The Ambassador in Cuba (Beaulac) to the Department of State

CONFIDENTIAL

No. 99

Subject: Quarterly Report on Operation and Status of Programs Under the Mutual Security Act of 1951.

HABANA [sic], July 14, 1953.

( Drafted by Ambassador Beaulac )

Economic and Political Conditions.

The Cuban Government which took office through force on March 10, 1952 has maintained order but has failed to win substantial political support. Outside of President Batista's own party, which is not one of the most important political groups, and outside the armed services, the Government has little organized support. The opposition, moreover, has made some progress toward uniting its forces. A continuous war of nerves is being carried on against the Government and predictions of rebellion and disorders are freely made.

The political difficulties of the Batista regime have been increased by a sharp decline in Cuba's economy due to a world sugar surplus which developed shortly after the Government came into office. The Government has been obliged to discharge a large number of employees, to decree reductions in salaries of all remaining employees, and otherwise to effect budget economies. Despite these adjustments, it will probably be impossible for the Government to balance its budget during the present year.

The Batista Government is friendly and cooperative toward the United States and the military services are cooperative, with the limitation that in existing circumstances their principal interest and effort is to maintain and if possible improve the Government's domestic political position and their own political position.

Point Four.

Cuba's economic development has been retarded principally by corrupt and demagogic government and by nationalistic and restrictive laws and practices which discourage foreign and domestic private capital from making the contribution they otherwise might be willing to make.

In the circumstances, our Point IV program in Cuba has been small and has been directed at objectives of immediate as well as long-range importance to the United States as well as to Cuba.

The most important project is the Cooperative Fiber project, which is aimed at the development of the kenaf industry.

Spurred by war conditions which threatened the supply of bagging material from the Far East, a cooperative fiber program between the United States Department of Agriculture and the Cuban Ministry of Agriculture was launched in 1943. In 1951 it was made a cooperative Point IV project. Technical direction continued under the United States Department of Agriculture. During the period of the project's existence kenaf varieties have been developed, adaptable to Cuban conditions, which have a high percent of good quality fiber. They are also comparatively resistant to disease. Decorticating methods and machinery have been developed and under test have demonstrated the feasibility of mechanizing the extraction of kenaf fiber.

On the basis of the above developments and encouraged by a fiber purchase program of the United States Government, private industry invested heavily in decorticating installations during 1952. The United States Government has now abruptly discontinued its fiber purchase program, and the prospect is that much of the private capital invested will be lost.

The cooperative kenaf program is given great importance by the Ministry of Agriculture. The Cuban Government recognizes the value of a local source of bagging fiber, as Cuba's needs alone approximate 110,000,000 pounds annually, which would require 110,000 acres to grow the fiber and the labor of 10,000 workers for a period of three months annually.

The three months during which workers would be employed in the kenaf industry occur during the sugar industry's "dead season", and the kenaf industry would therefore help very importantly to overcome the serious seasonal unemployment in the sugar industry.

Upon the request of the Cuban Government, the Cooperative Fiber Program (not the fiber purchase program), was recently extended under agreement for a period of two years (June 23, 1953 through June 30, 1955 ). This will provide for continuation of technical assistance.

On June 29, 1953, two additional agreements which incorporated extending technical aid to Cuba were implemented through the completion of an exchange of notes.[1] Under these agreements we will furnish mining engineers and geologists for the purpose of the location and development of minerals that are in short supply in the United States.

Modest grant aid continues to be given to the Cuban Air Force and Navy. The Air Force, which appears to be particularly favored by the Cuban Government in the way of funds, has made commendable utilization of the aid given. The amount of cooperation which the Navy is prepared to give is not so clear. The difficulty there appears to be a shortage of funds and the circumstance that under existing political conditions naval vessels tend to be retained in ports for domestic political reasons. Likewise, improvement in Navy organization is made difficult or impossible because of mutual suspicions within the Navy due to political and other circumstances.

Because of the unsatisfactory political situation, our military aid continues to be modest and to be extended in the most discreet manner possible. Our armed services are enjoined to give the least possible publicity to the aid they are giving the Cuban armed services. Such things as the exchange of decorations among military officers of the two governments, and other public demonstrations of solidarity between the armed forces of the two countries which are capable of giving Cubans the impression that the armed forces of the United States sympathize with the existing intervention of the Cuban military in the politics of the country, should be enjoined.

Because of the sharp decline in Cuba's economy and because Cuba is faced with a budgetary deficit, it is especially important that the United States should not ask the Cuban Government to make any expenditures which are not absolutely necessary. In particular, no unnecessary expenditures for the administration of the Mutual Assistance Security Act [2] should be indulged in and no personnel not needed for the administration of the Act should be assigned here by MSA. The present system under which the Chief of the Air Force Mission is Acting Chief of MAAG, and the Chief of the Naval Mission is Chief of the Naval Section of MAAG, is entirely satisfactory and should be continued in the interest of economy and of efficiency.

WILLARD L. BEAULAC

NOTES:

[1]The referenced notes, dated Mar. 31, June 27 and 29, 1953, entered into force on the latter date, were transmitted to the Department of State under cover of despatch Totec 32, dated July 6, 1953, not printed (837.00 TA/7-653).

[2]Apparent reference to the Mutual Security Act of 1951.