811.20 Defense (M) Bolivia/878: Telegram
The Ambassador in Bolivia (Boal) to the Secretary of State
[Received March 17—12:48 a.m.]
502. Reference our letter February 2671 and cable 399.72 American lawyer at Embassy of opinion Rubber Agreement could successfully be challenged in the courts because of failure of President and Cabinet so far to promulgate in legal form. Our Agreement with Banco Agricola combined with numerous decrees might conceivably be sufficient to uphold our rights. However, there is no reason why the Government should not promulgate the Agreement as they are obligated to do by their repeated assurances to consider the Agreement in [Page 558] effect and valid. I suggest that before considering any of the suggestions in the Bolivian Government note of March 3, see cable 497 [487],73 we insist that the existing Agreement be duly promulgated by the President.
If the Government should refuse to promulgate the present Agreement to be legalized by signatures of President and Minister of Agriculture, the whole question of continuance of American cooperation would presumably arise since this would be an act of obvious lack of faith on the part of the Bolivian Government. We think that if the Agreement were open to any form of discussion for amendment, items other than the inclusion of Velasco and the treatment of Larecaja and Caupolicán would probably arise and therefore the issue should be made now on the terms of the present Agreement and we should evince no willingness to discuss anything else. Meantime supplies should be provided only to producers with whom we have existing private contracts and in whom we have some degree of confidence.
The chief point at issue will evidently be to try to circumvent the clear provision in the existing Rubber Agreement that exports to neighboring countries should be limited to 250 tons annually. This is the point the Bolivian Government is evidently trying to open up under pressure from Chile and Uruguay and more particularly from Argentina.
We would appreciate having your views as to our next step. Please communicate to Rubber Development Corporation.