To separate the facts from the rumors, "U.S. News & World Report" sent its Inter-American News Editor--Clark H. Galloway--to Cuba for this exclusive interview with Fidel Castro after he took over as Prime Minister.

The rebel leader discusses the problems confronting Cuba, and how he intends to meet them.  Cuba, and how he intends to meet them.  The interview, conducted in Spanish, took place in the National Palace in Havana.

At HAVANA

Q    Mr. Prime Minister, is your Government going to take over some of the North American firms in Cuba?

A    Nothing has been said here about nationalization.  We have not raised that question.  We can revise some of the concessions made by the Batista dictatorship because they are onerous concessions and they are against the economy of our country, but we haven't spoken of nationalization.

Our economic problems are different, they are fundamental, such as, for example, carrying our agrarian reform and developing industries in this country.  As far as public services are concerned, they are diversified. For example, some of them are furnished by several companies at different prices, different rates. This is a problem that has to be studied and solved, but we haven't said the nationalization of any public service is
fundamental.

Q    What are the big changes you want to make in Cuban?

A    Well, fundamentally the problem of Cuba is a problem of creation more than one of changes.  It is as if we have been fenced in for many decades.

Our most serious problem is that the population grows constantly and, in contrast, the sources of employment do not increase.  And, by the same degree to which industry adopts new technology and needs fewer and fewer workers, our population increases, and we find ourselves in a vicious circle from which there is no escape-men who have no work and who, thus, cannot be consumers, and an industry that cannot develop because it does not have consumers.

We cannot compete with European industry in machinery and manufactured products, nor with U.S. industry.  Our industry has to be an industry of consumption, principally consumption inside this country, and it is not possible to develop industry unless there is purchasing power.

But how is it possible to give work to the people if the country is not industrializing?  Our big problem is the hundreds of thousands of men who are out of work.

Q    What kinds of industries do you have in mind?

A    Principally those that produce foods, a textile industry and industries to produce manufactured products for Cuban consumption.  Our industry could not hope to compete fundamentally with foreign industry; thus is must develop on the basis of domestic consumption and produce the largest possible quantity of articles and goods to be consumed in this country.

Q    How much will this industrialization program cost?

A    That depends, because you have to distinguish between the program of industrialization and the program of public works that should be carried out to meet many needs.  Any Cuban town, our of the 200 or 300 towns that are more or less important, has a series of fabulous needs that never have been satisfied.

You go to the towns and they ask you for schools, a hospital, sewers, street paving, trucks to use in cleaning the streets, parks, markets, city waterworks of all kinds. For example, they ask you for water-purification plants.

They want so much-I am making a census of all their needs.  I have asked all the active citizens of each town to tell me what things they need and in what order they would like to have the Government provide them.  I estimate that, to fulfill all these needs, it will be necessary to invest at least 2 billion pesos [equivalent to 2 billion dollars].

Q    Where would you get the money?

A    The money will come from this country, from the increase in the Government's income in the same measure in which the standard of living is raised.  I think that, in three years, we shall have doubled our budgets. Already after two months there is a surplus of 55 million pesos as the result of the increase in tax collections.

Q    And the money for industrialization?

A    The capital for industries will be partly Cuban and partly foreign.  Fundamentally, we want to have capital loaned to us so that we can invest it through the credit agencies of the country, because, it capital comes from abroad and is invested directly, we have to pay interest, which is the cost of the capital, we have to amortize the capital, yet after we have amortized the borrowed capital, we shall still have something left for ourselves.

Q    Where would you borrow this money?

A    It could come from the United States, it could come from England, it could come from France, it could come from Germany.

Q    Would you borrow it from the governments or from commercial banks?

A    It appears that there is an abundance of capital in the at this moment, because we have received many offers of loans and investments, above all because they see that our Government is honest and because they see that we have decided to repay the pending debts of the dictatorship-that we have not refused to pay them.

Q    How do you feel about trading with the Soviet Union other Communist countries?

A    I think that we should sell to them if they buy from us.  Because what we are going to do it we have the products left and they want to buy them?  That's what the United States does, and England and all the other countries,

Q    Do your see a danger in Cuba in that?

A    There can be no danger if we do what Cubans want, if we provide social justice and solve the substantial social problems of all Cubans in a climate of liberty, of respect for individual rights, of freedom of the press and thought, of democracy, of liberty to elect their own Government. The revolution that we are making offers to the Cuban people things that no other social regime can offer in the world today.  Do you understand?

No, I have no fear at all of any other ideology.  The ideology of the Twenty-sixth of July Movement, which is the ideology of social justice within the limits of the most ample democracy, liberty and human rights, is the most beautiful thing that can be promised to a man.  Why should we be frightened?  We do not have to be afraid.

Q    There have been reports that your brother, Maj. Raul Castro, and Maj. Ernesto Guevara are Communists or fellow travelers.  Would you comment on this?

A    Well, I am going to tell you my opinion about that, and it is that here in Cuba politics always has been very traditional, very conservative, and there never existed any revolutionary hope.  Many young people leaned to the left rather than sympathize with the traditional political parties that existed.

From the moment when there was organized in Cuba the Twenty-sixth of July Movement-which is a truly revolutionary movement, which intends to build the economy of the country on just foundations, which is at the same time a revolutionary movement and a democratic movement with ample human content-this movement has absorbed into its ranks many people who formerly had no political alternative of any kind and who included toward parties of radical ideas.

