811.516 Export-Import Bank/12–1647: Telegram
The Chargé in Bolivia (Galbraith) to the Secretary of State
982. For Export-Import Bank from Kinnear and Holbrook.55 At interview with President this afternoon he expressed opinion that [Page 359] cancellation McGraw-Warren contract by BDC despite agreement described ourtel 977, December 1356 was result misunderstanding which he regretted. To replace McGraw-Warren president proposed formation a Bolivian corporation to be composed both Bolivian and American technicians at same time accepting any controls bank might wish exercise. We did not comment on this but do not agree.
YPFB decree although signed in form which caused concern expressed ourtel 97856 is, on President’s categorical promise over objection Minister Economy, to be replaced by decree which avoids political interference confirming present by-laws and management. President reaffirmed promise to Stambaugh to keep political interference out of both BDC and YPFB.
President requested we remain until something worked out. We agreed this saying we would ask another interview as soon as information received viewpoints bank and we had opportunity effect necessary consultations. Consequently reply ourtel 97656 urgently needed.
Minister Economy asked whether bank objects to removing two BDC members from board YPFB. President thought this would be desirable since it would represent a saving but said it is a point on which he will not insist. We replied this should be discussed next interview.
Since these are two of four members YPFB board supporting manager Mariaca our opinion is bank must disapprove this proposal.
Considering dangers illustrated by proposal in paragraph immediately preceeding we strongly recommend Bank and State Department despite existing contrary policy consider advisability in case Bolivia reverting to participation American members board directors BDC and YPFB. We request authority discuss this proposal with President. [Kinnear and Holbrook.]