810.154/8–1144
The Secretary of State to the Ambassador in Nicaragua (Stewart)
Sir: Reference is made to the Embassy’s despatches nos. 2314, 2398 and 2474 dated June 9, July 14, and August 11, 194429 respectively and to the Department’s instructions nos. 1143 and 1304 dated March 16 and August 3, 1944,30 relating to the future of highway construction in Nicaragua.
As pointed out in instruction no. 1143, March 16, 1944, it appears that considerable disbursements have been erroneously charged to funds earmarked for the Inter-American Highway from the second $2,000,000 Export-Import credit obtained by the Nicaraguan Government.31 No final report has been received by the Department as to the results of the audit of the Public Roads Administration. The Department hopes that it will very shortly be possible for the Embassy [Page 200] to furnish adequate information regarding the ability of Nicaragua to finance the cooperative highway program, as indicated in its instruction of August 3. The Department wishes to be certain not only that the diverted funds will be restored, but also that the Government of Nicaragua has sufficient funds available to reimburse its entire share of the total construction costs, in view of the great increase in the estimated totals as indicated in Department’s instruction no. 1304 of August 3, 1944, and also in the enclosure to the Embassy’s despatch no. 2474 of August 11, 1944.33
The Department has studied the figures presented by Mr. Thomas A. Jones, Chief Engineer of the Nicaraguan Highway Department, enclosed in Embassy’s despatch no. 2474 of August 11, 1944, and in view of the great difference both in distance and costs between the Sébaco–Estelí–Condega route and the Matagalpa–Jinotega route, you are requested to inform the Government of Nicaragua that this Government believes that the Sébaco–Estelí–Condega route would be preferable and to indicate the desirability of returning to this original route as the official Inter-American Highway. When the original studies were made there did not appear to be any great difference in the costs between the two routes, but in view of the Pioneer Road construction and because of the revision in estimates, the difference in completing the two projects would now appear to be very great. Whereas certain factors have undoubtedly tended to accentuate the differences between the costs of the routes as estimated by Mr. Jones in December, 1941 and July, 1944, the Department is at a loss to understand how the difference in distances can have increased from 35 kilometres to 64 kilometres. This is a further important argument for returning to the Estelí route.
… The principal basis for your advocacy of the Estelí route should be not only the great economy in costs and the saving in disstance but also the fact that according to the Public Roads Administration, no practical route has as yet been found to connect Jinotega and Condega.
If the Government of Nicaragua insists upon the official route,34 the Government of the United States is committed to undertake construction [Page 201] on the basis of the 2/3–1/3 contribution, but it would require a clear indication of Nicaragua’s ability to pay its full 1/3 of the cost, as this Government would be averse to partial construction along this route unless the construction of the whole distance was assured at one time.
From a careful study of the map enclosed with your despatch no. 2474,35 it would appear that there has been a deviation from the official route between Matagalpa and Jinotega to include La Fundadora,36 which would add extra distance and extra cost to the official route. The Department is unalterably opposed to any such change if it would necessitate a deviation from the route which cost and constructional considerations would recommend. Should the Nicaraguan authorities insist that the route via La Fundadora is the best route, the Department would accede only after study and favorable recommendation by an independent engineer.
The Department’s instruction no. 1304 of August 3, 1944,35 merely directed you not to quote figures in writing; there is no objection to your discussing estimates orally with Nicaraguan authorities.
Very truly yours,
- Despatches 2398 and 2474 not printed.↩
- Instruction 1304 not printed.↩
- In May 1939 a credit of $2,000,000 was authorized by the Export-Import Bank in favor of Nicaragua, and in March 1941 a second credit of $2,000,000 was authorized to finance further construction of roads and other public works.↩
- A memorandum of August 1946 (810.154/9–646) by Mr. W. P. Cochran, Jr., Chief of the Division of Caribbean and Central American Affairs, on the status of the Inter-American Highway for the period January 1, 1944–June 30, 1946, contained the following: As regards the investigation of Nicaraguan highway finances, Mr. James of PRA reported on October 19, 1944 (810.154/10–1944) that the Nicaraguan Highway Department was nearly $2,300,000 in arrears, being in default on payments for equipment purchased from the United States Army Engineers; having two overdrafts at the Bank of Nicaragua; owing $200,000 on equipment and supplies already en route to Nicaragua. The cost of all road construction was increased in December 1944 when President Somoza granted a wage increase of approximately 50% to all road workers (810.154/12–2144).↩
- The Matagalpa–Jinotega–Condega route agreed upon in the exchange of notes of April 8, 1942; for texts, see Department of State Executive Agreement series No. 295, or 56 Stat. (pt. 2) 1845.↩
- Not printed.↩
- President Somoza’s farm, which was about 9 kilometers north of the projected route between Matagalpa and Jinotega.↩
- Not printed.↩