Memorandum of Conversation, by the Chief of the Division of North and West Coast Affairs (Espy)

Participants: Bolivian Ambassador, Sr. Don Ricardo Martinez Vargas
Assistant Secretary of State, Norman Armour
NWC, James Espy

During his call on Mr. Armour this morning Ambassador Martinez Vargas brought up the question of the delay in the reinitiation of work on the Cochabamba–Santa Cruz Highway, suspended since December, 1947.2 The Ambassador said that five months had now passed and that although negotiations have been held with the Export-Import Bank since the beginning of the year for reorganization of the highway project, no final arrangements had yet been made to get the construction of the road again underway. In the meantime the Bolivian Development Corporation with the limited funds at its disposal was trying to keep a minimum of work going on. However, its funds would soon be exhausted and unless arrangements were made for repair of the equipment, final engineering plans and a new contract, financed by further credits from the Export-Import Bank, the whole project would come to a dead stop. In that event, it would be very costly to the Corporation because of the large discharge payments which the Corporation would have to make to the highway laborers. Besides this consideration there was, the Ambassador stated, much dissatisfaction in his country over the length of time it was taking to build the highway. In this latter connection he referred to the Brazilian and Argentine efforts to push through railroads from the [Page 330] respective borders of their countries to the city of Santa Cruz and he stressed that it was of paramount importance both politically and economically to Bolivia and from an international point of view to South America that the highway, forming the communication link between Santa Cruz and the rest of Bolivia, be completed before the railroads are finished from Brazil and Argentina.

Mr. Epsy informed the Ambassador that the Bolivian exasperation over the slowness in the completion of the highway was understandable, but that he, the Ambassador, would realize the number of necessary steps which had to be taken to reorganize the work and put it this time on a sound basis. Such steps took time. However, the Export-Import Bank was actively engaged in assisting the Corporation to this end and was at the moment endeavoring to engage the services of a competent engineer to study and review the plans and specifications of the highway, consider the best way of repairing the equipment and make an estimate of the final cost to complete the highway preparatory to concluding a new construction contract.

At the close of the conversation Ambassador Martinez Vargas informed Mr. Armour that he would prepare a memorandum3 on the subject and present it to the Department.

  1. For documentation on the cancellation of the highway construction contract between the Bolivian Development Corporation (an agency of the Bolivian Government) and the McGraw-Warren Company, see despatch 1959 of December 19, 1947 and other documentation on this subject, ibid., pp. 359363.
  2. Not printed.