822.50/3–2345

Memorandum by Mr. Rollin S. Atwood of the Division of North and West Coast Affairs 21

Ecuadoran Development Corporation 22

While reducing volumes to a paragraph I feel the following are the pertinent facts. I have also made a recommendation as to what appears to me to be the possible solution, knowing full well that the conditions attached may make it impossible.

[Page 1052]

Present Situation:

1.
Official and unofficial criticism of the Corporation has culminated in a situation wherein immediate action would appear to be a “political must”.
2.
The Ecuadoran Minister of Economy24 has requested the liquidation of the Corporation provided the line of credit is not stopped.
3.
The Minister of Public Works25 has asked to have the contract with Ambursen Engineering26 cancelled and to have work on the road suspended. Action by the Corporation on this official request is presumably held up due to the lack of a quorum in the Corporation directorate.
4.
The Ecuadoran government’s position, summarized, seems to point to liquidation without cancellation of credits and without jeopardizing the completion of the Quevedo–Manta Highway.

Background:

1.
No adequate program for the Corporation was agreed upon before the credit was extended, nor has it been possible to agree upon a definite program since that time.
2.
The blame falls, more or less equally, on the United States and Ecuador; the latter promoted a variety of projects of questionable merit which were politically or personally expedient; and the former, lacking a definite program and adequate personnel equal to the required job of leadership, allowed its program to grow up like “Topsy”.
3.
A firm stand was belatedly taken to get out of the procurement of strategic materials such as rubber, quinine and balsa and to limit the Corporation’s program to the Quevedo–Manta Highway and the rehabilitation of the Pichilingue venture.27
4.
The activities of the Corporation are practically at a standstill with the exception of the work being carried on in connection with the highway.

Recommendation:

1. That the Ecuadoran Development Corporation be liquidated and all assets, with the exception of the remaining credit for the Quevedo–Manta Highway, be turned over to the Ecuadoran government. Some satisfactory arrangement will have to be made with the Ecuadoran government to continue the work on the Quevedo–Manta Highway, preferably without changing the present contract. It would appear that discussions among the three principals, State Department, Export-Import Bank, and Ecuadoran government will be necessary before this can be settled. The Export-Import Bank feels that the [Page 1053] Ecuadoran Minister of Economy (Mr. Eduardo Laso) should come to Washington for these discussions. However, Mr. Warren28 is definitely against Mr. Laso’s coming to Washington at this time.29

  1. Addressed to the Chief, Division of North and West Coast Affairs (Wright) and to Mr. John C. McClintock, Special Assistant to the Assistant Secretary of State (Rockefeller).
  2. Ecuadoran governmental instrumentality.
  3. Luis Eduardo Laso.
  4. Jorge Montero Vela.
  5. The Ambursen Engineering Corporation held the contract to build the Quevedo–Manta highway.
  6. The development of large cacao and coffee plantations.
  7. Avra M. Warren, Director, Office of American Republic Affairs.
  8. After the concluding sentence the following appears in handwriting: “and so am I. J. H. W[right].”