The Secretary of State to the Embassy in Liberia 1
102. Pres Tubman’s instrs defer Eximbank application and negots Fr interests appear based on unrealistic premises (Embtel 156, Jan 24 and 159 Jan 272). You shld emphasize Bank has not rejected either water or hydro project. Dept considers Bank request for additional data perfectly reasonable and Tubman shld understand door remains open awaiting this info. Additional data required establish soundness water and sewerage project can be collected in short time by Pirnie engineers. Tubman’s apparent effort pressure decision by proposed withdrawal road projects and enter negots with Fr interests creating unfavorable impression here.[Page 1288]
Implied tying acceptance road project loans to contingency that water project must be accepted same time creates impression here LibGovt more concerned with benefits to small group in Monrovia than country-wide development.
Assumption road construction not immed profitable, not valid. On contrary, US Govt believes road projects are ones from which quickest returns may be expected. Each mile new or improved road begins at once yield returns whereas hydro or water system must be wholly completed before returns begin. Advances on road loan, except for revolving fund, will be made as expenditures incurred. These will be small at first increasing in size as work accelerates with largest advances toward end construction period. Since each note is separate obligation, interest and amortization during first three years will be small and no serious burden LibGovt’s revenues.
Cancellation clause (art VIII of draft loan agreement3) makes clear no cancellation contemplated except for cause. Such clause in all Eximbank loan contracts. If wording unsatis Bank advises suggested changes may be offered for consideration.
While Dept doubts benefits will accrue Liberia from establishment Fr Bank, this matter for Lib to decide. Dept also doubts Fr will finance water system on more favorable terms than now under consideration. Pres Tubman shld, if Fr financing accepted, make sure commitments will not interfere with other loans or assistance for projects not included in Fr financing.
In ur discussion with Tubman you may use any or all foregoing pts as you deem necessary. You shld again remind him Liberia’s request for tech assistance is one of largest, and US Govt has endeavored provide assistance most desired by Liberia. Likewise Lib’s loan application has recd most sympathetic consideration by Eximbank.
Dept understands Lib Comm has forwarded loan agreement to Pres with recommendation agreement be approved.
- This telegram was drafted by Meier (NEA/AF) and was approved by Sims (NEA/AF), Bourgerie (NEA/AF), by the Investment and Economic Development Staff, and by the Export–Import Bank.↩
- Telegram 156 reported that President Tubman had informed Chargé Richardson that the Liberian Commission in Washington had been instructed to defer the application for an Export–Import Bank credit in part because Tubman felt that the Monrovia water and sewerage project was politically essential and more important than the road construction project. (876.10/1–2451) Telegram 159 reported that Tubman indicated to Chargé Richardson that the Liberian Government was inclining towards approval to a French banking syndicate for opening a bank in Monrovia. The French group appeared prepared to advance money for the construction of the Monrovia water and sewerage system. (876.10/1–2751) Regarding Liberia’s applications to the Export–Import Bank for credits for a number of economic development projects and the negotiations by the Liberian Commission in Washington on behalf of those applications, see the editorial note, p. 1285.↩
- Regarding the completed Export–Import Bank credit agreement with Liberia concluded on February 21, see the editorial note, p. 1285.↩