817.51/1973: Telegram
The Minister in Nicaragua (Eberhardt) to the Secretary of State
[Received 9:20 p.m.]
300. [Paraphrase.] It is the feeling among us all here that a postponement of the loan negotiations would be most unfortunate. Aside from the fact that the prevention of abuses in the collection of internal revenue and in the distribution of aguardiente79 during the election would be much more difficult if it cannot be effected through an amendment to the financial plan, it is our feeling that a postponement of the negotiations until after the election would very probably mean their complete failure. The opposition party, whichever it might be, would probably vociferously oppose any loan simply to embarrass the administration, and this opposition would cause the defeat of the loan if a Liberal Party candidate were elected [Page 554] President because at least one House of Congress will almost certainly be Conservative. [End paraphrase.]
The present financial plan is unsound and dangerous now that the obligations secured by the surplus have been overcome, because, after making only an inadequate provision for the current expenses of the Government, it leaves very large sums of money each year to be disposed of without restriction by the Executive. We feel that an indefinite continuance of this arrangement effected originally through the Department’s good offices, and the continued presence of the American High Commissioner without power to assure proper financial administration will be highly undesirable.
Furthermore, unless a new financial plan is adopted, the situation of the Guardia Nacional will be extremely precarious, as it will depend for the greater part of its funds upon a surplus which can easily be dissipated in advance by loans from the National Bank or merely by failure to collect the internal revenues. In a bad year there may be no surplus. If virtually all other expenses of the Government take priority over the Guardia budget, the complete collapse of this organization will merely be a question of time.
When I informed President Diaz of the postponement of the loan negotiations he expressed very keen disappointment. He suggested that even if the Department deemed it advisable to wait until after the election the plan be sent down now in order that the leaders of all parties might consider it and commit themselves to it and that a special session of Congress be called immediately after the election to adopt it. He said that a small initial loan would be satisfactory, provided it made possible the beginning of work on the railroad and provided the door was left open for future issues. Chamorro also has sent word to me that he would support any loan which carried with it the Atlantic railroad. General Moncada told me yesterday that he favors a loan for the Atlantic railroad and considers a small initial loan satisfactory. He suggested that action be postponed until the regular session of Congress in December because he feared that Chamorro might prevent approval in a special session. He said, however, that the plan would have the full support of the Liberals in Congress at any time.
After very full discussion and efforts to foresee conditions which will exist here a few months from now we all feel strongly that action on the new financial plan should be taken before the situation is complicated by developments in the political campaign and in order to simplify the conduct of the election. We can see no difficulty so far as the situation here is concerned in defending a small initial loan with a set-up which will give reasonable prospect of subsequent issues. We feel so strongly about this matter, particularly in view of its effect upon the future of the Guardia, that we venture to recommend most urgently that the new financial plan be submitted at once for consideration [Page 555] here, even though the Department is not fully satisfied with all of its details.
- Liquor.↩