The Ambassador in Paraguay (Beaulac) to the Secretary of State
[Received 11:44 p.m.]
471. Embassy’s despatch 1073, September 5.16 Report reaching Embassy indicates Captain van Hyning17 who was sent to Washington by Paraguayan Government in connection with Lend Lease requests is discussing with War Department and Paraguayan Embassy possibility of Paraguay’s acquiring under long term payment agreement machinery and equipment for aviation sub-depot which Paraguay had requested under Lend Lease. Before any agreement is reached, I suggest Department give careful consideration to Paraguay’s probable ability to pay, having in mind that current payments to Eximbank are being made through loans advanced by National Bank of Paraguay. Department should bear in mind also that personnel to operate this depot cannot be trained here and apparently can no longer be trained in Panama.
It should be borne in mind also that Paraguayan Army has expressed desire to increase Air Force from 650 to 4611 in the immediate future. This is more than Paraguay requires or can maintain.
In addition to foregoing Stagni18 has expressed desire to purchase in US six used DC–3’s and establish Paraguayan Government international [Page 1286] airline to La Paz, Rio, Monte[video] and Buenos Aires. He has little idea of what is involved in the maintenance of such a line and there is great doubt that it would succeed. His ultimate objective is probably to use line to finance greatly expanded Air Force proposed. I suggest therefore that our Government be very slow in encouraging him through easy payment agreements to embark on this enterprise.