Memorandum of Conversation, by the Assistant Secretary of State for Economic Affairs (Thorp)


Participants: Mr. Suñer, Under Secretary of Industry and Commerce
Marqués de Nerva, Commercial Attaché, Spanish Embassy
Mr. Thorp, Assistant Secretary of State
Mr. Dunham, WE

Mr. Suñer, who called at his request, stated that he wished to explain briefly the progress that had been made in the negotiations with [Page 1580] the Export-Import Bank. He said it has been possible to agree up to a certain point but differences still remain to be resolved on the two essential points—the financial terms and the categories of items to be included in the loan program. On the financial terms the Bank had offered 3 ½ percent interest and a period of repayment of 20 years whereas he was seeking an interest rate of 2 ½ percent and a period of 25 years. On the categories of commodities the Bank had agreed to consider cotton, tractors and fertilizer but had excluded corn, wheat and petroleum products. As he explained at his previous meeting with me,1 Mr. Suñer said, he considers these consumer items essential. In the interest of reaching agreement they had now agreed to reduce the total amount for consumer goods to the neighborhood of $36 million. He asked for my urgent and sympathetic consideration of these problems in the interest of reaching an early agreement.

I explained that there were three things which I wished to say. First as I had explained previously this is a matter in which the Bank has the primary responsibility and it is with the Bank that they must negotiate out of these problems. I said that I work closely with the Bank and I am very much interested in this matter, but the problems which they have raised should be settled in their discussions with the Bank. With respect to the financial terms I pointed out that the Bank has normal terms with regard to interest rates and maturity which range from 18 months to 15 years. Apparently their conversations with the Bank have been fruitful in this connection, in view of the terms which the Bank has already offered, and I expressed optimism over the possibility of their reaching an early and mutually satisfactory arrangement on both interest and maturity. However they should recognize that the Bank was departing from its normal policies and that the farther they go in this regard the more difficult it becomes for them.

On the subject of the items for which they were seeking loans, I said that I had already expressed my opinion particularly in connection with consumer goods. It often happens, I explained, that other nations in seeking loans from the Bank desire to draw up a full program of loans. But, I pointed out, it is the Bank’s practice to make loans which are immediately practicable and then thereafter to study each successive project without laying out a whole program in advance. I added that the point I wished to make was that Mr. Suñer had presented the Bank with a list of items for which they wished loans and that the Bank had already indicated its willingness to proceed immediately in acting on some of these. It seemed to me that [Page 1581] it would thus be wise for him to consider moving ahead on these items on which immediate action could be taken. During the discussion of this point Mr. Suñer said that the Bank had suggested that Mr. Tirana might be sent to Spain and that he would be prepared to continue working there with him in order to allocate the various amounts to be assigned to each item under the program. I said that such a trip seemed to me to be a very good idea. However, I continued to urge the advisability of proceeding now with those loans which could be made at once and Mr. Suñer said that he would take this suggestion under consideration.

As Mr. Suñer and Mr. Nerva were leaving the building, Mr. Suñer again deplored to Mr. Dunham the activities of the various “intermediaries” which were acting on behalf of the Embassy in the matter of loans.2 He also referred to the necessity, from his point of view, of reaching some agreement on this whole question of loans before he returns to Madrid. Mr. Dunham emphasized the encouragement which they had received from Mr. Thorp with respect to the financial terms and suggested the wisdom from his (Suñer’s) point of view of proceeding along the lines Mr. Thorp had suggested, namely, going forward now with those loans which can be made at once. Mr. Suñer said that he thought Mr. Thorp’s suggestion was an excellent one and, from his standpoint (i.e., his position at home as well as vis-à-vis the “intermediaries”), was one which he thought he should follow.

  1. A memorandum of Suñer’s conversation with Dunham and Thorp on December 14, not printed, is in file 852.10/12–1450.
  2. In a conversation with Dunham on November 29 Suñer had indicated that Lequerica and Don Eduardo Propper de Callejon, Spanish Chargé in the United States, were trying to arrange his meetings with various United States officials in a manner which hindered his negotiations for the loan. (852.10/11–2950)