824.2544/3–1353:Telegram
The Ambassador in Bolivia (Sparks) to the Department of State
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274. Foreign Minister called me to Foreign Office this afternoon and gave me informal account of first reactions of Cabinet which met this morning consider Andrade report on RFC decision; it is no longer interested discussing term tin contract. This problem handled in detail only by few members of Cabinet and news came as bombshell. First question was is US trying force Paz government out of office? Cabinet was unable understand why news should be kept confidential and Foreign Minister anticipated it could not be so kept. He recognized consequent situation will be grave. Government plans await details by airmail from Andrade before taking decision on formal reaction.
Discussed development along lines Deptel 223 March 12. However, Foreign Minister maintained problem is political and should be resolved between two governments and not between CMB and RFC. He admitted Bolivian Government had been on notice since September last year offer of term tin contract could not be held open very long. He added Bolivian Government had wished accept offer but US had attached political condition compensation agreement which required and still requires time to resolve. He declared compensation agreement without term contract has no meaning since if Bolivia could not sell its tin it could pay no compensation. In this connection, he reiterated his proposal Embtel 270 March 111 as an earnest of Bolivian intention compensate bona fide beneficiary US nationals. I stressed NPA announcement and RFC absolute legal inability exceed authority granted by Congress. However, he tenaciously sustained problems political and can be resolved only on political level. I also referred consistent tin overproduction during recent years which US had been purchasing for stockpiling purposes. Foreign Minister countered this overproduction was unreal and due to political restrictions on sales to Curtain countries; therefore, this also political.
[Page 525]Foreign Minister was most serious, obviously concerned and disturbed, and undoubtedly reflected government’s reaction. He anticipated when news is made public it will unjustifiedly be linked with attachment of the Banco Mineros funds in New York and will cause serious antipathy towards US in Bolivia. I feel certain news will be exploited not only by extreme left but also MNR party, in general, to our disadvantage. Effectively it is a blow to government from which it may not recover. Without assurance of US market for one-half its tin production Bolivian descent to economic chaos with attendant political consequences will be accelerated.
- Telegram 270, from La Paz, dated Mar. 11, 1953, reported a discussion between Ambassador Sparks and Bolivian Foreign Minister Guevara Arze and reads in part as follows: “Foreign Minister made two suggestions: (1) Compensate US nationals at stock market value Patiño shares October 31, and (2) sign term tin contract with percentage retention clause and continue negotiate compensation agreement. I argued first suggestion had merit if date were prior April 9 since decline in value attributable directly to acts Bolivian Government. View Department’s previous position I remarked second suggestion did not seem practical since positions two governments now so far apart discussions could continue indefinitely.” (824.2544/3–1153)↩