Foreign Relations, 1977–1980, Volume XXIII, Mexico, Cuba, and the Caribbean

32. Action Memorandum From the Director of the Policy Planning Staff (Lake) and the Director of the Bureau of Politico-Military Affairs (Gelb) to Secretary of State Vance¹

Washington, May 26, 1978

Trade and Financial Embargo Against Cuba

Issue for Decision:

Whether you or the President should raise in private discussions during the NATO Summit the possibility of a Western trade and credit embargo against Cuba.²

Discussion:

Despite our strong verbal statements and the decisive and coordinated action of the U.S., French and Belgians against the Katangan gendarmes, the Cubans’ perception of our inability and/or unwillingness to counter their moves in Africa probably remains largely unchanged. Nor have our efforts to encourage members of the Non-Alignment Movement to criticize Cuba been very successful so far.³ The Cubans feel able to act with the Soviets and in support of their friends—governments as well as liberation movements—without incurring serious costs to themselves at our hands. Looking ahead, the Cubans may well expand their role in southern Africa, on the basis of this general calculus. They have, however, shown some concern about our recent reactions to their African policies, as evident in Castro’s personal assurances of Cuban non-involvement in the Shaba affair.⁴

Cuba’s behavior in Africa—and our inaction—has become a salient issue on both the foreign and domestic fronts. Internationally, important allies, such as the Saudis, are worried by the proximity of Cuban troops, and others are taking note of our failure to meet this challenge. The time might be ripe for us to ask our allies how far they would be prepared to go in taking joint action against Cuba. The NATO Summit offers us an excellent forum to do this, particularly if we find ourselves pressed to indicate what further action we intend to take against the Soviets and Cubans in Africa, by asking their views on a trade and credit embargo against Cuba.

A trade and credit embargo against Cuba by the West could significantly increase the costs to Cuba of its African policy. In 1976, 39% ($1.4 billion) of Cuba’s imports came from non-Communist countries. Since Cuba has been running a trade deficit with the West, it has had to borrow to finance additional imports, from Western commercial banks and official credit agencies. In 1975 and 1976, recorded Eurocurrency medium-term commercial borrowings were averaging about $200 million per year. Data for 1977 and 1978 is sparse, although in February a $42 million loan was extended by a Japanese consortium. Since 1973, Western governments have extended some $3 billion in official trade credits and guarantees, generally tied to national capital goods exports, of which perhaps $1 billion have been utilized. In addition, Cuba has received development assistance of about $20 million annually from the West.

If a universal trade embargo were implemented, a credit squeeze would be superfluous (trade with Comecon is on a barter or soft currency basis). However, nations that wished to ignore a trade embargo would be hampered by an absence of credit facilities.

We would link the lifting of the embargo to “substantial withdrawal” of Cuban military personnel from Africa. The pressures on the Cubans would be transferred to the Soviets quickly since Moscow would be called on to make up the economic costs of an Embargo. This could produce strains on the Soviet-Cuban relationship and certainly would increase the costs to Moscow of a more forward African policy.

The Risks

In the past, the Europeans have refused to include Cuba as a proscribed destination for the COCOM strategic embargo, even when the OAS was supporting our Cuban embargo. There has been a general feeling that the United States has been overly obsessed with Cuba. Moreover, since US trade and credits are already largely prohibited, the Europeans might feel that our suggestion was designed to get them to bear the full cost of the embargo, and to avoid more direct US efforts to deal with the Soviet/Cuban problems. The economic costs would be substantial for some countries; for example, in 1976, Canada sold $279 million to Cuba, Spain $221 million, Japan $213 million, France, Germany and the UK about $100 million each. In addition, existing Western bank exposure, at over $1.3 billion, could be jeopardized should Cuba feel that political motives were being introduced into commercial relationships.

Less costly to the Europeans—but still of importance for Cuba—would be a halt to official government trade credits and insurance for commercial trade credits. In addition, several Western governments have expressed intentions to review closely their aid programs, and Trudeau has decided not to renew a $10 million line of credit and $4.5 million in technical assistance.

The Europeans might balk also at an embargo against Cuba because of the precedent effect it could have for future OPEC consideration of another oil embargo. They may also argue that while it is important to halt the Cubans, it would be seriously damaging to the West’s “free trade” objectives at this time for the Europeans to impose a politically motivated trade embargo against another country. Finally, they would probably ask whether Japan or Spain, which are Cuba’s principal Western trading partners, would join in. (Our estimate is that Japan might but Spain might not participate in such an embargo.)

