810.20 Defense/2804: Telegram
The Ambassador in Paraguay ( Frost ) to the Secretary of State
[Received June 12—12:15 p.m.]
258. Department’s no. 170, June 5, 3 p.m. The Department’s attitude was discussed by me with the Foreign Minister on June 8 and 10 and by him at subsequent Cabinet meetings.
I also conversed extensively with Finance Minister. Tonight I have received formal memorandum to the following purport. The phraseology discussed in Department’s first paragraph is too absolute [Page 651] and categoric to be acceptable except during emergency importing most grave and unnecessary restriction, which may well be deemed derogatory to national sovereignty especially when it is a condition advanced from a foreign source. The Paraguayan Government insists on addition of language already proposed.
Regarding the Department’s second paragraph the memorandum considers that the reference to planes belonging to, registered in, operating for, or authorized by the United States, excluding mention of any other American country, will suggest to the humblest intelligence that the usufruct of a portion of Paraguayan territory will be in reality conceded to a foreign government and not to a private enterprise. The Paraguayan Government deems best, particularly in view of the provisions of article 18 and of clause 13 of article 76 in the national constitution of August 15, 1940, to accord any concession on such matters to a commercial concern rather than to a government. It regards the terms of article 9 of the projected decree law transmitted by my no. 233 of May 28, 7 p.m. with the modification suggested in my telegram 234, May 29, noon and air mail despatch 125, May 30,7 as to cover use of field by American planes, but if this is not acceptable it offers the following in substitution of proposal in second paragraph of Department’s instruction under acknowledgment.
“The field may be used by planes belonging to the American Republics which have subscribed to the Declaration of [Lima]. The Paraguayan Government in agreement with the concessionary company will determine in each case the conditions and special privileges in favor of aforesaid countries for said use of the airport, provided that this conforms to reciprocal conditions and privileges granted to the Paraguayan Government in the respective territories and on equal terms.”
This proposal is said to be in perfect accord with the letter and spirit of the Rio de Janeiro resolutions.8 Privately I am assured they will gladly give us the privileges asked, but do not desire these to figure in the contract.
On the first of the two points Paraguay wishes to insure herself a great national [airport?] for universal use. On the second she has to consider Argentina and preserve the principle that the concession is not from one government to another but from a sovereign government to a private foreign concern. If the terms indicated grants to a foreign concern the negotiations would require completely new examination and the Paraguayan Army would endeavor to have the airport constructed at an interior point.[Page 652]
On the first point I have the impression that some compromise might still be reached, such as a proposal that the post-war negotiations should not relate to planes of countries with which Paraguay has broken relations. On the second point any modification seems doubtful.
If the Department decides to renew its attitude on the points there may be anticipated protracted negotiations, and the question of whether Panair should continue as the party in interest will arise. The negotiations might or might not be aided by the withdrawal now of the eight engineers of Panair waiting here for some time past who have become very restive. This withdrawal might cause the impression that Paraguay may really lose the opportunity of having the two airports constructed, particularly as the progress of the war indicates that they are even less likely than formerly to be needed for hemispheric defense. On the other hand since the Government feels very strongly on the matter of its sovereignty and has had difficulty with its army and Argentina on the entire question it would be apt to feel that a strong attitude by us on the points would be both exigent and lacking in comprehension.