Havana, December 2, 1958 - 6 p.m.

570. Today at meeting members of my consultative group from local American community (see despatch 880, April 28 [2]) question of US policy toward Cuba came up for discussion.

Consensus of views expressed by American businessmen follows:

1. Cuban situation deteriorating very rapidly. Unless strongly supported by US, Batista cannot last until February 24, and maybe not beyond January 1. Even with such support, it doubtful he could hold out to end of his term.

2. Castro movement is Communist-inspired and dominated. (Unanimous agreement but no new evidence produced; Potts said a recent 26 July Movement statement extraordinarily similar to statement issued by Arbenz government in Guatemala, where Potts was

ESSO manager at the time.)

3. Triumph of Castro movement will be followed by bloodshed that will dwarf bloody aftermath of Machado's overthrow. US, in own interests and those of Cubans in general, who look to US for help, should not stand by silently and let this occur.

4. Since inconceivable that US assist Castro and since probably too late to help Batista, US should promote and give full and actual support including arms to a military civilian junta. Group generally felt junta would be more likely to enlist wide popular support and would weaken Castro, if it incuded some of best elements of present GOC, of political opposition, and of civic groups now supporting Castro. Batista should have no role in government.

Present at meeting were:

Scott Thompson, President, Portland Cement Company, Habana.

Richard Colligan, Vice President, Moa Bay Mining Company.

William Caswell, Vice President First National Bank of Boston.

G.W Potts, ESSO Standard Oil.

J.N. French, Cuban-American Metals Distributors, Inc.

Alvin Kline, President, Viveres, SA

Other members of group were out of town.

While Embassy does not necessarily concur in all these views, and in particular, believes still too soon be sure about point 1, it believes these views of responsible American businessmen should be taken into account. It also believes US should not be silent spectator but should if possible infuence events toward peaceful solution that would also keep Communist influence from developing.

Without entirely rejecting promotion of military junta as possible solution, Embassy considers this course dangerous (exposes US to serious charges of intervention), uncertain of success (how persuade Batista or other top military leaders not included in junta to accept), non-peaceful (Castro group would still have to be dealt with), and unconstitutional (disregards results of elections). Embassy accordingly proposes following as preferable alternative, to be put into effect when we are surer about point 1 above:

1. Batista to be persuaded to turn over Presidency to Rivero Aguero soonest.

2. US to give full support to Rivero Aguero upon our being satisfied he has support of military and upon his announcement of conciliatory program including:

(A) Formation of national union government embracing

respected elements from political and civic opposition.

(B) Calling Constituent Assembly.

(C) Shortening of his own mandate by calling for general

elections within two years.

(D) Restoration of constitutional guarantees as soon as feasible.

It is my opinion if US strictly adheres to non-intervention policy, Communists will be the only ones to profit from resulting chaos and US may have to intervene later for humanitarian reasons. [2]

Smith

NOTES:

1. Source: Department of State, Central Files, 737.00/12-258. Secret; Priority.

2. In despatch 880, Smith announced that that he was setting up a consultative group of local American businessmen and listed its members. (Ibid., 437.1172/4-2858)

3. In telegram 571 from Havana, December 3, Smith said that the Business Advisory Group felt strongly that he should go to Washington to present its views. Smith discouraged this because it was so soon after his trip to the United States in mid-November. He asked Rubottom, however, because of the urgency and importance of the situation, to bring telegram 570 to the attention of Secretary Dulles and Under Seceretary Herter. (Ibid., 737.00/12-358)