Foreign Relations of the United States, 1961–1963, Volume X, Cuba, January 1961–September 1962

118. Memorandum From the Executive Secretary of the Department of State (Battle) to the Presidentʼs Special Assistant (Schlesinger)⁰

Washington, undated.

SUBJECT

• Cuba Contingency Plan

Pursuant to your conversation with Mr. Coerr of April 18, 1961, I am enclosing the original of the Cuba Contingency Plan.

Since it may have some additional interest, I am also enclosing a penultimate draft of the plan¹ which touches on broader aspects of the possible post-Castro situation such as United States objectives, conditions for recognition, etc.

You will observe that the Contingency Plan is being sent to you before it has been submitted to the Secretary.

L.D. Battle²

Attachment³

POSSIBLE US ASSISTANCE TO A FRIENDLY CUBAN GOVERNMENT AND SOME IMMEDIATE PROBLEMS AFFECTING US-CUBAN RELATIONS

1. A friendly government in Cuba might request from the US assistance in the following fields:

(a) Loans and/or grants for critical foreign exchange needs.

(b) PL-480⁴ foodstuffs.

(c) Critical medical and public health supplies, and technical assist-ance.

(d) Loans and/or grants providing local currency for immediate budgetary support.

(e) Joint planning, in cooperation with the Cuban government and multilateral agencies and within the context of the “Act of Bogota”⁵ and the “Kennedy Program”,⁶ toward programs for the economic, social and political reconstruction and development of Cuba.

(f) Cooperative arrangements, either on a bilateral or multilateral basis, for programs in such fields as the following: (i) Agrarian reform, agricultural improvement and diversification; (ii) Educational reconstruction; (iii) Public administration and Civil Service improvement; (iv) Technical and development assistance; (v) Accelerated industrial expansion and diversification; (vi) Increased employment.

2. Financial Assistance.

(a) General. The provision of immediate financial assistance for both critical foreign exchange needs and budgetary support will be required to permit the goverment to operate until lines of credit can be reopened and the economy can function again. Presumably, this period will not exceed 60-90 days, by which time, in addition to re-established commercial credits, action by other agencies in the nature of stand-by agreements, stabilization loans, etc., may have been taken.

(b) Foreign Exchange. It is estimated that there should be immediately available $35 million to cover foreign exchange needs during the early critical period. This amount should be provided on a grant basis calling upon Cuba to deposit counterpart equivalent in local currency, which may in turn be granted or loaned by the US for budgetary support or other agreed-on purposes. (See Tab A)⁷

(c) Budgetary Support. It is estimated that approximately $15 million per month may be required for budgetary support to enable a new Cuban government to continue paying salaries and wages of the minimum number of government employees and workers needed to maintain essential administrative services. The total required under this heading would be $45 million, which, if determined necessary, should be provided from counterpart funds generated from the grant $35 million contingency funds under 2(b) above, and as necessary by additional grant or loan. (See Tab B)

(d) Need for New Currency. If the convertibility of the Cuban currency to a par with the US dollar is to be restored, it will probably be necessary for a new Cuban government to issue new currency, exchanging the new for old bills on the basis of a rate determined to represent a fair value in relation to the dollar at the time. A prospective new Cuban government ought to have prepared in advance a new currency issue of approximately $500 million, (see Tab C) which would probably require a currency stabilization loan of approximately $100 million.

3. Immediate Foodstuffs Requirements.

(a) General. It is probable that a successor Cuban government will encounter an immediate need in feeding parts of the population owing to the interference of civil disorder, etc., in the normal production of local foodstuffs and to the presumed failure of the Castro government to maintain imports of basic necessities in sufficient quantity. (See Tab D)

(b) Quantities and Value. The following commodities will probably be required in the indicated amounts, and advance arrangements should be made to supply them under Title I of PL-480, during an immediate period of 60 days.

Commodity	Metric Tons	Approx. Value
Lard	13,000	$3,000,000
Evaporated milk	1,000	300,000
Corn	18,000	$1,000,000
Rice	35,000	7,350,000
Wheat	23,000	1,850,000
Wheat flour	15,000	1,500,000
	Total	$15,000,000

Note: Any of the above not available through PL-480 should be financed by contingency funds.

