The Chargé in Uruguay (Chapin) to the Secretary of State

No. 946

Sir: I have the honor to refer to my despatch No. 939 of May 7, 1941, transmitting a copy of a note received from the Minister for Foreign Affairs requesting certain assistance in connection with the completion of the Rio Negro Hydroelectric Project in Uruguay.

As stated in my despatch, I approached the Minister for Foreign Affairs informally for supplementary information which I stated our government would need before it could give full consideration to the Uruguayan request. There is enclosed a copy and translation of a memorandum of May 870 transmitted to me by the Minister for Foreign Affairs attempting to reply to the specific points which I raised with him.

It will be noted that although the Uruguayan Government gives assurances that the proposed purchases of hydroelectric equipment in the United States are for its own account rather than that of the German syndicate and will be treated as a separate contract for eventual control by the Uruguayan Government, these assurances do not, in the Legation’s opinion, cover the question of continued German participation in the project. In particular, although it states that the proposed contract with United States firms would be similar to the present contract with the German syndicate and “exclusively for the execution of works made by the Uruguayan Government itself”, the Uruguayan Government does not venture to communicate to our government a copy of the contract with the German Consortium. Finally, it may be observed that although the purchase from the United States of hydroelectric equipment and its installation on the project would no doubt be a direct primary benefit to the Uruguayan Government, the point is not made clear that it would not be an indirect benefit to the German Consortium.

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Accordingly, the Legation feels that the United States Government would be well within its rights if it informed the Uruguayan Government that before giving any final consideration to the request, it should be furnished with a copy of the original contract between the Uruguayan Government and the German Consortium, together with copies of such subsidiary agreements or understandings as may in any way depend therefrom.

Up to the present time, since it is without any specific instructions from the Department, the Legation has not felt authorized to go so far as to insist upon obtaining a copy of the contract, but it now strongly recommends that the Department instruct it to do so before proceeding to any final decision in the matter.

Respectfully yours,

Selden Chapin
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