Foreign Relations of the United States, 1961–1963, Volume XII, American Republics

322. Memorandum of Conversation¹

New York, October 3, 1961.

PARTICIPANTS

• Dr. Joaquin Balaguer, President of the Dominican Republic
• The Honorable George Ball, Under Secretary of State
• The Honorable George McGhee, Counselor of the Department of State
• Mr. John Calvin Hill, Jr., Consul General, Ciudad Trujillo

SUBJECT

• Program for the Dominican Republic

President Balaguer came alone, at the request of the United States, to Ambassador Stevenson’s suite in the Waldorf Astoria for an informal and confidential conversation which lasted from 9 p.m. until about 11 p.m. No notes were taken during the meeting in order to preserve the atmosphere of confidence.

Mr. Ball opened the conversation by telling the President that we welcomed the opportunity to discuss the Dominican situation with him informally and frankly as the United States was, within a few days, going to take further specific decisions with regard to its Dominican policy. He stated that the objective of the United States was the reincorporation of the Dominican Republic in the inter-American system.

He noted that President Balaguer had taken certain preliminary measures toward creating the conditions which would make reintegration possible. While recognizing that the problem was not simple and that President Balaguer was faced with formidable difficulties he felt it necessary to say frankly that so far the rate of progress had seemed to the United States Government to be disappointingly slow.

After the United States Government had fully developed its policy within the next few days it would be able to make clear with precision the nature of the steps which it regarded as an indispensable prelude to the lifting of sanctions. Certain of these steps would have to be taken by President Balaguer as the head of the Dominican state. Other steps would have to be taken by General Ramfis Trujillo as head of the Trujillo family. When the United States position was fully defined the precise nature of the required steps would be made known both to President Balaguer and General Trujillo.

Meanwhile he could say in general that the United States regarded the following as among the pre-conditions to the lifting of sanctions:

(1) The deconcentration of the political and economic power of the Trujillo family, including the early departure of General Arismendi and Generalissimo Hector Trujillo, and

(2) Appropriate arrangements for the disposition of the Trujillo properties.

(3) Cessation of repressive measures by the repressive groups and progress towards observance of human rights.

(4) Arrangements with the moderate opposition, such as a coalition government, and

(5) Effective action against repressive and Communist elements which sought to undermine the democratic system.

President Balaguer replied to these points as follows:

(1) Trujillo family.

He agreed with the United States position on the Trujillo family. It was essential that Arismendi go as he was the most reactionary of them and [less than 1 line of source text not declassified]. Hector had withdrawn from politics but as long as he remained in the country he would be a natural focus for reactionary elements in both the civilian and military sectors. Balaguer noted, however, that the United States position, which asked only for the key members of the Trujillo family to leave the country, was different from that of the opposition which demanded that the whole family go.

He thought that it was essential for Ramfis to stay for the time being to assure the unity and support of the armed forces which was necessary for the stability of the nation and the government. He described Ramfis as desiring to retire and go abroad as soon as the situation permitted. He said that there was no problem about arranging for him to leave when the time came.

Later in the conversation, Mr. Ball raised the question as to what would happen if Ramfis were to leave the country now. Would General Sanchez then be able to control the Armed Forces and would he be likely to undertake repressive action against the opposition?

The President replied that, if Ramfis should leave the Dominican Republic at the present time, he did not believe that General Sanchez could maintain his position with the Armed Forces. Sanchez, the present Air Force Chief of Staff, was, he said, only 32 years old. [1-1/2 lines of source text not declassified] If Ramfis were to leave now, the Armed Forces would be likely to break up into warring groups as various officers made their bids for power. Anarchy would result.

The President suggested that, when the time came for Ramfis to leave, [4 lines of source text not declassified].

(2) Trujillo properties.

The President indicated that while the book value of the sugar enterprises was $170,000,000—$140 million for the Rio Haina complex and $30 million for the northern mills—this was exaggerated. Under present conditions a more realistic price would be $80 million. They were subject to debts owed the Dominican Government aggregating $48 million.

As a result Balaguer stated that, if the properties were sold, the Dominican people would benefit by the repayment of these debts. Ramfis proposed, he said, to dispose of the properties in the following way:

(a) He proposed to sell the northern properties, on which the Government-owned Banco Agricola held a note, for $30 million to Dominican businessmen—[2 lines of source text not declassified]. The sale price would be $30 million. The purchasers, however, would not put up any money on their own. They would borrow $30 million from the Banco Agricola and repay the indebtedness owed by the northern properties to the Banco Agricola. The transaction would thus be a “wash sale”.

(b) He proposed to sell Rio Haina to foreign investors for $50 million. He hinted that the purchaser would be George Pappas. Of this $50 million, $18 million would be applied to repay a note owed by Rio Haina to the Banco Central.

President Balaguer emphasized the fact that if these transactions were completed the Dominican Government would thus receive $48 million through the repayment of the notes owed by Trujillo on the sugar properties. This money could be used for badly needed public works such as the CIBAO irrigation project.

