Position Paper Prepared in
the Department of State[1]
CONFIDENTIAL
[WASHINGTON,]
July 15, 1952.
A RECOMMENDED POSITION IN THE EVENT THAT CUBA SHOULD REQUEST THE DEPARTMENT'S VIEW ON THE SALE OF SUGAR BEHIND THE IRON‑CURTAIN
As a result of increased plantings and favorable
weather conditions, it is anticipated that Cuba's 1952 sugar crop will be the
largest in that nation's history and that there will be a sugar surplus
possibly approaching two million Spanish long tons. The Batista administration
is extremely concerned about the effect that this surplus and subsequent
possible surpluses can have on the price of sugar and about the repercussions
that a fall in price could have on the Cuban economy. In accordance with a plan
advanced by representatives of the Cuban sugar industry, the Cuban Government
intends to take measures to restrict 1953 sugar production to five million
Spanish long tons and to dispose of the surplus remaining from the 1952 crop
over a period of five years. There is some dissatisfaction with this plan
however, on the part of certain elements in the sugar industry and labor groups
who would prefer unrestricted future production and the maintenance of the
present level of employment.
Cuban Communists have seized this opportunity to
initiate a press campaign in favor of Cuban trade with the Soviet bloc.
Stressing the point that restriction of the sugar crop would mean "hunger,
misery and ruin for labor and for the country," the Communists have
suggested that Cuba open extensive commercial relations with China, the Soviet
Union, and the "People's Democracies". Markets in these countries
have been depicted in glowing terms by the Communist press.
It is believed that few responsible Cubans will
entertain illusions about trade behind the "Iron Curtain". It appears
probable, however, that every possible outlet for Cuban sugar will be explored.
In this connection, Cuban representatives may be expected to request the views
'of the Department regarding the selling by Cuba of sugar behind the "Iron
Curtain".
What should be the position of the Department of
State in the event that Cuban representatives request its views on selling by
Cuba of sugar behind the "Iron Curtain".
Among the factors which should be brought into a
consideration of the problem are the following:
(1) It is the policy, and in the best interest, of
the United States to assist Cuba to maintain its economic and political
stability and to develop its economy and political system.
(2) A failure by Cuba to dispose of its surplus
sugar crop in an orderly manner and at normal prices could severely threaten
both the economic and political stability of Cuba.
(3) Sugar is not considered a strategic commodity at
the present time by the United States or by other nations of the free world.
United States policy does not preclude its sale, or that of other items not
included on strategic lists, to the U.S.S.R. and to the Eastern European
nations comprising the Soviet bloc. Exports to Communist China and to North Korea,
however, are not permitted by the United States and by many other members of
the United Nations.
(4) The U.S.S.R. and the Eastern European countries
of the Soviet bloc, according to available recent statistics, are in an export
position as far as sugar is concerned. Communist China has a relatively small
need for sugar imports, and its area has not furnished in the past a normal
market for Cuban sugar. It would seem therefore, that the "Iron
Curtain" countries do not constitute a market for Cuban sugar under normal
circumstances.
(5) In the light of recent Communist divisive
activity in Cuba and elsewhere, however, it would not be unlikely that a
Communist country, for purely propagandistic reasons, would make an offer to
purchase Cuban sugar. Such an offer probably would not be for a quantity of
consequence, but it could have strong propaganda effect. To achieve this, the
Communist countries might offer to make payment in dollars‑something
which the Cubans would probably require. Such payment from Communist China
and/or North Korea would almost certainly involve United States banking
facilities or Chinese credits in United States banks, either of which would be
in contravention of United States Treasury regulations.
(6) The degree of opposition which the United States
could express to Cuba's trade with Communist China is limited by the fact that
United States policy does not call for special pressure against certain Western
European countries such as Great Britain to desist in their "normal"
trade in non‑strategic commodities with Communist China.
(7) In both the UN and the OAS, Cuba has joined with
the United States and the other free nations in measures which, in the former,
recommend a strategic embargo against Communist China and North Korea and, in
the latter, express agreement to cooperate fully in the adoption of measures of
economic defense and security control. The United States would wish Cuba to
observe these commitments and, also, to follow with the other nations of the
free world as much as possible, the example of the United States in regard to
trade behind the "Iron Curtain".
(8) The United States is not in a position to offer
Cuba any substantial assistance in disposing of the sugar surplus. A Cuban
delegation came recently to Washington to discuss with United States officials
on an informal basis the situation in Cuba and to outline the measures being
taken to relieve it. The delegation requested United States assistance in the
intensification of efforts to reach a new International Sugar Agreement. It
also asked that the United States Government consider certain additional
measures collateral to the stabilization of the sugar market through an
international agreement. It appears that the Cubans will have to be given a
predominantly negative reply to the latter requests. The United States,
however, already has taken a position in favor of a revised international
agreement and will continue to support Cuba in international discussions toward
this end.
In the light of the above factors and the present
international situation, it is recommended that the Department adopt the
following position:
(1) If Cuba should request the views of the
Department of State in connection with consideration of a Cuban sale of sugar
to the Soviet Union or to the Eastern European countries within the Soviet
bloc, it is recommended that the Department point out to Cuba that the United
States does not embargo the sale of non‑strategic items such as sugar to
these countries. The Department should then indicate that a decision to sell
sugar to those countries is one for Cuba alone to make. It would be implicit in
its reply that the Department has no overriding objection to such a sale.
(2) If views are asked in connection with a possible
sale to Communist China or North Korea, it is recommended that the Department
remind Cuba that the United States prohibits all exports to that area and that,
accordingly, a Cuban sale of sugar to Communist China or to North Korea would
not be viewed with favor. This reply should be accompanied by an expression of
sympathy for the Cuban problem and of an appreciation for the Cuban inquiry and
for past cooperation in denying the benefit of free world production to that
area. If Cuba should refer to the United States attitudes regarding the trade
in nonstrategic commodities of certain Western European countries with
Communist China, it can be pointed out that Cuba, unlike those European
nations, has never developed a comparable pattern of trade with Communist
China, and it is not in a position to plead the necessity of continuing an
established trade. If Cuba, however, should indicate that the terms for the
sale would involve an exchange of sugar for some strategic commodity which
would add materially to the strength of the free world, it should be informed
that this factor would be a consideration that might outweigh objections which
would otherwise attach to the transaction.
[1]
Drafted by Cedric C. Phillip of the Office of Middle American Affairs; cleared
with the Offices of Regional American Affairs, East European Affairs, and
Chinese Affairs, the Economic Defense Staff, and the Agricultural Products
Staff. Forwarded to Deputy Assistant Secretary Mann, Director of the Office of
Regional American Affairs Cale, and Director of the Office of Middle American
Affairs Rubottom under cover of a memorandum by Mr. Phillip, dated July 29,
1952. The covering memorandum indicates that Mr. Cale and Mr. Rubottom
concurred; it also bears the following handwritten notation, initialed by Mr.
Mann: "it is a commendable thing to anticipate problems of this kind and
if the question is squarely put up to us this will make it possible to reach a
conclusion very quickly. But, lawyer‑like, I prefer to pass final
judgement when the issue is drawn."