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APPFOViC FORPE1EASE DATE:7
CUBA'S CHANGING INTERNATIONAL ROLE
THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL INTELLIGENCE.
THE UNITED STATES INTELLIGENCE BOARD CONCURS, EXCEPT AS NOTED IN THE TEXT, AS FOLLOWS:
The following intelligence organizations participated in the preparation ol the estimate:
The Central Intelligence Agency, the Intelligence organization! of ihe Department! ot State, Defenie. and Treaiury, ond the Notional Security Agency.
The Deputy Director of Control lnteU>ge.>cetho Central Intelligence Acjency
The Director of Intelligence ond Beteorch representing ihe Deportment of Siote Ihe Director, Defence Intelligence Agency The Director, Notional Security Agency
The Special AuUtant lo the Secretory for National Security, Deportment of lite Treaiury
The Deputy Aulttant Adeniniitrafor for Nolionol Security. Energy Reuarch ond Development Administration
Abifoinrngi
The Auafant Director, Federol tureaw of Invettlgotion
Alio Participating;
The Aiintant Chief of Staff for Intelligence. Deportment of the Amy
The Director of Naval Intelligence. Deportment of the Navy
The Altaian! Chief of Staff, Intelligence, Department ot tho Air Force
CONTENTS
1
4
THE REVOLUTION MATURES 1
THE PRINCIPAL COALS OK CUBAN FOREIGN 7
Cuba mnA the Tliinl 7
Cuba and Latin America 8
Cuba and the USSR 8
Cuba and the us10
The us Sanction*II
12
OUTLOOK FOR US-CUBA RELATIONS13
The Cuban Economy
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cuba'S changing international role
PRECIS
During the last five years, Fidel Castro has wrought dramatic changes in national plans, priorities, and methods of governing Cuba.esult:
His Revolution has become more institutionalized, with theParty assuming an expanding policy-making role.
Economic conditions are better than at any timethe economy has recently benefited from exceptionally high sugar prices and remains heavily dependent on Soviet trade and assistance.
A new governing consensus has emerged which better relates policy and its implementation to current Cuban needs.
Castro's power and popularity have increased.
Thesewith Castro's view that the world power alignment is changing in favor of the Socialistto have persuaded him that the Revolution is secure and successful, and to have reinforced his conviction that Cuba is triumphing over "imperialism."
onsequence, he has had increasing success in fulfilling the often divergent roles of:
leader of the Latin American and Caribbean communitiespokesman for Third World and revolutionary causes, whilea loyal member of the Soviet camp; and
intermediary between Third World and commuiiist countriesatalyst inreater convergence of interests among them.
Castroormalization of relations with the US because he believes it will:
confirm to the world the legitimacy and permanence of his
give him access to US products and markets; and
facilitate the accomplishment of his foreign policy objectives.
In maneuvering toward normalization, he will weigh the sometimes divergent views of his leading advisers:
Hardliners support normalization but with serioiis misgivings; they are likely to urge Castro to take'strong positions and to move slowly.
Pragmatists in the leadership want to secure the economic benefits that they believe would resultifting of the sanctions, and would concede the most toettlement soon.
Wc believe that Castro is ready to enter into preliminary discussions with the US now, but he probably calculatesegotiatedwith the US is unlikely soon, androtracted process ofwould be more to his advantage than to that of the US. Wethat he will not agree lo negotiations on substantive issuesfurther action by the US to lift its sanctions against Cuba. Thereetter-than-even chanceartial reduction in the scope of US sanctions would be enough lo lead Castro to engage in substantiveHe would of course expect that one consequence of thewould be the complete lifting of the sanctions, and he might believe thai the conduct of negotiations would of itself improve thefor trade.
Castro will be prepared lo make concessions on some issues. He;
will probably be willing tomall percentage of the claims for compensation for expropriated US propertiesreat deal of hard bargaining.
will probably be willing to curtail some of Cuba's activities inof Puerto Rican independence, but Cuba can be expected to continue lending propaganda support to the Puerto Ricanmovement, though increasingly through international front organizations.
will be less conciliatory on issues relating to Cuban sovereignty, and is likely toefinite commitment by tho US tothe naval base at Cuantanamo Bay and to terminate
Castro will he inflexible about negotiating Havana's relationship with the USSR and he will not jeopardize his broader foreign policyin Latin America, the Third World, and the communist campto get quick solution to his bilateral problems with the US. Rather, he hopes that rapprochement will enable him toore energetic foreign policy in these areas and enhance his prestigeeading Third World statesman.
SECRET
DISCUSSION
0 icprrsMitrdwatershed io the development of (he Cuban Revolution. Following die disastrous effort lo produceillion tons of sugar, thean economy was inCastro wa! at tliu nadir of his popularity, hoth at home and abroad, and his ability topolitically wasow ebb. Responding to these problems and to pressure from Moscow and elements in the Cuban leadership loore flexible oourso, be set Inweating rccon-stitutlon of the political process. The result was the increasing insh'turionaliution of uw* Revolution that for years was an extension of Castro's person ality. the emergenceew and more pragmatic governing consensus,adical alteration of national plans, priorities, and methods of governing.
THE REVOLUTION MATURES
ew years ago. Castro was fearful of any institutionalization of the Revolution that might dilute his own authority, and reluctant In delegate powers of decision. He now seems not only reconciled to institutionalization but persuaded that it is essential to perpetuate his Revolution. He has apparently become convinced that complex bureaucracies can easily be controlled in ansociety, partieiil.ii lytrong and popular lender. The evidence Is that he is indeed in control
of the institutional lTdt ion pfOOOM. The larger and more competent apparatus that Ik- If creating to cany out his proclaim has become an addition to the two traditional bulwark* of ItUsupport he receive* from the military nnd security establishment and) hts popularity with the masses.
