817.00/3–1546: Telegram

The Acting Secretary of State to the Ambassador in Nicaragua (Warren)


91. Your airgram A–88, Mar 15.32 Somoza appears to be operating under several obvious and serious misconceptions with regard to possible loan. Following observations are pertinent regarding specific objectives of loan as envisaged by Somoza:

1. and 2.
Under Exim Bank’s established policy no loans could be made to increase capital of Banco Hipotecario or Banco Nacional.
Eximbank has already opened general line of credit for International Standard Electric operations abroad. Specific proposal for Managua exchange already under consideration by Bank thus obviating necessity further action by Somoza.
Projects for water and light plants can be considered by Bank only if presented in specific, detailed form, with full evidence of economic justification. Project descriptions and supporting data should be submitted to Bank, at least for its preliminary study, through normal channels i.e. Nicaraguan Amb in Washington. In any event, were any such loans approved by Exim Bank they would not be made directly to Nicaraguan Govt but to American interests concerned.
Extension of loan for payment of Lend-Lease account would not be considered.
An audit to determine amounts due Nicaragua for road expenditures has been undertaken and Dept is endeavoring to expedite action. No loan would be made to cover amounts due (these amounts furthermore are still subject to determination).

Not only is Eximbank unable to make loans in specific instances stated but no other agency of this Govt is in a position to do so.

You are authorized in your discretion to bring the above to Pres Somoza’s attention pointing out that item 4 constitutes the only possibility among those mentioned for which loan could possibly be considered.

  1. In this airgram President Somoza outlined to Ambassador Warren the six purposes for which a loan was needed (817.00/3–1546).