825.51/9–2746
Memorandum by Mr. Alexander Schnee of the Division of North and West Coast Affairs95
The action of the National Advisory Council in approving a loan of $15,000,000 to Chile did not commit the Council or the Eximbank to the granting of funds for any specific project.
The $15,000,000 figure was developed by the Fomento Corporation when it was requested by the Eximbank to divide the $40,000,000 originally requested into (A) those projects in which the Eximbank has an interest continuing from past commitments and (B) new projects to be undertaken by Fomento. The $15,000,000 covers loans for projects in which the Eximbank has an interest continuing from past financing.
When this figure was presented to the Eximbank, that Agency informally indicated that it would consider a loan of this amount to Chile, but the Bank did not accept the list of specific projects as a basis against which the $15,000,000 credit could be drawn if it were approved by the NAC.
On Monday, September 30, the Chilean Fomento Corporation will present to the Eximbank a list of projects which that organization wishes to be financed out of the $15,000,000 loan recently authorized. The Bank is of the opinion that the petroleum loan96 will be included in the list presented by Fomento. All the projects presented by Fomento will of course be reviewed by the Bank and the Department will have an opportunity to express its views. I suggest that it would be useful if informal approaches to Mr. Clayton97 and Mr. Ness,98 or other members of Mr. Clayton’s staff, were again made on this subject with a view to making sure that the Department will take a vigorous stand on this matter when it comes up at the Eximbank.
With respect to Chile’s ability to service the debt, I understand that a sub-committee of the NAC, after a study of Chile’s balance of payments, came to the conclusion that if very good conditions prevail for sometime in the future Chile should be able to service an additional foreign debt up to a total of $40,000,000. The decision of the Eximbank to finance only $15,000,000 of the requested loan was based upon the shortage of funds available to the Bank rather than the Bank’s estimate of Chile’s ability to assume the burden of a larger foreign debt.
- Addressed to NWC: Mr. Gerberich, Mr. Hall, and Mr. Wells; and to ARA and A–BR: Mr. Smith.↩
- For documentation on the interest of the United States in Chilean petroleum, see pp. 620 ff.↩
- William L. Clayton, Assistant Secretary of State for Economic Affairs.↩
- Norman T. Ness, Chief Economist, Export-Import Bank.↩