824.51/7–2345: Telegram

The Acting Secretary of State to the Ambassador in Bolivia ( Thurston )

493. For the information of the Embassy, there is quoted below the text of the aide-mémoire drafted by the Eximbank and signed by the representatives of the Bolivian Development Corporation, [Page 591] President of the Eximbank, the Bolivian Ambassador, and a representative of the Department of State:

“The representatives of the Bolivian Development Corporation, Lt. Col. Enrique Camacho, Dr. 3Gonzalo Romero, Director, and Mr. José Romero Loza, Advisor, being accompanied by officials of the Bolivian Embassy, have had a series of conversations with Mr. Taylor, President of the Export-Import Bank, together with other officials of the Bank and officials of the Department of State.

“These discussions have covered the general affairs of the Corporation relating to the use of the Export-Import Bank credit and have resulted in an understanding on the following points:

  • “1. The Corporation recognizing the necessity of competent management has appointed Dr. Joseph MacCaskill as General Manager of the Corporation with the approval of the Bank.
  • “2. The Corporation has entered into a contract for the construction of the Cochabamba–Santa Cruz Highway with the firm of McGraw–Warren, and the Bank has approved the selection of this firm and the contract of construction.
  • “3. Under the approval of the petroleum program within the terms of the Loan Agreement,74 the Corporation has expended approximately $1,100,000 for the purchase of machinery and equipment necessary for the drilling program, and the Bank has indicated that these expenditures will be reimbursable immediately under the credit upon the presentation of the promissory notes of the Corporation accompanied by the documentation described in the Loan Agreement.
  • “4. The Bank is of the view that it has a direct interest in only the two projects to which its credit has been allocated, the petroleum project and the highway project and that it therefore did not desire at this time to express any definite views concerning, or to discuss the possible availability of funds for, other projects which the Corporation intended to carry out with funds other than those obtained under the credit.
  • “5. With reference to the Cochabamba–Santa Cruz Highway project, the Export-Import Bank has, at the request of the Corporation, allocated $10,000,000 of the credit for the construction of the highway. This allocation was made pursuant to the Export-Import Bank approval dated December 26, 1944, which requires the prior expenditure of $3,000,000 of Corporation funds contributed by the Bolivian Government before the Bank credit will become available. The Corporation has expended up to July 4, 1945 approximately $2,130,000 of its own funds and hoped that the Bank would reimburse it to the extent of these expenditures. The Bank expressed the view that it was not willing to discuss the request of the Corporation with reference to the reimbursement of the previous expenditures of the Corporation for the highway, but that it was immaterial if the assurances for the completion of the highway were represented by actual expenditures or other guarantees satisfactory to the Bank. The Corporation accordingly, with the authorization of the Bolivian Government, [Page 592] offered the guarantee of the Banco Central contained in the following cable from President Villarroel:

    ‘The Banco Central will make available up to 2 million dollars for the completion of the highway in case the 10 million dollars available under the Export-Import Bank credit are insufficient, such Banco Central funds to become available after the expenditure of the Export-Import Bank credit. The Government has approved the law creating resources to finance this operation in virtue of which it considers the guarantee requested as provided, enabling you to continue on this basis your negotiations.’

  • “This guaranty, when properly formalized and made effective by the requisite law, will be satisfactory to the Bank. Accordingly, the Corporation may expect reimbursement under the credit for expenditures made on the highway from July 4, 1945 and may use, for whatever projects it chooses, the sum of $870,000 which would otherwise be applicable to the Cochabama–Santa Cruz Highway under the approval of December 26, 1944.
  • “6. The Corporation pointed out that it had an extensive road program and that it would like to initiate as soon as possible studies of several of these roads, on the understanding that the Bank would be willing to discuss the possibility of additional credits as suggested in the note of Secretary Hull, dated August 14, 194275 addressed to the Bolivian Ministers of Economy and Finance. The Bank indicated that it looked forward to pleasant and mutually satisfactory relations with the Corporation, and would be prepared to discuss the above-mentioned matters at any time, but that it would be more desirable if the Corporation would progress substantially with the Cochabama–Santa Cruz Highway before presenting for consideration additional highway projects in Bolivia.”