834.51/407: Telegram

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

274. Department’s airmail instruction of June 11 enclosing draft agreement between Export-Import Bank and Paraguay was discussed with Argaña who had previously received draft from Ambassador Velázquez. Argaña stated proposal was discussed in Cabinet meeting and referred to Finance Minister31 for study. Preliminary opinion is that the conditions are severe in respect to participation of Export-Import Bank and other American experts and technicians. Argaña stated Brazil has signed a contract loaning Paraguay 100,000 contos to be used with absolute freedom.

I brought out by inquiry for information the fact that this sum will be available only in six annual installments. I mentioned that the basic legislation of the Export-Import Bank imposes requisites arising from circumstance which caused creation of bank. The point made in the Department’s telegram No. 146 of May 14, noon [midnight] [Page 662] that our entire program here should be regarded as a whole and that most of its features are generous in the extreme was also fully expounded again.

I have talked subsequently with Finance Minister and he wishes to ascertain whether conditions offered are similar to those accepted by other countries especially as to supervision of projects. He also wishes to study statute creating Export-Import Bank. Probabilities seem to be that proposal will be accepted perhaps with requests for modification, but terms of the Brazilian loan have certainly not contributed to enhance Paraguay’s appreciation of our offer. Rumors still persist that Brazilian loan is to be made with funds secured by Brazil through borrowings in the United States.

  1. Rogelio Espinoza.