(c) Channels of Distribution. It is recommended that the distribution of the foregoing quantities of food within Cuba be handled by a joint committee composed of representatives of the successor Cuban government and of an American liaison group to serve temporarily as an adjunct of the Embassy. The joint committee should determine the proportions of the supplies to be made available for free distribution to the needy, for handling by voluntary relief agencies, and for sale to the public through existing registered food dealers. (See Tab E)

If internal transportation facilities are seriously disrupted, the successor Cuban government may find it necessary to undertake distribution directly to retail outlets.

Any sales proceeds would be granted for work relief, direct economic development, or economic development activities in the Cuban budget. Concurrently a Title I program for meeting the continuing commercial requirements should be developed.

(d) Procurement in the US. Procurement and shipment in the US should be handled in accordance with established procedures under Title II of PL-480. Outward freight charges have not been taken into account in the values indicated in (b) above, but should be assumed by the US.

(e) Stockpiling in the US. In the belief that stocks of the basic commodities listed under (b) above are normally available at storage points at or near Gulf and East Coast ports, no special advance preparations would appear to be necessary for the stockpiling of foodstuffs for Cuba.

4. Non-Food Requirements.

(a) General. In addition to financial assistance and supplies of foods, it is anticipated that immediate supplies of non-food items will be required for the rehabilitation of critical installations such as electric power, telephones and other communications, oil refineries, docks and transportation; and machinery spares, tires, automotive spares, steel bearings, fuels, lubricants, iron and steel semi-manufactures, copper products, fertilizers, dyes and chemicals, textile fibers and yarns, wood pulp, plastic molding materials, etc., for restoring important local industries to production. (See Tabs F & G) There will also be a need for medical and public health supplies.

(b) Medical and Public Health Needs. Medical problems may arise, whether from military action, lack of doctors and supplies, or from a period of public disorder or paralysis cutting off medical supplies and shutting down health services. These problems might be met by emergency shipment of medicines, medical supplies, and equipment parts and replacements. The return of Cuban doctors, nurses and other medical personnel to Cuba should be facilitated by urgent means, and possibly a team of US doctors and sanitary engineers should also be sent to evaluate the situation and establish the basis for larger scale assistance. Dispatch of a hospital ship from the Atlantic Fleet would be a dramatic means of providing medical assistance. It is estimated that approximately $500,000 might be needed for medical and public health supplies, included in the $35 million in 2 (b) above.

(c) Rehabilitation of Critical Installations. It is assumed that critical installations will have been subjected to sabotage and other damage although the extent of damage cannot be foreseen, and that it will be of the utmost urgency to restore these installations to at least minimum operation.

Preliminary discussions have been held with representatives of the Cuban Electric Company and the Cuban Telephone Company alerting them to the necessity of having competent technical personnel ready on short notice to appraise the needs for rehabilitation parts and supplies.

It is estimated that emergency funds in the amount of $5 million be on hand (included in the $35 million mentioned in 2 (b) above) for this purpose. The major probable demands of supplies and parts follow:

Cuban Electric Company	$2.0	million
Cuban Telephone Company	1.5	million
Oil Refineries	.5	million
Railways	1.0	million

(d) To assist in processing the procurement of parts and supplies, the organization of a liaison group composed of Americans with experience in Cuba will be required to work with the Embassy. These men should have had technical experience in the following industries; sugar refining, electric power, telephones, petroleum refining, railroad, mining, rubber, textiles, metals, agricultural and automobile equipment. It is anticipated that these men would work with Cuban counterparts named by the new Cuban government. (See Tab E)

The liaison group should prepare detailed recommendations for the allocation of the contingency funds mentioned in 2 (b) above, would review and approve specific procurement orders, and assume responsibility for seeing that plans and orders are complied with.

5. Seized US Properties.

(a) Steps to be Taken by the US. The following steps should be taken by the US:

i. Assemble documented data on the claims of US interests against Cuba resulting from the actions of the Castro government.

ii. Seek assurances from the new Cuban government that the ownership of property as it existed on January 1, 1959, be recognized, and an undertaking to accept as the premise for further discussions the provisions of the Cuban Constitution of 1940 which apply to seized properties.

iii. Seek a commitment from the prospective successor Cuban government to establish a joint claims commission to administer and dispose of seized properties and to treat with former owners.

iv. Correlate policies relating to US claims with the overall plan for the solution of the varied and complex economic and social problems that will face Cuba and which have been responsible for the development of political difficulties within Cuba during past years; and taking into account that the economic and political system prevailing in Cuba prior to the Castro period may be fundamentally modified in response to political necessities.