X Tlte restructuring of Cuhan institutions largely reflects Castro's acceptance of Soviet advice and bureaucratic models. Responsibility for managing the economy has been delegated by Castro as he has looked outside of the circle of his trusted former guerrilla cJleagues for talent The authority of the party has been greatly expanded and the influence of the military in civilian affairs has been curtailed.Cuban Communist Petty is scheduled to hold its first national congress in December as an important part of this continuing process.
During the last year or two, Cuba's domestic and foreign policies have come closer to fulfilling Castro's aspirations than at any time since he rose to power.esult, Castro's position as Cuba's maximum leader has been considerably enhanced. Better management und planning, combined with the increased productivity of an expanded work force and high world .sugar prices, haw resulted in better economic conditions than al uny time' Public morale and support of tiiehave improved as KM of the benefits of economic growth have filtered down and as the mass mobilizations, evltnrtatiom. and martialof earlier yean have been increasingly supplanted by efforts to stimulate production through the use of tangible rewards. Rationed goods are more readily availableesult of Cuba's increased capacity to Import andin transportation and distribution. Some luxury goods are no longer rationed and arein greater quantities.
Castro has alsoumber of successes in the international aniia. During the past few years he ha* Itceii Irumfonnrdirtual pariahosition of increasing acceptance and even respectability. Tlte ri>iug mood of economic nation-alum in I. din America and tluoughout the Third
1 Statistic* on the economy and the outlook for economic pcrformsiK* during tiie next year or two ore at Anne*.
World and the increasing spirit of solidarity among die less developed nations have worked to Cuba's advantage. These developments, and the defeat of US policy in Indochina, have added to Castro's belief that the US is on the defensive and that the international balance of power has shifted in favor of the communist and Third World countries.
Extremists have long since been removed from positions of influence in Cuba and theis more united than ever before. NonethdesSi disagTeements among individuals and groups In the hierarchy arise from distinctive generationalold rivalries, and different opinions about specific aspects of national policy. Castro remains fully in control, but he has increasingly assumed tlte role of mollifier and arbitratoruccessful effort to minimize factionalism. As one means of balancing the differences and competing interests of groups in the leadership, Castro has moved to compartmentalize administrative and policymaking functions. The remaining "old" communists are concentrated in the fields of foreign policy and economic planning, while Castro's former guerrilla colleagues control the military and securityA new generation of technocrats isinfluential in the party and government bureaucracies.
Castro's new outlook and methods reflect his acceptance of much of the advice of the "old"of the prc-revolutionary communist party who survived the purges of. Although few in number and aging (many are inhey have acquiredinfluence as the architects of thedomestic and foreign policies tliot have been pursued during the last few years. They usually are tint first in the leadership to reflect Soviet attitudes and to recommend pragmatic solutions for Cuba's problems. They have survived because of theirto adjust their views and tactics to prevailing circumstances, their administrative and technical competence, and their commitment to Castro and the Revolution. Carlos Rafael Rodriguez, thetop foreign policy official and one of its ablest planners and theoreticians, is the leading member of tlie group and probably the mostCuban leader after Castro and his brother, Raul.
l-oyal associate* of uV Castro* from Ineof them inndoccupy all of thep ilin the military and security forcesill continue to do so. Castro's control over theseiercued through his brotlier.
he regime'sommand Iwtb In the partygovernment, and Castro's chosen heir. Aother guerrilla veteranshave retiredmilitary continue- toconsiderableIheir civilian pwtvoro Present and formerofficers constitute the "hardline" wing ofon mosthere is probablywithin this group, principallyits reduced influenceeneralThe Caslros have gone to considerableneutralize possible discontent however, andprior military approval of
m nl) appearances, iheyen
hird eliteemerging generation ofbelieved generally to endorse the plasmatic policies of ihe "old" communists. Theyadvanced quickly throoghmit the party and government both iiecaiis* their scientific, technical, and managerial skilU air so ludly needed and bc-causc, ma products of the Cuban Revolution, their credentials arc unassailable In theirnd
30s. they have few memories of the pre-rcvolutionary period. Their knowledge of Ihe outside world was acquired for the most part in tlte USSR and Eastern Eiuope where many were trained, particularly those with advanced degrees or skills. Although minima tion about them is scarce at brat, we believe that most of the young technocrats are committed to Ihe decentralization ami institutionalization that isplace and to the new policies pursued at home and abroad.
he party and government institutions that wilt emerge from the CommimisI Parly congress Ibis year will reflect Castro's desire to balance theof Ihe principal elite groups as well as his goal ofore effective bureaucracy. "Old" eOrnmutlists and young technocrats probably will be represented in laiger numbers in lite regime's top (vind together they could constitutein many. Carlo* Rafael Rodriguez is likely to
be elevated Io (he Politburo and some of hisincluding Biasleader of the pre-revolutionary communistare slated to gain stature in recognition of theirRegardless of how the bureaucracy is staffed, however, Castro's comrades-in-urim from theostra will remain his principal base of support and Ihe most potent political force In Cuba.
Buoyed by the increasing coalescence of (he Revolution and his enhanced personal power and popularity, Castro hasore relnsed style ol leadership. In contrast Io tbe impulsive and exu-beraiil manner that was characteristic through, he is now relatively restrained and out of the limelight for lengths of lime. Hts Speeches are fewer and shorter, and departing from his earlierstyle of oratory, lie often reads fromlests or notes. He lias less direct contact with Ihe public, and no longer tries to functionoving ombudsman for Hie common man. Castro wasnut decpile recurring minorand intestinal problems, he is in good health.
As Castro has matured, he has come toIhe state of (he Revolution and its standing jlini.nl more rigorously and dispassionately. He is better able lo concentrate on immediate priorities rather than bis visions of Cuba's distant future and is devoting more attention In ihe tediousduties required by his party and government posts. Iks personal sense of security has increased as threats to his rule have diminished and, now thai he no longer is continually on the defensive, he teems to have his ego better under control. Arrogant, pugnacious, and boastful conduct has been rare during the Last few years, and his behavior andare likely lo remain more constant andthan in the pasl. Despite his more suicided style, Castroegree of confidence and righteousness that is reminiscent of his triumphal mood of the.
