moved most of its funds to the Bank of Nova Scotia in Canada. Under the type of action he envisages the U.S. Government would freeze all Cuban public accounts, probably leaving private accounts free. However, the principal effect of action under the Trading with the Enemy Act would be that we would not buy Cuban sugar. In other words, the Cubans would have nothing more to sell, we would institute import and export controls, and the effect on Cuban credit in third world countries, except perhaps for the Bloc countries, would be extremely drastic.

The Secretary inquired whether the Trading with the Enemy Act, should it be invoked, have to be done under the Korean emergency? Mr. Hager indicated that the Korean emergency is still in effect and [Page 964] would presumably serve. Secretary Anderson said that, if not, perhaps the President would have to declare another special one with respect to Cuba. Mr. Merchant observed that it would be important to distinguish between private bank accounts and public accounts in that he felt certain the majority of the private bank accounts in this country would belong to persons whose support we would need to maintain; that is persons opposed to the Castro regime. There was general agreement on this point.

Mr. Rubottom said that action taken which might be based on the communist danger and threat in Cuba and to the hemisphere is a much better basis on which to place our cause than U.S. economic interests in Cuba. As to the possibility of utilizing this approach in the OAS, he asked the group’s indulgence to read from a special paper prepared on this subject by Mr. Jamison (copy attached).7 With regard to the possibility of a statement on the increasing alignment of Cuba and the USSR, he said that ARA has been considering the possibility of a statement, perhaps by the Secretary or the Under Secretary. The Secretary observed that perhaps, should Raul Castro sign a mutual security agreement, it would be helpful in contributing to the opportuneness and possibility of OAS action.

Mr. Gray inquired whether the group would consider a treaty with the USSR as a meaningless treaty? In other words, would the Soviets meet their obligation or at least is there danger that they might do so? The Secretary said that he himself would doubt it and expressed the opinion that the Soviets would not be around in the event that there were a military show-down over Cuba.

At this point the Under Secretary joined the group to announce that the Administration feels relatively certain of obtaining sugar legislation which would give the Executive a blank check with regard to the sugar quota for Cuba and outlined briefly for the group the provisions of the pending legislation. There followed a further discussion as to the effect of a sizeable cut in the Cuban quota on the U.S. domestic market.

Under Secretary Morse indicated that the U.S. beet producers cannot significantly increase their production before 1962 and that they are insured of selling all the sugar which they can produce prior to that time. He also added that Cuba is a heavy buyer of U.S. rice, beans, lard and flour and should Cuba suspend trade as a result of a cut in the sugar quota the Cuban public might well suffer shortages of these products.

[Page 965]

Mr. Rubottom described to the group the status of the Nicaro negotiations indicating his opinion that the latest reports suggest that the GOC has no real intention of trying to buy the plant and might be willing to accept a negotiated tax agreement.

Mr. Bohlen asked if the group might return to the discussion of a possible mutual security agreement between Cuba and the USSR. He expressed the opinion that if the USSR signs such an agreement it would be a striking departure from present Soviet policy as we know it. [1 sentence (3½ lines) not declassified] The Secretary said that it is his feeling that the Soviets would not like to see a complete take-over of Cuba by the communists but desire rather to create the most possible devilment for the United States while leaving the burden on us to prove communist domination. Secretary Gates inquired whether the USSR might not be expected to send volunteers to Cuba. Mr. Bohlen observed that they will send technicians to instruct on arms but that he doubted very much that military volunteers would be provided.

Mr. Gray inquired as to the group’s views with regard to American companies doing business in Cuba. He said that until such time as the U.S. Government is prepared to back up these companies he sees no basis or justification for the Government to try by persuasion or otherwise to prevent normal business relations with Cuba. Secretary Anderson agreed and added that if we ask, most American companies are prepared to cut off business with Cuba, but we cannot ask of them this sacrifice unless we are prepared to give them our full support. In his view Mikoyan did not visit Cuba nor will Khrushchev visit Cuba nor will Castro go to Russia just for the purpose of speaking platitudes. If we sit on our hands and wait and this thing happens, the posture of the U.S. Government will suffer a severe blow. What if the USSR just says that it intends to have a missile base in Cuba? It does not matter whether they intend to do it or not. It might indeed bring the Latinos closer to us, but the effect of such an announcement in this country will be the loudest screaming which has been heard for a long time. Secretary Gates observed that he tends to agree with Secretary Anderson that should the Cubans announce an agreement with the Russians the announcement may have a very profound effect [1½ lines not declassified].

The Secretary said that we should give further consideration to all that we might be able to do to lessen the prospects of a Cuban-Russian success and also to what we can do to back up our own words.

