834.51/407: Telegram

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

205. Your 274, June 19, 9 p.m. The Department is sure that you agree that no useful results will come of cooperation with Paraguay unless there is a certain amount of technical assistance to insure the effective carrying out of the projects.

As a matter of fact, the contract proposed by the Export-Import Bank is similar and in some respects more liberal than those in effect with other countries in which the funds are to be utilized not only for the acquisition in the United States of machinery and equipment, but also for local expenditures. It is only with a limited number of countries that the Export-Import Bank has made contracts permitting any local expenditures whatsoever. The provisions included in the draft agreement prepared by the Export-Import Bank are liberal compared with similar provisions in contracts with other countries in which local expenditures are permitted.

All of the contracts which are limited to dollar expenditures in the United States which have been entered into with the larger countries, such as Brazil, are strictly limited in that no material may be purchased for export from the United States without the specific approval of the Export-Import Bank. These contracts are, if anything, more restrictive than the contract with Paraguay.

It is not deemed that a detailed discussion of the Export-Import Bank statute will be productive.


[The agreement between the Export-Import Bank and the Republic of Paraguay for the establishment of a $3,000,000 credit in favor of Paraguay was signed at Washington, September 30, 1942, by the President [Page 663] of the Export-Import Bank, Warren Lee Pierson, and the Paraguayan Ambassador, Celso R. Velázquez.]