US SANCTIONS CURTAIL FREE WORLD SHIPPING TO CUBA

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• Publication Date: March 1, 1964
• Content Type: BRIEF

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11 ~j
Current Support Brief
US SANCTIONS CURTAIL FREE WORLD SHIPPING TO CUBA
CIA/RR CB 64-18
March 1964
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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e I s ific lion
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
.Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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US SANCTIONS CURTAIL FREE WORLD SHIPPING TO CUBA
A combination of persuasion and punitive legislation by the US govern-
ment brought a sharp decrease (57 percent) in 1963 in the number of Free
World ships engaged in trade with Cuba. However, better utilization of the
cargo capacity of chartered Western vessels and increased use of Soviet
Bloc and Cuban ships held the decline in cargo to about 7 percent in 1963.
If the delivery of Soviet military goods is excluded from the tonnage s.ta-
tistics, cargo deliveries fell off only about 3 percent compared with 1962.
Thus the drastic reduction in Free World shipping to Cuba last year had
only a slight effect, if any, on the Cuban economy.
The passage by the US Congress of the Foreign Assistance Act of
1963, the general buoyancy in world shipping markets (which reduces
the attraction of the Cuban trade), and the rapid growth of the merchant
fleets of Communist countries all point to a probable further decline
this year in the number of Free World ships calling at Cuban ports. An
exception to this general decline may be the number of British-flag ships
chartered in the Cuba trade in 1964, depending on the availability of Free
World charters. Of the voyages of Free World ships to Cuba in 1963,
about one-third were under the British flag; the other two major sources
of Free World shipping were Greece -- now virtually out of the Cuban
trade as a result of the Greek royal decree -- and Lebanon, where re-
strictive legislation is pending.
The present size of the rapidly growing merchant fleets of Commu-
nist countries is sufficient to maintain Cuban imports without employing
Free World vessels. Free World ships now under charter to Communist
countries could be substituted for Communist vessels at present being
used on other than Cuban trade routes. Consequently, although US sanc-
tions against Free World shipping to Cuba may cause inconvenience and
somewhat higher shipping costs to Communist countries, these sanctions
are unlikely to reduce the Cuban trade materially.
1. Volume of Cuban Foreign Trade
Since September 1962 the US Government has made an intensive ef-
fort to reduce Cuba's trade with the rest of the world and, with the as-
sistance of natural economic forces, * has achieved a notable decrease
See 4, below.
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in the number of Free World ships calling at Cuba. The total number of
Free World ships that arrived in Cuba in 1963 declined to 371 from a
level of 865 in 1962 (see Table 1). This reduction in the arrival of Free
World ships to a level of only about 43 percent of that of 1962, however,
did not result in a proportional decline in cargoes delivered to Cuba by
Free World ships. Because of better utilization of cargo capacity, *
deliveries of cargo in Free World ships in 1963 fell to only 69 percent
of the level of 1962 -- that is, they dropped from about 4.1 million tons**
in 1962 to about 2. 8 million tons in 1963 (see Table 2 , '11).
However, because cargo deliveries on Soviet Bloc and Cuban ships
increased, there was only a decline of 7 percent in Cuba's total imports
in 1963. Furthermore, if military cargo is not included in the dry-cargo
statistics, the decline in Cuba's imports is only about 3 percent. (Mili-
tary cargo deliveries were 175, 600 tons in 1962 and 38, 500 tons in 1963.
These figures indicate that the drastic reduction in Free World shipping
to Cuba probably was not a significaxnt factor in the small reduction of
economic deliveries to Cuba last year.
2. US Measures to Obstruct Ship Traffic to Cuba
Three measures have been employed by the US Government to re-
duce Free World shipping to Cuba. These measures are (a) persuasion;
(b) denial of military or economic aid to countries that permit their
ships to carry military or economic aid goods to Cubat; and (c) denial
of cargoes, the freight charges for which are paid by the US Govern-
ment, to ships that have made voyages to Cuba. tt
3. Results of Programs for the Discouragement of Shipping to Cuba
Persuasion, which has been employed since the Soviet military
buildup in Cuba in mid-1962, has proved to be the most effective tactic.
The improvement in utilization of cargo capacity of aggregate Free
World tonnage arriving in Cuba in 1963 compared with 1962 was due in
large measure to a reduction of ships arriving in ballast and to the com-
plete elimination of cargo liner traffic (see the chart, inside back cover).
Tonnages are given in metric tons throughout this publication.
