711.37/12–948

Memorandum of Conversation, by the Acting Secretary of State

confidential
Participants: The Acting Secretary
Cuban Minister of State—Señor Carlos Hevia
Ambassador Belt—Cuba
Mr. Walker—CRB

The Cuban Minister of State, Señor Carlos Hevia, called on me this afternoon to discuss a number of matters regarding United States-Cuban relations. He said that President Prío’s forefathers had fought in the Cuban struggle for independence and that because of this background, the President had an attitude of sincere friendliness toward the United States. In this connection, he mentioned that some Cuban officials friendly to the United States were reluctant to demonstrate their friendship because to do so might be considered politically unpopular in Cuba, but that President Prío was not afraid to show his sincere friendship for the United States.

The Minister referred to conversations last evening between President Truman and President Prío, and said that these discussions were carried out in a frank, sincere and friendly atmosphere. He explained that he wished to discuss with me various matters in the same atmosphere. I told him that the President had informed me this morning of his conversations with President Prío last evening and that I had looked forward to the opportunity of conferring with the Minister. I remarked that it was a real pleasure to be able to converse in such a frank and sincere manner.

The Minister stated that stabilizing the sugar industry was the most important objective of his Government. From year to year, he pointed out, it is not known how much sugar will be marketed, and, therefore, no long range planning can be made. He referred to the fact that sugar production is carried on for only four months each year, but that labor is paid for the twelve-month period. This system, he explained, results in high cost production, and the Cuban Government would like to develop other industries to supplement the sugar industry and to absorb idle labor during the so-called dead season. He specifically mentioned the development of Cuba’s mineral resources such as iron and oil and the diversification of agriculture. Such a program, he said, cannot, of course, be carried out without economic and technical assistance from the United States. He also mentioned the desire of his Government to carry out a public works program designed to improve sanitary [Page 574] conditions by the construction of more modern aqueducts and sewage systems.

The Minister referred to the tariff preference on sugar which Cuba has historically enjoyed and emphasized the importance of this preference to Cuba.

He referred to the effort being made by President Prío to curb inflation and to reduce the cost of living. He went on to say that Cuba obtains many of its basic food commodities such as lard, oils, rice and flour from the United States and that his Government hopes that it will be possible for the United States to supply those commodities in greater quantity in order to assist in lowering the cost of living.

I informed the Minister that this Government was most appreciative of the role played by Cuba during the war in maximizing sugar production. I mentioned that the Cuban sugar industry had benefited from the purchase this year by the Commodity Credit Corporation of 1,238,000 tons of sugar and the ECA financing of European purchases which approximated $35,000,000. I expressed the opinion that in all probability the over-all sugar situation would be approximately the same next year. With regard to stabilizing sugar, I said that this would seem to be extremely difficult to achieve because price is determined by supply and demand, and because some countries having lower cost of living are able to produce at a much lower cost than countries which have higher wages and living standards. I remarked that in connection with the market in the United States we always had to take into account the domestic sugar industry, as well as the producers in Hawaii and Puerto Rico. I expressed the hope that the Minister would understand our position in this regard.

With regard to increasing the supply of foodstuffs and other commodities, I told the Minister that there was reason to believe that the production of fats and oils, including lard, and fertilizers will be larger next year and that barring some unforeseen conditions, Cuba should be able to procure larger quantities. I also stated that while agricultural implements were still in short supply, there were indications that the supply situation will be much better next year. I said that I thought the supply situation with respect to rice and flour had already improved considerably. The Minister agreed that this was true and at the present time there was no shortage whatever of these two commodities in Cuba.

I informed the Minister that this Government would be pleased to further the economic cooperation between the two countries and to render technical assistance. I then informed him that we had some problems which we would like to have cleared up and that it did not seem that they would be too difficult to resolve. I referred to some [Page 575] difficulties being experienced by American business interests in Cuba and to the efforts that were made over a period of years to conclude with Cuba a Treaty of Friendship, Commerce and Navigation. I explained that there was always some risk involved in any capital investment, but that a certain amount of security is expected. I then expressed the opinion that the creation of a more favorable atmosphere for capital investments might tend to stimulate further investment in Cuba which would result in the development of new industries. I also brought to his attention the long pending claims of American nationals against the Cuban Government.

The Minister said that he was aware of the problems confronting American business interests and that he had recently discussed this situation with several officials of the United States Chamber of Commerce in Cuba. He seemed to feel that none of these problems would be difficult to resolve and suggested that perhaps some over-all treaty or alliance could be concluded between the two countries. He said, however, that a Treaty of Friendship, Commerce and Navigation as such would be politically impossible because it has been the subject of so much unfavorable publicity during the past ten years, but thought that an agreement with another name would accomplish the same objective so far as the United States was concerned. I told the Minister that I foresaw no difficulty at all in finding a name which would be more palatable.

The Minister referred to the claims issue and said that it was the intention of his Government to settle these claims. He said that President Prío in his first message to Congress had requested the establishment of a Tribunal of Accounts to liquidate all existing claims. He pointed out, however, that the financial position of the Cuban Government was not good at this time and explained that when President Prío took over the presidency in October there were no funds at all in the treasury. He expressed the hope that the Government’s fiscal position would improve materially next year.

The Minister said that he considered Cuba to be the southern boundary of the United States and that consideration should be given to an alliance between the two countries. I explained to the Minister that we have a mutual defense pact as the result of the Rio Treaty and that I did not believe an alliance would be possible. I also explained that the proposed North Atlantic Pact, which is patterned after the Rio Treaty, is designed to strengthen the Brussels Pact countries and as such to reduce the possibility of a world conflict.

The Minister said that he had merely mentioned the name alliance, but he thought any other name would do just as well. He pointed out that as a result of his experience in the Cuban Government during the [Page 576] war with various war projects conducted in Cuba by the United States he believes that it is highly desirable that some over-all understanding be reached between the two countries so that Cuba will know exactly what its responsibilities will be in the event of war. He explained that had there been such an agreement before the last war, many problems of cooperation and coordination between the two countries would not have arisen. I suggested that it might be well to undertake some exploratory talks to determine whether some understanding might be feasible and also to determine what end product we had in mind. I stressed the importance of ascertaining what the end product should be before deciding upon what kind of factory should be built. The Minister agreed that this was a good suggestion and that if he had some definitive views in the matter, he would make them known to us.

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