The Minister in Guatemala (Des Portes) to the Secretary of State
[Received March 12.]
Sir: I have the honor to refer to my despatch No. 2602 of March 4, 1942 (File No. 711/824.2),7 reporting the preliminary reaction of the Guatemalan Government to the observations contained in the Department’s telegram No. 78 of February 19, 9 p.m., 1942, the substance of which was conveyed to the Guatemalan Minister for Foreign Affairs in a Note of February 20, 1942, regarding the furnishing of military equipment to this Republic.
The Foreign Office by a Note No. 3229 of March 6, 1942, a copy and translation of which are enclosed, has now made formal reply setting forth its point of view relative to the type of engagement which it deems appropriate for the procurement of the arms and ammunition. It may be observed that the spirit and sense of the formal reply closely approximates that of the preliminary response as contained in the President’s oral statements and the Ministry’s Memorandum7 summarizing negotiations in the matter.[Page 436]
No material technical difficulty should be encountered in supplying the Guatemalan Government with the equipment it desires for its own immediate military needs and for which it proposes to pay cash. The matter of the larger amount of equipment which Guatemala needs for cooperation with the United States Government in hemisphere defense presents a much more difficult problem. It occurs to me that this phase might possibly be solved by an arrangement whereby Guatemala would secure the equipment under the normal terms of the Lend-Lease Act, without any exceptions of principle in its favor which might be considered as unfair departures by other American Republics, but at the same time the contract to be so drawn as to afford in substance the end sought by Guatemala. Concretely, it is suggested as a compromise that perhaps Guatemala might be induced to make small installment payments over the usual period of years, with the proviso that at the end of the war the Guatemalan Government would be permitted, as it evidently desires, to return to the United States such equipment as it has not expended and which is in good condition. The value of the equipment so returned would be credited against the obligation contracted by this Republic under the Lend-Lease Act. If the amount of equipment returned were to exceed the monetary balance due by Guatemala subsequent to installments effected, the sum of the excess would be refunded to the Guatemalan Treasury. If the equipment returned were not sufficient to liquidate the monetary balance due, the Guatemalan Government would be obligated to discharge the sum of the deficit. Such a proposal of course presupposes, on the side of the United States, that the arrangement is legally possible and within the policy adopted, and, on the Guatemalan side, that the installment payments called for would be so spaced and in such moderate amounts that the demands could be met by Guatemala within its extraordinary budgetary resources and without resort to public loans.
I do not know whether such a plan would be agreeable to the Guatemalan authorities. Doubtless the Department may evolve a more satisfactory arrangement, the present suggestion being advanced by me merely as one solution which might merit exploration and without any attempt to pass on the justice of Guatemalan pretensions. The ostensible value of the plan, which the Legation ventures to submit for examination, is that the United States would be assured of payments in keeping with the provisions of the Lend-Lease Act and Guatemala would obtain acceptance of its contention that it be not obliged to pay for arms and ammunition over and above its immediate needs and which are not actually expended by it.