Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

611.38/5–453

The Chargé in Haiti ( Folsom ) to the Department of State

confidential
No. 696

Port-au-Prince , May 4, 1953.

Subject:

• Haitian Problems as Expressed by Officials to Assistant Secretary of State John M. Cabot.¹

Summary

In conversations with members of the Haitian Cabinet and President Magloire, lasting from 9:00 a.m. to 1:00 p.m. on April 9, 1953, the problems confronting Haiti were reviewed for the benefit of Assistant Secretary of State for Inter-American Affairs, John M. Cabot. (Mr. Cabot was accompanied by Chargé d’Affaires a.i. Robert S. Folsom at all the conversations and by Colonel Valentine Smith, Army Attaché of the Embassy at the military conversations.) Certain of the Cabinet Ministers presented memoranda containing their views either at the time of the conversations or subsequently. (These are attached,² in translation, as enclosures. It is understood that another set³ in French is being given to Mr. Cabot by Haitian Ambassador Leger.)

In brief, certain factors, as follows, emerged as strongly influencing present thinking of the Haitian Government:

1. Signature of a bilateral military assistance pact with the Dominican Republic, plus other such pacts, the desire of Haiti to improve its defensive force and its hope to contribute to UN Military needs.

2. Adverse economic developments, including a smaller coffee crop, collapse of sisal export prices, drop in sugar and cotton prices and restricting markets for export crops, all of which led to smaller Government revenues at a time when economic development is in progress, raising Government expenditures and creating financial problems.

3. The collapse of SHADA and the role of American management and the Exim Bank therein, plus numerous instances of difficulties with the Exim Bank in initiating work on the Artibonite Valley Project.

Consideration of these factors resulted in Haitian proposal of the following requests to the United States Government:

1. Negotiation of a bilateral military pact

a) to enable Haiti to equip a combat team of 5–10,000 men for national defense requirements and capable of overseas duty, should need arise under UN commitments.

b) to enable Haiti to construct the military portions of a new international airport.

c) to lay ground-work for acquisition of other equipment as deemed necessary in the future such as arms, ammunition, planes, etc.

2. Considerations of the possibility of a short-term bank loan of $3,000,000 to be guaranteed by the Haitian Government to permit it to continue its program of economic development:

a) in rehabilitation of the banana industry,

b) in rehabilitation of SHADA,

c) in strengthening the Institute of Agricultural and Industrial Credit, and

d) in the development of tourism.

The planned financial and banking legislation reform was cited as a special consideration.

3. Assistance of the State Department in facilitating relationships with the Export-Import Bank relative:

a) to signature of the proposed IIAA–ODVA contract on the former’s role in the Artibonite Valley (with particular regard to apparent Bank insistence on retaining management control) and

b) to settlement of day-to-day problems of working relationships.

4. Reconsideration by the Exim Bank of the question of hydroelectric power for the Artibonite Valley Project.

5. Consideration of revision of the existing rates of U.S. and Haitian contributions to the technical assistance programs in the future (present rates—U.S. 1 per Haitian 3).

6. U.S. aid in securing for Haiti a larger sugar quota on the international market.

7. Sympathetic consideration for a larger quota for Haitian sugar in the U.S. market and lower tariffs, and

8. Various specific requests for aid.

Mr. Cabot throughout the conversations emphasized that he was not present to negotiate or to make any commitments, but rather to listen to the exposé of Haitian problems. He pointed out that Haiti is protected from aggression under the Rio Pact,⁴ in discussing the proposed bilateral military agreement, and also stressed the existing heavy financial commitments of the U.S. in regard to military aid to other countries. He expressed great interest in Haitian difficulties in obtaining U.S. arms, ammunition and replacement parts.

With regard to the economic request, Mr. Cabot expressed interest, while cautioning that revision in the sugar situation was unlikely and that a loan would require careful consideration, admitting, however, that the financial and banking reform might provide a special favorable aspect. He stressed the role of private investment in economic development and the need to create a favorable climate for such investment.

I. —Military Phase

Discussions opened at 9:00 a.m. in the office of the Secretary of State for Foreign Affairs. In addition to the Foreign Minister, also present were the Secretary of State for National Defense, Interior and Justice, Ducasse Jumelle, and the Chief of Staff of the Haitian Army, General Antoine Levelt, Assistant Secretary of State John M. Cabot and Robert S. Folsom, Chargé d’Affaires a.i. of the American Embassy. (Colonel Valentine Smith, Army Attaché of the American Embassy was also present at the military talks.)

After a few brief preliminary remarks of welcome to Assistant Secretary Cabot by the Foreign Minister and the Minister of National Defense, General Levelt was asked to speak for the Haitian Government.

General Levelt stated that the Haitian Army is a combination of army and police force in which the officers are primarily military and only secondarily police, while the reverse holds true for much of the enlisted force, which is detailed for constabulary duty throughout the provinces. He emphasized the American character of the Army, pointing out that it uses U.S. manuals, has the U.S. table on organization and that training of officers and men is by U.S. methods.

