21. Memorandum From Secretary of the Treasury Blumenthal to President Carter1
SUBJECT
- Next Steps on Normalization of U.S. Cuba Relations
At the PRC discussion of this issue on August 3, two views emerged as to how much leverage is afforded the United States by our trade embargo on Cuba.
I do not believe that our lifting the trade embargo completely, let alone relaxing it partially, would be sufficient to deflect Cuba from pursuits which it considers central to its own national interests, presumably including its involvement in Africa.
Our main lever is opening the U.S. market to Cuban products. Outside of sugar, however, exports to the United States would remain negligible for many years—especially if we did not extend most-favored-nation treatment to them, which would require Presidential certification of Cuban emigration practices. Even on sugar, our leverage in economic terms is quite modest. Access to the U.S. market would provide a slight cost advantage to the Cubans vis-a-vis competing sugar producers, but would not be terribly significant to Cuban export earnings.
On the U.S. export side, there is little if anything which Cuba can buy from the U.S. which is not readily available elsewhere in the world with perhaps a slight cost disadvantage due to transportation costs.
The political significance of both sides of the trade issue far outweighs economic effects. There is always a tendency to overestimate political leverage afforded to us by possible economic concessions. The last two administrations made this error regarding the Soviet Union and China; in both cases, efforts to achieve major political concessions in return for increased economic exchange failed almost completely. We should not overestimate the scope for action in this area.
At the same time, several lesser but important U.S. objectives can be served by an exchange of concessions if normalization with Cuba continues. As indicated in your directive of March 15, these include the combating of terrorism, and the release of political prisoners and American citizens in Cuba.2
[Page 56]In addition, partial relaxation of our trade embargo could logically and effectively be linked to a settlement of Cuba’s liabilities for expropriated U.S. property. U.S. claims now total about $2 billion, on which a settlement of at least $600 million (the usual 30%) might well be possible. Progress on this issue would also generate political support for the entire normalization process and thereby reinforce its prospects for success.
We should certainly seek to reduce Cuban involvement in Africa, using every lever available to us. If the Cubans refuse to negotiate on that issue, however, I believe that we should pursue the talks with other U.S. objectives in mind and seek to achieve the most balanced package possible.
- Source: Carter Library, National Security Council, Institutional Files, 1977–1981, Box 184, PRC 029 Cuba, 8/3/1977. Secret; Nodis. Drafted by Bergsten on August 11.↩
- See Document 9.↩
- Printed from a copy with this typed signature and a stamp that indicates that Blumenthal signed “Mike” above the typed signature.↩