Batista was so friendly with American interests that he lived in the USA when his first term expired. He shuffled back and forth between a hotel room at the Waldorf-Astoria in New York and his home in Daytona Beach, Florida. He returned to Cuba to run for his second term. But when it appeared he would be defeated, he staged another military coup to place himself in power again. The United States welcomed this power grab and recognized his government.35 In his second term, Batista was much less accommodating to the progressives on the island. Therefore, between 1954 and 1956, new foreign investment in Cuba quadrupled.36 One of the highest growth industries was the American dominated tourist resort business. Large tax breaks and other subsidies resulted in the construction of 28 new hotels and motels. Some projects, like the Havana Hilton and Havana Riviera hotels, had direct state financial assistance during construction.37 Batista was so accommodating to American businesses that in 1958 he declared Cuba a tax-free haven. In other words, if an American company wanted to place its headquarters in Cuba, it would not be subject to state taxes.38 By the end of 1958, the total book value of American enterprises in Cuba was the highest of any state in South America, save the then Standard Oil dominated nation of Venezuela.39
What made it all worse for nationalists in Cuba was the fact that, from 1952 through 1958, Cuba imported anywhere from 60 to 65 percent of its total needs from American sources. This caused the state to run large negative trade balances, which, in turn, Cuba had to finance through short-term borrowings via Wall Street and the International Monetary Fund.40 But the familiar result was that the debt was not eliminated—it was just turned over. But the loans kept coming since Batista himself was so friendly and accommodating to American businesses. Because of this favoritism, enterprises like Moa Bay Mining Company cultivated ties with high-level Batista officials.41 As one CIA operative stated, if you had a business problem, all you needed to do was get a call into Batista and he would fix it for you.42 And this aid and cooperation extended over to the American Embassy, which did all it could to furnish help in obtaining both the contacts with Batista and a favorable business outcome. Both American ambassadors to Havana in this time period—Arthur Gardner and Earl T. Smith—were told to get along with the dictator: “We were not to do anything to overthrow Batista, but to support Batista as the Government of Cuba that we recognize.”43 And since Smith himself was very close to these business interests, he cast a blind eye to the mushrooming labor unrest, unemployment, and poor living conditions of the working class. This dissatisfaction was magnified by the growing corruption and bribery in government, not just from American capitalists, but also from the American mob—led by Meyer Lansky and Santo Trafficante—which had strong interests in the Havana resort hotels, and also the gaming industry and prostitution, which operated through them.
One company that Smith was close to deserves special interest here since it touches on various tangents to be discussed later. Smith, who had no previous diplomatic experience, owed his appointment largely to New York multi-millionaire John Hay Whitney. A year before his appointment, Smith had made large contributions to a Republican finance committee that Whitney had chaired. Whitney, in addition to owning the New York Herald Tribune, was chairman of a company called Freeport Sulphur. Freeport had various operations inside of Cuba. These dated as far back as 1932.44 Two of these that are relevant to this narrative are Nicaro Nickel Company and the aforementioned Moa Bay Mining Company. Moa Bay would develop a nickel processing facility in New Orleans. In 1960 former Ambassador Smith was accused in the American press of negotiating a large tax reduction for Moa Bay with Batista at the behest of Whitney.45 Although this dubious dealing was denied by Smith, it had been previously discussed in the Cuban press in early January of 1959. Smith resigned his post shortly after his work for Moa Bay and Whitney was exposed. CIA officer David Phillips’s later protege Antonio Veciana—the man who said he saw Phillips with Lee Harvey Oswald three months before the assassination—received his intelligence training in Cuba in a building that housed both a Berlitz School and a mining company. And it is here, at this time, that Phillips appears to have met and recruited him.46 Further, while in pre-revolutionary Cuba, Phillips knew Julio Lobo, a Cuban banker who contributed money to the setting up of the Cuban exile group in the USA called the Directorio Revolucionario Estudiantil or DRE. Fellow CIA colleague Howard Hunt later told the House Select Committee on Assassinations that Phillips ran the DRE for the Agency. The DRE is a group that Oswald would later have a strange encounter with in New Orleans in the summer of 1963.47
The Fall of Batista
Because of his mission statement—to get along with Batista in the name of American enterprise—Smith slighted the growing uprising on the eastern part of the island. In fact, some diplomatic cables from Santiago warning of this growing rebellion were actually doctored at the American embassy in Havana in order to discount this growing threat.48 In fact, even in 1957, when 31 American Marines were kidnapped by the insurgents, the State Department favored negotiation rather than armed intervention.