He pointed out that with a population of 3,000,000 Haiti has available some 300,000 for military service (i.e. enough for 30 divisions). He asserted that manpower and training presented no problem for increase in the army, and that the sole limiting factor is equipment.

Turning to the Haitian Air Force, he noted that the pilots, and other officers and men, were trained to handle and service many types of planes and that, if equipment (planes) were available, the Haitian Air Force would be useful for submarine patrol in case of war. He suggested that the Air Force could patrol the Windward Passage (Haiti–Cuba) and the passage between Haiti and Jamaica.

He suggested the need for a bilateral military pact with the United States with one of its objectives the creation of a combat team of 5,000 men or perhaps a light division of 10,000 men capable of service abroad. In this connection, he emphasized that U.S. aid should be given as Haiti reaches certain attainments.

He said that the present airport is rapidly becoming obsolete. He noted that a study had been made by the U.S. Air Force Mission in cooperation with the staff of General Kiel,⁵ which placed the cost of a new field (excluding cost of the land) at from five to six million dollars. He said the project had also been discussed with Juan Trippe, President of P.A.A., recently and that the latter had suggested that the new landing strip be made in three sections, the center part to be civilian, with a cost of about $2,500,000 (exclusive of buildings) for which P.A.A. would seek an Exim Bank loan. Mr. Trippe had also suggested that P.A.A. would share in the cost of buildings. General Levelt said he sought aid from the U.S. in connection with the military sections of the field ($2,500,000–$3,500,000).

Mr. Cabot replied, emphasizing the existing U.S. commitments to aid Haiti in case of attack and the already heavy financial commitments of the U.S., but said he was glad to have the Haitian views on the subject of a bilateral treaty.

General Levelt then emphasized the psychological importance of a bilateral pact, especially in view of the pact just negotiated with the Dominican Republic.

He then set forth certain specific minor problems. First, he emphasized the difficulties (actually the impossibility) experienced in 1947 in seeking to obtain parts for Springfield rifles even on a cash basis.^* He noted that, as a result, the Haitian Army had been forced to turn to Belgium for Mauser guns. He pointed out that the case of Haiti was by no means unique; that other Latin American nations had the same problem and that the effort at standardization of equipment has been materially damaged. He noted also that Haiti has had offers from three different European Governments, each of which has offered to sell U.S. aircraft, Springfield rifles and other arms and equipment.

Enclosure No. 1, a memorandum prepared by the Department of National Defense, summarizes the views of General Levelt and the Ministry.

II. —Financial and Economic Phase

Following conclusion of the military phase of the discussion, there was a brief recess while the Minister of Defense, General Levelt and Colonel Smith withdrew and the other members of the Cabinet took their places at the round table.

a) Minister of Finance and National Economy, Lucien Hibbert, was called upon for the first exposé. Following an outline of Haiti’s economy and its problems in general, he noted that Haiti had signed the Investment Guarantee Agreement.⁶ He also spoke briefly of land reform, noting the need for regrouping of small holdings rather than for breaking up of large holdings.

Noting that Haiti is a one crop country with coffee supplying more than 50 per cent of exports, that sisal prices had collapsed and that the banana industry is nearly dead, he discussed the consequent losses in foreign exchange and Government revenues and suggested a short-term (four year) credit of $3,000,000 to give the Government more elasticity in carrying out its program of economic development during a period in which it was proposed to reorganize financial and banking legislation.

Mr. Cabot interjected that the Exim Bank usually does not consider credits to cover budgetary deficits, but that, in view of the proposed banking and financial reforms, the Bank might consider the case as a special exception.

The Foreign Minister noted at this point that the budgetary deficit was not the fault of the Government, but of outside forces (world prices, etc.).

The Finance Minister then said that he had not intended to imply the need for a credit to cover a budgetary deficit, but rather to enable the Government to aid economic development in four specific areas: (1) the banana industry, (2) the sisal industry (SHADA), (3) the Institute of Industrial and Agricultural Credit, and (4) tourism, through roads, hotels, beaches, etc. He added that he contemplated a bank-to-bank (Exim Bank to Banque Nationale de la République d’Haiti) short-term loan guaranteed by the Haitian Government. He asserted that such a loan in the amount of $3,000,000 would remove all development projects from the budget leaving revenues free for normal functional expenditures.

He suggested that, after all financial and banking legislation had been implemented and after the economy was in good shape, Haiti might seek a long-term loan to consolidate its short-term loans.

Mr. Cabot cautioned that usual interest on long-term loans is about 5%, as against 3.5% on short-term loans.

Enclosure No. 2 summarizes very succinctly the views of the Minister of Finance.

b) Director of ODVA, Major Alcide Duviella, stated that good progress was being made on the Artibonite Project, except as regards the IIAA–ODVA Agreement, in which it appeared that the Exim Bank did not agree with either the IIAA or the ODVA as to who should name the Director of the project.

He emphasized the need for development of hydroelectric power and asked that the Exim Bank reconsider its position on this subject.

