596. Memorandum of Discussion at the 464th Meeting of the National Security Council, Washington, October 20, 19601

[Here follows a list of participants at the meeting.]

1. U.S. Policy Toward Cuba (NSC Action No. 2166–b–(l); NSC 5902/1; NSC Actions Nos. 2177, 2191, 2195, 2201, 2206, 2213, 2217, 2228, 2239, 2259, 2261, 2269 and 2273; Memo for NSC from Acting Executive Secretary, same subject, dated August 5, 1960; NSC Actions Nos. 2283 and 2309)

Mr. Dulles introduced Council discussion of the situation in Cuba by presenting that part of his intelligence briefing which dealt with this subject. He said that we believe that active opposition to Castro continues among scattered groups inside Cuba despite fear caused by executions and increasing repression. There are about 1000 guerrillas in the Escambray Mountains. These are poorly armed and have inadequate provisions, but their worst problem is their lack of unity and of effective popular leaders. Most of the potential leaders are either in jail or have left the country. Some could be sent in, however. Most of the guerrillas who were captured and exhibited in trials last week were seized in the lowlands and were seized some weeks ago.

[less than 1 line not declassified] indicate that there have been further defections from the military within Cuba and isolated acts of sabotage. A new decree is ready for issuance which will impose compulsory military training on all males and females between the ages of 14 and 40.

Mr. Dulles noted that Soviet military aid continued; that three shipments have arrived and that a fourth is aboard a Soviet vessel enroute to Cuba. We have recent indications that these shipments have included anti-aircraft artillery, machine guns, jeeps and possibly tanks. We have no definite word on whether they included MIGs. [less than 1 line not declassified] indicates that Cuban pilots and maintenance personnel are being trained in Czechoslovakia.

Guevara is expected to leave for Moscow today as Castro’s representative to the 7th of November celebrations. Reportedly, he will also sign a new economic agreement with the USSR, [less than 1 line not declassified] indicates that Guevara may visit Communist China and hopes also to visit Yugoslavia and Japan. It will be of interest to see, Mr. Dulles suggested, whether a further arrangement on sugar is concluded. The possibility of a sensational Soviet offer has been reported. The Soviets do not need sugar and purchase of Cuban sugar could be a [Page 1095] very costly operation for them. The Cuban Under Secretary of Foreign Affairs has indicated that Cuba intends to recognize East Germany. A Cuban sugar magnate, Julio Lobo, who recently left Cuba after his holdings were seized by the government, has said that Guevara had stated to him that while Khrushchev may admit the possibility of coexistence between capitalism and socialism, such co-existence was not possible in Cuba.

Cuba was likely to react strongly to the new U.S. export controls. It may press charges of new U.S. aggression. What it will do was, however, difficult to guess. A few American companies which had not so far been seized—Sears Roebuck, Woolworth, and Coca Cola—may now be intervened and taken over. Castro may make a personal appearance before the UN to present the Cuban case.

After Mr. Dulles had completed his briefing, Secretary Herter described foreign reaction to the U.S. export embargo. He stated that prior to the action, U.S. missions in Latin America had been asked to get the reaction of the Foreign Offices. On the whole, the reaction had been good, in fact, suprisingly good. None of the countries considered it to be an act of external aggression and Chile was the only country that had expressed doubts. An interesting aspect of the reaction was the fact that a number of the countries did not think we had gone far enough. Mr. Herter suggested that we should work through various missions with a view to getting further inter-American action at the Quito Conference on March 1. The most unfavorable reaction had come from Canada.2 The Bank of Nova Scotia in Cuba has not been nationalized. The Canadian General Motors is thinking of supplying spare parts to Cuba. The Canadian reaction was discouraging, particularly if it meant that the Canadians would play the part of supplier to Cuba. The NATO countries, on the other hand, had already inquired about trans-shipment controls and are more likely to cooperate.

Secretary Dillon pointed out that two problems had been mixed up in the newspaper accounts of the Canadian reaction. The first was the problem of trans-shipment from the U.S. via Canada to Cuba. The second was direct sales by Canadian companies to Cuba. We had never asked the Canadians to do anything about the second of these problems although the press had raised it immediately in Canada. This was a problem about which Prime Minister Diefenbaker would do nothing. The problem of trans-shipment controls was, however, under consideration in the Canadian Cabinet. In response to a question as to why we were asking the Canadians and no one else to apply transshipment controls, we had told the Canadians that the reason was that [Page 1096] we had not previously applied destination controls to Canada. We pointed out that we were asking their cooperation in order to avoid the necessity for applying such controls. Probably in the end, Secretary Dillon observed, the Canadians would come through in some form on the trans-shipment problem.

