The American Delegate (Braden) to the Secretary of State

No. 574

Sir: I have the honor to report that in an all day meeting yesterday, the Brazilian and Peruvian delegates and I submitted general preliminary bases for a final peace treaty to Dr. Zubizarreta and Dr. Cardozo, Paraguayan delegates, and obtained their promise to make us informally a counter proposal which, while undoubtedly presenting their maximum aspirations, nevertheless will follow the broad lines laid down by us and which, from conversations with the Bolivian delegate, we have reason to believe may constitute the initial formula on which to build the peace. We explained to the Paraguayan delegates that we had not consulted the Bolivians, and in fact we knew our suggestions would meet resistance and initial refusal from Dr. Alvéstegui but if the Paraguayans accepted them we would undertake to open negotiations with him on the following bases:

No sovereign port for Bolivia but a limited free port (puerto franco) in the vicinity of Puerto Casado with adequate wharves, warehouses, railroad terminus, etc. to be installed by Paraguay for Bolivian use.
A frontier to the east of that described in paragraph 6 (a) of my despatch No. 482 of August 31, 1937.29
Bolivia to pay Paraguay a sum of money which will be invested by the latter in the construction of the Paraguayan section of a railroad from the Puerto Casado district to the Camiri region. Bolivia to construct the remainder.
Mutual renunciation of war responsibilities.
A well implemented non-aggression pact.

With respect to these bases the following comments may be made:

1. Bolivia still insists officially that a sovereign port on the Paraguay river is a sine qua non to any final agreement. The Bolivian [Page 40]delegate has, however, confidentially advised my Brazilian colleague and myself that his government will accept a free port providing the other terms of the treaty are satisfactory. It is evident that Bolivia desires a free port in the full sense of the word without any restrictions and including the installation of their own customs. Paraguay, on the other hand, wishes free port facilities to be limited, so that while there would be no Paraguayan taxes or duties imposed upon the transit of people and material through the port, there would not be a Bolivian customs office and Paraguay would retain a certain degree of supervision in the free port area. This is essentially a detail to be worked out in negotiations.

2. The Paraguayans will unquestionably at first insist upon a frontier lying along the intermediary line and that any withdrawal to the east or south of that line should be compensated for by an approximately equal area to the north or west. On this point we will encounter our greatest difficulties. However, yesterday we proposed the following line to the Paraguayans: Starting at the intersection of longitude 61º with the Pilcomayo river, north through Fortín Esteros, northwest to Cañada Tarija, northeast to Ingavi and east to the intersection of latitude 20º–0′–35″ with the river Otuquis. As was to be expected, the Paraguayans were shocked at the suggestion of such a boundary. Dr. Zubizarreta intimated that we should at least propose a line approximating that mentioned in paragraph 6 (a) of my despatch No. 482.

3. The Bolivian delegate has indicated to Ambassador Rodrigues Alves and me that his country, providing other conditions are satisfactory, would be willing to construct a railroad from the Camiri area to Puerto Casado and even to contemplate some participation by Paraguay in the oil industry of southeastern Bolivia. Yesterday Dr. Zubizarreta held that the portion of the railroad within Paraguayan territory should be constructed and owned by the Paraguayan government and that, to this end, Bolivia should pay to Paraguay the requisite amount of money, leaving to the latter to decide when railroad construction should begin. It is interesting, in this connection, that whenever the building of a railroad in the Chaco has been mentioned, Dr. Saavedra Lamas has endeavored to have the route to run from Puerto Casado to Yacuiba, thus effectually furnishing Argentina with a strategic line in the Chaco.

Incidentally, a railroad from Camiri to Puerto Casado might substantially reduce the value of the proposed Argentine railroad from Yacuiba to Santa Cruz and it would probably greatly lessen, if not eliminate, Argentina’s interest in Bolivian oil, excepting for that in the Bermejo region, and thus might indirectly make Bolivia more disposed towards some mutually satisfactory settlement with the Standard Oil Company.

4 and 5. I doubt that there will be any difficulty encountered on these points, providing an agreement can be reached upon the first three.

The foregoing plan is, of course, vague and preliminary, but at least seems to offer an opportunity to bring the ex-belligerent nations together on the fundamental elements for discussion and to afford satisfactory starting points for the territorial-boundary deliberations.[Page 41]In fact, I would feel quite optimistic respecting these negotiations were it not for Dr. Saavedra Lamas’ ignorance of the Chaco problem, his gross indiscretions and intrigues, plus the fact that he categorically refuses to permit the formation of any Conference committee or to allow any meetings whatsoever of delegates without his presence, even though one of the other Argentine representatives attend. In other words, he makes it impossible for us to adopt an intensive, intelligent procedure such as was followed successfully by the Prisoners Committee and which both the ex-belligerent delegates agree is the only satisfactory way to work. Until he is out of the way our only course seems to be to make such progress as we can through “prohibited” meetings analogous to the one held yesterday, despite the deliberate obstruction of the Conference president.

Respectfully yours,

Spruille Braden
  1. Not printed. Paragraph 6 (a) read: “A permanent frontier starting from some point on the Pilcomayo River between D’Orbigny and Ballivian, running north to approximately Lat. 20º south then eastward to the inner Bay of Bahia Negra;” (724.34119/1007)