THE PRINCIPAL GOAIS OF CUBAN FOREIGN POLICY
the pasl year or so, Castro hasable to fulfill hisoftenpolicy coals, toeader ofAmerican and Caribbean communities andfor Tnird World and revolutionary causes, whileoyal member of tbecamp. He has gained prestige within Latin America and tlie Third World even as he has more conspicuously synchronized Cuba's domestic and foreign policies with Moscow's. Thut. although he has more willingly complied with Soviet urgings to loosen lib lies with subversive groups advocating armed insurrection, continued to defend the USSR against charges that it is unower, and even acted as Moscow's surrogate in severalof Ihe Tnird World, it is paradoxical that his standing has improved since ihe period ia thendhen he was widely regardedoviei puppet.
has succeeded in juggling hispolicy goats largely because one of Ihcand long-standing assumptions of Cubanpolicyeo reversed, as the psychology"Revolution besieged" has given way to tbethat i( is secure and successful. This hasto move away from his characteristic roleaggrieved underdog in continualthe US ami lo assume oneeniorstatesman who has triumphed over USBecause he has been able lo playrole convincingly, be feeU less compelledhis credentials by forneutingasserting his imiependence of Moscow,with (lie US.
Cuba ond the Third World
seems to be looking ahead to anprestigious role for himself andforceful and optimistic foreign policyhas focused onsh to act not only asbetween communist and Thirdbutatalyst inreaterof interests among them. This goalevidenttin America, where theregional communist parties who met inJune announced (heir intention to join withand revolutionary groups in unitedal undermining US influence. Inthe confcnTK'e, Castro was helping loSoviet design of strengthening theIn the hemisphere, but he also wasthe desiie to net as an independent broker be-
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communist and other leftisthblight variationheme that has strongly influenced Castro's thinking since ihe.
astro's ability lo play this complex and am-hitiousacilitated, be believes, not only"imperialism" Is in eclipse, but because of Cuba's unique qualifications. One of these is the racial diversity of the Cuban populace and itsand linguistic affinitiesumber of less developed nations. Also, unlike the leadi-rahip elites of virtually all comrnunisf and Tnird WorldCastro'sth ofmembersraditional pro Moscow commu-nbt party and veteransuccessful guerrillaHe relies primarily on members ol the Rodriguez: group to represent Cuba with otherparties, uml on hb former coinratles-in-arms as emissaries to revolutionary groups and govern-mrnts. In Portugalew other countries, both lines of communication are cultivatedBecause of these special qualifications.ble to balance theon him byperforin as tlictand-in in certain Third World countries with his fervent desire to maintain hi* ievolutionary image and to enhance hb credibilityridge between the communist and less developed worlds.
V Cubans are active in the Third World, often working closely with thehetechnical, and security assistance that CiiIkui advisers provide the gen eminent! of severalincluding Congo. Equatorial Guinea. Guinea, Guinea Bissau. Sierra Leone. Somalia, andcontributes directly to the fulfillment of both Cuban and Soviet objectives Military advisers from both nations work with the government of South Yemen to traiu Arab guerrillas, including members of the Popular Front for the liberation of Oman and members o( Palestinianumber of Cubans reportedly aho have been assigned to work wilh the pro-Soviet Popular Movement for theof Angola.
Cuba and latin America
astroore independentatin America and the Caribbean than elsewhere in the Third World. Hb desire toajor andregionalo fundamental, in fact, that il hits Ii it to hb only continuing slvow of db-pleasure with Moscow during the last few years.2 he made clear that Cuba wa* inducted into membership In the Soviel-sponsored CEMA only reluctantly, and he has subsequently rendered only half-hearted support to the organization.he ha* publicly expressed hb preference for regional economic organizations such as Ihe Latin American Economic System (SELA) and theCentral American and Qirihhcun Shipping Fled, Havana ha* emphasized Us independent stance in bilateral relations in the region as well. In Pern, the Cubans apparently aic continuing toi- pro-government labor movement rather than tho pro-Soviet group.
has all but eliminated hb supportinsurgency in Latin America, but heto maintain contact with someHe would probably resume his supportthiough suchntl training if lie believed that It hadchance of succeeding. At Ihehowever, be apparently sees nolor armed insurgency anywliere in
and Soviet objectives andthe hemisphere are increasinglyMoscow now appears satbflvdeadership in the region workadvantage as well ashis has beentrue since the meetbig of Latin Americanin Havana in June whendifferences between Castro and theapparently were resolved. Al thaithe Castro government committed itself notgroups advocating armedin collaboration with the localpanics. To create broad leftistlias already begun to urge groups thatsupported in other countries lo unitecommunist parties
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In return, the USSR probably has conceded toonsiderable degree of freedom inthe current broad front tactics in Latin America and in assuming moreeadership role In regional communist affairs. Recent reportsfor instance, that tbe USSR plans to transfer to Cuba the school now located in Moscow which trains iMin Americans in Marxism and Soviettechniques. In certainin the Caribbean basin where Sovietis marginal and Cuban interestapparently is deferring to the Cubans. In Guyana, for example, Castro has developed close tics with the Bumham administration and reportedly hastheprincipal oppositionsubordinate themselves to theent party. Elsewhere in the Caribbean, Castro also seerns to have won Soviet backing for hisefforts to expand Cuban influence with established governments.
