The Secretary of State to the Ambassador in Uruguay ( Dawson )

No. 219

The Secretary of State refers to the Department’s instruction no. 121, November 4, 1941,51 concerning proposed arrangements by which the Government of the United States would assist the Government of [Page 732] Uruguay in obtaining materials for the Rio Negro hydroelectric project and would provide certain other assistance with respect to the project.

After further discussion with the Uruguayan Ambassador52 and Señor Luis Giorgi, representative of the Rione, the Department has agreed tentatively to certain modifications in the proposed arrangements as set forth in a new draft of a memorandum of agreement, a copy of which is enclosed, with a copy of the covering note53 with which the Department expects to transmit the memorandum to the Uruguayan Ambassador. There is also enclosed a translation of a communication of December 3, 194154 addressed by the Rione to the German consortium which is at present working on the Rione project, notifying the consortium that the Rione expects totally to rescind its contract with the consortium if it has not delivered in Uruguay before June 1, 1942 all the machinery, equipment and materials that are now lacking for total compliance with the contract.

The status of the enclosed tentative memorandum of agreement and of the arrangements which it contemplates is as follows: The Department agreed with the Uruguayan Ambassador and General Giorgi to accept the wording of the enclosed memorandum, and Señor Giorgi has obtained the approval of the Rione for this purpose. This wording has also now been accepted tentatively by Mr. D. M. Simmons of the General Cable Corporation, representing the consortium of manufacturers in the United States that would provide equipment to the Rione, subject to the approval of a meeting of representatives of all the companies comprising the consortium, which is scheduled for January 6, 1942. The Department has entered into discussions with the Office of Production Management and the Board of Economic Warfare with a view to obtaining a definite confirmation, under the changed circumstances resulting from the involvement of the United States in war, of the priority rating tentatively obtained on behalf of the consortium of United States manufacturers and the Rione in August 1941.

Señor Giorgi has entered tentatively into discussions with the Export-Import Bank with a view to obtaining credits for the works definitely provided for in the proposed memorandum of agreement, and he is also entering into tentative discussions with the consortium of United States manufacturers with a view to the conclusion of a contract with them at an appropriate time after conclusion of the memorandum of agreement with this Government.

Señor Giorgi mentioned, in preliminary discussions with the Export-Import Bank, that it was expected that the works definitely contemplated by the proposed memorandum of agreement would cost [Page 733] between $4,000,000 and $5,000,000 and that approximately twenty percent of this amount would be for local expenditures in Uruguay. Mr. Warren L. Pierson, President of the Export-Import Bank, commented with respect to this information that it is a policy of the Export-Import Bank to avoid wherever possible the extension of credits for expenditures in local currencies. Señor Giorgi replied that he would take up with the Rione the possibility of obtaining credits in Uruguay for the local expenditures.

  1. Not printed.
  2. Juan Carlos Blanco.
  3. Neither printed.
  4. Not printed.