Another thing that had stirred up the Canadians, Secretary Dillon indicated, arose out of the old problem created by the fact that many Canadian companies are controlled by U.S. parent companies. One example of this problem in the current situation involved a subsidiary of Continental Can in Canada which, upon learning that a Canadian steel company had an order for tin plate from Cuba, told the steel company that if it filled the order, it could expect no business from Continental Can for the indefinite future. We have told the Canadians that they have to realize that this action was an expression of private industry’s feeling about Cuba. We had stated that although such action was probably not wise, it would probably continue to happen. However, the Canadians were very sensitive about this problem. Mr. McCone asked Secretary Dillon whether we encouraged such action by American companies. Secretary Dillon indicated that we did. Mr. McCone suggested that since most Canadian companies were controlled by U.S. companies we ought to get them to cooperate in enforcing the export embargo.

Mr. Gray noted a newspaper story which suggested that perhaps our action on U.S. exports had come too late. This story indicated that in recent weeks the Cuban Government had bought overwhelming quantities of spare parts. He suggested that Mr. Fisk comment on this story when he made his report on the export controls. Secretary Dillon said that while we had no figures on monthly exports to Cuba for September, figures through August totally disproved this news story. In August, exports were $18 million, the lowest level they had ever reached. There had been no significant change from May through August in exports of machinery and vehicles which were running about $3 million per month. Exports of chemicals dropped from $4 million in May to $3.1 million in August. Unless there was a surge in exports in September and the first half of October, the story was not borne out by the facts. Mr. Fisk stated that he had no later figures and agreed that exports had been dropping. There was no evidence, he indicated, of a great build-up just prior to the imposition of controls. Secretary Dillon stated that it was our impression that if we had not imposed controls within two or three weeks, there would have been some important shipments to Cuba. Several American companies were holding shipments back in anticipation of some such action by the Government.

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Mr. Fisk then gave the Council a full report on the probable effects of the export controls. He pointed out that Cuban industry is primarily of U.S. design and that Cuba could not conveniently get maintenance and operations supplies to operate its industry from any other source. U.S. machinery and vehicle shipments to Cuba declined from $189 million in 1957 to $101 million in 1959 and to $28 million in the first eight months of 1960. There were a number of reasons for this decline including Cuban import and exchange controls, the reluctance of U.S. firms to advance credit, reduced orders by management because of the uncertain situation, and the reluctance of U.S. suppliers to make shipments to Cuba.

The situation now, Mr. Fisk continued, was one where a minor break-down often resulted in a costly shut-down. A number of firms have ceased operations or have greatly curtailed them for lack of maintenance, repair and operations supplies. Cuba, for example, needed $1 million in bus parts in order to put a number of buses back in operation. It needs hundreds of items for its power and light operations, the absence of which would hamper the sugar industry. The U.S. action should result in major shut-downs and have a snowball effect. Thus the shut-down of a rayon plant would affect tire production and thus would affect automotive transport. Reduced availability of automotive transport would in turn affect movement of all kinds of goods.

Mr. Fisk stated that Cuba could get supplies from the USSR or other Western powers but that since Cuba has predominantly a U.S. economy, replacement would require time-consuming efforts. Cuba was already having difficulties and these difficulties would become worse and more damaging. He noted, for example, that absence of control valves could cause plant closures. Eventually this problem could be surmounted but in the meantime vast amounts of productive capital were kept idle. Tin plate obtained from the USSR had proved unsatisfactory. A catalyst obtained from a non-U.S. source for a Cuban oil refinery was mixed with supplies obtained from the U.S. with disastrous results. Wood pulp obtained from the USSR had not worked in a Cuban rayon plant.

Mr. Fisk pointed out that exports from the U.S. to Cuba totalled $616 million in 1957; $281 million in six months of 1959; and $196 million in six months of 1960. U.S. imports from Cuba were not as important to the U.S. as Cuban imports from the U.S. were to Cuba. Seventy-eight per cent of U.S. imports were accounted for by sugar. Other imports included tobacco, fruits and vegetables, and nickel.

Mr. McCone inquired as to whether the Moa Bay and Nicaro operations had been closed down. Secretary Dillon stated that Moa Bay was shut down and we had given thirty days’ notice that we would shut down Nicaro on the 4th of November. The Nicaro plant [Page 1098] has been locally, but not publicly, intervened. Local labor has taken it over and the few Americans still there are gradually leaving. The Cubans may attempt to run the Nicaro plant and pile up the nickel. The nickel cannot be used by the Soviet Union or elsewhere. Until the thirty days are up, the plant continues to run and we are paying for its operation.

Mr. Stans inquired as to whether we had frozen Cuban credits and assets. Secretary Dillon pointed out in response that such action would require invocation of the Trading with the Enemy Act. Mr. Dulles noted that, in any event, most of the Cuban assets in the U.S. were gone. In response to a question from Mr. Gray, Secretary Herter indicated that the actions on U.S. exports had been taken under the Export Control Act and that such action, therefore, did not involve the declaration of a national emergency.