Castro's commitment to tliese new means of pursuing his leadership designs in Latin America has been reinforced, moreover, by recentand emerging trends in the region. The legitimacy and permanence of the Cubanhas been widely acknowledgedesult of the recent OAS decision in Costa Rica to endsanctions against Cuba and the willingness of an Increasing number of governments to establish formal relations with Havana. Castro also has been encouraged by the nationalistic attitudes of manythose in Venezuela. Peru, Panama, Mexico, and the Commonwealthby their increasing desire to work together and with Havana. Cuba has, forbroadened its tics with Panama since the
f diplomatic relations hi4
personal respcetalitlUy has been greatly enhanced, moreover, as the list of Latin American cruris of state and other senior officials to visit Cuba has grown, and as some Carilibean leaders have attempted lo adapt certain Cuban programs and policies to their countries
s Cuban interest and influence in thehave mounted, Havana has greatly expanded its out sporadically since the earliest days of Ihepromotefor Puerto Hico. Over the past year or so the issue has been pressed withie UN and other international forums. Havana was the site of an international conference in early September to generate support for lhat cause, and top Cuban officials increasingly have become identified with it. In the keynote address al the Havana meeting. President Dortieos reasserted Cuba's long-standing position that Puerto Picoatin American nation subjugated to colonial domination and isomestic problem of then Septemberastro lent the weight of his prestige lo Hie Issue. In remarks apparently intendedesponse to what hetrong statements" by US officials, he implied thai Cuban solidarity with the cause of Puerto Ricaii independenceutter of principle and that it will not be renounced in order lo improve relation* with ihe US.
is difficult to understand why Castropushing Ihc Puerto Rican issue. Hefew illusions about the vitality of Iheindependence movement, and he couldlulledecognize that Cuba's stancethe prospects for normalizingossible explanation Is thul lieusing the Puerto Rican issue as ain dealing with the US. In addition, hecome to believe that he could generatesupport for Puerto Rican indrpa-iKkenceAmerica and the Third World, whileenhancing his image as revolutionaryWorld leader. His conviction lhat thebalance of power has changed and thatnnd influence are decreasing maya simple rniscalculation of hishit rravonv. he clearly did not expectreaction lo be as strong as it was.
Cuba ond the USSR
political, orsmoouc, and militarythe USSR pervade national life andthan ever before. The domestic andof the Castro government reflect broadin Soviei tutelage, and Castro Isconsent to an even wider range ofthe next year or two. In recenthas gone to some unusual length* to dem-
onstratc its affinity for Moscow: it ostentatiously supported Moscow's position fn llic Slno-Soviet polemic at the recent meeting of Latin American communist parties in Havana, Cuban spokesmen and the media went to extremes in praising the Soviet role lo World War II on the recentof the war's end. and the preamble of tbe draft Cuban constitution now under considerationaudatory reference lo the USSR. These gestures probably were mtended emphatically to renffirm Cuban-Soviet solidarity as Havanatoward reconciliation1 US.
he USSR txmtinucs to underwrite tbe Cuban economyubstantial scale. Direct Sovietassistance totaled5 millionringing Soviet balancc-of-payrnents andaid to4 billionn addition. Moscow has paid0 million in premium prices for Cuban sugar during this period. It provides nearly all of the island's petroleum needs at less than half the world price, and has subsidized Cuban petroleum purchases to the tune5 million since the rise in world oil pricesoscow remains Cuba* principal Hading partner, accounting last year for about two fifths of its total trade and aboutercenl of total Cubannother Strong indication of the Soviet commitment is the presence ofoviet civilian advisers and technicians situated ihniughout the Cuban bureaucracy.
he Cuban military establishment is almost entirely dependent on the USSR. Moscow maintains the defensive capabilities of Ihe Cuban armed force* by replenishing materiel at the modes! levels of recent yearn;illion worth ofhardware was delivered. There is no evidence lhat new weapon systems have been introduced, although twourface-to-air missile sites have been under construction forear and could become operational in short order if the required equipment were supplied. The Soviet naval air force continue* lo use Havana's Jose Marti Airport three or foureartaging point for its long-rangeircraft, and Soviet navalperiodically call at Cuban ports. No Soviet submarine* have participated In the last Ihree visits, and (mm naval operations with the Cubans were not held as In earlier years.
oviet military mission consistingersonnel is permanently stationed In Cuba. Of these, anre probably assigned to advise their Cubannand maintaining Soviet-supplied equipment and in related training activities. They probably are concentrated in those areas where the mosttechnology ishe air force, lace-to air missile system, radar networks, and tain naval unit* Thisommandedoviet army lieutenant general. Sovieto work closely with Cuba's intelligence services. HMlMi which were organized with extensive SovietM'Tri' ance and training and winch collaborate with tlje. In Intelligence operations abroad.!"
appears to be little opposition ingovernment to the extent of Cuba'son the USSR. The Cuban leadershipthe enormous contri button of Sovietsupporting the Cuban economy. Most of thehave bad close tics with; the military cannot functionSoviet largesse; and the young technocratsgenerally to reflect Soviet attitudes.Crtstron forinei guerrilla colleagues now In|obs probably desire greaterMoscow even at (lie expense of reducedbut theyistinct minority.in strongly with the majority, forrr.iumsaust he knowi tin*no alternative. Most importantly, hehe can successfully pursue his leadershipLatin America and the Third World whilethe benefits of his close association with
Cuba ond the US
has moved to reconcile Cuba'swiih tbe US, partly in responv toMoscow and the Rodriguez group Hefirst important steps in that direction byan anti-hijacking agreement with thend by publicly accepting theof detente inyasthat he wasavorable position because
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Ihe cohesion and strength of his regime. Us in-creasing accomplishments al hotne and abroad, and his I-hat pressures on the US Government to accommodate him were mounting. FollowingNiton's resignation, he became more willing to reconcile bilateral differences and moreabout the chances of doiug so to his advantage. He continued, nevertheless, to adhere to bisdemand that the US unilaterally lifl itssanctions against Cuba before he wouldIhe full list of bilateral problems.
