The Ambassador in Peru (Cooper) to the Secretary of State

No. 60

Sir: I have the honor to refer to the recent negotiation between Peruvian authorities and the President of the Foreign Bond Holders Protective Council regarding the prospective settlement of the Peruvian external dollar debt and to the Peruvian interest in obtaining Export-Import Bank loans.

In this connection specific reference is had to paragraphs 1 (a) and (b) of the enclosure to the Department’s confidential communication of May 23, 1946, concerning the status of current economic problems with Peru;86 the Department’s memorandum of March 20, 1946, reporting a conversation between Sr. Carlos Montero Bernales Peruvian ex-Minister of Finance, and officers of the Department; and to the pertinent portions of “Policy and Information Statement” dated February 15, 1946, which was received under cover of the Department’s secret communication of March 11 of this year.87

I realize that the Department is being subjected to pressure from certain business and other interests in our country to liberalize credits to foreign governments and I am likewise aware of the temporary stimulus that could be expected to accrue to our foreign trade as a result of new United States credits at this time. Notwithstanding a full appreciation of those considerations, however, I wish to record with the Department my considered opinion that it would be most unfortunate if the Export-Import Bank or other agencies of our Government were to accede to the Peruvian desire for financial assistance prior to the satisfactory settlement of the Peruvian external dollar debt. I believe that such assistance not only would jeopardize the possibility of approval by the new Peruvian Congress of the terms of the settlement already negotiated but would, moreover, place our Government in a more difficult position in dealing with the settlement of any similar loan-debt problems that may be pending or which may later arise with respect to third countries. Finally, it would appear that the granting of loans to Peru at the present stage of the debt settlement negotiations and prior to the satisfactory consummation thereof would not enhance the prestige of our Government in the eyes of the Peruvians.

It is assumed that any proposed loans, extensions or augmentations of unused Export-Import Bank credits to Peru prior to the final [Page 1258] settlement of the outstanding Peruvian dollar debt will be cleared through this Embassy.

Respectfully yours,

Prentice Cooper
  1. Not printed.
  2. Communication of March 11 and enclosure not printed.