(b) Principles Governing the Disposition of Seized Properties. The following principles should govern the disposition of seized properties:

i. Prompt, adequate and effective compensation, including agreement for long-term compensation, in cases where the Cuban government decides to retain seized properties.

ii. The negotiation of terms of acquisition in cases where the Cuban government desires to retain the properties.

iii. The provision of legislation or regulations providing that uncompensated losses and damages sustained during the period of seizure may be taken as tax losses under U.S. laws by the United States owners upon restitution of their properties, allowing adequate carry-forward of losses to insure that the benefit of the losses actually accrues to the owners.

6. Other Problems.

(a) Reconstituting US Embassy and Consular Staffs. The Department of State should be prepared to send an American staff of 29 persons, including Defense Attaches and Marine Guards, to reopen the US Embassy at Habana, and four Americans to reopen the US Consulate at Santiago de Cuba. These persons should be ready to proceed to Habana and Santiago on the day that a new Cuban government assumes power. (See Tab I)

One week later an additional 5 Americans should proceed to Habana and one additional American to Santiago.

(b) Control of Travel from the US to Cuba. With a friendly Cuban government in power, many persons will probably wish to travel to Cuba from the US. Most of these will be persons concerned with the promotion or protection of legitimate interests, Cubans and persons of other nationalities resident in Cuba and tourists, and the US will probably wish to encourage their travel. There will be other persons, however—irresponsible speculators, gamblers, gangsters, etc.—whose purposes will not be in the best interests of either Cuba or the US, and whose travel ought to be minimized. In view of the above, it is recommended that present travel controls be retained at least for the initial period.

(c) Voluntary Relief Agencies. It may be anticipated that voluntary relief agencies, notably Catholic Welfare and the Church World Service will be active in post-Castro Cuba. A register of approved voluntary agencies is maintained by the Advisory Committee on Voluntary Foreign Aid of the International Cooperation Agency. Government support for the operations of agencies listed in this register can be approved and provided in a minimum of time, and can include providing surplus foods and other supplies, paying the costs of ocean freight, etc. (See Tab K)

7. Reconstruction of US-Cuban Relationships. A friendly Cuban government may provide an opportunity to rebuild the structure of US-Cuban relationships on a new basis, eliminating factors which have been the cause of strain in past years. Such factors would include the preferential commercial relationships (see Tab L), and the role and structure of sugar and mining companies, public utilities, and other US investments.

It is considered essential for the successor government to “capture” the vital forces of the Castro revolution, i.e., nationalism, obsession with economic and political independence, widespread pressures for land reform, industrialization, economic diversification and, above all, employment at all levels from manual labor to the utilization of skilled, technical, managerial and professional personnel. It is equally essential that the US be closely identified with this movement and with the solutions to these problems.

Whatever policy the US adopts toward Cuba is likely to be regarded as a model for US relationships with the rest of Latin America and as having implications with respect to US policies toward the rest of the underdeveloped world in Africa and Asia as well. Needless to say, the magnitude of a long-term aid, technical assistance and social development program in Cuba will be great. Preliminary estimates indicate it might be initiated at approximately $125 million per year.

0. Source: Department of State, Central Files, 737.00/4-1861. Secret. Sent through Presidential Special Assistant Ralph A. Dungan. Drafted by J.P. Hoover in ARA on April 18.
1. Not printed.
2. Printed from a copy that bears this typed signature.
3. Secret. Drafted by Hoover on March 24.
4. The Agricultural Trade Development and Assistance Act of 1954; 68 Stat. 454, et seq.
5. Recommendation I of the Report of the Secretary General of the OAS to the Council of the OAS, October 11, 1960. For text, see American Foreign Policy: Current Documents, 1960, pp. 293-299.
6. An apparent reference to the Alliance for Progress proposed by President Kennedy in his inaugural address and in his initial State of the Union Address. See ibid., pp. 8 and 18-19.
7. None of the attachments cited in the contingency plan is printed.