An embargo against Cuba could also have political costs for us. The cold war mentality it would recall could affect public attitudes toward other dimensions of East-West relations on which we seek progress—notably, SALT. It is also possible, however, that this move would increase public confidence in the Administration’s firmness, which could translate into reduced misgivings about our policies in areas of East-West cooperation—again, most notably, SALT. We may also encounter pressures from some African states to explain why we are willing to embargo Cuba but not South Africa, and we could come under heavy criticism for dealing with a problem in Africa, i.e., Cuban military involvement, by actions outside Africa which are basically keyed to East-West competition. Many African states do not consider Cuban assistance illegitimate when requested to defend territorial integrity. The non-aligned countries may rally to Cuba’s defense, even those which disapprove of Cuban policy, in order both to illustrate their solidarity with a member country under western pressure and because each may fear it could be vulnerable to similar pressure in the future. And, of course, instead of moderating Cuban behavior, a Western economic embargo would push the Cubans into greater dependence on the Soviets and possibly make Cuban behavior even more reckless, including in this hemisphere. Nor is it likely to bring about a major change in their present African policy.

On balance, however, we believe that the Europeans should be asked whether they are prepared to pay some of the costs of bringing real pressure to bear on the Cubans. An embargo is the only way to show Cuba quickly that the price of interventionism is economic deprivation and political isolation, at least within the West. We also believe that since many of our allies have repeatedly expressed dissatisfaction with our “inaction” we should not hesitate to ask for their cooperation. Broad western participation would, however, be indispensable to impose such measures.

If it were disclosed this subject had been discussed, the results would be mixed. It could jeopardize any chance of European cooperation and make it easier for those European Governments reluctant to chance an embargo to shy away. This could reenforce an image of US-NATO inability to deal with the Cuban problem, focus attention on allied disunity, and potentially exacerbate our alliance relationships. At the same time, it would underscore for others, including Saudi Arabia and Iran, and for the American public that we were seriously looking for ways to constrain the Cubans.

Because of the adverse foreign policy consequences of a premature “leak” we believe it is particularly important to limit exploration of this idea to careful discussion in private, either by the President or yourself next week, perhaps initially at the Quadripartite Dinner Monday night. The context should be a European query to us as to what we might do rather than a clear US initiative to the Europeans.

S/P, PM, and EB believe a careful feeling out of European views is useful even if the likely results are negative, if only to underscore for the Europeans the dilemma of finding appropriate ways in which to deal with Cuba. EUR has no objection to such approaches but is uncertain about the results. ARA does not believe we can get wide support for a trade embargo and believes raising the issue could be counterproductive. ARA does not object to raising the credit issue but believes even if all western countries cut off new credits, Cuban policy would not be significantly affected. AF is opposed to an approach and to an Embargo which it believes would seriously compromise our African policies.

Recommendation:

That you sign the attached memorandum to the President suggesting that he raise the embargo issue at the NATO Summit.⁵

1. Source: National Archives, RG 59, Anthony Lake Working Papers, Lot 82D298, Box 17, TL Sensitive 4/1–6/30/78. Secret; Sensitive; Nodis. Cleared by Katz, Moose, Bushnell, and Vest.
2. The NATO Summit was held from May 30 to May 31 in Washington. Telegram 138250 to USNATO, May 31, summarized the summit discussions and did not mention Cuba as a major issue. (National Archives, RG 59, Central Foreign Policy File, D780228–0365)
3. See footnote 2, Document 29.
4. Lane was called to Castro’s office on May 17 so Castro could send a message “urgently and in strict confidence to Secretary Vance and President Carter” denying Cuban involvement in Shaba. (Telegram 1300 from Havana, May 18; National Archives, RG 59, Central Foreign Policy File, D780208–1126)
5. The memorandum is attached but not printed. Vance checked the disapprove option. Tarnoff clarified Vance’s decision with the following comment, “Question of a trade/credit embargo against Cuba should be studied in the PRM–36 exercise and not be raised with foreign governments before decisions are made in the context of PRM–36.” PRM/NSC–36, “Soviet/Cuban Presence in Africa,” May 23, directed a PRC review of U.S. policy aimed at limiting Soviet/Cuban activity in Africa.