Mr. McGhee pointed out that if the transactions were undertaken as described by President Balaguer the net benefit to the Dominican Government would be only $18 million, since the $30 million repaid to the Banco Agricola would be offset by a new loan by the Banco Agricola to [less than 1 line of source text not declassified] who were not putting in any equity capital. The President replied that these were “fictitious” paper transactions. Mr. McGhee asked if it might not create a more favorable impression on the opposition if the northern properties were taken over by the Banco Agricola directly. He pointed out that under the proposed arrangements [less than 1 line of source text not declassified] would in effect acquire the properties without putting up any money of their own. The President agreed that this was the case and that it might be better to have the transaction handled in the manner suggested by Mr. McGhee.

Mr. Ball pressed the President as to whether he thought Ramfis Trujillo would be willing to contribute a substantial portion of his net receipts from the proposed transaction ($32 million) to a foundation. The President replied that if the properties were sold he thought that the General might be willing to give a portion of the proceeds to a foundation, mentioning the Instituto de Auxilios y Viviendas.

In the discussion of these financial matter problems the President seemed [2 lines of source text not declassified].

The President stated that, in his view, it was more important, as part of the conditions, to concentrate on assuring that the greater portion of the current income of the properties be made available for the Dominican Government and people than to concentrate on titles which could be left in suspense. He agreed that the Trujillo family was “on its way out” and that, when it lost its position in the country, the state would almost certainly move to take over the properties.

(3) Measures by repressive groups.

The President said that repressive measures would in large part automatically cease with the departure of Arismendi—which he reiterated was urgent—since he was responsible for most of them. He also stated that a program was being undertaken to purge the armed forces of undesirable elements.

(4) Coalition Government.

The President expressed the view that, while the PRD and 14 of June were flexible, the UCN was inflexible and radical in its demands. The President was entirely willing to have them come in to the government; some concessions could be made; and the climate would be better when Arismendi and Hector had departed. He acknowledged that the UCN was opposed to Ramfis’ remaining, but this was a necessity that they would accommodate to because it was a reality that he was needed in the armed forces.

Mr. Ball stated that in his opinion conditions would not be propitious for elections in May 1962 and that the elections should be postponed. The President replied that there would be no problem about postponing the May 1962 elections if there was a coalition government. The members of the government could then agree on when they should be held.

At this point, the President entered a strong plea for gradual but progressive action by the United States with respect to lifting the sanctions, starting with lifting the January sanctions (on petroleum, petroleum products, trucks and spare parts) and going on to full lifting the sanctions as progress was made. He argued that inaction at this time had the effect of making the opposition more intransigent and the military more alarmed and he did not know what could happen.

(5) Subversive elements.

The President pointed out that the FNR had already been deported and it was planned to take similar action with others, including (the MPD’s) Lopez Molina.

Mr. Ball raised the subject of the OAS Human Rights Committee, suggesting that the Dominican Republic should issue an invitation for it to the Dominican Republic. Mr. Hill explained that it was possible to issue such an invitation under the Statute and highly desirable to do so promptly as the Committee itself was considering Cuba and the Dominican Republic and that the expected refusal of Cuba to cooperate would contrast to the favor of the Dominican Republic. The President demurred, saying that the Dominican Republic had already taken action to put itself on the same footing as the other American Republics, that no other country had invited the Committee, and that the matter would have to be studied closely on his return to Ciudad Trujillo to see if it would be possible to extend an invitation without giving the Committee a power of “vigilance” intruding on the country’s sovereignty.

Mr. Ball alluded to the President’s possible acceptance of the candidacy of the Partido Dominicano, pointing out that it would be difficult to reach an understanding with the opposition if he were a candidate. The President said that he had been under great pressure to accept the nomination because the party needed a candidate but that September 24 Convention had been postponed indefinitely. He said it could be made a condition that he not accept, since he personally hoped to retire to private life at the end of his term in August 1962. However, if no progress is made (towards the lifting of sanctions) a new and dangerous situation would arise and he would have to judge what was best for the nation in that circumstance.

Asked by Mr. Ball if he had any questions of his own to raise, the President asked for a personal estimate on when it might be possible to lift these sanctions. Mr. Ball replied that, primarily, it depended on progress in fulfilling the conditions which would be spelled out in greater detail in the next few days and replied he could not be more precise at this time. He said a high official, authorized to be a spokesman for the United States Government, would meet with the President and with General Trujillo shortly.

Prior to the meeting, when Mr. Hill picked President Balaguer up at his hotel to escort him to the Waldorf, Sr. Luis Mercado was in the President’s suite talking long distance with Ramfis. He told Ramfis that we were leaving for the meeting and he would call him back after it was over.

In the car going to the meeting, the President expressed distress that sanctions could not be lifted for two or three months, according to the plan. On the return trip, he reiterated that it was more important to assure that the income from the Trujillo properties go to the State than to concentrate on the titles and indicated Ramfis was waiting to see some evidence that the United States was going ahead before taking action on Lopez Molina.

1. Source: Department of State, Central Files, 739.00/10-361. Secret. Drafted by Hill and Ball.