Position Paper Prepared in the Department of State 1
State-Defense-Treasury Position Paper on Colombian Reimbursement for Logistical Support
In negotiating with governments whose forces have been furnished logistical support, the United States has followed the uniform practice of requesting full reimbursement in U.S. dollars on a current basis. These terms are embodied in the standard draft agreement which is presented when negotiations are initiated. Such agreements have already been signed by four countries—the Netherlands, the Union of South Africa, Norway, and Sweden. In addition, informal arrangements have been made with Canada on the same basis. Negotiations are pending with twelve other countries.
Colombian forces, consisting of a frigate and an infantry battalion, have been participating in the UN action in Korea since May and June 1951, respectively. It is estimated that the U.S. Government has furnished logistical support amounting to roughly $8 million through July 1952. The Government of Colombia, in its note of November 14, 1950,3 “recognizes that there will be an obligation to reimburse the United States Government for the training, logistical support … the details to be arranged later between the Government of Colombia and the Government of the U.S.” Subsequently, in a note dated March 31, 1952,4 the Colombian Ambassador stated, “after very careful examination of the problem and the actual potentialities of the country from an economic and fiscal point of view, my Government considers that … it is able to bear the cost only of the pay and benefits of personnel assigned to that theater, and not the other expenses which such collaboration involves”.
In reply to the Colombian Ambassador, the U.S. assured him that we “fully appreciated the difficulties being faced by Colombia in the maintenance of units now serving in Korea” and that we were ready to give “most sympathetic consideration to Colombian problems arising from the undertakings of the Colombian Government with respect to the reimbursement of the United States.…” In a subsequent conversation, the Ambassador implied that his Government would be forced to withdraw its forces in Korea in the absence of assistance from the United States. He then referred to verbal assurances given his Government before its ground and naval units were sent to Korea that payment might be deferred to the future on the basis of a settlement [Page 785] understood to involve only a nominal sum. Assistant Secretary of State Edward G. Miller recalls having been present at a meeting in which such assurances were give the former Colombian Ambassador by Generals Ridgway and Bolte.
The Ambassador inquired in a later conversation with Assistant Secretary Miller regarding our reaction to the temporary withdrawal of the battalion now serving in Korea to assist in restoration of internal order in Colombia. Following the informal but nevertheless definite adverse reaction of Mr. Miller, he later stated that his Government had given up any idea of withdrawing the battalion and that it would be kept in Korea as an act of friendship and faith. This assurance was at least impliedly qualified on that occasion, as previously, by emphasis on Colombia’s limited resources as a factor in its ability to carry on in Korea without relief from the obligation of reimbursing the United States for logistical support.
The conflicting character of the Colombian Ambassador’s statements leaves open to question the willingness of the Colombian Government to carry on in Korea for any prolonged period of time without a United States commitment to waive all, or at least a substantial part, of the cost of the logistical support furnished.
That Government’s ability to pay, as distinct from its readiness to do so, is indicated by a sound budget and favorable balance of payments position. Budget surpluses were achieved in 1950 and 1951 and there are strong indications that the record budget of 1952 will be in approximate balance. Colombia’s gold and foreign exchange position has improved remarkably in 1951 with holdings increasing by almost $25 million, and it is expected that there will be an increase in reserves of the same magnitude in 1952.
Assuming, therefore, that Colombia’s stake in the Korean operation is so great as to justify the budgetary outlays, there would appear to be no economic justification for negotiating an agreement providing for less than full reimbursement. In actual fact, however, first priority is being given an extensive program of economic development which was drawn up in consultation with the IBRD. Parts of the program, including the rehabilitation and improvement of road, rail and air transportation has already been started. It involves extensive loans from abroad as well large internal expenditures. To the Colombian Government, this program and the military repression of the growing guerrilla movement in Colombia are probably of considerably greater importance to the national welfare than is the United Nations operation in far-off Korea. The Colombian Government probably feels, that, in any case, the United Nations operation will be carried on regardless of the presence of Colombian troops. Given these circumstances and regardless [Page 786] of the good will involved, it is not improbable that Colombia would withdraw from Korea in the absence of relief from the United States. It is generally agreed that such a development would not be in the national interest of the United States, as indicated by the Department of State in its letter of June 25, 1952, to the Departments of Defense and of the Treasury.5
Some additional factors must be taken into consideration in meeting this problem.
