Mr. Betancourt telephoned today to say that he had passed on to the Castro Movement Mr. Leonhardy's concern [2] over the 26th of July Movement's attempts to collect "taxes" from American Companies operating in eastern Cuba and the Movement's recent activities of sabotage and killings in that area. He said Mr. Leonhardy had mentioned the possibility of increased restrictions on Cuban exiles in the United States and of possible resumption of arms shipments to the Batista Government, etc. He said he had been told to inquire whether Mr. Leonhardy was expressing the official position of the Department or was "speculating" on possibilities.

I replied that I was not present during Mr. Leonhardy's conversation with him but that I assumed that Mr. Leonhardy was doing the same thing that I would have done and that is simply in a frank informal conversation to admit to him the increasing concern felt generally by persons following Cuban developments over the recent attitude and acts of the 26th of July Movement. I said that the result was increasing pressures from many quarters for protection of U.S. interests against these unwarranted rebel activities. I commented that such activities are not calculated to increase the confidence in the leadership of the 26th of July Movement.

He attempted to justify the 26th of July project by explaining that the Batista Government was not exercising any real control in eastern Cuba and the rebel movement simply had taken it over and was levying taxes for the revolutionists as the real authority in that part of the country. I replied that no matter how he attempted to define it, the acts boiled down simply to extort money from American business firms under threat.

He commented that the rebels in Oriente do not look on things of this kind with the same broad knowledge of repercussions abroad as do others who are not facing the same dangers. I answered that I realized this but understood that that was why they utilized the services of representatives in foreign countries including the United States who were supposed to keep the 26th of July Movement informed of such repercussions. I said the question is whether such representatives keep the rebel movement properly advised and if so, whether the rebel movement intends to utilize the services of its representatives. He mentioned that after all the Batista Government is now attempting to increase taxes on sugar and the rebels have a similar right in the area under their control. I asked if this meant that the 26th of July Movement was trying to imitate the Batista Government.

He then began speculating on what would be our attitude if the rebels proclaimed a provisional government in eastern Cuba. I replied that I would not discuss this point but must adhere to the present fact that the 26th of July Movement is attempting to extort money and other things from American companies which the movement both threatens and sabotages and I felt constrained to tell him that if this tendency continued, I did not know how heavy the pressures would be brought to bear on the United States Government nor could I predict the consequences. I told him I thought it very ill-advised of the rebel movement to attempt to use threats and extortions against American companies in Cuba who are attempting to give jobs to Cubans and at the same time to avoid any involvement in Cuban politics. I reminded him of the statement recently issued by the American Embassy[3] and which had the full authorization and concurrence by the Department of State. I pointed out that it made it clear that the United States Government disapproves of contributions to any political faction whether pro or anti-government and recalled in this connection that the representatives of the Cuban revolutionary group had only recently complained to me[4] that the Batista Government had been pressuring American companies to contribute to pro-Government political parties in Cuba. I pointed out to him that the Embassy's statement made clear that the United States Government disapproves of any such attempts at forced contributions to any political movement, but wants the company to follow a policy of complete impartiality.

Mr. Betancourt said that he would transmit these comments to the 26th of July Movement.

NOTES:

1. Source: Department of State, Central Files, 737.00/10-858. Confidential. Drafted by Wieland.

2. See Document 130.

3. See Documents 138 and 143.

4. This conversation has not been further identified.