The Rodriquez group, the leading forcenormalization of relations with the US, is probably supportedajority of the new Cuban technocrats. Both groups favor detente to stay in step with Moscow and to secure the economicthat they believe would result from trade and access to US markets. Compared to oilier groups and mdividuab in the leadership, they probably would concede the most to US demands forfor properties seized during theand would not place heavy weight on the Guantanamo and overflight issues. On the oiher hand, they would strongly resist any effort towith Cuba's ties with Moscow or any threats to the regime's ideological integrity. Because of the srrom; position they have taken in favor of detente with the US, leading members of the Rodriquez group must realize that should Castro feelor tliwarted in Im overtures or in future negotiations, they would be the logical scapegoats.
Cuba's military leaders apparently also favor reconciling bilateral differences with tliv US, but with some serious misgivings They concurred in Castro's public assessment early this year that the "danger of US aggression" had diminished greatly. They also realize that their goals of regainingand ending US reconnaissance Mights can only be achieved in the contesteneral
t the same time, many present and former military leaders are concerned about the possible effects ol detente, ami they will insisl on playing an important role in any bilateral negotiations in order to protect their interests. They particularly fear thai cultural and ideological influences from the US coulduban youth and haveational campaign aimed alsuch "diversionism" Because of the relatively austere line they take on social and economic issues, they probably attach less importance to anyadvantages that would accrue to Cuba.there is no evidence on the point, ihey may also worry that once Cuba and the US come to terms, ihe importance ol Iheir country- and itsneeds will recede in the Soviet view. They probably prefer tliat rapprochement proceed slowly, and probably are counseling Castro to bold fast to his position that Cuba will not enter fonna) talks until the US sanctions are lifted unilaterally. Raul Castro's opinion on these issues is not known, but as the originator of the campaign againstdiversioiiism- he must tliare some of theof his lop lieutenants.
motives for seeking aweights he places on the issues, and Dieand tactics he will pursue arc likely toreflecting his desire to balance the viewsprincipal advisers. like the Rodriquez group,to see the US emliargo terminated socan gain access to US goods and markets.the attitudes of many of his militaryhe will seek to protect and enhanceHe wants the Guantanamo navalthe reconnaissance flights ended, andthat would result from the acceptancegovernment by the US. Castro hasby normalizing relations with the US, hoonly enhance the prestige and legitimacy ofbut also gain maneuverability to pursueactive foreign policy elsewhere in theis ready to negotiate outstanding bilateralseems to believe that he can get most ofwants without conceding too much in return.
Th* US Sonefioni
the last few months, Havana hasits loiig-standing demand that the USend its embargo on trade with Cuba as afor negotiations On Mayhilewas in Cuba, foreign journalistsCastro repeated the Cultan demand for alifting of Ihe US embargo, butthe suspension of restrictions on thefood and medicine would be enough tu permit
SE<
negotiations to begin. The official Cuban presswas more ambiguous, quoting Castro as having said onlyartial lifting would be construed by Havana "as an unporrant step that would leadeconsideration of Cuba's relations with thenress conference held during tbe visit to Cuba of President Echcvcrria of Mexico, Castro said that Cuba did not object to establishing contact or to holding talks. Thewould have to be lifted, however, before there could be "deep negotiations "
uban insistence on removing the "Woe* ade" is notymbolic stumbling block'egotiating device, however. The myriad pro-see! ptiom that the US executive and legislative branches applied ugainst the Castro government in the early IftOCh were used by the regime forears as one of its most powerful and emotional propaganda themes. Resistance to the "blockade" was employed until recentlyasic means of rallying popular support, motivatingarmed forces, and justifying the economic hardshipsby many Cubans under Castio. Castro was closely identified with it, and his stubborn insistence that he would "never negotiate while under the pressure of the blockade" has become an integral part of his personal political platform. In tbe mindi of many Cubans, in addition, the "blockade" includes not only the US economic denial program but past covert actions aimed at undeiuiining the government and the economy. Tims, the issue Is deeply Imbedded In tin" consciousness of llieand its leadership, and is particularly salient to present and former military leaders. If it were waived during the nest year or two without some significant US concession, Castro's prestige with hardliners in the hierarchy might In1 badly
e lielleve. however, (hat the Rodriguez group and the emerging young technocrats in the government view the sanctions dispassionately from an economic planning perspective. The sarsctiorti still impose annoying restraints on Pertain sectors of the economy and are the bane of theand planners who arc required to compensate forignificant portion of Cuba's industrial machinery and equipment was manufactured in the US and is extremely difficult to maintainof the lack of US spare parts. Morehowever, these pragmatists in the hierarchy are anxious to see the sanctions ended because they believe that many of the agricultural and industrial goods that Cuba currently acquires in Europe and japan can be bought more cheaply in the US.addition, many Cubansreference for US goods and probably continue to believe in theof American technology.
tbe sanctions were lifted, from oneto one half of Cuba's Importsillion last yearillion Inbeto the US. Cuban interest wouldcenter on spare parts, foodstuffstransportation and agriculturalother capital goods includingand some consumer goods. Incould sell sugar, nickel, tobacco andand shellfish to the US. After meetingto tbe communist markets, it has been
-sellingillion tons of sugar on tbe free market annually, of which up0 million al Current worldbe made available for export to Ihe US. Production of nickel, tobacco, and shellfish probably will be sufficient during the next few years lo permit exports of these items to the US totalingillion per annum.
Compensofion
principal elements in tbe Cubanrecognize that in the US Use "blockade"linked historically, legally, and politicallyfor compensation for properties seizedRevolution. We believe that they takedivergent views, nevertheless, whichwith their perspectives on how muchshould compromise in order to achievewith the US. Hardlinerspressing Castro lo remain.committed tohe took repeatedlyear or sohe ruled out any possibility ofwhile demandingdamages caused by Ihe US economicThe Rodriguez group is moreapparently believes that US demands forcan be satisfiedannerboth sides.
