740.34112 RP/6: Telegram

The Ambassador in Paraguay (Frost) to the Secretary of State

98. Conversations with Paraguayan officials regarding forced sale or intervention of local firms on the Proclaimed List have recently progressed favorably and it apparently may be possible to arrange for the creation of a Paraguayan authority which will supervise the sale and transfer of the more important German interests to acceptable Paraguayan firms or individuals. The problem of finance appears to be most conspicuous and inquiry has been made of me by Finance and Foreign Affairs Ministers53 as to possibility of Paraguayan Government securing such aid from the American Government. Department’s circular instruction December 17, 194254 regarding the forced sale and intervention of Proclaimed List business enterprises indicates that under proper circumstances such funds might be available from Export-Import Bank.

Possibility seems to exist of encouraging forced sale of such firms as German bank, Staudt, Krauch, Ferreterías Universal and Alemana, Tubos, Mannes, Mann and Wiske, the leading German firms in Asunción. Total assets probably do not exceed $1,500,000. However, before continuing these conversations Paraguayan Ministers wish to confirm whether in principle if forced sale of these firms to Paraguayans is provided by decree law the funds required might be made available by the Export-Import Bank to finance such transfers through whatever government organization may be set up by Paraguay to supervise such transactions.

Frost
  1. Rogelio Espinoza and Luis A. Argaña, respectively.
  2. Not printed.