P. 4, below.
t Under the provisions of Section 107 of PL 87-877, the Foreign Aid
and Related Agencies Appropriation Act, signed by the President on
23 October 1962.
tt Provided by National Security Action Memorandum No. 220, dated
5 February 1963.
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Arrivals of Free World Ships in Cuba, by Flag
1962 and 1963
1962
1963
865
Belgium
2
0
Chile
4
0
Denmark
41
1
Finland
3
1
France
14
8
Greece
172
99
Honduras
2
0
Italy
36
16
Japan
27
1
Lebanon
52
64
Liberia
23
0
Morocco
5
9
Netherlands
20
0
Norway
85
14
Panama
15
0
South Africa
1
0
Spain
37
8
Sweden
44
3
Turkey
4
0
UK
165
133
West Germany
82
2
Yugoslavia
31
12
Most of the countries that have forbidden their shipowners to engage in
the Cuban trade or persuaded them to abandon it did so before the pas-
sage of punitive US legislation. West Germany, Panama, Liberia, and
Honduras imposed official controls on shipping to Cuba. Other countries,
including the Netherlands, France, Denmark, Norway, Turkey, Japan,
and Italy, asked their shipowners to leave the Cuban trade and received
almost complete compliance. On 14 March 1963, as a result of US
Government pressures, the Greek Government by royal decree forbade
Greek-flag ships to carry any sort of cargo to Cuba unless they were
operating under charters signed before the date of the decree. Greek-
flag ships then became predominant among those sailing to Cuba in bal-
last to load sugar. A second Greek royal decree, of 27 September 1963,
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Cargo Tonnage Delivered to Cuba
by Free World, Communist, and Cuban Shipping a/
1962 and 1963
Thousand Metric Tons
1962
1963
Dry Cargo
Tanker
Total
Dry Cargo
Tanker
Total
Total
3,327
4,536
7,863
3,106
4,222
7,326
Free World
2,144
1,909
4,053
1,241
1,552
2,792
Communist
1,038
2,626
3,,664
1,634
2,671
4,304
Cuba
145
0
145
230
0
230
a/. Because of rounding, components may not add to the totals shown.
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forbade Greek-flag ships to carry cargoes from Cuba unless operating
under charters signed before the decree. As a result, the number of
Greek-flag ships in the Cuban trade dropped to two in both November
and December.
The Lebanese Government had virtually no influence with owners
of Lebanese-flag ships, because few of these ships are owned by Leba-
nese companies. As for the government of the UK, it has taken the
position that British shipping is entitled to the freedom of the seas in
Cuban as well as in any other trade.
Because of the many loopholes provided in the language of Sec-
tion 107 of the Foreign Aid and Related Agencies Appropriations Act,
it was nearly impotent as a deterrent to Free World shipping to Cuba
and served best as an expression of US feeling. Its penalties did not
apply with respect to ships that called at Cuba (a) if they did not carry
identifiable items covered by the Battle Act or goods associated with
known foreign aid assistance programs in Cuba, (b) if they were at sea
when the legislation was passed, (c) if they were operating on charters
negotiated before the legislation was passed, or (d) if they arrived at
Cuba without cargoes (many arrived in ballast to load sugar and molas-
ses). The sanctions did not have significance for a number of countries
that receive no economic assistance from the US.
The penalties of National Security Action Memorandum No. 220
fall not on governments but on shipowners, and, therefore, the effec-
tiveness of this measure was dependent on economic conditions. Until
late summer 1963 the world shipping market was deeply depressed,
and many shipowners preferred to charter their ships in the Cuban
trade rather than to maintain their eligibility for US Government-
financed cargoes by leaving their ships unemployed.
4. Other Pressures on Free World Shipping in the Cuban Trade
Two new factors are now at work that will tend to reduce the em-
ployment of Free World ships in the Cuban trade. One factor is the
increased world demand for shipping since September 1963, particu-
larly to carry US PL 480 cargoes (for which ships that have been to
Cuba since 1 January 1963 are ineligible). Before September 1963,
chartering for voyages to Cuba (and chartering to Communist countries
in general) provided the only available employment for ships that other-
wise would have been laid up and probably has kept some small ship-
owners from going out of business during the long depression in the
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world shipping industry. Moreover, freight rates in the Cuban trade
have been advantageous. Now, however, the general buoyancy in world
shipping markets reduces the dependence of marginal shipowners on
charters to Communist countries and on Cuban voyages. The second
factor that reduces the need for Free World ships in the Cuban trade is
the present large size and high rate of growth of the merchant fleets
of Communist countries and the increasing facility with which, if nec-
essary, these countries can keep Cuba supplied without using their
chartered Free World tonnage on the Cuban routes.
The somewhat dismal outlook for charter business from the Com-
munist countries after 1965-66 may influence some of the larger owners
to withdraw their ships from the Cuban trade as their charters to Com-
munist countries expire in order to have these ships removed from the
"blacklist" of the US Maritime Administration and made eligible again
for cargoes financed by the US Government. Owners also may hope that
by prompt action now in withdrawing from the Cuban trade they may get
their ships off the "blacklist" of the International Longshoremen's Union
as well as the tanker "blacklist" of the Standard Oil Company of New
Jersey by the time that Soviet Bloc business has become much less available.
