1941: Cuba

Although not the first country to follow the United States into the War (See COSTA RICA), as President Batista predicted before a labor demonstration in November, Cuba promptly declared war on the Axis powers. A state of national emergency was voted Dec. 17, and special war-time powers were conferred on the President and Cabinet. Among these is authority to call civilians into military service and to sign military compacts with the United States and other nations. The Balán bill, providing for compulsory military service modeled on the United States selective service law, already had the support of the administration and of all opposition forces, including the Communists following the German invasion of Soviet Russia.

Foreign Relations.

Cuba's proximity to the United States and the strong economic ties between the two countries have made Cuban-American relations very close since the outbreak of the World War, and cooperation with the United States in its continental defense program has been relatively unquestioned. The strongest anti-democratic movement in the Republic has been the Falangist, but several steps have been taken during the year to suppress it. The Spanish Consul-General, Genaro Riestra, once expelled from Mexico for totalitarian propaganda, was declared persona non grata. The local head of the Falange, Francisco Alvarez García, however, was acquitted of charges of anti-democratic activities, due to insufficient proof. All the 'social welfare' organizations and soup kitchens operated by the Cuban chapter of the Falange were closed in mid-summer. A quantity of propaganda shipped from Madrid was seized in Havana. Cuba's large Spanish community has been under close surveillance for several months. The intrigues of the Franco Government and the activities of the Consejo de Hispanidad will be closely watched throughout Latin America now that the coming of war to the Western Hemisphere reduces the chances for Nazi propaganda.

Lease-lend aid to Cuba, of an unspecified amount, for the purchase of defense materials, was provided early in November. It has been implied that repayment would be in Cuban export products, such as sugar, tobacco and manganese. The 1941 output of the Cuban-American Manganese Corporation increased 85 per cent over that of 1940. Production of this strategic material here, as in Brazil, is capable of considerable expansion. Cuba is the only Western Hemisphere producer of another strategic metal, chromium, and normally supplies about one-fifth of the United States' import needs. With the Philippines cut off, the Cuban source will be even more important.

Trade Conditions.

Cuban exports for the first eight months of 1941 reached the highest figure for any corresponding period since 1937, and were P. 10,000,000 in excess of total exports in the full calendar year 1940. The increase in imports was small and the Republic had a favorable balance of P. 52,503,000. The United States in 1941 took all but 12 per cent of Cuba's exports. Ratifications of a reciprocal, most-favored-nation trade agreement with Argentina were exchanged Nov. 13. Its terms grant Cuba a 21 per cent reduction in Argentine customs duties on Cuban tobacco, while Argentina obtains tariff advantages on linseed oil, wheat, grapes, wines and other products. More important from the point of view of Cuba's dominant industry is the supplementary trade agreement with the United States, signed Dec. 23, which grants tariff concessions on sugar, molasses, tobacco, meats, fruits and other important products, in return for concessions on some thirty-eight items. Like the original pact concluded in 1934, and the first of the Hull reciprocal trade treaties, this is an exclusive preferential arrangement between the two countries.

The reduction in the tariff on Cuban sugar from 90 cents to 75 cents a hundredweight was not as great as Cuban sugar producers had hoped. Prospects for 1942 are very favorable, however, as a result of the curtailment of Philippine and Hawaiian sugar imports to the United States — hitherto the source of 30 per cent of the United States' supply. Furthermore, war-time requirements for industrial alcohol stimulate the demand for sugar. The United States and Great Britain have agreed to purchase the entire 1942 crop at a guaranteed price of 2.65 cents a pound, and will also take all sugar stocks remaining from the 1941 crop. The average price for the first ten months of 1941 was 1.57 cents. The prices obtained for Cuban sugar in the first World War, 4.60 in 1918, 5.50 in 1919, present an interesting comparison. In August the OPACS put a ceiling price of 3 cents on raw sugar in the United States. Cuba expects to produce about 3,500,000 tons of raw sugar in the 1942 grinding season, as compared with 2,400,000 in 1941. On Dec. 26 President Roosevelt signed a bill extending the 1937 sugar quota system for three years, with only slight changes. The quotas for 1942 show a 20 per cent increase over the 1941 total, and raise Cuba's allotment to 2,297,538 short tons. Attempts of the continental producers to have the Cuban quota cut, and their own increased correspondingly, were abandoned under pressure from the Roosevelt administration, which considered such a move contrary to the Good Neighbor policy and an unfair return to the island for its sympathetic declaration of war on Japan.

Finance.

The encouraging outlook for sugar has sent the Cuban peso from a low of 82 cents in July, 1939, up to parity with the United States dollar. The recovery in the exchange value of the silver peso is attributed, in part, to the $11,000,000 Export-Import Bank loan, signed June 12, to finance the grinding of 400,000 tons of surplus sugar. A law authorizing an Export-Import Bank loan of $25,000,000 was signed by President Batista on Nov. 21. This latter credit will be used for highway repair, construction of new highways and an agricultural diversification program, involving irrigation works.

The budget for 1942 shows a 19 per cent increase over the preceding budget, and reaches a new high for expenditures (P. 89,956,138). The largest increase is accorded to national defense, direct military expenditures totaling P. 22,000,000.

Politics.

The only serious political disturbance of the year was the Pedraza revolt in February, which was quickly and bloodlessly quelled by the president. The conspiracy to overthrow President Batista was led by Col. José Pedraza, chief of staff of the army, who resented Batista's move toward non-military, constitutional government. Associated with him were Col. Angel A. González, chief of staff of the navy, and the chief of national police. All three were ousted and exiled.

Opposition to the Batista coalition has been strong enough in Congress to delay action on important government measures, such as the Export-Import Bank loan, the budget and tax reforms. Congressional elections scheduled for Dec. 1 have been postponed to March 1942, to allow time for party reorganization. New coalitions among both government and opposition parties are expected.