No.

2333/65

CEJTfRAL INTELLIGENCE AGENCT

Directorate of Intel!igence
IS October 1965
IN TELLIGENCE MEMORANDUM

The Fall of C ho Guevara and the Changing Pace

or the Cuban Revolution
S u p g a r ,7

1. yidel Castro's willingness to drop Eraaato

"Che" Guevara conflrns the shift in Cuban policies
that has been under way for about tbe past year.
Guerara's fall from power apparently rasulted fron
his persistent opposition to the practical policies
recommended by the Soviet Union. His views on Cubas
economic development and foreign policy reflecting
his general opposition to Soviet advice both seem
to have played a role.
2. Guevara, who bas been considered Cuba's
most ailitant revolutionary spokpsuaac, disapproved
of Castro's alignment with the USSR in the SiceSoviet dispute and of his willingness to dinlnish
C u M ' s role as a catalyst and supporter of revolu
tions la Latin America and Africa. This side of tbe
controversy has be-en aaply treated elsevrhcre. This
paper concentrates core on tbe dispute between the
two r-en over economic policy.
3. Vhile he was in favor with Fidel Castro,
Che Guevara was one of the most important architects
of tbe Cuban economy. He retained this role for scae
tine, even after his industrialisation plan had been
proven wrong and some of his other policies were
beine challenged. Not until July 1964, when Presi
dent Dorticos became the Minister of. Economy and the
Director of the State Planning Board (JUCS(U*AN), did
Guevara's position really begin to weaken. Since

that tine Fidel Castro has dedicated most of bis

energies to Cuban internal natters, and to finding
remedies for the disastrous effects of the regime's
earl7 policies largoly those engineered by Guevara.
Industrialization Guevaras Greatest Failure
4. From the outset Guevara bad encouraged tbe
rapid nationalization and centralization of tbe
economy, and by tbe spring of 1961 tbe Cuban economy
was almost entirely state owned.
Although he was
not a trained oconcaist, Guevara convinced Castro,
against the objections of Carlos Rafael Rodriguez
and others, that accelerated industrialization wat
necessary. Ho asaintained tbat a diversification of
agricultural production and increased investment in
industry was required to cad dependence on sugar and
Cuba's "economic enslavement" by the US. By the
tieC Guevara and Castro admitted, in late 1963, that
tbe industrialisation plan must be scaled down to
reassign resources to sugar production, Guevara's
policies had brough the econcey- to its lowest point
since Castro case to power.
Guevara's Dispute with tbe National Bank
5. Because of the failures of the economy
Castro was paying increased attention to other ad
visers by the end of 1963. lo February 1964 some
of tbe strains and tensions within the regiae caae
into the open, .torsolo Fernandez Font, the Presi
dent of the Xational Bank, published an article in
the ideological Journal Cuba Socialista on tbft his
tory and functions of a socialist" baok. In the
next issue of the same journal Guevara reacted
angrily. Be charged tbat Fernandez still thought
in terns of 'classical oconoMics" and even "vulgar
economics"? tb*t be sought to make the Bank instead
of the Finance Ministry tbe center of the Cuban
economy; aod that be wanted to control investment
?nd oredits through the National Bank.
6. In the Hay issue of Cuba Socialist* Fernandez
meekly tried to defend himself without taking issue
with Guevara or even mentioning his aane. Fernandez
said tbat socialist planning could take a monetary
form with tbe bank necessarily playing a pronineot
role. A fourth article, b7 Luis Alvarez Roo, Jttoister

