398.14/8–2851: Telegram

The Secretary of State to the Embassy in Brazil


217. For Bohan from Mann. Verbatim text message.

Aide Memoire

internatl bank and braz

The Management of the Bank has based Its policy towards Braz on the three Fol fundamental considerations:
  • (a) The Joint Braz–US Econ Development Comm wld review the whole problem of Braz developmental needs and possibilities and pass upon the appropriateness and priority of the various projects making up that program.
  • (b) The Internatl Bank wld be prepared to participate in the financing of Braz development up to a very substantial amt over the next four or five years.
  • (c) The Bank’s financing wld be related to the For exchange costs of those projects which were sponsored by the Joint Comm and approved by the Bank.
It has been the understanding of the Management of the Bank that the above approach was acceptable to the US Govt, to the Braz Govt and to the Joint Comm itself.
It was agreed between the Bank and the Joint Braz–US Comm that, at this stage, the only project which had the sponsorship of the Joint Comm was power development in the State of Bio Grande do Sul. A Bank Mission has just returned from Braz after studying the power situation in the State of Bio Grande do Sul and there is every reason to hope that it will be possible for the Bank to work out financing of the expansion of power development there.
As far back as Jan 1950 the Bank expressed the view that transportation was a high priority in Braz development needs. The Bank was asked, informally, by the Braz authorities if it wld be willing to sponsor a transportation survey. The Bank indicated its willingness, in principle, to consider such a survey, but after the appointment of the Joint Comm, it was understood that the Joint Comm, itself wld wish to review the need for such a survey and the form that it shld take.
It is not possible for the Bank to commit itself to a gen line of credit for railway and port development in Braz before the Bank has had the opportunity of considering properly worked out projects upon which it wld be proposed to use the proceeds of the line of credit. The Bank’s policy with respect to gen lines of credit has been clearly explained to the Braz authorities and was apparently understood by them.
It is impossible for the Pres or the Vice Pres of the Bank to visit Braz at this time in view of the forthcoming Annual mtg of the Bank. It is Mr. Black’s present intention, however, to visit Braz soonest after the Annual mtg. The Management wld, however, be glad to receive the MinFin in Wash either at the time of the Annual mtg, or earlier, if that is convenient to the Min, and to discuss with him all aspects of the Bank’s relations with Braz.
If Bohan wld wish to come to Wash now, or at any time in the near future, for consultation with the Bank, the Management will be glad to receive him. [Mann.]