Foreign Relations of the United States: Diplomatic Papers, 1942, The American Republics, Volume V

824.50/194: Telegram

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

Washington , November 25, 1942—10 p.m.

871. Your 1094, November 24, 1942.⁹² The Department and the Export-Import Bank have reached the conclusion that the proposed law as well as any legislation proposed by the Bolivian Government should conform to the provisions of the contracts already agreed to by the two governments if it is to result in the implementation of those contracts.

The text of the law clearly does not conform to the understanding reached with the Bolivian Mission for the following reasons:

1. Complete autonomy in the Corporation with freedom to select projects for submission to Export-Import Bank for approval and to carry such projects into effect when approved is basic to the credit commitment. Therefore, Article 9 of the proposed law which provides for the appointment of a Federal Comptroller to handle the resources destined to the execution of the works and to the administration of the Bolivian Development Corporation is directly contrary to the basic understanding of the credit.

2. Likewise Article 6, in detailing specific projects, limits the powers of the Corporation to select projects contrary to the theory of the credit. Funds will not be available under the credit for any project unless such project is approved by Export-Import Bank, and no project will be approved unless submitted by the Corporation in detail in accordance with the terms of the agreement.

3. Export-Import Bank cannot approve any extension of credits under a law which indicates a commitment—even in principle—for a possible credit of $15,000,000 in addition to the present $15,500,000, or which states such credits may be in the nature of revolving funds. In discussions with the Bolivian Mission it was definitely understood these points went beyond the Bank’s commitment and would not be mentioned. There is, however, nothing to prevent the Congress from authorizing the Executive to contract a general credit in excess of the $15,500,000, provided such authorization does not indicate any commitment on the part of the Bank for such additional amount.

4. Department’s Cable 719 of October 8⁹³ remains unchanged and any legislation should conform to the suggestions contained therein and the comments made above, if the Export-Import Bank is to be expected to give favorable consideration to the proposed credits.

The foregoing observations are for your background information and guidance in replying to any further inquiries that may be made by Bolivian officials. While the Department of course regrets that the proposed law in its present form will not facilitate the rapid conclusion of the agreements previously reached between the two Governments, you should carefully avoid any action which might be construed as an attempt on the part of this Government to influence the Bolivian Congress or intervene in any way in a matter of internal legislation.

Hull

92. Not printed; it transmitted text of law approved by Bolivian Chamber of Deputies authorizing the Executive to borrow funds for the Bolivian Development Corporation (824.50/194).
93. Not printed; it stated that the Export-Import Bank did not wish to draft or to assume responsibility for Bolivian enabling legislation for the Bolivian Development Corporation, but the Bank did offer observations on the Bolivian drafts, objecting to linking present loan to any additional loan authorizations, proposed rotating credits, and draft limitation on life of the loan. Provisions for the enabling legislation were suggested. (824.50/173)