824.796/104: Telegram

The Minister in Bolivia ( Jenkins ) to the Secretary of State

42. Department’s 26, March 31, 11 a.m.15 Vidal and Campbell this morning orally presented to President16 and Cabinet plan along the lines outlined in my No. 38, March 26, 4 p.m. with following changes suggested by New York head office:

(1)
Purchase by Bolivian Government of all LAB stock at a fair price to eliminate completely any German stock ownership.
(2)
Panagra to supply funds for purchase by LAB of equipment and for ground facilities, part [of] latter [to be paid] for in LAB stock and part to be [paid for by a] loan secured by equipment as collateral and amortized over a period of years, instead of all to be loan as originally suggested. Pan American–Grace-owned stock to be voted by Bolivian citizens.
(3)
LAB to enter into management contract with Pan American–Grace.

At the end of meeting President said that plan was acceptable in principle and asked for submission of detailed plan in writing, negotiations appear to be progressing satisfactorily. Major obstacle which may arise is question of stock ownership by Panagra. It envisages stock control while Government will probably want to retain majority itself.

If disagreement on stock control develops it might be possible to solve it by (1) having Panagra give Government option to buy stock after period of years, or (2) Panagra’s making straight loan taking stock as collateral and voting it until loan is amortized.

Advisable that plan be presented as soon as possible. Vidal is asking for prompt instructions from New York. Request advice as to whether changes meet with Department’s approval and any comments on stock control question.

Jenkins
  1. Not printed.
  2. Enrique Peñaranda del Castillo.