811.20 Defense (M) Bolivia/228: Telegram

The Ambassador in Bolivia (Boal) to the Secretary of State

497. For Finletter. Today I saw the Foreign Minister who returned to La Paz yesterday. He explained that he has discussed the rubber contract with the President and considers they are now ready to conclude but feel some provision must be made to cover their situation vis-à-vis Argentina which, through the Bolivian Ambassador in Buenos Aires,19 has made it clear again that if Bolivia cuts them off without any contractor [contract] despite their offer of a 5 years’ contract, economic reprisals may be expected. The Foreign Minister suggested that payment of 150 tons annually for “neighboring countries” be made in our contract with the provision that the situation be re-examined with view to adjustment by mutual consent at the end of the first year.

The Foreign Minister had at first suggested that 15% of Bolivian production be set aside for export to neighboring countries but I pointed out that this would unfairly [apparent omission] our cooperation to increase production.

The Foreign Minister appreciates that subtracting 150 tons annually would probably mean proportionate reduction in development funds to be supplied by us but says that in view of Argentine stranglehold on Bolivia’s food supply and oil transportation system he considers contract must include the 150 tons as a gesture. He adds that even if this gesture is not satisfactory to Argentina it will place him in a position to stand his ground against further intimations of unrestrained pressure.

As an Argentine representative may arrive in the next few days it would be most helpful to have the Department’s reply as early as [Page 573]possible tomorrow with a view to trying to reach a conclusion before his arrival which might complicate matters.20

  1. Adolfo Costa du Rels.
  2. Notation on file copy indicates that a reply was made by telephone on July 3 but does not give the nature of the reply. Article 3 of the agreement signed on July 15, however, contains a provision for an annual quota of 150 tons for export to neighboring countries; for text, see p. 576.