It was not the Dulles brothers, or Eisenhower, or Vice-President Richard Nixon who first began to focus on the growing weakness and corruption of the Batista regime. It was the press and Congress. In the summer of 1957, the New York Times did a series of extensive interviews with mid-level trade union officials in three major cities in Cuba. The report discovered that the majority were politically anti-Batista. And on the eastern part of the island, in Santiago, the working class was characterized as being in “open revolt” against the government.49
But further, as Batista grew more and more unpopular and had to resort to more suppression and torture tactics by his paramilitary secret police, there began to be a debate in Congress as to whether or not to keep on extending military aid. This began in early 1958, and the focus on human rights and the brutality of what one senator called a “fascist dictatorship,” forced many congressmen to, for the first time, reconsider Eisenhower’s unqualified support for Batista. Some went as far as to call for an immediate halt to American military assistance to Cuba, plus a withdrawal of all military missions there. By the middle of 1958, even the State Department began to see that there was a serious problem in Cuba. For at this time, Batista sustained a serious defeat in his attempt to suppress the rebellion led by Fidel Castro and Che Guevara.50 Some at State recommended that Batista resign, and a broad based transitional government be appointed. But Batista would not cooperate. Instead he staged phony national elections, which isolated him even further from the populace.51 In the face of this obstinacy, the CIA began to devise desperate tactics to stave off a Castro victory. One alternative was to arrange a meeting between wealthy U.S. industrialist William Pawley and Batista. The goal, with Howard Hunt as the mediator, was to release from jail a former Batista opponent, General Ramon Barquin, in hopes that he could displace Batista and provide a viable popular alternative to Castro. Neither of these tactics came off as planned.52 After Ambassador Smith informed him that the U.S. could no longer support his government, Batista decided to leave the country on New Year’s Eve, 1958. No one knows how much money Batista embezzled and took with him. But estimates range well into the nine figures. On January 8, 1959, Castro and Che Guevara rolled their army into a jubilant Havana.
As we have seen, Eisenhower and the State Department were slow in recognizing just how bad the Batista regime really was and how potent the rebellion against it was. Eisenhower was also a bit slow in realizing who Castro—and the even more radical Che Guevara—really were, and what they represented. On January 15, 1959, the American Embassy in Havana wired its first dispatch to Washington describing the new government. It characterized it “as basically friendly toward the United States and oriented against communism.”53 This view should have been undermined by what Che Guevara had told the CIA about a former Batista agent now under his control. Jose Castano Quevedo had been second in command of BRAC, which stood for Buro para Repression de la Activivdades Communistas. This
was Batista’s own Gestapo service. Suggested to him by the Dulles brothers, BRAC was meant to hunt down and then torture, maim, and frequently kill suspected communists.54 BRAC headquarters was immediately seized by the rebels as a symbol of everything evil about the former regime. Quevedo was now imprisoned and was about to be summarily executed. What made him even more despicable to Che Guevara was that he had been one of the many Batista officers trained in the USA. When the Agency asked him not to place Quevedo before the firing squad, the revolutionary replied that if he did not kill Quevedo for being a former Batista lackey, he would do so because he was an American agent.55 Although the State Department seemed to be wrong about the sentiments of the new regime, the CIA was certainly getting a different take on the antipathy held by Che Guevara toward Batista’s former northern ally.
But if the United States had any hope of having friendly relations with Fidel Castro, those hopes were soon quashed by American policies quickly instituted against him. Because Batista’s programs had left the government shackled by debt, and because he had also looted the treasury, Castro and Che Guevara needed the extension of credit in order to make their new programs work. But since most of these new policies were aimed at providing relief for the poor and working class and, on the other hand, cancelling the American owned Cuban Telephone Company’s 1957 rate increase, these extensions were not immediately provided.56 In fact, private banks were calling for a quarantine of credit toward Castro until the USA learned all the facts about the new government. And these private banks advised international agencies, like the Export-Import Bank, to do the same. This initial reluctance to extend a hand included a freeze out by the White House. When Castro visited New York in April of 1959 to address the American Society of Newspaper Editors, Eisenhower seriously contemplated not granting him a visa. He eventually backed off that stance but proudly wrote that, “I nevertheless refused to see him.”57
On this trip, Castro and his entourage did meet with some lower-level Treasury and State Department employees, and discussions about loans and credit did take place. But Castro had given his aides prior instructions to not formally request any funding on this visit. He wanted the exchange to be a process by which he could gauge the kind of aid that America was willing to grant his new government. The general idea put forth by the American side was that assistance was contingent on Havana’s ability to negotiate an IMF stabilization loan.58 Castro understood what this meant. And he knew that to agree to this would amount to a betrayal of his revolution. For as John Perkins has described in his book Confessions of an Economic Hit Man, these types of loans almost always mean that the general populace will experience lower wages, price increases, and social welfare budget cuts, and further, that the client state will stay in debt and that the American dominated International Monetary Fund would have a growing influence on the client’s domestic policy agenda.
