Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

724.58/4–2254

The Secretary of State to the Secretary of the Army (Stevens)¹

confidential

[Washington,] July 22, 1954.

Dear Mr. Secretary: I refer to a memorandum of April 22, 1954² from Major General James M. Gavin to Mr. George O. Spencer, and to subsequent discussions between officers of the Departments of State and the Army regarding the extension of the Army Mission Agreement with Bolivia.

The Department of State has brought to the attention of the Bolivian Government its outstanding obligations to the United States for transportation expenses for Army Mission members and has urged that some action be taken by that government to settle this obligation. This Department is prepared to follow this matter up in negotiations for extension of the Mission Agreement with a view to arriving at some arrangement for the settlement of this account.

This Department does not, however, believe that the payment of this account should be a prerequisite to extension of the Agreement. The inability of Bolivia to keep this account current is apparently due to its unsatisfactory economic condition which reached very serious proportions when the price of tin dropped drastically last year and resulted in total grants by the United States to bolster the Bolivian economy of $14 millions. The Congress has been requested to appropriate an additional $9 millions for fiscal year 1955. The deficit in Bolivia’s foreign exchange budget during 1953 was around $12 millions and the estimated deficit for 1954 is over $21 millions. In the light of this situation, I do not believe that it would be desirable or productive of results to press strongly for payment of this account. I would suggest instead that consideration be given to modifying the existing Agreement to reduce the dollar cost of this Mission to Bolivia and thus avoid further additions to Bolivia’s outstanding account. I understand, for example, that the Department of the Army has the authority to assume the cost of transportation of members of the Army Mission and their families and the shipment of their household goods and effects to and from Bolivia and does pay such costs under the terms of similar agreements with Costa Rica³ and Paraguay.⁴

General Gavin’s memorandum also notes that because of the political situation in Bolivia it has not been possible for the Mission to perform as effectively as it should. It appears now that the Bolivian Government is endeavoring to re-establish a professional army. Recent events also show that the Bolivian Government has placed itself squarely on the side of the United States and against communism. There has, therefore, been a material improvement in the last six months over the situation described in paragraph five of General Gavin’s memorandum.

In addition to the fact that it is our general policy to maintain military missions in Latin America, it is in our interest that we help Bolivia rebuild its military establishment so that it can help in maintaining internal security. It is particularly important at this time to insure that the Bolivian Government will be able to back up the strong stand it is taking against communism and to thwart the efforts that the communists are making in Bolivia to create unrest and to cause the overthrow of the present government.

I would appreciate being informed whether the Department of the Army would be agreeable to entering into negotiations with the Bolivian Government for extension of the Army Mission Agreement on the understanding that efforts would be made to arrange a settlement of Bolivia’s outstanding obligation but that payment of this obligation would not be a prerequisite to extension of the Agreement.⁵

Sincerely yours,

For the Secretary of State:

Henry F. Holland

Assistant Secretary

1. Drafted by Robert M. Sayre of the Office of Regional American Affairs; cleared with the Office of South American Affairs.
2. Ante, p. 557.
3. Reference is to the agreement providing for the services of a U.S. military mission in Costa Rica, signed at Washington, Dec. 10, 1945, and entered into force on the same date, as subsequently extended and amended; for text, see Department of State Executive Agreement Series (EAS) No. 486, or 57 Stat. 1184.
4. Reference is to the agreement providing for the services of a U.S. military mission to Paraguay, signed at Washington, Dec. 10, 1943, and entered into force on the same date, as subsequently extended and amended; for text, see EAS No. 354, or 57 Stat. 1184.

5. A letter by Assistant Secretary of the Army George H. Roderick to Assistant Secretary Holland, dated Aug. 12, 1954, reads in part as follows: “The Department of the Army is agreeable to entering into negotiations with the Bolivian Government for a new Army Mission Agreement along the lines set forth in your letter. However, it is recommended that continued efforts be made to effect liquidation of Bolivia’s outstanding obligation.” (724.58/8–1254)

   For text of the exchange of notes, signed at La Paz, Aug. 9 and Sept. 9, 1955, and entered into force on the latter date (operative retroactively to Aug. 11, 1950), extending and amending the agreement of Aug. 11, 1942, as extended and amended, see United States Treaties and Other International Agreements (UST), vol. 6 (pt. 3), p. 3907.