Mr. Folsom stated that to economic, the Port-au-Prince market must be opened for the sale of hydroelectric power, and that to obtain this market a modus vivendi had to be worked out with the Compagnie d’Eclairage Electrique des Villes de Port-au-Prince et du Cap-Haitien. He emphasized that, under the present contract, the Company could not amortize even existing equipment and would not be able to undertake additional installations to connect up with the hydroelectric power, unless some arrangement were reached. He asserted his belief that, with a reasonable arrangement, the Company would be amenable to purchase of hydroelectric power. (This led to some discussion and expression of diverse opinions.) The Foreign Minister stated his belief that a reasonable arrangement could be made.

Enclosure No. 3 summarizes the views of the ODVA. It should be noted that the last sentence of the final paragraph is in error, as Mr. Folsom did not concede any Haitian point of view, but rather stressed the need for the Haitian Government to reach a satisfactory arrangement with the local light and power company.

c) The Minister of Public Health and Labor, Roger Dorsinville, suggested consideration of revision in the proportion of U.S. and Haitian contributions to the Point IV Health and Sanitation program (now $1.00 by the U.S. for each $3.00 contributed by Haiti). He also spoke in general terms of projects he had in mind.

Enclosure No. 4 summarizes the views of the Ministry of Public Health.

d) The Minister of Agriculture and Commerce, Daniel Heurtelou, asked for consideration for revision of the international sugar quota assigned to Haiti and, more particularly, for an increase in the U.S. quota assigned for Haitian sugar and more favorable treatment in the U.S. markets.

Mr. Cabot drew attention to the Sugar Act⁷ and stated any change in the U.S. market situation would be obtained only with great difficulty.

Enclosure No. 5 summarizes the views of the Ministry of Commerce.

(At this point, no time remained for continuation of the conference, which was adjourned accordingly to permit Mr. Cabot to keep his appointment with the President.)

Enclosures Nos. 6, 7 and 8 are respectively summaries of the views of the Ministries of Agriculture, National Education and Public Works. The latter is rather an amazing list of requirements.

III.—Conference with President Magloire .

At 12:15 p.m. Mr. Cabot and Mr. Folsom called on President Paul E. Magloire, who received them in company with Foreign Minister Liautaud and Mr. Daniel Theard, Chief of Protocol.

The President, after welcoming Mr. Cabot, summed up the views already expressed by his Cabinet officers at the conference earlier in the morning, stressing:—

1) his interest in and desire for a bilateral military pact with the United States;

2) the need for a better working relationship with the Exim Bank on the Artibonite Project (pointing out the disastrous results of mixed responsibility in the case of SHADA and placing almost all the blame for its failure on the first and last American managements and the Americans on the Board of Directors, specifically Mr. Darton of the Exim Bank. He stressed that he was anxious to avoid any such fiasco in the Artibonite Valley);

3) the desirability of revision in the ratios of U.S.-Haitian contributions to the technical assistance programs (towards a reverse in the ratios);

4) the need for an international airport and his hope for U.S. assistance; and

5) his hope that Haitian sugar might receive more favorable treatment in the United States.

In stressing the need for U.S. economic assistance, he readily admitted that previous Haitian administrations were to blame for the collapse of the banana industry, though, as noted above, he placed blame on Americans for part of Haiti’s present problems with the sisal industry.

It is a regret that transmission of this despatch has been delayed. Copies of most of the enclosed memoranda were not received from the Ministry for Foreign Affairs until April 30, 1953.

Robert S. Folsom

1. Assistant Secretary Cabot visited a number of Latin American countries during the period Apr. 6–May 3, 1953; pertinent documents are in file 110.15 CA.
2. None printed.
3. Not found in Department of State files.
4. Reference is to the Inter-American Treaty of Reciprocal Assistance (Rio Treaty or Rio Pact), opened for signature at Rio de Janeiro, Sept. 2, 1947, and entered into force for the United States, Dec. 3, 1948; for text, see 62 Stat. (pt. 2) 1681, or Department of State Treaties and Other International Acts Series (TIAS) No. 1838.
5. Brig. Gen. Emil C. Kiel, Commander, Caribbean Air Command, Canal Zone.
6. General Levelt admitted later that he knew that it was not the policy of the U.S. to give arms to unstable Governments, referring to the period of the overthrow of President Lescot and the early days of the Estimé régime. Since 1947 no effort has been made to acquire ammunition in the United States. [Footnote in the source text.]

6. Reference is to the exchange of notes signed at Washington, Mar. 13 and Apr. 2, 1953, and entered into force on the latter date, constituting an Agreement relating to guaranties authorized by Section III(b)(3) of the Economic Cooperation Act of 1948, as amended; for text of the notes, see TIAS No. 2818, or United States Treaties and Other International Agreements (UST), vol. 4 (pt. 2), p. 1546.

   The Economic Cooperation Act of 1948 is Title I of the Foreign Assistance Act of 1948 (Public Law 472), approved Apr. 3, 1948; for text of Title I, see 62 Stat. 137.

7. Apparent reference to the Sugar Act of 1948 (Public Law 388), approved Aug. 8, 1947; for text, see 61 Stat. 922.