The Twenty-sixth of July Movement is a party of radical ideas, but it is not Communist movement and it differs from Communism in several essential respects. And in the Twenty-sixth of July Movement are men like Raul and like Guevara who are very much in agreement with my political
thinking.

Q    Then they are not Communists?

A    Certainly not.  The thinking of the Twenty-sixth of July Movement is not communistic.

Q    Mr. Prime Minister, will there be any question about having the United States continue to occupy the naval base at Guantanamo on its present terms?

A    That demand has not arisen.  We have other problems which have more interest for us.  We have economic and social problems.  If we can maintain friendly relations with the United States-commercial, political, diplomatic-I see no reason why conflicts can arise.

PLANS FOR "LAND REFORM"-

Q    You referred earlier to agrarian reform. Can you explain that program in a few words?

A    The agrarian reform is as follows:

Here in Cuba we have 200,000 or 300,000 families who are farmers and who have no land of their own.  Those farmers work two or three months a year, during the sugar season only.  They have no work for the rest of the year, they have no land to sow or to produce the most necessary things for their consumption.

Many of those farmers come to the city seeking jobs, and they increase the number of unemployed people in the city.

More than half of the country is rural and we have to convert it into a consuming population.  Those farmers will never be consumers if they do not have land to produce things. The agrarian reform will increase many times the purchasing power of the farmer, and it will be the base for industrial development in China.

There are the lands of the state and the private lands, and we think that there should be set a maximum limit to the farms devoted to the different kinds of production.

Q    A limit on the size of sugar plantations, for example?

A    We are studying this matter I am favorable to setting a limit on sugar lands also.  Now, that would be good for the sugar factories because there has been a law for many years which prohibits sugar-mill owners and sugar factories from having cane land of their own. They evaded the law in this way:  They established a company which was the owner of the sugar factory, and another company which was the owner of the sugar-cane plantations, and it was the same thing--they evaded the law.  An industrial company must be industrial an not agricultural at the same time.

The sugar factories cannot compete in the world market with a good price for sugar nowadays because their cost is very high.  It is very expensive because the sugar mills are obsolete.  If the sugar mills tried to modernize, to improve, the result would be that there would be many
workmen unemployed, or, they would have to work have time; that is, it would create a very serious problem.

The only way the sugar industry can be technologically improved is through the agrarian reform, which will draw off from that industry the excess of personnel which is demanding work--do you understand?  They have to modernize themselves through the agrarian reform.

What are they going to lose?  They are not going to lose anything, because they are going to have sugar cane to grind, more sugar cane to grind and better conditions for improving their machinery.

The other way there would be an eternal argument between an increasing number of workmen asking for work and an industry that has not progressed at all during the last year, and an industry which cannot progress if is not improved.  Thus, agrarian reform does not mean any loss.

We will indemnify them for the land.  If we have no cash--and we will probably not have if for indemnifying them for all that--we can indemnify them in bonds, bonds which will have the guarantee of an honest Government, which can be sold on the market, bonds with interest, at the shortest possible term.  I am thinking today, if persons who are more expert than I am in this matter do not differ from my opinion, that we could make the bonds run 10 or 15 years.

These could be sold, and then we could ask the industrialists, the sugar-mill owners, and the great producers of sugar cane and cattle to invest those bonds in industries, because we are willing to give all guarantees to industries, with the condition that they pay high wages.

Q    Well, since Cuba depends to a great degree on its sugar exports, do you think that this dependency should be reduced?

A    It is convenient for us to sell to the United States, and it is convenient for the United States to buy from us, because, in the difficult times that the United States has gone through it has always had a major sugar produce in Cuba.  It is in the interest of the United States that this provider be preserved, because sugar is a basic good for the United States, and we can produce it cheaper here than you can there.

We could offer to the American people a cheaper price than today's price; yet the United States Government makes people pay a higher price because it is protecting certain sugar interests in that country. Land in the United States and produce wheat, it can produce other things that are subsidized. We could favor the American people in the future by selling them all the sugar they want, much cheaper than today.

If it is true that, on the one hand, United States policy benefits certain agriculturists who have a completely artificial industry, we would benefit the whole American population by selling sugar at a cheaper price than today's. Americans like sweet things a lot, and we can offer them all they want and maintain good relations.

MAIN WORRY:  LOCAL PROBLEMS--

Q    Do you favor having Cuba serve as a base for military operations against the Dominican Republic and perhaps other countries?

A    Well, I am going to tell you what I think about that.  We have work to do here.  What worries me fundamentally--I am going to answer you with complete frankness--what worries me in these moments are the problems of Cuba.  What interests me are the problems of Cuba and the work that we have to accomplish.  All right, that is not to say that a person could be so selfish as to view with indifference the sufferings of other people of Latin America.

Trujillo [President of the Dominican Republic] is a danger to Cuba.
Trujillo is a danger to Latin America.

We could seek out Batista anywhere if we wanted to. Here we have enough volunteers to go and kill Batista in the United States, in Mexico, wherever he might be. However, we shall never accept or promote or support any action outside our national territory, because we respect the laws other countries. Trujillo does not respect them. Trujillo has established a continental dictatorship.

In a certain sense it is logical that a democratic government and we democratic Cubans would view with sympathy any movement against Trujillo, but for us to intervene directly in the problems of Santo Domingo--no.