335. Telegram 674 From the Embassy in the Dominican Republic to the Department of State1

674. Subject: Operation “Exorcist.” Ref: Santo Domingo 543.

1. Reftel reported the beginnings of debate and other organized activity in the Dominican Republic for the purpose of eventually delineating the respective roles of the domestic and foreign private investment sectors. As reported, the catalyst of this activity has been local uneasiness over Gulf & Western Americas (GWA) expansion into areas that appeared to threaten domestic capital interests. Their principal source of concern has been a finance company, Cofinasa, organized and fifty percent owned by GWA which has been making loans in the Dominican private sector. Attributing diabolical motives to GWA’s interest in Cofinasa, local capital interests started meeting privately to form a group to counter the GWA apparent threat to their futures and ended up by making an offer to buy out GWA’s interest in Cofinasa. Such was the state of common anxiety that the Brugals and Bermudezes, long-standing rival rum producers, sat in the same meeting for the first time in memory. Deeply suspicious of the motives of the local capital group, GWA for its part started arraying its forces to counter the group. GWA believed that Alejandro Grullon, who had once tried to purchase GWA’s holings at La Romana in a manner GW chairman Bluhdorn found offensive, was the satan behind the Dominican groups desire to purchase Cofinasa. The issue between GWA and Dominican capital rapidly deteriorated in a classic of demonology: each attributing to the other the most malevolent of motives and becoming increasingly persuaded that its respective back was against the wall.

2. During the past several weeks, the Ambassador has been lunching separately with representatives of each of the two parties, serving as a bridge of communication between them. Fortunately, just as his digestive tract was about to rebel, he succeeded in arranging a joint luncheon between the two. Predictably, the two groups quickly ascertained that each had erroneously impugned the motives of the [Page 890] other and that they had more in common than otherwise. A basis for further direct communication between them has been established and the devils seem to have decamped.

3. Comment: We believe that our responsibility for preserving and promoting American private investment here is better served over the long run if the Dominican and U.S. private sectors focus upon the interests that unite rather than divide them. We hope that whatever new rules of the investment game emerge here, they will have been the result of close coordination and communication between the two groups. Accordingly, we have been quietly nudging the American Chamber of Commerce in this direction.

Hurwitch
  1. Summary: The Embassy reported on its role in bringing together Dominican and American businessmen at a time when it appeared that the Dominican business community was becoming suspicious of the growing involvement of the Gulf and Western Americas Corporation in the country’s economy.

    Source: National Archives, RG 59, Central Foreign Policy File, [no film number]. Confidential. In telegram 543 from Santo Domingo, February 6, the Embassy noted that the Dominican Republic’s Association of Businessmen had established a commission to consider the appropriate role for foreign investors in the country, adding that the expanding economic activities of Gulf and Western were understood to be among the businessmen’s primary concerns. (Ibid., [no film number])