- The Colombians are already on record in their note of March 31, 1952 as being unwilling to pay for logistical support. Continued delay in meeting the issue might, therefore, create the undesirable impression that the U.S. has, in effect, acceded to its request. The Colombian Government might not, accordingly, feel either morally or actually obligated to the United States for the support furnished since, if not before, March 31, 1952.
- It will be difficult to deal with a Colombian reference to assurances by high ranking United States Government officials that the eventual bill for reimbursement will be settled at a nominal rate.
- Any final settlement at the present time involving less than full payment might reduce our bargaining power in negotiations with the remaining twelve and conceivably could jeopardize the full-reimbursement agreements already reached with five countries.
- Almost four months have elapsed since the time (May 14) when discussions with the Colombian Ambassador were adjourned pending the establishment of a unified U.S. governmental position. It would be embarrassing and probably detrimental to U.S. financial interests to resume negotiations and then be forced to postpone them for another prolonged period of time in the event of the Colombian Government’s refusal to consider payment on the same terms as have been agreed to by other countries.
In view of Colombia’s stated position and our desire that Colombian forces remain in the Korean operation, the U.S. should be prepared to indicate to Colombia that the U.S. would be receptive to funding the Colombian obligation over a suitable period of time, or to any alternative solution offered by the Colombians that embodies the principle of full reimbursement. While, as indicated above, a final settlement for less than full reimbursement would have adverse repercussions on negotiations with other countries and while it would not be otherwise tactically desirable for the U.S. to propose such a settlement, the U.S. should consider any such proposals by the Colombian Government to determine whether acceptance at this time would, on balance, be in the best interests of the U.S. The U.S. may also consider, if no acceptable definitive settlement appears possible through current negotiations, the desirability of suggesting an interim settlement under which Colombia would make periodic payments of some moderate amount, the balance to be negotiated at a specified time in the future.[Page 787]
- Formal negotiations with Colombia should be initiated in the near future to obtain reimbursement for U.S. logistical support.
- The U.S. negotiators should inform the Colombians that the U.S. has given careful consideration to Colombia’s situation in connection with its obligations to reimburse the U.S. In view of Colombia’s generally satisfactory financial situation, internal and external, the U.S. does not find justification for departing from the principle established in agreements with other countries which provide for reimbursement in full.
- The U.S. negotiators may also inform the Colombians that, although other countries have agreed to pay on a current basis, the U.S. would not be adverse to a definitive settlement that would provide for payments by Colombia over a reasonable period of years (to be determined by the negotiators).
- The three Departments recognize the paramount importance of the
retention of the Colombian forces in Korea. In the event the
negotiators have good reason to believe during the course of the
negotiations that the Colombian forces will be withdrawn from Korea
if the U.S. does not agree to grant particular financial concessions
or assurances, the Departments will reconsider the situation on an
emergency basis. Subject to these principles, the following will
- If it becomes clear that the Colombian Government will not presently agree to full reimbursement on either a current or funded basis, the Departments will consider (i) concessions (scaling down) that the U.S. may agree to in a definitive settlement, or (ii) the terms that may be offered in an interim settlement.
- If inter-Departmental concurrence is reached as to specific concessions or interim terms that should be agreed to by the U.S., the Departments, without clearance of higher authority, will instruct the negotiators to proceed on the basis thereof. It is understood, however, that approval for a complete waiver cannot be given without the consent of the President.
- If the Departments can find no satisfactory basis for a definitive or interim settlement that is also acceptable to Colombia, the negotiators will be instructed to seek agreement to adjourn the discussions, preferably to a specified future date.
- Drafted by Mr. Bernbaum, and Murray Ryss and Mortimer D. Goldstein of the Monetary Affairs Staff. A covering transmittal memorandum to the Treasury and Defense Departments, dated Sept. 15, 1952, is not printed.↩
- On Aug. 19, 1952, at a meeting which took place at the Department of State, representatives of the Departments of State, Defense, and Treasury tentatively agreed that formal negotiations looking toward a settlement of the reimbursement question should be initiated with the Colombian Government (memorandum for the files, by Mr. Mackay, dated Aug. 19, 1952, 721.5 MSP/8–1952).↩
- Reference is to Colombian Embassy note no. 2539, not printed (795B.5/11–450).↩
- Reference is to Colombian Embassy note no. 380, not printed (795B.5/3–152).↩
- For a draft of this letter, see p. 770.↩