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1135. James B. Donovan, private US citizen and counsel for Cuban Families Committee, reported last night Castro signed agreement with him release 1113 Bay of Pigs prisoners on following conditions:
1. Assurances to deliver $53,000,000 pharmaceuticals, medical supplies and foodstuffs and possibly some related products such as insecticides.
2. Delivery of goods in Habana amounting to 20% of above value before prisoners released.
American Red Cross acting in collaboration Cuban Families Committee has vessel now loading which together with air cargo now being prepared will deliver the 20% by December 23 in order begin airlift prisoners Miami area dawn December 23. Three Cuban Red Cross represent-atives arrived Miami last night to inspect cargo being loaded. Transaction is therefore on Red Cross to Red Cross basis.
Goods donated by US private companies to ARC now total about $45,000,000; contributions continue to be made. (FYI. If necessary US prepared to make available upon ARC request powdered skim milk from surplus stocks in amount not to exceed about $10,000,000 which represents less than 10% existing surplus this commodity. Such release can be made within existing statutory authority. End FYI.) These donations by private companies allowable under current tax legislation. Rulings rendered by Internal Revenue re these donations conform to existing regulations and precedent. Private companies have choice under the law between paying taxes on this amount or making charitable contributions (up to 5% of their profits) for tax deduction purposes. This choice entirely theirs.
Inland and overseas freight, insurance, handling costs and labor have been donated by railroads, airlines, steamship lines, trucking companies, insurance companies and labor unions. No USG funds involved. Government role has been essentially to cut red tape in order expedite transaction.
Prisoners fought bravely at Bay of Pigs before capitulating. Since capture none has defected or publicly condemned US despite offers to reward them for doing so. Prisoners suffering severe malnutrition and disease (some may be near death).
While difficult assess precisely, Department does not believe transaction will materially affect stability Castro regime. Reports indicate veteran Cuban communists opposed transaction while 26 July group favored. Cuban normal annual imports pharmaceuticals alone over $60,000,000 hence transaction involves substantially less than year's supply any commodity. Castro regime had budgeted approximately $1,000,000 in foreign exchange for purchase pharmaceuticals; inclusion pharmaceuticals (which comprises over half of amount) therefore releases only that amount foreign exchange for other purposes.
FYI. Donovan reports Castro prepared review cases of twenty-four US citizens now imprisoned with view clemency or amnesty provided current transaction consummated good faith. End FYI.
Bearing in mind that last minute snags may upset transaction, you authorized draw on foregoing except FYI portions in reply inquiries. Cable press and official reaction transaction.
Source: Department of State, Central Files, 737.00/12-2262. Limited Official Use; Niact. Drafted by Hurwitch and approved by Martin.