The Acting Secretary of State to the Ambassador in Ecuador (Scotten)
286. From Eximbank. Following consideration Smith waterworks application Eximbank Board Directors has reviewed present commitments to Ecuador. Inasmuch as Development Corporation credit has since Aug 1 been in default in an amount approximately $250,000 Board decided not to proceed further with existing commitments until arrearage is paid up. This decision was communicated to Ambassador Plaza. Following discussion of individual commitments Bank agreed as exception to conclude negotiations for Guamote-Tambo Highway credit agreement.
There was an understanding between Bank and Ambassador Plaza to effect that Bank would rely upon his discretion concerning time and manner of undertaking to secure resumption of debt service. He subsequently informed Bank that in telephone conversation with Quito he expressed as his personal opinion concern that Bank would be unwilling to proceed with unutilized commitments in view of default. He said he had reported that Smith project was turned down because of this default.
Following understanding with Ambassador Bank received from Municipal Council Guayaquil notice of imminent departure of Commission [Page 879] authorized to conclude negotiations on Guayaquil waterworks credit. As Bank did not consider it advisable at that time to make a flat statement to effect that it would not consider Guayaquil waterworks project until all arrears had been paid it replied that due to its preoccupation with conclusion of Guamote-Tambo negotiations it was not at that time prepared to receive delegation but promised to inform Commission of appropriate time to come to Washington.
Board’s unfavorable action on Smith application was not based primarily upon default status of Corporation credit but upon Ecuador’s entire credit and exchange position.
In view of Ambassador Plaza’s resignation and since Bank does not know extent he informed either his govt or his colleagues here of foregoing Bank is undertaking to review situation with Chargé d’Affaires and to request that he inform his govt immediately. [Eximbank.]
From Dept urtel 331 Jun 2596. Dept emphasizes Eximbank credits are considered entirely apart from and independent of Galápagos negotiations.
- Not printed.↩