824.054/9–1152:Telegram
The Secretary of State to the Embassy in Bolivia 1
niact
80. Urtels 80 and 83.2 Approach Paz immed re nationalization and long-term tin contract. Reiterate that we consider decision to nationalize or not one for sovereign Govt of Bol to decide but that consequences of nationalization if undertaken have important bearing on contract question. Request formal and definitive oral statement whether Bol Govt has taken irrevocable decision re nationalization and if so what this decision is. State that RFC will sign contract 1 to 1½ yrs, same price and smelter charges as offered in draft short-term contract given Canedo ($1.17 and new smelter charges) or alternative terms offered him orally ($1.17½ with different sched new smelter charges) immed upon either (a) a definitive decision not to nationalize or (b) estab form nationalization which provides prompt adequate effective compensation and protection re title ores deemed adequate by RFC. Explain that until one of these events occurs US will not negot on long-term basis either with Bol Govt or with an intermediary but that when either does occur will be perfectly willing negot directly with Govt. FYI only with regard to production of properties subj to nationalization program State may urge RFC negot only with Bol Govt rather than intermediaries because of special circumstances of present case: (1) contingency of contract on Bol Govt actions re nationalization, (2) cumbersomeness of timing if intermediary involved since RFC wld insist on giving all potential agents equal chance, (3) our desire [Page 504] that contract benefit Bol economy which wld be in part defeated if extraordinarily onerous terms proposed by certain aspirant intermediaries were accepted. Explain also that because of fluctuations in tin market this offer cannot be held open very long but advance notice of few days will be given before its withdrawal. (FYI only offer will not be withdrawn except with reasonable notice and after consultation between State and RFC and State will consult you before concurring.) Add that when possibility of nationalization without satis compensation or of a nature which wld make Bol poor banking risk no longer a threat US will be prepared again consider broad program economic coop.
Explain frankly US purpose is offer Paz opportunity follow middle of road course, dressing up recommendations of Study Comm so as derive polit advantage but avoiding econ chaos and internatl friction which wld almost certainly follow confiscatory nationalization. Present proposal in best possible light and endeavor discreetly ascertain whether in Paz’s opinion this offer gives him sufficient strength forestall nationalization or undesirable form thereof. If ur best efforts unavailing and you convinced Paz is not merely bargaining, Dept and RFC prepared consider some alternative course.
Take occasion of above conversation to remind Paz RFC offer purchase 6000 tons accumulated tin stocks and Sept production still stands.
Re Fabulosa offer RFC sees no particular advantage negot with Fabulosa and on balance wld prefer not to since wld open door possibly less attractive offers from other medianos and Bco Minero for production small miners.
- Drafted by Mr. Hudson; cleared with the Bureau of Inter-American Affairs and the Office of International Materials Policy, the Reconstruction Finance Corporation, and in substance with the Defense Materials Procurement Administration, the Emergency Procurement Service, and the Export–Import Bank.↩
- Regarding telegram 80, see footnote 4, supra. Telegram 83, from La Paz, dated Sept. 11, 1952, discussed special permission granted by the Bolivian Government to Fabulosa Mines, a medium-sized tin mining company, to negotiate a contract for the sale of its tin directly with the RFC (824.25/9–1152).↩