<M

Of Finance and a close Guevara associate, appeared

in the July Issue and attacked Fernandez* position.
By. the time that issue appeared, Fernandez bad been
removed from tbe Kational Bank and given tbe position
of Kinister of Foreign Trade, Ho was replaced by
Salvador Vilasjeca Force another close Guevara asso
ciate. Banking and finance were both in tba hands
of Guevara followers.
T. Guevara's outlook, which approximated
present-day Chinese rather than Soviet--econoaic
practice, was behind the controvcroy. A serie of
articles in fiucatra Industrie, the official organ of
Guevara's Ministry or industries, spoiled out his
opposition to the Soviet proposals for onccuraging
greater financial respoasibility and independence la
enterprises. Guevara objected to Soviet tendencies
to place individual plants on n self-supporting
basis.
S. Thus Guevara's war on tbe role 'envisioned
for tbe Cuban National Bank by Fernandez was only
part of a ouch larger war against decentralization,
relative autonomy, financial flexibility, and greater
material incentives. Guevaras publication explicitly
expressed disagreement with "the emphasis given to
material Interest" by the Soviet econcoist 7. G.
Mtocraan, whoa it charged with advocating change in
the "ttethods of collective incentive, abandoning
the old formula or reward based on the fulfillment
of plans in order to aovc to aiorc advanced plans."
The arrr Soviet economic treads were seen by Guevara
as h threat to the moral incentive as the "predominant
fora" in Cubas construction of socialism.
Guevara's Polcalc Over Centralisation
S.
One of Guevara's most powerful econoaic op
ponents was Professor Charles Bettelheia, a French
economist of Comuaist persuasion. Bettelheia had
nade several trips to Cuba at Castro's request and
had helped convince his in tbe latter part of 1963
that tbe ecoaoay should be based oa agriculture for
the next decade. He also warned against centraliza
tion. Because of his advice Castro nade preliminary
investigations into tbe decentralization of authority
and in 196S began <jxperlents in local autoncy in
tM> towns. But despite these expcrir&ants, and despite

3-

the declaration of a six-year sugar plan, Bettelhoin

was outweigh**! by Guevara still the strongest voice
on Cuban <3C o q 0r 1c affairs.
10, In torch 3$f34 Guevara declared that ''it^ls
supreaely Important for us to dafend energetically on
all fronts tbe principle of central organisation of
tbe economy." For Guevara, centralization" wae a
principle froa which tbo Cubans could not depart with
out sacrificing ideological purity. For Bottelheia,
however, centralization wac a aeans to be prudently
eoployed only as it was necessary for planning. In
an article in Cuba Socialist* in April, Bettelheias
suggested that a "'certain liberty of local Inter- .
change" as well as "individual production" would he
Just as beneficial In Cuba as in the Soviet Cnion.
He tried to tell Cubanc that they had- nationalized
too auch and too fast a 3lap at Guevara.
11, A uontb later Guevara accused Bettelhelu
of making a "nochanicaX analysis," but was concerned
mostly with the suggestion that .it night be more
profitable to nationalize only large industrial units,
and leave small enterprises in private hands- Much
of tbe argument centered on the emprecao consolidadas
(consolidated enterprises), the Cuban"bodies ucder
the Ministry of Industries which controlU<d a group
ing of similar but otherwise independent units.
Bettelhein said that this ofton eeunt artificial and
inefficient collectivization as in the case of
garages. But Guevara replied tbat '"to say an enpresa
consolidada is an aborration is to say that the Cuban
revolution is an aberration." Guevara argued ulti
mately that administration really nattered ltss than
tha principle o1 collectivity, and his arguments
prevailed over those of Bettelheia-.
Porticos Challenges Guevara
12, In July 19$<s two Important cabinot appoint
ments signalled the power struggle over internal eccnoaic policy which culminated in Guevara's elimination.
President Dorticos was appointed to two major posts in
an attenpt to improve the management of the badly dis
organized economy, While this ove was apparently
aiaed at taking a portion of the administration of econoaic affairs from the bands of Guevara, Che did never
theless register a success of his own.
In tbe sane

