Memorandum by Mr. Albert H. Gerberich of the Office of North and West Coast Affairs to the Director of that Office (Mills)


Subject: ARA position re Colombian Eximbank and International Bank loan applications

John Cady1 talked over with me the loan applications before the two Banks at length yesterday afternoon. He feels that the time may have come to re-examine our position2 vis-à-vis the Colombian applications for these reasons:

The economic situation in Colombia is better: her commercial indebtedness has been paid off, she closed the year with a balanced budget, her dollar and gold reserves now total more than $120, 000,000, the balance of payments situation is better. Dollars are rolling in from coffee sales.
Colombia has met the conditions imposed by the International Monetary Fund and Eximbank in our telegram of August 1948.
It is questionable that the state of siege can be considered bad for Colombia, from one point of view. It has resulted in restoration of order, which in turn has improved the economic situation. We must [Page 810] ask ourselves whether it is the part of wisdom to oppose the applications on this ground.
We must ask ourselves if we are treating Colombia equitably. Argentina is nearly bankrupt, yet she is receiving favorable consideration for loans;3 Chile has received a loan to establish a competitive industry,4 yet Chile does not permit a US oil firm to operate there; Bolivia has actually received a couple of loans totaling about $7,500,000 to go into the oil business;5 Mexico has driven out American oil interests, yet is favored with loans.6 He does not think Ambassador Beaulac’s argument that the oil companies should be better treated before we grant any more loans is very realistic.
He says we loaned $77,000,000 in all to Latin America in 1949, and the other republics paid back $34,000,000 on old loans—a net risk of about $43,000,000 in all. In the same year we poured billions into Western Europe and the near East, most of it in outright grants. This gives the Latin republics good cause to complain of unfair treatment.

He had other minor arguments that I won’t go into. The upshot of it all is that he agreed with me to prepare a paper, stating the problem thus: Has there been sufficient improvement in the political and economic situation in Colombia to warrant a revision of the Department’s position re, pending loan applications? If we decide that there has been, then we should make new recommendations. If we decide to stick to our previous policy, we should spell out plainly what we expect the Colombians to do to qualify for loans—i.e., not tell them they must provide healthier working conditions for US interests, but state what those conditions should be.7

  1. Of the Office of Regional American Affairs.
  2. In a memorandum dated March 2, 1950, Mr. Gerberich said in part that the ARA was not inclined to recommend favorable consideration of Colombian loan applications by the IBRD or the Export-Import Bank as long as a state of siege existed in Colombia. He implied that this policy had been established in January 1950 by Ambassador Beaulac and Mr. Miller. (821.10/3–250)
  3. For documentation regarding U.S. loan policy towards Argentina, see pp. 691 ff.
  4. Reference is presumably to a credit to Chile of $48 million for steel mill equipment authorized by the Export-Import Bank, September 11, 1945. For documentation, see Foreign Relations, 1945, vol. ix, pp. 809824.
  5. For documentation regarding U.S. assistance to Bolivia for petroleum development, see compilations treating Bolivian-U.S. relations in Foreign Relations volumes for 1942–1949.
  6. For information on U.S. development loan policy towards Mexico, see pp. 936 ff.
  7. Documentation indicating precisely when or why a change occurred in this policy has not been located in State Department files. However, see the section headed “Attitude toward Democratic Institutions” in the Policy Statement for Colombia dated May 8, 1950, p. 822.

    Beginning with an authorization of May 24, the Export-Import Bank authorized credits to Colombia totaling $6,095,000 during 1950, of which $3,250,000 represented the completion of action on previous commitments. In November 1950 the IBRD authorized two loans to Colombia totaling $6.1 million.