Mr. Gray observed that we could not predict the results in Cuba of our action on U.S. exports. The reaction could range upward to an effort to take Guantanamo. He noted that Mr. Dulles suggested to him the day before that Castro might cut off Cuban sugar exports to the U.S. He inquired as to the impact such action would have upon the U.S. Secretary Dillon stated that such action by Cuba would be in accordance with our own ideas. We plan to set aside Cuba’s sugar quota for the first quarter of next year. The Secretary of Agriculture had recommended the initial step in this direction to the President last week3—the removal of all controls on U.S. sugar beet production. The U.S. sugar beet growers know the purpose of this action although we have not announced our plans with respect to Cuban sugar imports.

Secretary Dillon went on to say that the Canadians had had what he could only call the presumption to tell us that one reason they were worried about the U.S. action was the fact that they had received reports from their diplomatic sources which did not agee with ours, indicating that the U.S. action would cause a serious loss of good feeling toward the U.S. in Latin America. When we had asked them about the reaction they had got in Central America, the Canadians had had to admit that they had no representative in that area.

Mr. Stans said that he looked upon this U.S. action as a major move and assumed that further moves would follow. He assumed that we were studying all economic sanctions that might be applied and that we would not stop half-way. Secretary Herter indicated that every possibility was being explored. The action on exports was clearly within our own domestic jurisdiction and could not be interpreted under the Rio Treaty as an act of aggression. If we took action which could be interpreted as going beyond the Treaty, it would make us vulnerable to action against us in the OAS. It was for this reason that [Page 1099] the Latin American reaction had been so encouraging. Secretary Dillon noted in this connection that the press release had emphasized that this action was in defense of American industry and a sovereign act of the U.S. If we invoked the Trading with the Enemy Act under a new proclamation of emergency, that would be a clearly political act. Such action would cause real problems. If we could accomplish the same result in another way as, for example, we had been able to do in the case of sugar, we would be better off. Secretary Scribner agreed that, in view of the fact that the Cubans had few assets left in this country, we would have to pay quite a price to get very small results if we were to invoke the Trading with the Enemy Act.

Mr. Stans asked if we knew whether the military support being provided by the Bloc was for internal security purposes only or also included equipment that could be used in an attack on other nations. Secretary Herter stated that the Latin American countries were worried about the possibility that Cuba was obtaining equipment for the latter purpose. In the discussion which followed, it was indicated that Cuba might be getting some tanks which could be used in an external attack. It is also possible that Cuba will have two squadrons of MIGs by the first of the year. Secretary Herter noted that there is a sensitivity in Cuba to the possibility of a fake U.S. attack on Guantanamo to justify military action by the U.S. against Cuba. Secretary Dillon pointed out that there were indications that Cuban aircraft on Cuban airfields had been recently painted with U.S. insignia. Our Ambassador was asking about these aircraft in a note4 which would state that it was well-known that there were no U.S. aircraft in Cuba and which would suggest that the Cubans might be preparing a provocative military action.

Mr. Gray asked whether the local diplomatic and military authorities had all the authority they required to effect evacuation of U.S. personnel. Secretary Herter pointed out that dependents of U.S. personnel had been told to leave Cuba. General Lemnitzer and Secretary Dillon noted that the dependents of U.S. civilian officials and U.S. military personnel had left Cuba. Secretary Herter noted that we were planning to recall our Ambassador. The situation was hopeless from the point of view of diplomatic negotiations; the OAS Committee of Six had been boycotted by Cuba. In response to a question from Secretary Scribner, Mr. Dulles stated that there were about 4000 non-official U.S. personnel in Cuba. Secretary Herter stated that all these people had been alerted but that they were staying on in Cuba if they wished to do so. A warden system had been initiated so that in the event of violence, these people could be called and could go to places from which they could be evacuated.

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The National Security Council:5

Noted and discussed recent developments with regard to the situation in Cuba on the basis of a briefing by the Director of Central Intelligence, comments by the Secretary of State and the Under Secretary of State on free world reactions to U.S. controls on exports to Cuba, and a report by Mr. Bradley Fisk, Assistant Secretary of Commerce, on the probable effects of such U.S. controls on the Cuban economy.
Noted that the Department of State is studying all forms of possible sanctions against Cuba which the United States could impose consistent with its international obligations.
Noted a report by the Secretary of State on the status of evacuation of U.S. citizens from Cuba.

[Here follows discussion of items unrelated to Cuba.]

Marion W. Boggs
  1. Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Prepared by Boggs on October 24.
  2. A memorandum of a conversation on October 18 among Dillon, Mann, and Canadian Ambassador Heeney regarding the U.S. export controls on shipments to Cuba is in Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199, October 1960.
  3. See Document 590.
  4. Not further identified.
  5. Paragraphs a–c that follow constitute NSC Action No. 2322. (Department of State, S/SNSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council)