811.516 Export-Import Bank/11–2047: Airgram

The Chargé in Bolivia (Galbraith) to the Secretary of State

A–357. Reference Embassy’s recent telegrams and despatches concerning the Bolivian Development Corporation and progress of renegotiation of contract with McGraw–Warren Corporation.

As previously reported, no real progress has been made as a result of conversations held so far, and the Bolivian Development Corporation in the first part of last week stated that it was not overly sanguine that a satisfactory arrangement could be reached. Developments came to a head on Friday, November 14, when the Corporate Directorate informed the Embassy that it had practically reached its limits and saw no possibilities other than complete cancellation of the present arrangements with McGraw–Warren Corporation. The same afternoon, however, the atmosphere improved slightly as the representatives took the stand that rather than terminate conversations, they would carry the BDC counter-views direct to their home office and would return shortly with specific instructions which would then demonstrate either definite acceptance or rejection of the Corporation’s desired objectives.

The President of the Corporation, General Bilbao, told the press on November 15, that one of the new demands of the contractors was an increase of their fee from $280,000 to double that amount. He stated that under no conditions could the Corporation accede to such a request [Page 358] and further indicated that unless 99 percent of the Corporation’s counter-proposal to the contractors was accepted by the contractors, there could be no contract.

It is now apparent that the Corporation will not concede anything beyond its last proposal to the contractors, and its views in this respect appear to have the backing of the entire country. In his regular weekly interview, the President stated to the Press on November 18 that conversations with the contractors and the Corporation had reached an impasse, but it was not possible to state categorically that the contract would not be renegotiated, in view of the return of the contractors’ representatives to the United States to discuss the possibility of accepting the conditions laid down by the Corporation. That the government no longer feared the spectre of a no-contract was evidenced by the President’s further statements in which he said that in the event the contractors refuse to accede to the terms of the Corporation, which already have been conciliated, the government must find another American enterprise or even a national company suitable to the Export-Import Bank to conclude the project. He added that it would be interesting should Bolivian engineers and technicians have the opportunity of demonstrating their capacity and training in this field by bringing the program to a successful conclusion.

Today’s press announced the resignation of the Corporation’s Vice-President, Roger D. Barneville. This resignation has been confirmed by the Corporation and the Corporation indicates that it was submitted because of the personal desire of Barneville to return to his previous undertaking involving construction programs under the Argentine-Bolivian Mixed Commission. Corporation spokesmen added that the resignation was not in any way connected with, or in any way intended to influence, present negotiations with McGraw–Warren Corporation.

Meanwhile, work on the highway continues and the next step in conversations will be developed upon the return of Messrs. Holloway and Williamson,54 who are expected again from the United States within the next few days.

  1. James S. Williamson, an engineer of the McGraw–Warren Corporation.