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

No. 2325

Sir: I have the honor to refer to my despatch no. 2306 of March 15, 1943, concerning the recent agreement under which the Export-Import Bank opened a credit of $20,000,000 in favor of the Government of Uruguay, and reporting with regard to criticism of the agreement primarily because of the control to be exercised by the Bank. (Reference is made also to my telegram no. 315 of March 18.)49

The Embassy received this morning from the Foreign Office a note stating that the Government finds Clauses 5, 8 and 9 of the agreement50 [Page 787] not “entirely satisfactory”; that it has been decided to initiate “friendly negotiations” with a view to their modification; and that instructions in this sense have been addressed to the Uruguayan Embassy in Washington, The Foreign Office requests my assistance in the matter. The text of the note and an English translation are enclosed.51

I already had an appointment later in the morning with the Foreign Minister52 and in the course of our conversation he mentioned the loan matter and his note. He told me that the instructions to the Uruguayan Ambassador in Washington53 referred to in the note had been forwarded yesterday by airmail and not by telegraph. He gave me for my information a copy of a memorandum which had also been sent to the Ambassador. I enclose copies of this memorandum54 which lack of time has made it impracticable to translate.

Minister Serrato said that he hoped and believed that the changes desired by the Uruguayan Government could be made in the agreement. He expressed the opinion that matters could be taken care of by changes in wording which would satisfy Uruguayan sentiment and at the same time give the Export-Import Bank the assurances which it requires.

As I had previously told Dr. Mendívil (my despatch no. 2306), I explained to Sr. Serrato that, according to my understanding, the Export-Import Bank operates subject to laws and regulations 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. I assured him that there had been no intention whatever to cast any reflection on the credit of the Uruguayan Government or on the conduct of its finances and of course no intention to impose conditions which could in any way be considered as “humiliating”.

Sr. Serrato said that he realized all this but that it must be remembered that Uruguayan opinion is very sensitive (quisquilloso). He remarked that the loan contract in its present form would prove highly embarrassing politically, that it would be made a political football by the Herreristas, and that in fact an Herrerista Senator had already [Page 788] requested information concerning Dr. Guani’s negotiations with the Export-Import Bank.

In conclusion, Sr. Serrato said that, speaking quite frankly, it was his opinion that, unless the clauses in question were amended to meet the local situation, the Government would not make use of the loan.

I may add that today’s Mañana contains an article stating that the Government has suggested certain changes in the loan agreement, that the changes pertain to control clauses which are hardly in accord with the “principles of inter-American cooperation”, and that this shows that La Mariana was right in criticizing at the time the haste with which the agreement was considered by the Council of State. Critica of Buenos Aires also dealt with the matter yesterday in an article in which its Montevideo correspondent reports that the former Council of State authorized within 24 hours (as was the case) the signing of an ad referendum agreement; that this was done on the basis of a telegram from Dr. Guani containing the financial conditions of the operation; that the urgency was due to Dr. Guani’s desire to sign the agreement himself; and that “subsequently and in an additional document” other clauses were stipulated which the present Government considers; objectionable (inconvenientes).

It is to be hoped that some means can be found by the Department and the Export-Import Bank of adjusting the difficulties which have arisen. In view of the more recent developments and of my conversation with Minister Serrato, it is doubted if the statement suggested in the closing paragraph of my despatch no. 2306 would suffice to overcome the objections of the Uruguayan Government.

Respectfully yours,

William Dawson
  1. Not printed.
  2. Clause 5 provided that Uruguay present to the Bank itemized statements of withdrawals from the fund with promissory notes of the Republic; clause 8 required that equipment and supplies for the public works were to be produced in the United States or Uruguay and those from the United States were to be carried in ships of United States registry; clause 9 gave the Bank the right to inspect projects and verify records and accounts.
  3. Not printed.
  4. José Serrato.
  5. Juan Carlos Blanco.
  6. Not printed.