837.51 Cooperation Program/65
The Ambassador in Cuba ( Messersmith ) to the Secretary of State
[Received April 5.]
Sir: I have the honor to acknowledge the receipt of the Department’s strictly confidential instruction No. 563 of March 25, 1941, and have noted carefully the directives given therein for my guidance in further conversations with the Cuban Government in the matter of financial and economic cooperation. I am in agreement with the Department that the time has arrived when these conversations may be renewed on a definite basis.
With respect to the Habana waterworks, the Department transmits a letter from the Deputy Federal Loan Administrator to the Mayor of Habana on the subject of a credit for the Habana waterworks project, and I am instructed to deliver this letter to the Minister of State, for transmission to the Mayor of Habana, as soon as an agreement upon the settlement of the Morris Claim is reached. I shall, therefore, not deliver this letter to the Minister of State for the present, and not until there is information with regard to adequate progress on the settlement of the Morris Claim.
As I interpret the Department’s instruction, our Government is prepared, provided agreement can be reached with the Cuban Government on the general categories under the global commitment, to recommend to the Federal Loan Agency public announcement of a commitment of $30,000,000, and that the Department would, of course, expect inclusion within this amount of the cost of the rehabilitation of the Habana waterworks. I note that the Export-Import Bank will require the Cuban Government’s guarantee of the credit to the Municipality for the waterworks rehabilitation. It is further my understanding that a preliminary condition to this action by the Department [Page 144] would be an agreement upon the settlement of the Morris Claim, as it is believed by our Government that in other respects adequate progress has been made in the matters which I brought to the attention of the President of Cuba and the Minister of State in accord with the Department’s instruction No. 421 of January 11, 1941.
With specific reference to the Morris Claim, I have reported to the Department that I have on several occasions discussed this with the President and the Minister of State, and both of them have indicated their full agreement that this matter should be settled without delay. The Minister of State informed me the other day that while the Cuban Ambassador, Dr. Concheso, was here, he would instruct him immediately on his return to Washington to take up the Morris Claim with the claimants or their representatives in order to arrive at a settlement. During his brief stay here, the Cuban Ambassador came in to see me and informed me that the President and the Minister of State had instructed him to take up this matter of the settlement of the Morris Claim immediately on his return to Washington and to bring it to a satisfactory conclusion.
The Department is aware that I have in an informal manner during the past few months been in constant contact with the Minister of State on these matters of financial and economic cooperation. He has on several occasions recently informed me that he is preparing a memorandum for submission to our Government, through this Embassy, covering the various points in the program. There have been many matters of a purely internal, but pressing, character which have required the immediate attention of the Minister of State, in spite of the importance and pressing nature of the financial and economic assistance which Cuba needs. I think this delay in the delivery of this communication by the Minister of State must be attributed to the unusual pressure under which he has been working. He informed me on several occasions during the last week that he was working on this memorandum and hoped any day to discuss it with me prior to putting it into final form.
In view of the foregoing, I have not raised with the Minister of State the concrete questions set forth in the Department’s instruction No. 563 of March 25, 1941. I believe that I can more effectively do so when he renews these conversations. I shall, when we take up this matter together, secure the information desired under points 2, 3 and 4 in the Department’s instruction No. 563.
There is one point on which I would desire to make the following comment at this time. The Department states that it is prepared to recommend to the Federal Loan Agency public announcement of a commitment of $30,000,000, which would include the cost of the rehabilitation of the Habana waterworks. As the cost of the waterworks [Page 145] project is estimated variously as from $8,000,000 to $12,000,000, and as the cost would undoubtedly be nearer the latter figure, this would leave only $18,000,000 for agricultural diversification and public works projects in which the Government of Cuba is primarily interested. If the Government should desire the budget loan in the amount of $4,000,000, this would reduce the amount available for agricultural diversification and public works to $14,000,000. This, I believe, would be a source of considerable disappointment to the Cuban Government and to the Cuban public, and I would strongly recommend to the Department its consideration of making a recommendation to the Export-Import Bank of a global commitment of $30,000,000, exclusive of the amount needed for the rehabilitation of the Habana waterworks. The Cuban Government has consistently, in its conversations with me, taken the attitude that it desires the Habana waterworks project to be considered as a separate one. It is noted that the Bank will require the guarantee of the Cuban Government of any credit to the Municipality for this project. This is a guarantee which the Cuban Government, I believe, would prefer not to give in view of the autonomy of the Municipality, but I have always considered that the Bank would, in any arrangement with the Municipality, insist upon the guarantee of the Cuban Government of the credit, and I believe this to be a quite proper requirement of the Bank. This, of course, will require legislation by the Cuban Congress. On the other hand, there is some basis for the attitude of the Cuban Government that the credit for the waterworks project should be considered separately and apart from the global credits which may be announced to the Cuban Government for agricultural diversification, public works, etc. Whatever arrangement the Bank reaches with the Municipality with regard to the waterworks project, it will undoubtedly be on a purely commercial basis with very definite requirements such as any private bank would require for amortization of principal and payment of interest.
If the approximately $12,000,000, which is needed for the Habana waterworks, is included in the global commitment of $30,000,000, it will, I believe, cause considerable concern to the Cuban Government and the loan will not have the effect on public confidence which it is desired by both Governments it should have.
There is the further consideration that the specific commitments and expenditures thereunder, under any credit which we may give to the Cuban Government, will be for important projects to be agreed upon between the two Governments. Although some basic study has been made of these projects, and active steps could be taken with regard to some of them without delay, in the case of others further study would be necessary. Whatever global commitments we may [Page 146] therefore make in the way of a credit to the Cuban Government, the actual expenditures thereunder would be made only very gradually. This, I believe, should be considered by our Government and the Bank in the consideration of the amount of the global commitment.
I therefore respectfully urge the Department to consider the advisability of recommending to the Bank the global commitment of $30,000,000 exclusive of the amount which the Bank may be willing to advance for the Habana waterworks project. This action by our Government, I believe, is necessary in order to give the adequate effect to the loan which we wish it to have and which the Cuban Government has consistently pointed out is essential to it. It is obvious that only a part of such global commitment could be immediately used, but the effect would be to strengthen our position here and to strengthen the position of the Cuban Government and to give to the Cuban economy the confidence and impulse which it so definitely needs. It is my hope, therefore, that when we take this important step in our relationships with Cuba, which are progressing so satisfactorily, that we may do so in an adequate and fully effective form in order to reach the ends desired by both Governments. The record of the past few months shows, I believe, conclusively the real desire of the Cuban Government to clean its house as rapidly and as completely as possible, and to cooperate with us fully in other respects, including that of defense.
I will particularly appreciate the Department’s immediate consideration of the foregoing recommendation and any observations or instructions which it may be able to give me for my further guidance.
With respect to the specific points on which the Department has requested further information, I shall write as soon as I have been able to discuss these matters with the Minister of State.
Respectfully yours,