ECttl
OUttOOK FOR US-CUBA RELATIONS
In assessing the prospects for the nonnaliza-ttoo of relations with the us. Castro has probably concluded that he enjoys some distinct advantages. Changes within Cubahich might have been expected to weaken him. have in facthis position. As the undisputed headnited leadership, he isosition to balance divergent views while preserving his ownHo appears to lielleve that tho us is on the defensive, that international pressures on the us to accommodate him are increasing, and that us public opinion is shifting gradually butin his favor.
as unmistakably signaled his willingness toialogue with the us. we believe that be does notoncrete tune-table or program andumber of condderj bons probably tempt him to protract the process. He is under no great pressure to proceed toward normalization and can do some hard and lengthy bargaining from the position of strength he now enjoys. He probably caltulales that with theof time, pressures nn the us to accommodate him will continue to grow. He may also believe that he can improve his bargaining position andetter settlementew us
We estimate, nonetheless, that Castro isto enter into negotiations now. He would probably do so without precondition if the talks werereliminary and exploratory nature, and wereecret. We believe that he would not enter into substantive talks on tlte issues without securing some us concession to his long-standing condition that theerminatedIn this regard. Castro has alreadystated that lite recent us rolasalion on trade with Cuba by subsidiaries ol us companies in third countriesositive gesture, but that inthe "blockade" was still in force. Thereetter than even chance, however,artial reduction in the scope of the embargo on us trade withllowing the sale of food and medscine and possibly certain industrial goods and spare parts as well, would be sufficient toCastro to negotiate on the issues- He would, of course, expect that oneof thewould be the complete lifting of thend he may believe that the conduct of negotiations would itself further improve Ihe prospect for trade. He mayoreface-saving device, however, and propose that the us and Cuba engage in secret talks toconceptual agreements on some of the major issues. lie may reason that in tills manner Cuba could secretly make concessions in advance of formal talks in exchange for the lifting of the embargo as an apparently unilateral move,
Castro will be strongly impelledesire to establish tlte legitimacy and permanency of lu's regime. He would view an agreement to hold talks as serving this purpose and would considerof relations with the us as putting the final stamp of legitimacy on the CubanThus, as he maneuvers toward negotiations, and during any talks that might ensue, his actionsotivatedesire to strengthenuba triumphing overe is likely to oppose any negotiating scenario, or concessions, which appear inconsistent with Ibis strategy.
Castro will esercise broad personal authority over the conduct of the negotiations and theof Cuban positions. He is likely to try to seize and maintain the initiative, and to indulge his penchant for public dramatics to advance Cuban positions. He will probably try to generate pressure on the us executive through appeals to legislative and public opinion and by using domestic and international media. He is also certain to seekof support from other countries, much as General Torrijos has done with respect to Hie Panama Canal negotiations. In Latin America, he will probably solicit and receive such supportumber of countries on issues related to Cuban sovereignty, such as the return of Guantanamo and an end to us overflights. Conversely, he will be quite sensitive to reactions in Latin America and other Third World countries to what he docs prior to and during any talks.
Castro Is prepared to negotiate on the issue of paying compensation for expropriated usCuba has publicly recognized the principle of compensation, and Castro almost oertainlythat little progress can be made on other
SEC|6n
y the emlwrgu.uhan concession! on compensation. Then-fore, liewill agree tomall percentage of US claimsreat deal of bard bargaining. We have no basis (or estimating how much of8 billion in claims certified by the US Foreign Claims Commission Cuba would be willing to satisfy. In arrivingigure. Castro will be influenced by the settlements the US reached in Eastern Eun>pe and Peru. He can be expected to advancefor damages he alleges the US inflicted on Cubaesult of the embargo, the liny of Pigs, exile raids, and similar activities. In order totlte amount he would ultimately have to pay. Castro will not agree to any settlement that would put serious strains on the Cuban economy.
espite the strong public statements of its leaders, we bebeve that there is some flexibility in Cuba's position on Puerto Rico In2 anduban Ambassador Alareon sharplyhis efforts and rhetoric at the UN aimed at highlighting the issue of tbe island's status, in order to avoid upsetting the talks then underway between the US and Cuba on airplane hijackings. We believe that Cuba wouldimilar patlem Inwith any future negotiations with the US. Castro reportedly is under pressure from Moscow to reduce the intensity of Cuban propaganda about Puerto Rico In order to facilitate detente with the US, and lo support the Puerto Rican Communist Party instead of the more active Socialists. Many of liis principal advisers, in addition, probably echo that line, and some reportedly are chagrined that the issue has intruded into tbe jiroces* ofrelations with tlte US.
f the subject is raised, we estimate thai Havana will Initially insist that its support for Puerto Rican independence Is nonuegotlable. We believe, however, that to achieve its more Important objectives Id tbe normalization of relations with the US, il would ultimately agree tonot droppro-indeperider>ce propaganda and its activities at intcrriational forums. Cubanprobably would seek US concessions in return lor any Ihey make regarding Puerto Rico. Their future support for Puerto Rican Independence wouldncreasingly throughfront organizations.
astro will be less conciliatory on Issue*to Cuban sovereignty. He will demand acommitment by the US to relinquish Ihe naval base at Cuantanumo Bay as part of any negotiated settlement. His public statements suggest lhat he would be content toimetable for US withdrawal rather than insist on immediate and total evacuation He views Coantanamouch less important issue in the US than the Panama Canal, nevertheless, and probably will pros* for complete reversion of Ihe base areaubaairly short period of time. In order lo achieve Ibis obfective he might be willing to provide some form of assurance that Cuantanamo Ray would not be made available to the military forces of any nation."
