837.61351/12–1344: Airgram
The Ambassador in Cuba (Braden) to the Secretary of State 53
[Received December 14—6 p.m.]
A–2783. The following are the most significant recent developments in connection with sugar purchase negotiations:
- 1.
- Last week the Minister of Commerce54 in discussing the foodstuff situation expressed serious concern over the present shortage of wheat flour. He was informed that the present shortage was temporary and would be relieved by the expected early arrival of the 150,000 bags on which the subsidy was recently re-established. He was told, however, that Cuba would face a very real wheat flour shortage in January, unless the sugar negotiations could be promptly concluded, as local flour importers would doubtless withhold further purchases until they had the assurance that the stabilization agreement would be renewed. The Minister appreciated the seriousness of this situation and subsequently told me he had impressed the urgency of it on the President. That he had done so was confirmed in a press interview issued by the latter underscoring the importance in connection with sugar negotiations of obtaining supplies of flour and other foodstuffs from the United States.
- 2.
- Yesterday, while lunching at the Palace, the President expressed to me his concern in respect of these supplies. I told him I was not particularly alarmed, excepting as to wheat flour on which there had already been criticism of the amount of our subsidy on shipments to Cuba, and that it would be impossible for us to continue the subsidy unless we could point to its being a part of a successfully concluded sugar negotiation. Grau appeared to understand the situation and said that in an interview with the Cuban Sugar Mission the day before yesterday, it had been amply confirmed that the industry desired him to force them to accept a 3-cent price and that he did not wish to be put on any such spot. However, he had intimated to them that unless they got on with the negotiations, they might have to bear the blame for any shortages in wheat flour and other products.
- 3.
- On my return from the Palace, Doctor Seiglie called, presumably to get any last minute information on the sugar negotiations before appearing at last night’s Senate Committee hearings (please see my despatch no. 8362 of December 555).
Seiglie said that in a discussion on December 11 with other Cuban delegates he had pointed to the need for prompt action in view of the [Page 955] difficult supply situation which is developing. He added that Hacendado and Colonos delegates would close like a shot at 3.15 and intimated that, with pressure from the President, they would do so at 3 cents. He then went on to discuss other main points of difference in the proposed contract56 and observed that a successful conclusion of the sugar negotiations would be expedited if a meeting of the minds could be obtained on the following:
- A.
- There were, he said, certain definite advantages for the Cubans if we agreed to buy the 1945 and 1946 crops on a global basis of 9,250,000 short tons (I had intimated my optimism that we could get the 1946 position up to 4,000,000 tons); he added that, since the price for both years would be the same, no grower would risk the perils of cyclone and fire by not cutting in 1945 in order to obtain a greater yield in 1946 and that, moreover, adequate guarantees could be given us in this connection.
- B.
- The increase to a maximum crop or at least to 4,000,000 tons in 1946 would, he added, practically eliminate the problem in connection with shipping ports (article 5, paragraph “b” of our proposal) and therefore he wanted to revert to the 1944 provisions in this connection.
- C.
- He said he likewise wished to revert to an exchange of notes in connection with stevedoring, loading and port expenses since both the Government and the Hacendados feel that this will greatly fortify their position.
- D.
- He was very insistent on the necessity for our purchasing molasses and alcohol in 1946, as well as in 1945.
In reply I told Seiglie that on the question of price I had run into a stone wall, reinforced by steel, and had been told by Washington that 3 cents was tops, repeat tops. On the other points raised, the following comments are pertinent:
- a)
- I expressed willingness to re-submit to Washington in the hope we might obtain an agreement on this point, as it was my opinion, shared by my associates in the Embassy, that it may be mutually advantageous to purchase Cuba’s entire sugar production for the next 2 years.
- b)
- I also expressed willingness to re-submit but Norregaard disagrees with Dr. Seiglie in that the purchase of Cuba’s entire 1946 production would eliminate the need for the provision on internal sugar movements contained in article 5, paragraph “b” of our proposal. He suggests however that, if necessary, we might agree to revert to the 1944 contract provisions in this respect with a stipulation that CCC should not be required to defray any expense involved in moving 1946 crop sugars to make room for 1947 production.
- c)
- I said Washington was most insistent on this point. However, since we had already for 3 years covered the situation by an exchange of notes, I would be disposed to recommend (if this would materially facilitate the negotiations) that we accede to Cuba’s request that the clause on stevedoring and port charges be embodied in an exchange of notes as heretofore.
- d)
- I said other agencies in Washington were adamant that we would require no Cuban molasses and alcohol in 1946, and therefore I could hold out no hope in this connection.
According to today’s newspapers, the Senate hearings which began last night were devoted to descriptions by Seiglie and Mañas of our offers. Seiglie reportedly stated that the United States made two offers, one of 2.75 cents for the 1945 and 1946 crops and another of 3 cents for the 1945 crop only. Mañas (speaking for the Hacendados) declared that the price of 3.25 was maintained by the Hacendados but that they were still prepared at any moment to “reconsider it.” He added, however, according to the press, that the Hacendados were maintaining their thesis that 3.25 was the minimum price. The only fireworks in the hearing appeared to have resulted from Senator Aurelio Alvarez’ challenge of Mañas’ statement that mill owners’ net profit was only equivalent to what they obtained from molasses.
All of the foregoing has confirmed my impression that the Cubans are becoming increasingly nervous over the delay and that, if we persist in sitting tight, they will eventually accept 3-cent price, provided we can cede on some of the other points which they have raised.