5. Participation by Flag of Free World Shipping in Cuban Trade
in 1963 and the Outlook for Free World Carriage of Cuban
Trade in 1964
A total of 206 Free World ships were involved in the Cuban trade in
1963, as follows:
-- ~l Oil_Lu5 rlag
206 France
Morocco
64 Spain
Greece 58 Sweden
Lebanon 413 Finland
Italy 10 Denmark
Yugoslavia 6 West Germany
Norway 6 Japan
This reduction in the dependence of Communist countries on char-
tered Free World shipping probably is the principal reason why one
British shipowner failed to renew a number of long-term Soviet time
charters on tankers to carry Soviet oil to Cuba when their terms ex-
pired.
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Of these ships, about one-third were under the British flag and are not
likely to be forced out of the Cuban trade by UK governmental action.
Greek-flag ships amounted to 28 percent of the total, and virtually all
of these are out or soon will be out of the Cuban trade as a result of
the Greek royal decree. The Lebanese-flag ships, representing 21 per-
cent of the total, may be forced out of the trade if the Lebanese Govern-
ment passes legislation now in process. The remaining 41 ships are
scattered among the flags of 11 countries, none of which has a very large
participation. With the exception of Yugoslavia and France, the remain-
ing countries are somewhat susceptible to the provisions of the Foreign
Assistance Act of 1963, which became effective on 15 February 1964.
Thus it appears that British-flag ships will constitute the principal
part of Free World shipping in the Cuban trade in 1964. They probably
will be available for the Cuban trade in sufficient numbers unless a
continuation of the present world shipping boom offers more remunera-
tive employment elsewhere. It is conceivable that some British ship-
owners, seeing a dim future for charters to Communist countries and
wishing to remove their names from various US blacklists, may decide
to pull out of the Cuban trade in the near future.
Some ships, not presently under the British flag, may be registered
under the British flag for the purpose of trading with Cuba. Of the 43
Lebanese-flag ships in the Cuban trade in 1963, 24 were controlled by
British shipping companies (none of the 43 was controlled by a Lebanese
company). If continuing these ships in the Cuban trade offers sufficient
financial advantages, the British owners can switch from Lebanese to
British registry. The British shipowners in the Cuban trade typically
have chartered their ships to Communist countries in recent years and
control many more ships (many of which are under charter to Com-
munist countries) than they have used in the Cuban trade. Their ships
fly various flags, and if they can no longer send Greek-flag or Lebanese-
flag ships to Cuba, they can substitute British-flag ships. *
* In January 1964, three British-flag ships controlled by Basel M.
Mavroleon (the Mulberry Hill, the Oak Hill, and the Sycamore Hill)
arrived in Cuba. The employment in the Cuban trade of these ships
that had not been to Cuba in 1963 and were not previously on the
"blacklist" of the US Maritime Administration somewhat overcom-
pensated for the removal of two of Mavroleon's Greek-flag ships (the
Pollux and the Polaris) from the Cuban trade in response to the Greek
royal decree.
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Analysts:
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Figure 1
SHIP ARRIVALS IN CUBA
1962 - January 1964
Januar
y
BLOC
liners )*
di
l
ng cargo
u
FREE WORLD (exc
..
FREE WORLD ( including cargo liners')
CUBAN
r
i
!
r
v
v
0
0
S
O N D J F M A M J
A S O N D
J
J F M
J F M A M J J A
1962- 1963 1964
( Figures for latest month shown are preliminary,
* Many Free World ships, operating on scheduled cargo liner both moral suasion and sanctions to discourage shipping
service, called at Cuban ports to offload small amounts of to Cuba? This action effectively removed Free World
cargo until the establishment of the U.S. quarantine on 22 cargo liners from the Cuban trade,
34875 2-84 October 1962, Since then, the United States has employed ~ao>
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13 March 1964
MEK ANDt) FC: Chief, Dissemination Control Branch, DD/CR
FRQ4 : Chief, Publications Staff, ORR
SUBJECT : Transmittal of Mater.al
It is requested that the attached copies of CIA/RR CB 64-18,
US Sanctions Curtail Free World sipping to Cuba, March 1964, Secret/NO
PO EIGN DIEM, be forwarded as follows:
State, m Communications center,
Room 7818, state Dept. Bldg.
For Embassies in Moscow, Bonn, Brussels)
Copenhagen, Frankfurt' The Hague, Lisbon*
London, Madrid, Paris, Rome, ?Iokyo, Athens,
Beirut, and Mexico
25X1A
Attachments:
Copies #18 - +198 of CB 6+,18
ccs CGc/RB
COMPLETED
7h^ dissomination reque;tgd by
;his memorandum has been completed,
BY: ~6'
Date: //=~7 .6~/
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85
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