Mr. Mann observed that perhaps we should consider the possibility of a private communication to the various governments of this hemisphere rather than a public announcement by the President. Mr. Rubottom stated that the idea of a private communication with the various Latin American governments would seem to offer possibilities [Page 966] in his opinion. We might address ourselves to these various governments indicating that the Khrushchev invitation to visit Cuba and the plans of Castro to visit Moscow are of profound concern to the U.S. Government and should there be any closer alignment with the USSR on the part of Cuba, the U.S. Government will feel called upon to invoke immediately the Caracas and Rio Treaties. He expressed the view that we can and should seriously consider this step. Secretary Anderson doubted that the Government leaders in Latin America would take a public stand and wondered if to ask them to do so would be fair, for example, to a man like Lleras Camargo who is having increasing difficulties in controlling his own people. The Secretary remarked that several of the Central American countries are in the process of breaking relations with the Cuban Government, and Mr. Rubottom said that there are various other indications that the tempo has picked up. He added that ARA has been doing a variety of things to insure that this tempo will not slacken. The Secretary indicated his desire that this whole matter be discussed with NACOIAA later this week.

Mr. Mann expressed the hope that the Government will not wait for the OAS to take action. Mr. Rubottom observed that there are various things which we should try to do with the OAS while we are at the same time working on other possible steps. He agreed that we should move ahead on the economic front. Mr. Dillon indicated his opinion that there is nothing wrong with the action contemplated with regard to preferences and tariffs but that unless we are ready to go the whole way, that is, cut off all trade, he does not feel we are likely to have success. Mr. Mann observed that we should try to demonstrate that irresponsibility does not pay and that it did not seem to him that we would have to go all the way at once. Mr. Dillon said that very shortly we will have the necessary legislation to take steps with regard to sugar, then perhaps steps with regard to tariff and bilateral agreements and then, “are we prepared to go all the way”?

The Secretary asked all present at the meeting take special care not to discuss the matters covered at this meeting, stressing how important it is that we not telegraph our intentions.

[Page 967]

Attachment

QUESTIONS CONCERNING A PROGRAM OF ECONOMIC PRESSURES AGAINST CASTRO8

1.
Is a Presidential decision required, or does the President’s approval of a program for Cuba given on March 14 serve as clear authorization?
2.
If a Presidential decision is required, in what form should issues be presented to the President?
3.
Should not a firm decision be taken now that every practicable economic pressure be brought to bear?
4.
Assuming the decision in 3 above, what specifics need to be discussed? As examples:
a.
Assuming that Congress has given the President discretionary power with respect to the sugar quota, should it be reduced 25%? 50%? 75%? 100%? When should such action be taken and should we simultaneously be prepared to redistribute the resulting quota?
b.
Should we take simultaneous action with respect to tariffs in every possible case?
c.
Should we take every feasible step to deny to Cuba U.S. assistance in refining oil? Should we boycott refined Soviet oil products? Should we encourage American airlines to refuse Soviet oil and oil byproducts (on pretext that they are of improper grade or are not adequate in terms of octane)?
d.
Should we not now indicate discreetly to those who control U.S. investment in Cuba that the Government strongly encourages any and all economic pressures?
e.
Can we now decide as to the applicability of “Trading with the Enemy Act”? (Involved here is the question of whether all other measures referred to in cumulative total would be sufficiently effective to accomplish our purposes or is invocation of the Act necessary for the needed impact?)
5.
If any or all of the above measures are agreed upon, what is our posture within the OAS, as well as publicly, with respect to Articles 15 and 16 of the Charter of the Organization of American States?
a.
Can we ignore them?
b.
Can we reconcile our actions with them?
c.
Can we somehow take the position that Castro’s conduct has made them inapplicable?
6.
What are the organizational and procedural problems involved in an all-out program of economic pressures? For example:
a.
Does the OCB and/or its working group have a role?
b.
Should there be designated a “quarterback” or “field general” to monitor and coordinate the entire economic pressure campaign? If so, should there not be a single individual designated within the State Department with this as his sole concern?
7.
What are the public relations problems? How best do we organize to anticipate and meet them? Especially what is our public posture with respect to the “campaign”?
8.
What agencies, other than those here represented, should specifically be brought into the operation? Or, is the coordination process already established adequate?

Related Questions

1.
Should a recommendation be made to the President that at the earliest practicable opportunity he take a strong public position with respect to any possible mutual security arrangements between Cuba and the Sino-Soviet Bloc and indeed between the Sino-Soviet Bloc and any Western Hemisphere country?
2.
Should we seek extraordinary ways to influence members of the OAS by means of increased economic assistance to those who fully cooperate?
  1. Source: Department of State, S/P Files: Lot 67 D 548, Cuba 1959–1961. Secret; Limit Distribution. Drafted by Stevenson and approved in S on July 26.
  2. A note on the source text indicates that Dillon joined the meeting late.
  3. For a record of the discussion at the March 17 meeting at which the President approved the program for Cuba, see Document 486. The program itself is printed as Document 481.
  4. For text of Rubottom’s June 20 statement, see Department of State Bulletin, July 11, 1960, pp. 60–64.
  5. Not further identified.
  6. Presumably a reference to Beltran’s separate conversations on June 9 with the President and the Secretary of State. A memorandum of the former conversation is published in Declassified Documents, 1984, 1872. A memorandum of the latter conversation is in Department of State, Central Files, 737.00/6–960.
  7. Not printed.
  8. Secret. No drafting or clearance information is given on the source text.