The Carter administration has made clear recently that worsening East-West relations have not changed its desire for an international sugar agreement that helps Cuba economically and that has the strong support of the Soviet Union.
This was evident from officials in several agencies who said the administration wants the Senate to hurry up and ratify the agreement, which was signed last fall in Geneva by the United States, Cuba and 72 other nations. The reason, they indicated, was that the U.S. government, for domestic reasons, wants the sugar agreement as badly as the Cubans do.
"As far as we're concerned, the fact that they [the Cubans] got what they want doesn't change the fact that we got what we want," one official said.
These realities of sugar politics were cited as examples of difficulties faced by government experts who are studying ways to limit Cuba's role in Africa, either by providing it with inducements or by devising counter measures or sanctions against the regime in Havana. The options are being prepared for a presidential review memorandum that will go to President Carter soon.
Cuba is the world's largest sugar exporter. Slightly more than half of this sugar is delivered to the Soviet Union, in return for oil. U.S. experts say the terms are extremely favorable for Cuba, with the Soviet Union currently committed to buy the sugar at about four times the world price of 7 cents a pound.
However, Cuba relies on non-communist customers (other than the embargoed United States) to buy between 2 and 3 million tons annually. These exports provide Cuba with about three-quarters of its hard currency revenues.
The agreement worked out in Geneva last year seeks to raise world sugar prices to a floor of 11 cents a pound through buffer stocks and export quotas. The size of individual export quotas was negotiated by sugar exporters during three weeks of bruising bargaining in Geneva. Cuba demanded and received the largest quota. As of July 1, its quota will be just over 2 million tons a year. Australia and Brazil, the other major exporters, have quotas of just under 2 million tons.
The price increase is considered essential to Cuba's economy. The country's current five-year plan was based on expected prices of 15 cents a pound, and some goals reportedly have already been scrapped because of the global sugar price depression.
This same agreement also was seen as a major accomplishment in Washington. If the accord functions as planned, it would raise world sugar prices. This, in turn, would remove the need for a costly, politically controversial U.S. domestic sugar price support program and would help the country keep its free trade credentials. Sugar prices have been supported at 13 1/2 cents at home, and importers have had to pay fees and tariffs to raise foreign sugar to that price.
"The United States' position in the sugar agreement was dictated by domestic pressures," said one official. Others described the Cuban role at the Geneva meeting as "cooperative." The Cubans were reported to have compromised on several points. They wanted higher minimum prices than 11 cents; they agreed, ultimately to limit their exports to China and Asian communist countries to 650,000 tons; and they accepted a world trade quota backed by the United States.
However, Cuba was permitted to keep its special, secret sugar trading arrangements with the Soviet Union. The government in Moscow strongly supported the final accord.
The sugar pact is to be policed by the International Sugar Organization, an independent, London-based group. However, it now seems unlikely that the Senate will ratify the agreement in time for the United States to participate by the starting date of July 1.
Sen. Frank Church (D-Idaho) has told the administration that he will not start the ratification process in the subcommittee on foreign economic policy he chairs until he gets assurances of higher domestic price supports for best growers. The Carter administration has threatened to veto such a bill.
American leverage through the sugar agreement is sharply limited. American participation in the agreement is needed for it to work, since this country is the world's largest importer. But in the absence of an agreement Cuba could continue to sell its sugar to foreign customers. In some respects Cuba would be less affected than other countries, since Cuba has a guaranteed customer in the Soviet Union. Other nations friendly to the United States, such as Australia, would be deprived of the benefits of higher world prices just as Cuba would if the agreement collapsed.