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

No. 2306

Sir: I have the honor to refer to the Embassy’s despatch no. 2168 of February 11, 1943,47 reporting with regard to local editorial comment [Page 785] on the agreement under which the Export-Import Bank opened a credit of $20,000,000 in favor of the Government of Uruguay.

While the general reaction was very favorable, the Herrerista organ El Debate (see penultimate paragraph of despatch under reference) attacked the loan on the ground that the manner of its approval was unconstitutional. It asserted furthermore that, in view of the current deficit, interest and amortization payments could not be met from general revenues without the enactment of heavy additional taxes.

El Debate was not only bitterly hostile to President Baldomir but attacked him and his Administration in the most scurrilous manner. Shortly after the conclusion of the loan agreement had been announced, it began inquiring in its columns and has continued to inquire whether a “commission” had been paid in connection with the loan—its inquiry being tantamount to accusing Dr. Guani or some other official of the Baldomir Administration of profiting personally by the operation.

On March 13 and in its two succeeding issues El Debate has carried violent articles condemning the loan on the ground that the Export-Import Bank is to exercise a certain control over the expenditure of the funds and to designate a “fiscal” (representative with supervisory functions) for the purpose. El Debate considers this humiliating for Uruguay and contrary to “American solidarity”, concluding one of its articles with a statement intimating that even Liberia would not expect such treatment. In order that the Department may appreciate on what a low and scurrilous plane the campaign is being conducted, I enclose copies of the three articles referred to.48 Similar items will no doubt continue to appear.

The Embassy has seen no other recent comment regarding the loan agreement in the Montevideo press. Incidentally neither the text nor the details of the agreement have been made public.

El Debate’s articles are on a par with other blasts directed against the Baldomir Administration and in view of its general attitude what it says need not be taken too seriously.

However, a few days ago Dr. Javier Mendívil, who was Minister of Finance in the Baldomir Cabinet and now holds the position of Minister of Industries and Labor, told me that he was very disappointed in the terms of the agreement signed by Dr. Guani with the Export-Import Bank. He referred in particular to the clauses requiring the Government to justify and to report upon the expenditure of funds and stated that the contract contained provisions which were “humiliating” and should not be necessary in the case of a country like Uruguay. He said that Uruguay had an excellent financial record and that it could not for a moment be supposed that the loan would be used otherwise than for the purpose granted. Dr. Mendivíl expressed [Page 786] the opinion that no Congress would have approved such an agreement.

I told Dr. Mendívil that according to my understanding the Export-Import Bank operates subject to regulations and laws restricting the purposes for which and the conditions under which loans may be granted. I said also that similar agreements with the Bank had been entered into by other governments and that in fact it was my understanding that Uruguay had received rather more liberal treatment than certain other countries.

Thus far Dr. Mendívil is the only Uruguayan official who has mentioned the matter to me.

I am under the impression that Uruguay was given very liberal treatment as respects not only the financial terms of the loan but also the degree of control to be exercised by the Export-Import Bank over expenditures.

It might be helpful if the Department could send me a brief statement regarding the matter which I could communicate either officially or informally to the Foreign Office or to President Amezaga himself. I have in mind a statement covering very briefly the conditions under which the Bank usually makes such agreements and confirming my impression that Uruguay did receive particularly favorable treatment (assuming of course that this impression is correct). Such a statement would be useful in case the President and other officials should have the idea that the agreement contains provisions which are “humiliating” for Uruguay.

Respectfully yours,

William Dawson
  1. Not printed.
  2. None reprinted.