837.61351/4179
Memorandum of Conversation, by the Chief of the Division of the American Republics (Bonsal)
The Cuban Ambassador8 telephoned me this morning and referred to the conversation which he and López Castro had had with the Under Secretary on Friday, August 13. I informed the Ambassador that Mr. Welles had been absent from the Department since that date. I added that I myself was familiar with the details of the current sugar negotiations and that I would be glad to have a conversation with the Ambassador and López Castro. An appointment was, consequently, made.
During the interview which ensued, the Ambassador said very little. López Castro, after expressing very great appreciation at the way in which the negotiations have been conducted by Commodity Credit, stated that there were still two points unsettled. These he described as follows:
- (1)
- The Cuban Commission believes that there should be retained in the 1944 contract the same provisions as in the 1943 contract with reference to Commodity’s obligation to move sugar at its expense, if necessary, to enable storage facilities to become available for the 1944 crop. As I understand it, this does not mean payment for normal movement but merely for abnormal shifts of sugar to take advantage of warehousing facilities. López Castro expressed himself with great eloquence on this subject. He said that the failure to retain this clause would mean that the Cuban producers would be confronted with an uncertainty and would be placed in a disadvantageous position owing to the fact that Commodity determines shipping and port allocations without consulting the Institute. López Castro concluded that a failure on the part of Commodity to include this clause in the new contract meant in effect a closing of the door so far as he was concerned.
- (2)
- López Castro insisted that from the Cuban point of view the escalator clause should be retained in the 1944 contract omitting the twenty-two points mentioned in the 1943 contract.9 These points, in accordance with the 1943 provision, would not go to the Cuban producers in the event of an increase in the ceiling price of sugar. López Castro stressed that it would be politically and morally impossible for a situation to develop in which circumstances justify an increase in the ceiling price of sugar and the Cuban producers were debarred by this provision from participating in such an increase. I told López Castro that it seemed to me that the matter was of a rather theoretical nature in view of the determination of the agencies of this Government to hold the line on prices. López Castro replied that he agreed but that he felt that the Cuban position nevertheless should be protected. He then made the proposal that the first 44 [Page 173] points of any increase in the ceiling might be divided equally between the Cuban producers and Commodity. Thus, in the event of a 44 point rise in the ceiling, Commodity would recuperate the 22 points mentioned in the 1943 contract.
By the time he had finished setting forth these two points, López Castro was in a relatively high state of emotion. Both he and the Ambassador asked me, on the basis of the State Department’s knowledge of Cuban conditions and so forth, to do my best to secure favorable action on these two points.
Following their departure, I telephoned Mr. Courtney Brown. I told him that, in my judgment, López Castro and the Cubans had handled themselves extremely well in this whole negotiation. I stated that the acceptance by them of a 2.65 price represented a breadth of understanding and statesmanship which I hoped we all appreciated. I then added that on the two points which López Castro had described to me, I hoped that a favorable decision might be reached. I said that the warehousing clause had already been included in the 1943 contract and that I felt that it was impossible for the Cubans to accept anything less favorable in 1944. I pointed out that this clause would be operated on the basis of consultation and cooperation between Commodity and the Institute. It would definitely not be at the whim of the individual mill owners, so far as expense to Commodity is concerned. With regard to the escalator clause, I gave it as my own view that a clause eliminating all mention of the 22 points would be desirable. In other words, I went further than López Castro’s latest proposal. However, I did describe this proposal to Mr. Brown, who seemed favorably impressed. (Later the Cuban Ambassador telephoned to say that, in the event that López Castro’s proposal appeared satisfactory from our point of view, it would be highly desirable from the tactical angle for it to be presented as a United States proposal. López Castro apparently believes that it will be acceptable to the Cubans, if presented by us.)
Mr. Brown outlined the difficulties which he had been encountering in accepting the Cuban point of view on these matters. He said, however, that he would continue to work on his colleagues, including Mr. Hutson.10 He appeared fully to recognize the general reasonableness of the Cuban approach to the matter of the 1944 contract.