811.516 Export-Import Bank/8–2147: Telegram

The Ambassador in Bolivia (Flack) to the Secretary of State

us urgent

755. For Export-Import Bank. Deptels’ 47452 and 475, August 18 and 19. Mourning yesterday for deceased Deputy with closure offices prevented seeing President until today. Statements made to me by President today confirmed Bolivian Ambassador’s statements your 474 with addition of consideration noted my 745, August 1552 represent inability Bolivia to cover dollars 2 million Central Bank guaranteed.

I today reiterated to President Hertzog Bank’s position as stated your 475 and left with him memorandum in Spanish. He agreed with all of the Bank’s views and said that in spite of all that had been said in Congress the Govt had agreed in principle to continue with McGraw–Warren and make the payment of $1,125,000 and that the Central Bank would guarantee the additional $2,000,000 previously mentioned. He added that to confirm this he would call a Cabinet meeting tomorrow which would resolve officially the government’s viewpoint after which I will again cable.

President stressed Bolivia’s very difficult foreign exchange situation and the necessity of the government to obtain dollars 2 million loan or other sources guaranteed by Central Bank to cover this amount, and asked our and Export-Import Bank’s assistance. In view of my knowledge very difficult Bolivian foreign exchange position, I recommend most strongly Dept and Export-Import Bank most favorable consideration this appeal by President Hertzog.

In view of President’s full agreement with Export-Import Bank viewpoints, and his cordiality, I feel that it would be most unwise and paralyzing to use suspension of other credits to attempt to hasten solution already decided in principle and will be officially resolved tomorrow.

In delivering to Foreign Minister Export-Import Bank’s previous [Page 356] expression hopes [for?] solution [of?] matter prior to signature of petroleum program credit, I stressed to Foreign Minister that this was in no sense a threat but merely the frank view of the Export-Import Bank on an important urgent business matter.

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