Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume VI

811.51/6149: Airgram

The Secretary of State to the Ambassador in Costa Rica (Des Portes)

Washington, June 24, 1943—6 p.m.

A–518. Your A–678, June 1, and 485, June 17.³⁴ The Department and the Treasury Department are at the present disinclined to adopt the proposal made by the Spanish Minister set forth in your airgram above referred to. It appears that the recent position which he has adopted in regard to the funds held by him on behalf of the Italian Government is without adequate basis in fact, and has been assumed for bargaining purposes. It would further appear that the concession to the Spanish Minister to which this Government previously agreed, (Department’s A–387, March 27, 1943) notwithstanding the objections [obligations?] of Costa Rica under the Washington Conference, is being used by him as an opening to develop further concessions which would obviously be contrary to the best interests of both Costa Rica and the United States. It is therefore regrettable that the Costa Rican Government has up to the present exhibited a tendency to accede to the wishes of the Spanish Minister in this matter. Therefore on the basis of the facts presented, this Government is inclined to refuse to release in this country the currency held in the name of the Spanish Minister unless in the opinion of the Embassy such refusal would mean the loss of adequate control of these funds. These funds it is noted are dollar funds and you may inform the local authorities that this Government takes the position that these are Axis funds and accordingly will take appropriate action to prevent their encashment. It is believed that this position may enable the Costa Rican Government to indicate to the Spanish Minister that the United States Government has not agreed to release these funds and therefore the Costa Rican Government is unable to extend him credit for the dollars which he deposited.

In discussing this matter with the Costa Rican authorities you may care to point out that the records of the Department do not appear to indicate that the Spanish Minister has ever denied, that the funds in question are the property of the Italian Government, and that this is in fact the case is well known to all concerned. If the Spanish Minister desires to avoid any possibility of being stigmatized as an enemy of Costa Rica by having these funds held in the custody of the Junta, he should cause the name of the account under which the Italian funds are held to show the true ownership of the funds, You may care to stress to the local authorities the artificial position assumed by the Spanish Minister with reference to the funds of a government with which Costa Rica is at war. You may also care to point out to the Costa Rican authorities that the request of the Spanish Minister to make withdrawals from these Axis funds is contrary to Resolution I of the Washington Conference to which both Costa Rica and the United States subscribed. If the Costa Rican Government insists that the funds must be treated as the funds of the Spanish Minister, it might be well to inquire why the Spanish Minister desires to use his personal funds to make payments to enemy aliens in Costa Rica. It does not appear from the Department’s records that these points have been brought out in discussions. In conveying to the appropriate Costa Rican authorities these suggested replies with particular reference to point two of your airgram no. 678, you should be careful to avoid any appearance of going beyond a friendly and informal indication of the possible manner in which the Spanish Minister’s arguments might be answered if the Costa Rican authorities should deem the suggestions appropriate.

It appears that it might be desirable for this Government to defer making a decision on the proposition recently advanced by the Spanish Minister until such time as he may have departed when it is believed that the Costa Rican Government may be more inclined to take positive action against these funds.

However, before any decision is made the views of the Embassy are desired in regard to the following points:

1. Does the Embassy consider it may be helpful to press the Costa Rican authorities to make further attempts to induce the Spanish Minister to recede from his position or is there a possibility that such a plan would jeopardize prospects of bringing the funds in question under Junta control? If the latter is the probable result, what informal controls might be established over payments from these funds to prevent their undesirable use?

2. Could the Spanish Minister be induced to permit the funds to be subjected to the control of the Junta, providing withdrawals up to $200.00 per month were agreed to, and are there enough Italian subjects in need in Costa Rica and under the care of the Spanish Minister to justify expenditures up to $200.00 a month for their subsistence. On what basis was this figure arrived at?

3. When is it expected that the Spanish Minister will be departing from Costa Rica? To what post is he assigned? Would not the Costa Rican Government be more likely to take effective steps against these funds after he has gone? Has a successor been named and in transferring the funds to the possible successor, could it be required that the ownership of the Italian Government be shown?

4. What in the opinion of the Embassy would be the disposition of the funds if this Government (a) refuses to accept the proposition of the Spanish Minister, or (b) defers its decision on the proposition until after the Minister will have left Costa Rica in the hope that the Costa Rican authorities would deliver these funds to the Junta at a later date.

5. Is there any possibility, in spite of appropriate representations which would of course immediately be made by the Embassy, that the Banco de Costa Rica might return these funds to the Minister and that he might be permitted to take them out of Costa Rica?

6. Does the Embassy feel that it would be inadvisable not to agree to the present proposal? What is the Embassy’s recommendation?

The Department appreciates the difficulties of appraising the above situation which is so largely based upon the personalities concerned. It is hoped, however, that the Embassy may be able to make suggestions which will result in the adoption by the local authorities of a course of action which will effectively block these funds.

Hull

34. Latter not printed; in this telegram the Ambassador informed the Department that the Costa Rican Minister of Finance, forced by the possible imminent departure of the Spanish Minister for a new post, was pressing the Embassy for the United States Treasury’s reaction to the arrangement described in Embassy’s airgram No. A–678, p. 105.