Foreign Relations of the United States, 1948, The Western Hemisphere, Volume IX

711.37/12–1048

Memorandum of Conversation, by the Acting Chief of the Division of Caribbean Affairs (Walker)

confidential

Washington , December 10, 1948.

Participants:	Señor Carlos Hevia—Cuban Minister of State
	Mr. Daniels—Director, ARA
	Mr. Walker-CRB

Mr. Daniels and Mr. Walker called at the Cuban Embassy today to confer with Señor Carlos Hevia, Cuban Minister of State, on a number of matters concerning United States-Cuban relations.

The Minister said that one of the most important objectives of President Prío is to further the economic development of Cuba and that to do so Cuba will require economic and technical aid from the United States. He said that Cuba must have new industries to supplement the sugar industry and also an agricultural diversification program.

The Cuban Government, he stated, desires to stimulate the development of Cuba’s mineral resources such as iron, oil, manganese, nickel and copper. He mentioned that the Government plans a public works program for the improvement of highways, particularly small rural roads, aqueducts, and sewage systems. Such a program, he said, would require that the Cuban Government seek a loan.

Mr. Daniels remarked that the Cuban Government could hardly expect to attract foreign capital until a favorable atmosphere is created for investments. He said that because of the treatment accorded American interests in Cuba, he was not in a position to encourage capital investments in Cuba. He then referred to some of the problems facing American business interests, such as the virtual ban on discharging employees regardless of the justification that might exist for their dismissal and also the restrictions governing the employment of aliens.

The Minister said that he was aware of those problems and that he was sure that some convention or treaty could be concluded which would resolve them and afford proper protection to foreign investments. He said, however, that it will be necessary to find a name for the convention which would be more palatable than the proposed Treaty of Friendship, Commerce and Navigation. Mr. Daniels agreed that this certainly would be advisable and suggested that we might call it an economic development convention.¹ The Minister concurred that this would be a far more appropriate name.

Mr. Daniels explained that it might be well to consider an over-all economic development program which would cover not only the convention itself, but a number of other items of interest to both countries. Such a program, he explained, could be prepared with a view to according many economic advantages to both countries. He said that he was aware of the fact that any sort of commercial convention might be the subject of considerable political opposition unless the Cuban Government were in a position to show that the convention was merely a part of an over-all program offering many inducements. The Minister said that he thought President Prío could get a convention ratified by the Congress, but that an over-all program such as suggested by Mr. Daniels would be more preferable.

Mr. Daniels said that there were many ways in which this Government could offer effective economic and technical assistance to Cuba and proceeded to outline these. He pointed out, however, that he was merely thinking aloud and trying to find a satisfactory basis for negotiating an over-all program, but he did not know whether these ideas would meet with the approval of his Government. The Minister said that he understood Mr. Daniels’ position in this regard and that he himself had been giving some thought to a draft which might be used as a basis for further discussions. In fact, he said that such a draft might be finished before he left Washington, but he pointed out that it would be very informal and unofficial.

Some items which Mr. Daniels suggested might be embodied in an over-all economic and technical program were as follows:

1. Economic Development Agreement which would contain principal points provided for in the draft treaty of Friendship, Commerce and Navigation. Mr. Daniels took occasion to point out in this connection that one of the important clauses of such a convention would relate to the employment of American citizens and that it would probably be necessary for the Cuban Government to amend some of its unwise legislation. The Minister expressed the thought that this could be worked out without too much trouble.

2. A statement outlining this Government’s policy with regard to Cuban sugar. Mr. Daniels thought it most unlikely that such a statement could be made owing to the fact that sugar quota matters fall within the province of the legislative branch of this Government, but he thought that some consideration might be given to it as a remote possibility.

3. Technical assistance to be rendered by this Government through the loan of agricultural specialists, geologists, experts on fisheries, and possibly other persons qualified in specialized fields.

4. The granting of an Export-Import Bank loan for certain projects (which, of course, will be presented for consideration and agreed upon before any decision is reached).

5. A statement that the United States and Cuba will make a study of taxation matters with a view to concluding a tax treaty.

6. This Government, possibly through the Department of Commerce, will endeavor to stimulate interest on the part of private entities to assist in the economic and industrial development of Cuba.

7. A statement by this Government that it will take a sympathetic interest in any loan application submitted by the Cuban Government to the International Bank. Mr. Daniels said that this was merely a thought of his and that he had no idea whether it would be feasible.

8. A statement of policy of the two governments with respect to the treatment of capital investments in each country. Mr. Daniels suggested that perhaps some of the language in the resolution of the Bogotá Economic Agreement on investments might be used. The Minister said that he would get a copy of the resolution and look into it.

The Minister seemed to be enthusiastic over the ideas expressed by Mr. Daniels and to be confident that there would be no objection to such an economic understanding. He expressed the hope, however, that it might be possible for this Government to assist Cuba in obtaining a larger supply of such commodities as rice, lard, fertilizers and edible oils. In this connection, he mentioned that the small exporters of lard engage in considerable speculation and that it would be very helpful if this Government could in some manner curb the speculative practices. Mr. Daniels said that the matter would be looked into and also that we would explore the possibility of including in the over-all program a general statement concerning the supplying to Cuba of fats and oils, rice and fertilizer.

The Minister stated that in his opinion an alliance or an understanding between the United States and Cuba outlining the responsibilities of each country in case of war was highly desirable. He referred to his experience in Cuba during the last war and to the many difficulties encountered due to the absence of any agreement between the two countries, and expressed the hope that something might be worked out. He had in mind particularly what would be required of Cuba with respect to air bases, the alcohol industry, the Nicaro Nickel Company project, and other matters. Mr. Daniels said that we should certainly explore the matter with a view to determining whether some understanding might be reached.

It was agreed that further consideration would be given to the ideas exchanged in the conference today and that a draft would be prepared in the Department for use as a basis for negotiations. The Minister said that further discussions regarding the matter could take place here with Belt or could be held in Habana between himself and Ambassador Butler. In fact, he mentioned that he would be prepared to come to Washington should it be considered desirable.

1. A draft of a new treaty entitled “Convention of Establishment and Economic Development” was handed informally to the Cuban Minister on January 18, 1949.