Memorandum by the Adviser on Political Relations (Duggan) to the Under Secretary of State (Welles)
Further Financial Assistance for Ecuador
As Mr. Collado’s memorandum attached48 indicates a very generous program of financial and economic assistance to Ecuador has been embarked upon. It should have more far-reaching effects on the economic life of Ecuador than any program yet agreed upon for any other country. Within a few months this program should be well under way and the effects begin to make themselves evident.
It is therefore believed that the only ground for emergency financial assistance is to bolster the Government politically.
During the last two days I have endeavored to form a conclusion as to the gravity of the political situation. I have talked with the Ecuadoran Ambassador who has left with me the attached extract from a letter from the President49 to him dated May 2250 which the Ambassador hopes that you will read. Others with whom I have spoken do not confirm the impression that the Ecuadoran Ambassador conveys that the political situation has deteriorated drastically during the last few weeks.… These persons in fact believe that the President is in a stronger position today than he was right after the Rio conference.
My personal view is that while the President is not in as weak a position as the Ecuadoran Ambassador portrays, he is probably under [Page 387] considerable pressure from the politicians of El Oro for assistance there and from the military for equipment, et cetera.…
In my opinion, if it is decided to give any assistance to Ecuador to help the Government politically, the aid which would produce the greatest political advantage would be a grant of money for the improvement of the housing facilities of the Ecuadoran Army.…
With the Army more solidly behind the President, it should be possible for him to ride out the criticism over the rehabilitation of El Oro Province. The report of the experts sent there indicates that the damage of the Peruvian forces was slight because there was very little to damage. The necessity of this province is for the development of new agricultural production which is in general the problem of all Ecuador. The Development Corporation would give preferential attention to the problem of new production in El Oro so that six months from now the criticism of the local politicians … should largely have disappeared.