834.50/29: Telegram

The Secretary of State to the Ambassador in Paraguay (Frost)

146. From the Under Secretary. Your 195, May 10, 10 a.m., and 203, May 11, 10 p.m.28 I have given the most careful attention to your telegrams and wish to leave no doubt in your mind that the entire Paraguayan situation and cooperative program is receiving my most careful personal attention. I have the following comments to make on your messages:

The sanitary and agricultural experts, plus Mr. West of the Export-Import Bank whom you fail to mention, constitute a very sizeable group to consider and recommend projects for health, sanitation, public works, and economic development.
Arrangements are being made at once to send from Rio Drs. Plunkett and Dunham (who will leave Rio on May 16) and Engineer West to begin the sanitation and public works studies. Other experts will leave for Asunción in the immediate future.
The terms of the financial and other assistance being offered Paraguay are most carefully considered in the Department, and you may rest assured that no part of the program is carried out independently by any other agency of this Government without the Department’s full approval and, in most cases, urging. The financial terms of the Lend-Lease agreement with Paraguay were worked out, as you know, by the State Department, the War Department having no part in the matter. These financial terms were worked out giving careful [Page 660] consideration to the program of economic cooperation. Export-Import Bank loans must be considered what their name implies—loans. I should like also to call to your attention the fact that the Coordinator’s contribution of $1,000,000 is a grant and that a portion of the Export-Import Bank credit, it is contemplated, will take care of Paraguay’s share of a joint health program in which the United States puts up at least 50% of the total. It is obviously unfortunate to permit the impression to exist that the terms of one part of the arrangement are more onerous than others. They are all part of a joint program and must be considered as such.
It is my personal conviction that detailed contracts can not be signed at once unless the Paraguayan Government is able to give some instructions to its Ambassador. The best that we have been able to do is to get the Ambassador to transmit memoranda prepared wholly by the United States to Asunción. The Export-Import Bank has for many months been quite prepared to extend certain credits to Paraguay. You yourself, prior to departing for Asunción, sat in at a meeting of the trustees of the Bank at which some credits were voted. Paraguay has never seen fit to utilize any of these credits. It is absolutely essential that you work out with the health, sanitation and agricultural experts and with Mr. West, the representative of the Export-Import Bank, some of whom will be in Paraguay next week, details which can be incorporated into a contract. In the meantime, the Coordinator’s Office and the Export-Import Bank will prepare broad and general agreements to hand to the Paraguayan Ambassador during the next few days. All implementation must necessarily come from Asunción, and I rely confidently upon your efforts to obtain rapid action in Paraguay.

The Department will inform you just as soon as draft contracts have been put in the hands of the Paraguayan Ambassador, and it hopes that you will be able during the next 2 weeks to report considerable progress in arranging the details of the productive enterprises to be begun. [Welles.]

  1. Latter not printed.