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mmsMmmmm

worth his closest protege, Orlando Borrego, was

oaaed to tbe new post of Minister of the Sugar In
dustry.
13.
It seeas, however, that the appointsenf
of Dorticos was the turning point for tbe econoaic
policies and fortunes of Guevara. Dorticos b$gae
to assvnc overall direction of tho eccaony and it
was rumored that tbe National Bank and tbe Finance
Ministry (both headed by Guevara followers) would
bo serged with the Ministry of Sconcnv and JUC2PLAJ?.
Tho norgor never took place, probably because the
opposing sides becaae fixed and tbe growing ten
sions threatened to break into the open.
1*1. Even so, Dorticos won an important vic
tory when one of Guevara's central points was
quietly suppressed. Referring to the consolidated
enterprises, Castro said in August that they "soaetiaes become boring, tedious, intolerable. It
would be better to have a garage that works well and
gives people good service. That is oucb aore im
portant than, to go around putting up a huge sign
to advertise that this place belongs to an cmpresa
eoosolldada.
iTho knows how ouch paint has been
vasted putting Up naaes of empresas concolidadaa?1'
Seeso ottprcsas coosolidadas were disnandcd late in
the year, ana Castro again ridiculed then as a
'4naniar in January 19(55.
Guevara's Views, on Foreign Policy
15. An adnlrer of Chinese foreign policy,
Guevara persistently had agitated for export of the
Cuban revolution to the rest of Latin Aaerica and
even to Africa. His aanual on guerrilla warfare
has been widely circulated in Latin America and he
was a prominent figure in planning invasions against
at least five Caribbean states in 1959. Guevara has
been justly described as a roving incendiary andrevolutionary.
An Argentino, ho reportedly assisted
tbe pr0 C0n>uaist Arbenz rceim in Guatemala boforo
it was overthrown ia 1954. Later he traveled to
Mexico where he met Fidel Castro in 1956.
IS. Guevara never wavered from his fira revo
lutionary stand, even as other Cuban leaders began
to devote nost of their attention to the internal

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probleas of tbe revolution. Moreover, Castro's ex

tensive popularity in Latin Anerica decreased sharply
once be comultted the reticle to rapid socialization.
His call for Cenaunist revolutions, after bis es
pousal of Harxisn io Deceaber 1961, had not beonre
ceived with the enthusiasm of his earlier revolution
ary incantations.
Indeed, various Latin American par
ties apparently opposed Cubas assistance to Pekingoriented revolutionary groups. Even so, Guevara con
tinued to press for Cuban aid to Latin American
revolutionaries. His policies generally prevailed.
17. About aid-1964, however, tbe regime began
to accelerate the process of institutionalization
attending to Internal econoaic problems and party
organization. Revolutionary fervor was tonpered
and Cuba begac to follow Soviet advice atore closely.
-Relations with China deteriorated during 1964, as
witnessed by a 50 percent drop-off 1b air travel
between the two countries. Relations became further
strained by November when Cuba took a pro-Soviet
posture at the Havana Conference of Latin American
Cozaunist Parties. The presence of Raul Castro at
the bead of a high-level Cuban delegation to the
consultative conference of Coaaunist Parties in Mos
cow in March 1965 confirmed for the Chinese Havana's
new "revisionist" posture.' Guevara, however, ap
parently still strongly opposed aodcratioo in Cuban
foreign policy.
The Abrogation of Guevara's Policies
18. In early Dsccmber 1964 Guevara had departed
oo a three-month trip to the United Nations, Africa,
and Peking. Keanwhile, Castro had lost faith in
Guevara's theories and aay have already decided
against his dogmatist views in favor of the "re
visionist" economic school headed b 7 President Dorticos
and Carlos Rafael Rodriguez. ' A clear indication of
this cone on 21 January 1965 when Castro announced
tbat ttaterlal incentives would be enphasized. Be
said that the 5,000 best cane cutters of the 1965 har
vest would receive rewards aucb as actOrcycles, trips
abroad, and expensive vacations at Cuban resorts.
19. It took Guevara only a short tire to respond
publicly, fihile in Algiers be wrote a letter to the
Uruguayan leftist weekly Marcha. la it he declared

