The Chargé in Ecuador ( Shaw ) to the Secretary of State

No. 3570

Sir: I have the honor to refer to the Department’s telegram No. 607 of October 11, 6 [5] p.m., 1945, concerning the selection of a hard core [Page 1046] Proclaimed List for Ecuador, and to the Embassy’s telegram No. 749 of October 16, 5 p.m., 1945,6 stating that the Embassy’s detailed Proclaimed List recommendations were being forwarded in the present despatch. Reference is made also to the Department’s instruction No. 1242 of August 11, 1945, concerning suggestions for changes in the Permanent Legislative Committee’s July regulatory decree relating to the modification of action taken under the 1943 vesting and forced sale decree of the Ecuadoran Government, and to previous communications concerning the possibility of the return of adjudicated properties to the former Axis owners.

Upon receipt by the Embassy of the Department’s instruction No. 1242, with its detailed comments on the two 1945 decrees affecting the disposal of adjudicated properties, the British Legation was consulted regarding joint action to be taken by the two Missions. The British Legation had already received authorization to protest to the Ecuadoran Government regarding the tenor of the two decrees. It was determined that the two Missions should present to the Ecuadoran Government notes setting forth the respective reactions of the Governments of Great Britain and the United States and should, in addition, present jointly to the Minister of Economy the informal note requested by him suggesting changes to be made in the regulatory decree issued by the Permanent Legislative Committee. Reference is made to the Embassy’s telegram No. 598 of August 3, 11 a.m., 1945.

On August 11, the Embassy addressed to the Ecuadoran Acting Minister for Foreign Affairs5 a note expressing the concern of the United States Government with the possible effects of recent Ecuadoran legislation regarding adjudicated blocked properties. A copy of the English text of the Embassy’s note No. 210, with the unofficial Spanish translation, is enclosed.6 The parallel note of the British Legation was transmitted to the Ecuadoran Government on the following day.

The memorandum listing suggested changes in the regulatory decree was prepared by the Embassy on the basis of the Department’s instruction No. 1242 of August 11 and was to be submitted informally to the Minister of Economy by the Ambassador and the British Minister. At this time the Embassy was advised in confidence that the Acting Minister for Foreign Affairs had informed the Minister of Economy that action with respect to the Embassy’s note No. 210 of August 17 and the entire problem of disposition of blocked properties lay within the exclusive jurisdiction of the Foreign Office, because of their relation to Ecuador’s international commitments. In view of this circumstance, [Page 1047] it was felt that any further direct approach to the Minister of Economy on the part of the Embassy might be resented in the Foreign Office, and the confidential memorandum was not presented.

The Ecuadoran Government presented a reply to the Embassy’s note No. 210 in Ecuadoran Foreign Office Note No. 209–DCC of August 25, 1945. In this communication, the new Minister for Foreign Affairs, Dr. José Trujillo, stated that he would study carefully the matter under reference and inform the Embassy of his decision in due time; meanwhile, the Embassy could be assured that the Executive Power would take international agreements into account. A copy of the Spanish text of note No. 209–DCC and an English translation thereof are enclosed.7

The texts of the notes of the Embassy and the British Legation on the blocked properties situation were communicated to the Permanent Legislative Committee by the Minister for Foreign Affairs. The answer of the Secretary of the Permanent Legislative Committee was published in El Día of August 25, 1945 in an article (enclosed) appropriately headed “Indefinite Situation”.8 The Secretary is said to have stated that the legal provisions under reference (the March 2 decree and the July regulatory decree on blocked properties) do not in any case imply the obligatory return of the properties to the former owners who are on the black lists. This statement would appear to be an attempt to placate the British and United States Missions and the opposition within the Government to the return of the properties to the former owners, at the same time leaving the way clear for any later decision the Committee may wish to make in favor of return of the properties. The reference to “former owners who are on the black lists” is an obvious evasion of the main point at issue, the possibility of return of the properties to enemy ownership, since it is a matter of common knowledge that most of the names of former owners of adjudicated properties are no longer included in the lists. It will be recalled that the reason for such deletions has been stressed in local publicity releases, and it was also emphasized in the Embassy’s note No. 210 of August 17 that mass deletions in Ecuador had been made not on the basis of the merits of individual cases but because of controls effected by the Ecuadoran Government, and particularly because of the transfers of blocked properties of undesirable owners.

The March 2 decree of the National Constituent Assembly concerning the annulment and ratification of adjudications of blocked properties set a 180 day period within which the Permanent Legislative Committee must decide all matters to which the decree refers, counting from the date on which the Committee should begin to function. [Page 1048] Reference is made to the Embassy’s despatch No. 2839 of March 20, 1945,10 concerning the decree annulling adjudications of blocked properties. The Permanent Legislative Committee began its work on April 1, 1945 and the 180 day period expired on September 17. During this period various claims concerning blocked properties were presented to the Committee, but no decisions were reached by it. The present holders of the property took the stand that the Committee had no further jurisdiction in the matter after September 17, hoping by this means to delay a decision until the next meeting of the Assembly; however, the Permanent Legislative Committee decided that it was still competent to examine and resolve all matters pertaining to annulled adjudications of blocked properties. An article in La Patria of September 22 reported the above decision of the Permanent Legislative Committee and stated that two members of the Committee had been charged with interviewing the President to inform him regarding the blocked properties situation and to discuss means of financing the purchase of blocked properties the State may wish to retain.

No additional official statements by the Government or by the Permanent Legislative Committee have appeared. It will be seen from the developments outlined above that the eventual disposition of the blocked properties remains problematical. The Embassy does not believe that the Proclaimed List for Ecuador should be reduced further until more satisfactory guarantees are received to the effect that the adjudicated blocked properties will not be returned to their original owners.

The Embassy recommends that the twenty-three names included in Category “A” of the Embassy’s despatch No. 2848 of March 22, 194510 be retained as the hard core list for Ecuador.

It is recommended that the names listed below be deleted upon the fulfillment of the following specific conditions:

The receipt from the Ecuadoran Government of adequate written guarantees that the blocked properties will not be returned to the former enemy owners, or the arrival at a final satisfactory solution regarding disposition of these properties;
In the case of Clemente Baquerizo, the establishment of satisfactory proof that the funds blocked in his name are his own and are not being held in safekeeping for the German Schering Company;
In the cases of Alfredo Brauer Gehin, Leopoldo M. Brauer Gehin Jr., Otto Heinrich Carstanjen, Augusto Ernesto Ridder, Max Rueff, and Heinz Schulte, the announcement that the deportation to Germany of the subjects under reference has been carried out.

[Here follows list of 42 persons and companies.]

If the Department concurs with this procedure, it is respectfully requested that the Embassy be authorized to advise the Ecuadoran [Page 1049] Government informally and orally that a substantial reduction of the Proclaimed List is being effected in the November supplement and that it is regretted that Ecuadoran names could not be included in the deletions, in the absence of satisfactory guarantees with reference to the disposition of blocked properties.

The British Legation is in agreement regarding the approach to the Ecuadoran Government suggested above and concurs with the Embassy’s opinion regarding the inexpedience of further deletions under existing circumstances. While it appeared in a preliminary discussion that the British Legation was in agreement regarding the selection of names which might be deleted in the event of a satisfactory solution of the blocked properties problem, a more detailed discussion indicates that there are some divergencies. …

Respectfully yours,

Geo. P. Shaw
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  2. Presumably Rodrigo Jacome Moscoso, Under Secretary for Foreign Affairs.
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