It is highly unlikely that Castro wouldthe right to support "wars of nationalas part of any agreement wiih Ihe United States. Cuba's draft constitution recognizes such "wars" as legitimate and descriltes Cuban aid for them as its "right and Internationalastro would probably agree, however, lo aby both parties declaring iheir adherence to the principle of nonintervention in the internal affairs of other countries.
Havana is likely lo Insist thai its relationship with the USSR is nonnegotiable. Cuba's political, econoinic. and military lies with Moscow are so extensive and vital In the regime's planning for the foreseeable future lhat there is little room forCastro might agree to reduce the numl>er of Soviet military advisers In Cuba by several hundred at most, but lie Is more likely lo emphasize that they arc engaged in routine roles assisting the Cuban military to maintain lis delemlvc capabili-
secret
ties. Ho probably would refuse to negotiate about current use of Cuban air and port facilities by Soviet military units.
astro is not likely to compromise his broader foreign policy objectives in the communist world or in Latin America and the rest of the Third World simply to settle bilateral problems with the US. On the contrary, he hopes that rapproachemrnt will enable him to pursue an even more energetic foreign policy and enhance his prestigeeading Third World statesman. Castro is likely to main-tain high-level and regular consultations with Soviet leaden as tlte process of rapprochement with the US proceeds. He will do so both to reassure Moscow that he is not compromising any Soviet interests and to seek guidance in formulating Cubanportions and tactics.
ven with the assistance of Soviet csperts In US affain. however, Havana is likely to formulate rtions that are hm-ilistorted
/But many Inder-'
"ship* remain surjnisingly naive about the complexity1of US political dynamics.-Castro's interest in the constitutional separation of powers In the US grew as the Watergate scandals unfolded and as Congress hasore active foreign policy role, but bis interpretation of these developments appears to lead htm to overestimate the role of individual legislators and news people in mfruetseing USpolicy. This, and his exaggerated view of Cuba's strengths and influence relative to those of the US. could lead bun to take extreme and overly optimistic positions in any future
astro probably lias few illusions about the possibilities ofpeedyof relations with tlie US. He con beto move forwaid progressively and to remain committed in principle to normalization but be will calculate each move according to his readingsariety of international cirtumstances. He hasinto the diplomatic gamesiiianship of detente, in addition, in the longer-term search forunavailable now and because he values the chance once again to strut conspicuously on the world Stage. Becauve he fully appreciates theand difficulty of hii art. Castro willslowly and cautiously toward reconciliation with the US while energetically pursuing otherpolicy objectives.
4
CUBAN
The Current Situation
uba's economic situation4esult of record world sugar prices and fundamental economic policy changes underwayeal CNP rose about 5but part of the increase reflected the recovery from poor sugar crops and lagging2uba's GNP at the end4 is roughly estimated1 billion5 per capita.
2 Sugar production and construction accounted for most of the economy's improvement. Sugar output increased toillion tons, upercent3 and one third above tbe2 harvest The return of normal weatherajor role in tbe upturn, as did ongoing efforts at rationalization and mechanization which permitted an increase In labor productivity.
Construction activity rose an estimatedercenteflecting Havana's heavyprogram. Expansion of infrastructure,in tbe rural areas, accounted for much of the growth. Industrial construction continued strong, however, and the belcagured bousingwhich has been receiving increasedin recent years,light gain.
The non-sugar sectors of both agriculture and industry lagged behind the economy's general growth. Exceptercent increase in thesector, growth of non-Sugar agriculture was hampered by inadequate rainfall during most of the year. The production of refined petroleum products and electric power rose significanUy, but lightachievedodest increase. Output in mining and building materials stagnated.
Improved management and die greaterof foreign exchange were Important factors
ECONOMY
in Cuba's stronger economic performance.0 Havana has beenumber of measures of rationalization, including moreplanning and cost accounting procedures, the greater use of material incentives to encourage worker productivity, and the strict enforcement of anti-vagrancy laws to reduce worker absenteeism. In addition, progressive mechanization of the sugar harvest has reduced the disruptive use ofcane cutters from other sectors of tbe economy.
Improved import capacity was due primarily to an unprecedented rise in sugar prices and to larger sugar shipments. Total export earnings soared3 level, imports also rose steeply, but not as much as exports, and Cuba achieved its first trade surplus since Castro took power
4 sugar dominated exports more than ever, accounting for aboutercent of the total. Nickel, shellfish, cilnis, and tolracco accounted for the remainingercent. Capital goods andequipment continued to be the leading imports, but there were increases in imports of petroleum, foodstuffs, eonstniction materials, and other intermediate goods during the year as well.
High world sugar prices and the strengthening domestic economy enabled Havana to expand its commercial ties with non-Communist countries. These countries accounted for aboutercent of total Cuban trade4 (compared with an average ofercent) andrade surplus of aboutmillion. Eager to exploit the expanding Cuban market, Argentina, Spain, the UK, France, and Canada have extended2 billion in long-term commercial credits In the last twoof which have yet to be drawn.
Nevertheless, Havana remained closely tied to the USSR and,esser extent, the other com-
SECRIT
countries. The USSR accounted lor about two Fifths of total Cuban tradend it provided virtually all of Cuba's petroleumajor share of its imports of capital Roods and foodstuffs. Cuba continued toeficit with the USSfC Soviet aid0 million, including5 million in balancenif-payments assistance and development credits and5 million in subsidized petroleum prices. Other Communist countries accounted for about one fifth of Cuba's trade, but provided little financial assistance.
Outlook for the Economy
The Cuban economy probably will continue to grow slowly over the next couple of years.Soviet assistance and credits from non-communist countries will enable Havana toa high rate of investment, and the Castro regime is not likely to interrupt the economy's momentum by shitting its game plan as it was pi one to do in tlie past Crowth will be considerably belowercent annual target set out in Cuba's first Five Year Plan. however.
