834.51/5–2546: Telegram

The Ambassador in Paraguay (Beaulac) to the Secretary of State


225. Minister Foreign Affairs told me yesterday Paraguayan Govt thru Embassy in Washington had requested additional one million dollar Eximbank credit for highway extension to Encarnación.

Pending details Paraguayan request I am prepared in principle to support additional one million dollar credit for purpose stated. While my view which I have communicated to Dept as well as informally to Paraguayan Govt has been that military expenditures should be reduced before additional credits requested I believe that in present international situation, having in mind Perón election in Argentina, [Page 1202] we should refrain from commenting to Paraguay on size and cost of its military establishment, particularly in view of apparently successful effort being made by President to cleanse army of politics.

I consider rather that at this stage consideration of any request for additional loans should be based on Paraguay’s credit which I and the Commercial Attaché consider to be excellent and on use to which funds are to be put.

Foregoing is not yet a definitive recommendation. I hope, however, Dept and bank will not reject Paraguay’s request without first consulting Embassy.