570. Letter From the Ambassador in Cuba (Bonsal) to the Assistant Secretary of State for Inter-American Affairs (Rubottom)1

Dear Dick : The purpose of this letter is to discuss with you certain aspects of our economic policy toward Cuba and to formulate a suggestion for a possible negotiating attitude on our part in the matter of sugar to be acquired by the United States in 1961 and thereafter. I am as convinced as anyone could be that we cannot do business with Castro and the people who currently control him, but I suggest that we should assume attitudes which will have the appearance of constructiveness even though, considering the people we have to deal with, they may not lead to constructive results.

Our current economic policy toward Cuba, so far as it has been revealed to this Embassy, has been manifested in the following actions:

The oil companies have refused to refine Soviet crude oil and have defied the order of the Cuban Government that they should do so. They probably would not have taken this attitude without the encouragement of our Government. As a result, the three refineries have been intervened and the Soviet Union has, in effect, assumed the responsibility for supplying crude oil to Cuba, a responsibility formerly discharged by Esso, Texaco, and Shell from their Venezuelan sources of crude. So far, there have been no indications of serious difficulties in the supply of petroleum products here. Such difficulties may develop in the future.
On July 6, we practically eliminated the unshipped balance of Cuba’s sugar quota in the United States for 1960. The effect of our action has been to reduce our purchases of Cuban sugar by perhaps as [Page 1041] much as one million short tons, if we consider the deficit allocations and consumption increases in which Cuba might have expected to share. So far, we have not experienced any very strong reaction to this step particularly in the other American republics because Khrushchev’s rocket-rattling statement of July 9 has been the center of attention. That was providential. However, the effect will be only temporary and eventually our action in bringing about so drastic a reduction in the sales in the United States of a product upon which Cuba’s economic welfare depends will be subject to sober analysis and discussion with results which, I anticipate, will be unfavorable to us. This will be particularly the case if the forthcoming meeting of Foreign Ministers results in some sort of resolution on behalf of the Inter-American System followed by an increasingly critical analysis of a number of aspects of the policy of the United States toward the other American republics including especially Cuba.
Our Government is apparently encouraging American business interests to abandon their activities here. This is apparently designed to increase the burdens and responsibilities of the Cuban Government. The representative of the Continental Can Company here tells me that the President of his company, General Lucius Clay, has been in touch with Secretary Anderson on this subject. Continental Can is abandoning its operation in Cuba which is a very minor one in the corporation’s total activity but which is most important to Cuba and will have to be carried on by the Government. A few days ago the Cuban-American Sugar Company’s three mills here (two of which are among the largest in Cuba) were intervened by the Government allegedly because the responsible management of the company left Cuba. Apparently there is involved here also the return to the National Bank of Cuba of several million dollars representing sugar sold and exported by the Cuban-American Sugar Company. Similarly, I understand that the United Fruit Company is planning to abandon its operations. I assume that other American sugar companies are working along similar lines. The result will be that the Cuban Government will have to insure the financing and the management of a number of important sugar mills although presumably it will be assisted in the financing by the availability to it of the Cuban assets, including local bank balances and raw sugar availabilities of the companies in question.

I hope that the above actions are a part of a carefully thought out program. I would appreciate any information available on the subject. The immediate result of these actions, is, of course, to increase the economic influence of our enemies in Cuba at the expense of our own.

The Venezuelan market for oil in Cuba has been lost for the time being. The Cuban economy has been made wholly dependent for crude on the Soviet Union, which has so far shown itself able to handle the situation. Our companies have lost the refineries and the market. The revolutionary ego is, for the time being at least, being really inflated as a result of this situation. There may, of course, be a day of reckoning—I hope so.

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With respect to sugar, the Russsians are buying 1,700,000 Spanish long tons of sugar in Cuba this year. The Chinese Communists are buying 500,000 long tons. That makes a total of 2,200,000 long tons sold to areas whose total purchases in the past have rarely exceeded half a million tons. While it is true that these purchases are at a low price compared to ours and that 80% of the price is to be paid for in goods of unknown price and quality, the fact is that 1960 will go down in Cuban history as the year when the Communists expanded their purchases of Cuban sugar by nearly two million tons while the United States was curtailing its takings by nearly one million tons.

With regard to the policy of “abandonment” of American assets here, I must say that I have shared the view of many Americans here to the effect that the best available policy could be expressed in the slogan “stick with it.” These people believe that the Castro Government should be obliged by positive actions to reduce our place in the scheme of things. Instead, the course of action which we advocate, by creating vacuums in the Cuban economy, also creates opportunities for the Cuban Government to walk in with increasing help from the Communist countries. The policy will, of course, further strain the management and the financial capabilities of the Government.

None of the above elements of economic pressure will bring this Government to its knees though they in themselves are being increasingly interpreted, even by our friends, as unsuccessful attempts to do so.

Now, I tend to think that this Government is doomed because of its own incompetencies and incoherencies and because it is becoming increasingly hateful to increasing numbers of the Cuban people. But I do not claim to have a crystal ball in good working order.

There are some who believe that the Government already is mortally wounded and that the power struggle going on around the sick or captive Fidel represents a final stage in its disintegration. I think that is over-optimistic though I respect the judgment of those who, like my Argentine colleague, take this view. I believe that, while the Government is doomed, its death struggle may well be quite prolonged and, I fear, quite bloody. But I do not believe this regime can last or that the Cuban people will submit indefinitely to the sort of regime which Ché Guevara is fashioning for them.