The American Empire in Cuba Falls
When Castro returned to Cuba, he then proposed his first major piece of reform legislation. This was the agrarian reform law, which was announced in May and passed on June 3. With this law, Castro was now indelibly marked as both a communist and an enemy of the United States.59 The goal of the law was to redistribute land in order to provide for more efficient agricultural production. The maximum land allotment in area was capped at 995 acres. Any property over this size was expropriated by the state, and the owner was compensated for it. The problem was that the compensation price was set by previous tax records. Since most owners had deliberately discounted the worth of their property to lower tax payments, they could not now challenge the records without exposing earlier tax evasions. Most of these expropriations did not touch American interests. But Washington perceived this move as a precursor of what was to come. And when Cuba asked for advice on the program, the American embassy deliberately kept its proper distance.60
But this law was not just a watershed event in regard to Cuban-American diplomatic relations. It also created the first serious tensions on the island between Castro and Che Guevara, on one side, and the more conservative members of the Cabinet, plus the upper and professional classes, on the other. Philip Bonsal, the new American ambassador, took notice of this split and immediately cabled Washington about it: “Opposition to the government among middle and upper classes is mounting as a result of the agrarian reform law, and the Embassy has heard numerous reports that counterrevolutionary plots are germinating.”61
This antagonism accelerated in June and July of 1959 when the Cuban government seized 400 of the largest American- and Cuban-owned cattle ranches, amounting to about 2.3 million acres. Several months later, Castro seized a Moa Bay Mining plant that processed nickel ore. In reply, the American Congress allowed various denunciations of the new Cuban regime by former Air Force Chief Pedro Diaz Lanz.62 The United States now began to make threatening noises about its largest bargaining chip with Castro: it would lower its purchases of sugar unless sound and sure compensation was meted out. In the face of this, Castro and Che Guevara did not flinch. In early November, American agricultural and mining properties in Oriente and Camaguey provinces were seized. This included properties owned by large businesses like Bethlehem Steel, International Harvester, and King Ranch.63 With this, the so-called “fact gathering” phase with the new regime was over. The businesses that had been at risk were now petitioning the State Department for action to salvage their investments. How angry were these businessmen who were now losing tens of millions of dollars? As Jim Garrison later discovered, Charles Wight of Freeport Sulphur appears to have instigated an assassination attempt against Castro.64
Therefore, in the fall of 1959, there began to be discussions about what the American response to these confiscatory actions would be. As a result, representatives from the CIA and State Department came up with a plan which was approved by President Eisenhower in March of 1960. It should be noted here: the approval of the plan came one month after Castro signed an economic agreement with the Soviet Union, thus ending the American monopoly of the island’s trade.
The War Against Castro
The March 1960 plan amounted to a secret war against Castro.65 The U.S. would first isolate Cuba diplomatically and economically by breaking off relations, embargoing the island, and urging other countries to do the same. It would also launch a propaganda drive against Castro, culminating in the clandestine recruitment of Cuban exiles. These policies were to be kept secret because they would offend Latin-American sensitivities by the raw display of American might. But the new Secretary of State Christian Herter (John Foster Dulles had died in May of 1959) recommended that the new leftist regime in Cuba be eliminated by the end of 1960.66 In other words, for Herter, Eisenhower, and Allen Dulles, there would be no living with Castro and Che Guevara. In the span of one year—like Mossadegh and Arbenz before him—Castro was now marked for an Allen Dulles manufactured CIA coup. Especially now that Castro and Che Guevara had both expressed interest in spreading the revolution into other areas of Latin America. Also, by the end of 1959, many of the more “responsible” members of Castro’s Cabinet had been replaced by leftist ideologues. For instance, Felipe Pazos was no longer head of the Cuban National Bank. The Argentine guerrilla, Che Guevara, now helmed it.
As these former civil servants were retired, they and former members of Batista’s military were recruited by the CIA. One such officer who did so was David Phillips, who had been stationed on the island before the revolution. He wrote that, “In meetings with Cuban officials, I found some disillusioned with the drift toward communism and recruited them as intelligence sources for the CIA.”67 The Agency was now in the process of creating a “third force” consisting of the Cuban refugees and exiles who had fled the revolution. In the face of Castro’s confiscation of property, thousands of middle- and upper-class Cubans had left with whatever wealth they could smuggle out. Most settled in the American Southeast: Florida, Georgia, Louisiana. Many had only one goal in mind after their resettlement: working for the immed
iate overthrow of Castro’s communist government. With this new covert plan approved by Eisenhower, they and the White House shared a mutuality of interest.
One example of a former Batista civil servant who was recruited by the Agency was Sergio Arcacha Smith. Arcacha had served as a Cuban Consul in various outposts in South America, Europe, and the Far East under Batista. He then went into private business in Venezuela managing the Lago Hotel in Caracas. He then worked public relations for American businesses in Latin America, for which he earned excellent fees. He even paid a visit to the Rockefeller founded International House, a body meant to encourage international trade and globalization.68 In 1959, Arcacha decided to leave Cuba. He landed at the Alvin Callender Naval Air Base in Belle Chasse, Louisiana. Two Navy jets ferried the former diplomat, his family, and furnishings into the USA.69 An Office of Naval Intelligence reserve officer—and friend of Guy Banister and Clay Shaw—Guy Johnson, arranged the drop off. Arcacha then became part of a CIA-backed Cuban exile group along with his friends Jose Miro Cardona and Tony Varona. Both Miro and Varona had served as Prime Minister of Cuba. All three men would become involved with the Eisenhower originated Bay of Pigs invasion.
Destiny Betrayed: JFK, Cuba, & the Garrison Case Page 3