822.796/183a Suppl.: Telegram

The Secretary of State to the Minister in Ecuador (Long)

89. The following comments concerning the aviation plan are submitted for your confidential information and guidance: (references are to numbered paragraphs of telegram no. 87, July 3, 7 p.m.)

The elimination of Sedta is of course the sine qua non of our proposals. We believe that in view of the immediate and anticipated advantages offered, and having in mind also the broad program of cooperation between this Government and Ecuador, that Government should itself buy out Sedta. Although we do not know what would be a just price, it appears to us that the estimate contained in your 133,11 Section 2, of 250,000 to 300,000 dollars (or its sucre equivalent) would be altogether excessive.

Paragraph 2 appears self-explanatory.

Panagra has urged that the suggestion in paragraph 3 be omitted, arguing that Ecuador is not now interested in having a national domestic service, that such a service might eventually prejudice United States international aviation interests, that the plan should be outlined in further detail before making the suggestion, et cetera. It seems clear to us, however, that by having in mind in the first instance the establishment of a national domestic airline, the Ecuadoran Government would be amply justified in bringing about the elimination of Sedta as a means of protecting the growth of its own enterprise. Certainly, such a domestic line would represent a legitimate aspiration of Ecuador, particularly in so far as it would aid the general internal economic and technical development of the country and its nationals. The Department feels that this argument has the virtue of logic in addition to being a sound business practice. The protection thus afforded the Ecuadoran national company and the participation as minority stockholders by an American commercial line, would [Page 839] be a definite insurance against future action detrimental to our mutual interests.

The maintenance of present Panagra cabotage and other contractual rights must, of course, be safeguarded.

With reference to paragraph 4: Since the proposed Oriente service would be specifically to serve garrisons adjacent to Peruvian outposts, and having in mind the extensive Panagra interests in Peru, we have agreed with Panagra representatives that their company should not be connected with that service at this time.

Paragraph 5 is, of course, of especial importance and a clear understanding on that score must be reached. We must carefully guard against the development of any situation in the future analogous to Sedta problem.

The suggestion has been made that the President-elect12 be informed of our proposals. The Department leaves that to your discretion.

  1. Not printed.
  2. Carlos A. Arroyo del Rio.