Sugar production56 probably will stagnate in0 million tons range,of adverse weatlier and delayed plantings. Assuining the return of normal weather, output7 should rise5 million tonsesult of continued modernization of the industry. Other sectors should continue to grow steadily as the investment prrtgram continues to develop both infrastructure and industry. Cuba's first Five Year Plan to begin next year reportedly calUillion overeriod, butar from certain that thb figure will be achieved.
5 Cuba's trade balance willmaller surplus than4 and will fall back Into deficit in subsequent years. After ruing5esult0 percent increase in the prion paid by the USSR for Cuban sugar, exports probably will stagnate and possibly decline6rimarily because of lower world sugar prices. Non-sugar exports will rise slightly during thb period, but major gains are not expected until0 when large expansion projects In the nickel Industry are scheduled to be completed. Imports, on the other band, are expected to jump sharply5 and continue to grow in the following two years (see the tableecause earnings from tourism and shipping will offset only part of lite projected trade deficits, Culta will again have to rely on capital inflows from communut and non-communbt sources, in the form of trade and development aid, to cover the expected current account deficits.
Despite the projected economic improvrnu-nt we believeittle likelihood that Cuba willonsumer society during thb decade. The accent on investment allows little room forincrease In consumption during the nest severalhile some consumerMt-ticularly luxury goods, willade avail-
FnrMgn Trade
1 Ifl7? 3 4 a
Total Kxporto jjtflo W
EMtarn
F"
'8 MS 1
ti
" J
Non-Communill
Total Import*
Communist
Eut+rn
M 76 75
Couwriw
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in greater quantities, most basic items will continue to be strictly rationed and the Cuban lifestyle will remain Spartan by Western standards.
Cuba-USSR Economic Relations
The Cuban economy remains closely bed to the USSH. Moscow is Havana's most important trading partner, providing not only virtually all of Cuba's petroleum needs, butajor share of its capital goods and fooustiuTa.uba utilized4 billion in Sovietand balance-of-payments assistance to bolster its lagging Import capacity. In addition. It received0 million in sugar subsidy payments and an5 million in pet ml cum subsidies following the rise in world oil prion2 Moscow formally recognized Cuba's inability to repay its debt and agreed to postponeand Interest6 with repayment to stretch out overears.
On Die domestic scene. Soviet influence in economic matters has increased sharply since therive to produceillion tons of sugar. Moscow has exerted strong pressures on Havana to Implement more orthodox planningand to improve economic management It has also urged greater reliance on the pricing mechanism and material incentives. Urns chipping away at some- of the basic tenets of the Cuban revolution. To help implement measures of this kind, the number of Soviet technical advisers in Cuba has been greatly increased.
The USSR will remain Cuba's masttrading partner over tbe neit few years and willajor role in tbe execution of Cuba's Five Year Plan beginningnder the recently signed Protocol for Coordination ofEconomic Plans, Moscow rralllimod its corn-mitmenf to underwrite tbe development of the Cuban economy. It will provide assistance to all important branches of the economy and Increased supplies of oil Indirect support In the form of sugar and petroleum subsidies will almostremain substantial. In addition. Moscow will continue to extend significant amounts ofaid both unilaterally and in conjunction with other CEMA members.
of Soviet assistance woulda drastic cutback In Cuban imports andeconomy to stagnate or decline. If Sovietwere halted, exports would declinemillion5 and perhaps as muchhe termination of subsidizedwould add0 million annuallyImport bill if ft attempted to maintainvolume of purchases abroad.
Prospects for Cuba-US Trade
The piospects for Cuban-US bilateral trade, if the US embargo is lifted, arc modest al best, and such trade will not return lo Its ptc-HevoIu-tionary levels. Even though the geographical prox-Imily and complementarity of the two economies make them natural trading partners,losely aligned with the USSR and other communistand for both Ideological and economic reasons would not reduce these ties lo any significantThe potential for US-Cuban trade Is further inhibited by Cuba's limited hardearnings and by strong competition for sales in Cuba by other major industrial non-communist countries. Finally, trade would not benefit from direct USin Cuba as it did in the period liefore the Rpvnlution.
Nevertheless. Cuba wouldodest market for US goods and technology. Cuban of-fieiab reportedly retain an affinity for US know how and arc not unaware of the potential savings in tramion costs in shifting toarket Given tbe availability of normal commercial credits, we believe that between one quarter ond one half of Cuban Imports from. Ihe non-communist world, which will total an estimatedillion inould eventually originate in the^US. Because of Cuba's emphasis on investment for economic growth, Havana would he primarily interested in technology and all kinds of capital goods, as well as in replacement parts for US machinery and equi|Hncnl already In Cuba. Il would also probably seek some foodstuffs, principally rice.
In return. Havana could sell to lite United States sugar, tobaoro and tobaccoickel, and shellfish. After meeting its annual obligations I" Ihe eummunivt markets, Havana bus nlxiul 2
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tons of sugar available for salee world free market. Of thla amount, we believe that Cuba would initially be willing to send up5 million at current worldthe United States- Sales of non-sugar iterna could bring total Cuban sales lo the US to0 million initially. Over the longer fn. Cuban sugar sales to the US could rise toillion tons annually, but Havana will avoid it* former dependence on the US market.
enewed trade with theot likely toignificant impact on Cuban economic growth. The US embargo has lost much of its effect over time as Culm has secured alternative markets and sources of supply. The impact on the vital agricultural sector, for example, would be marginal. Moreover, any Cuban trade with the US would largelyhift in Cuban sales and purchased from other non-communbl countries and would not leadignificant increase in Cuba's capacity to import. Nevertheless, access to US-made spore parts and high-quality US goods and technology would ease Cuba's remaining main-tenancc problems and provide some initial boost to economic activity in certain sectors. The renewal of trade would also result in some savings inaod wouldound base forof Ihe Cuban tonrbl industry.
r^frfl^
Original document.
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