b e gmmmmrn
that "tbe correct Instrument for the awakening ot
tbe Kisses nust be fundamentally of a noral nature."
In Cairo tbe following eonth Guevara again criti
cized Cuban econcoic policies.
Incorrectly, be
called the copies of the model of econcralc develop
ment Moscow had Imposed on the countries of Eastern
Europe when "no one had tbe guts to object.1'
20. An Interview published in the Egyptian
periodical Ai Taliah in April was the last cnccapa.ssl.ng public" definition of Guevaras policies.
In it he vebenently attaekd tbe econoaic reforns
adopted in Yugoslavia as well as "tho Liberoan ex
periment1' in tho OSSR. la criticizing Yugoslavia,
Guevara condemned its reaction against Stalinism
and its resort to tbe use of material incentives.
The two primary issuos lie singled out bad direct ap
plication to the Cuban situation. One *as workers
participation in management, which be said Cuban
workers wanted in order to gain extra benefits. Tbic,
be said, constituted "social oppression" and a kind
of exploitation. The second issue, that of workers1
profit sharing, was one be knew had been approved in
Cuba before be left. The official labor organ
Trabajo in December 1964 had announced a profitsharing scheme called tho Contract Sage Pilot Plan.
Guevara nust have been particularly irked when
Trabajo chose to Identify the worker's compensation
as "tbo prize." His statement in Al Taliah was
therefore another sharp criticisn of the <5iban
leadership and "liberal" economic policies.
21. Guevara returned to Havana on 13 torch
and was greeted by both Castro and JDortxcos. Re
was reported by tbe Havana press to have txade an
appearance on 20 Kareh, but be then slipped out of
sight. One of the first moves against his power
clique caae in mid-June when National Bank President
Salvador Vilaseca was reaoved iron his post and in
stalled as rector of Havana University,
22. Castro's 26 July speech dramatized the
shift away froa Guevaras vie*g. Castro spoke at
length about the seed for a regular system of local
authority. Earlier, in tbe face of conflicting
"conservative" and "liberal views represented by
Guevara and Bettelhein, Castro had supported Guevara
in preventing the JUCEl (local coordinating boards)

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froa exercising any rail authority. Now, however, be

reversed his stand. He called tor the decentralization
of local administration, and announced that extensive
refonos would begin to organize a completely new adainistrative apparatus. Castro heatedly denounced tbe*old
centralized system and graphically described tbe prob
lem. He said that when a dog Bade n mess in tbe street
of some provincial town, the central authorities bad
to be called to remove it. On 28 September Castro
again nade it perfectly clear tbat Guevara's views w*ro
in disfavor when he said: "Let me go on record that I
aa a defender of local developeseot and administration."
Another of Guevara*6 ebertsbed theories bad been aban
doned .
Cuba without Guevara
23.
With the announcement of the Central Committee
of tbo Conaunist Party on 1 October, It -was clear that
Guevara, bis followers and his policies were out of
favor. The only three ministers excluded frca tbe
central ccuaittee were Lais Alvarez Ron (tbe Finance
Minister who had sided with Guevara in the National
Bank dispute), Orlando Borrego (Guevarra's closestprotege), and Arturo Guzaan (the Acting Minister of
Industries). Salvador Vllasvca Forae (the foraor
National Saak President) was also excluded. These four
were the only high-level Cubans not included in the
Central Coxnittee and were also the only ones who bad
been intlnately involved with Guevaras econoaic poli
cies. yoreover, the party's now five-ao Economic
Cotaaittee was headed by President IJortlcos and staffed
with adherents of "liberal econonic views.
2 4 ta a speech on 2 October, Castro read wbat
be said was a letter fron Guevara. Tbe osaio Idea it
contained vas tbat Che felt bis revolutionary talents
now could be better used elsewhere.
It said at one
point, "I 'vCho) can do what is denied you (Fidel) by
your responsibility as head of Cuba." Thus there is oo
doubt that Castro's more cautious position on export
ing revolution, as well a3 bis different economic ap
proach, led to Che's downfall. Castro recently said
that tbe Cuban revolution oust find solutions accord
ing to its own "spirit and peculiarities." But frco
now on Cuba wall probably pattern both its domestic
and foreign policies wore in accord with Soviet ad
vice.

25. With this realignment, already strained relatioos with China will probably deteriorate further.
Last Novoober at a mc-fttinC ot Latin Aaerican Coacunist Party delegates in Havana, Cuba agreed to support
the orthodox parties rather than Peking-oriented **
oilltant groups. Relations with China deteriorated al
most imaediately after the Havana conference. Guevara
visited Peking lo February apparontly in an attopt to
explain tbe Cuban position, only to be sharply rebuked
by the Chinese, Alter resuming his African trip be
continued to vent bis "dognatic" views, which generally
reflected Chiaeso positions.
26.
In any case China now has clear Justification
for attacking Cuba as a "revisionist'* regime a charge
it has never publicly made. With the fall of Guevara
and the general acceptance of Soviet advice in domes
tic and foreign policies, the Cuban revolution ha3
entered a now phase. The shift in Cuban foreign policy
which baa been en train Since 1964 now is eonfirned
witb Guevara's fall.