Memorandum by the Officer in Charge of Mexican Affairs (Rubottom) to the Assistant Secretary of State for Inter-American Affairs (Miller)1
Subject: Additional World Bank Credit for Mexico
The Department has known for several months that the World Bank took the position, following the announcement of the $150 million line of credit2 extended by the Export-Import Bank to Mexico, that it would not grant additional credit to Mexico unless the Eximbank credit line was reduced by an amount equal to that lent by the World Bank. Lic. Carrillo Flores, President of Mexico’s Nacional Financiera, has been assiduously working to change the World Bank’s attitude, and it now appears that he has been successful.
Yesterday, at lunch with Alfonso Cortina, Minister Counselor for Economic Affairs of the Mexican Embassy, and Mr. Paez Urquidi, Director of the Mexican Federal Electricity Commission, the latter two related the following to Mr. Ohmans3 and me:
- The World Bank has agreed that it will not insist on having the Eximbank line of credit reduced by the amount of any additional World Bank loans provided the joint technical commission4 now readying to go to Mexico finds that Mexico’s present borrowing capacity is in excess of $150 million.
- The World Bank will consider an application for an additional $25 million (approx.) loan to the Federal Electricity Commission—no [Page 1481] action to be taken respecting the effect of this loan on the existing Eximbank line of credit until the commission’s study has been completed.5
- Mr. Paez Urquidi was in telephone communication with Lic. Beteta6 on Wednesday, and the latter agreed that Mexico would reduce the Eximbank credit line by $25 million if the joint study commission recommends that Mexico should not borrow more than the $150 million line of credit at this time. (It is quite clear that none of the officials concerned expect to have to reduce the credit.)
- No discussions will be held with the Eximbank pending the completion of the technical commission’s report.
For the time being, the Mexicans, prefer to keep this whole matter on an informal basis, but eventually the Department and the Export-Import Bank will be formally notified of the understanding reached with the World Bank.
- Addressed also to Albert F. Nufer, Director, Office of Middle American Affairs.↩
- For documentation on this subject, see Foreign Relations, 1950, vol. ii, pp.:959 ff.↩
- John L. Ohmans, Office of Middle American Affairs.↩
- This commission, known as the Combined Mexican Working Party, had been formed in February 1951. It did not complete its study until October 1952. For its report, see The Combined Mexican Working Party, The Economic Development of Mexico (Baltimore, Johns Hopkins Press for the International Bank for Reconstruction and Development, 1953).↩
- The IBRD actually approved a loan of $29,700,000 to the commission and Nacional Financiera on January 11, 1952 (398.14/1–252). In a memorandum dated January 10, 1952, the Deputy Director of the Office of Middle American Affairs (Rubottom) stated in part that he understood that “the Eximbank and the Mexican Government arrived at a definite understanding that the $150,000,000 earmarking would be reduced, at least for the time being, by the above amount.” (398.14/1–1052)↩
- Ramón Beteta, Mexican Minister of Finance.↩