It is important that the inevitable downfall of the present Government not be attributed to any important extent to economic sanctions from the United States as major factor. (If such sanctions were the only way open to us to keep Communism out of the hemisphere, that would be another question, but I do not believe that is the case either here or in the other American republics where the Communist menace [Page 1043] is potentially as great as it is in Cuba and where the economic pressures available to us are considerably less significant than they are here.)

A new government here which was generally believed to owe its existence to the destruction of the Castro Government through United States economic sanctions would be a weak one both at home and in the hemisphere. Castro and his followers would be the latest martyrs to American imperialism instead of, as I would hope, horrible examples of what happens when the Communist International takes over a legitimate revolutionary movement in the Americas.

Also it seems to me that the atmosphere of resistance and defiance created by overt American economic sanctions of the kind described above is helpful to the Castro Government both because it exacerbates the nationalistic sentiment on which Castro lives and because it furnishes a seeming justification for increasingly drastic actions to curtail and destroy private property rights.

This does not, of course, mean that we should continue to follow the same economic policies with Castro’s Cuba as we did with Cuba in the pre-Castro period. Then we were dealing with the government of a country which had long been our friend in time of peace and our unconditional ally in time of war. Now we are faced with an unfriendly government which will be the ally of our enemies in case of war. Our response to the attitudes and actions of the present Cuban Government, in the unhappy event that it remains in power, must be a thorough, if gradual, overhauling of the economic relationship from which the Cuban Government has removed by its actions the reciprocal advantage for the United States upon which the preferential treatment accorded by us to Cuba was based.

The approach which I now wish to suggest to you is based upon the above considerations. It endeavors to tie together, on the one hand, the Cuban interest in holding a share of the United States sugar market—an interest which coincides with our own interest—and, on the other hand, the compensation of American corporations and individuals whose property has been taken by the Cuban Government.

I propose that, at some time before a determination is made as to Cuba’s 1961 sugar quota, I be instructed to approach the Cuban Government at the highest possible level (Castro or Dorticoós) and that I state that the United States Government is considering its policy regarding purchases of sugar from Cuba in calendar 1961. I would add that Cuba had chosen its own course in economic and social matters, as well as in matters of trade with the United States, although our economic and trade interests had been seriously and adversely affected thereby. I would state that this Cuban unilateral action gave us the right similarly to exercise our sovereign power to defend and [Page 1044] advance the legitimate interests of our country and of our citizens as we see fit, but that I thought that prior discussion before we reached decisions might be desirable even at this late stage.

Specifically, I would say that as a result of action of the Cuban Government in the past 18 months, United States citizens have been deprived of their property and of essential property and management rights in assets valued at perhaps in excess of one-half billion dollars. I would point out that the prospects of any sort of prompt, effective, adequate compensation appear very slim in view of the circumstances prevailing here. In these conditions, sentiment in the United States for a further drastic reduction of the Cuban sugar quota is very strong and is hard to combat logically. The excessive hostility of Cuban leaders toward the Government and hence the people of the United States has done a great deal of damage. I would have no difficulty in making a very strong presentation on this subject.

I would suggest that there is a definite and logical relationship between continued purchases of sugar by the United States and fair treatment by the Cuban Government of American interests here which have been damaged by it. I would make clear that I am not endeavoring to reverse the policies of the Cuban Government in so far as they represent a legitimate exercise of Cuban sovereignty but that I am asserting the rights of our citizens under Cuban and international law and the right of our Government, in the exercise of its own sovereignty, to take such measures as it may see fit to defend those rights.

I would then make a specific proposal to the Cuban Government. I do not want to suggest the details of such a proposal at this time since they should be the subject of the most careful study in the Department. I believe, however, that the proposal should include the following:

The setting up of a Cuban-American Claims Commission with representatives of both governments to consider and, if possible, to agree upon the claims of American citizens against the Government of Cuba. The terms of reference of such a commission would have to include provisions for further procedures in the event of disagreement.
A commitment on the part of the Cuban Government to make available to the proposed Commission each year a sum of money which should be at least $50 million and might be initially suggested as twice that amount. These funds could be derived from a Cuban tax on sugar exports or from any other source, it being up to the Cuban Government to fulfill its commitment on this score.
A commitment on the part of the United States, if the above points are agreed, to fix a quota for Cuban sugar in the United States of a specific initial amount. I have thought of 2½ million Spanish long tons in this connection but believe this should be very carefully studied.

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Obviously, the amount which Cuba would make available for United States claims should bear a relationship to the dollars made available to Cuba as a result of the sugar price differential.

The timing of this approach would have to be very carefully considered. It might be a maneuver which would help in connection with the forthcoming meeting of Foreign Ministers. I cannot judge from here. I do think we should put ourselves in a positive position vis-à-vis this situation as soon as possible. The probable rejection by the Cuban Government of a reasonable proposal by us would be helpful to us in terms of hemisphere opinion. On the other hand, I think it is important that we make a serious effort to arrest the disastrous destruction of our economic interests in Cuba and of our trading position with Cuba, both of which are rapidly going down the drain as a result of the current actions of both governments.

Sincerely yours,

  1. Source: Department of State, Central Files, 611.37/8–260. Secret; Eyes Only.