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

No. 2340

Sir: I have the honor to refer to my despatch no. 2325 of March 18 concerning the Export-Import Bank loan agreement with Uruguay and transmitting a note from the Uruguayan Foreign Office to the effect that the Uruguayan Government finds clauses 5, 8 and 9 of the agreement not “entirely satisfactory”; that it has been decided to undertake “friendly negotiations” with a view to their modification; and that instructions in this sense have been addressed to the Uruguayan Embassy in Washington. In the despatch under reference I reported also regarding a conversation with the Minister of Foreign Affairs in the course of which 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.

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Today I am in receipt of a second note (copy enclosed) with which Sr. Serrato transmits a sheet (copy also enclosed)55 containing the changes which the Uruguayan Government proposes as respects clauses 5, 8 and 9. In his note he states (as is likewise indicated on the sheet setting forth the proposed changes) that it is desired also that the third paragraph of clause 5 and all of clause 10 be eliminated.

Statement by Dr. Guani.

There appeared last evening in the Montevideo newspaper El Plata (Blanco Independiente) a good statement (text enclosed56) in which Dr. Guani discusses the conditions under which the Export-Import Bank opens credits and states that the control provisions in the recent agreement are those included in “all other loans granted by the said bank to other nations and are also the same as those stipulated and already accepted by the Uruguayan Government in the contract negotiated a few months ago with the same bank for financing the Rio Negro work.” Dr. Guani adds that the financial terms are the best that could have been obtained anywhere in the world at the present time and are also more favorable than those of any other loan agreement signed by Uruguay prior to 1942.

In commenting on Dr. Guani’s statement this morning’s Mañana says that rather than a “rectification” it constitutes a “confirmation” of the existence of “unusual clauses”. La Mañana calls for the publication of the agreement. The Herrerista Debate continues its campaign against the agreement and in its edition of today publishes clause 9, stating that it makes clear the “existencia de un fiscal denigrante para nuestra condición de nación libre”.57 El Debate announces that it will subsequently publish other clauses.

In its afternoon edition, El Diario (which is affiliated with La Mañana) recognizes that, as Dr. Guani pointed out, the control provisions to which exception is taken were included in the Rione contract58 with the Export-Import Bank. It asserts, however, that “anomalous” provisions of this nature, although explainable in the special case of the Rione, are “embarrassing” (incomodas) where the “superior and responsible concept of the State” is involved.

Respectfully yours,

William Dawson
  1. Neither printed.
  2. Not printed.
  3. Translation: “provision for a supervisor degrading to our position as a free nation.”
  4. Hydroelectric project.