611.24/12–952
Memorandum of Conversation, by William P. Hudson of the Office of South American Affairs
Subject:
- Pending U.S.-Bolivian Problems
- Participants: Víctor Andrade, Ambassador of Bolivia
- ARA—Mr. Mann
- OSA—Mr. Hudson
Having returned late last week from a consultation visit to Bolivia, Ambassador Andrade called on Mr. Mann to discuss pending U.S.-Bolivian problems.
The first topic which he wanted to bring up, he said, was Bolivia’s desperate need for a long-term tin contract. He indicated that he had in mind a contract for one year to 18 months, at the price established in RFC’s Belgian and Indonesian contracts.1 The economic need for such a contract was obvious, he said, and the psychological need was also very important. For example, one of the most serious current problems of the Bolivian Government was the hoarding of foodstuffs, which was producing acute shortages for most consumers. This hoarding was motivated by a widespread fear that the United States would not buy Bolivian tin and that imports of foodstuffs would therefore be sharply curtailed. Only a long-term contract could remove this fear. A long-term contract was also essential to prove to the people of Bolivia that the United States was not imposing economic sanctions for Bolivian nationalization.
Mr. Mann inquired what the Bolivian Government was doing to insure that the people of Bolivia knew the facts of the situation. The United States had never even considered imposing economic sanctions on Bolivia. We had been buying tin on a spot basis from the new Government and were willing to continue doing so, but the Bolivians themselves had made no offers of tin on this basis since September. He wondered why these facts were not being placed before the Bolivian people.
Ambassador Andrade remarked that this all appeared a little subtle to him. It was the first clear statement he had had, he said, that the United States was prepared to buy Bolivian tin even on a spot basis. Nevertheless, a long-term contract was what Bolivia required, for the psychological reasons which he had set forth and to enable the Bolivian Government to plan the future.
The Ambassador said that he next wanted to bring up the question of combatting Communism in Bolivia. He had talked about this matter with his Government and had made a vigorous complaint about such episodes as the anti-U.S. remarks made by Ambassador Montenegro [Page 512] and Mario Torres in the Caupolicán Theatre in Santiago. Such actions by representatives of the Bolivian Government were a serious undermining of his own position in the United States.
Mr. Mann commented that the United States could not conduct the entire fight against Communism; there were some areas in which foreign governments alone could meet their domestic Communist problems by telling the truth about their relations with the United States and rejecting the temptation to make demagogic attacks on us. The Ambassador agreed, but said that the Bolivian Government would need some ammunition and the most effective ammunition would be a long-term contract.
The next point which he wanted to bring up, the Ambassador said, was the matter of compensation for shareholders of mining companies whose properties had been expropriated. Of course this was a question which in theory was entirely separate from the question of a long-term contract, but the two were in practice related since he did not believe that his Government could afford to take action regarding compensation unless it could obtain a long-term contract.
While he was in Bolivia he had convinced even the left-wingers in his party of the necessity for compensation, and he could assure us that his Government was definitely determined to make a fair arrangement with U.S. stockholders. For example, his Government was prepared to have 5% of the proceeds of a long-term contract set aside in a special Bolivian Government account which would be used in paying compensation once a determination had been made as to how much should be paid and who should receive it.
When Mr. Mann inquired whether this compensation account was to be used only for payments to American shareholders or for payments to shareholders of all nationalities, the Ambassador replied that the Bolivian Government could probably not afford to discriminate openly in favor of American citizens. Mr. Mann observed that the United States Government would probably not want to handle any funds except for its own citizens.
Mr. Mann anticipated that negotiations regarding compensation would be extremely complicated and would require a long period of time. The Department had not yet given full consideration to this problem and he could not speak with finality, but it was his personal, offhand opinion that the best procedure would be to establish immediately some machinery which both sides could be sure would ultimately produce a solution. Perhaps the best thing to do would be to set up a joint U.S.-Bolivian commission, with a provision that some impartial third party might be called in to resolve points on which agreement could not be reached. The Ambassador commented that such a procedure would amount to arbitration. He seemed receptive to the idea.
[Page 513]Mr. Mann then inquired whether, if some agreement could be reached to set the machinery of compensation in motion, the Bolivian Government would present this action to the Bolivian public as the result of coercion by the United States. He wondered if it might not better be presented as an arrangement which Bolivia had proposed to the United States and the latter had accepted. The Ambassador appeared to agree with this view.
Mr. Mann informed the Ambassador that the subjects which had been raised in today’s meeting would be discussed thoroughly in the Department. We would do what we could to help, and he would invite the Ambassador to another conference within a few days.
- The referenced contracts, signed in March 1952, were for 2-year periods, and stipulated that the purchase price would be $1.18 at the port of shipment or $1.215 at New York.↩