Memorandum of Conversation, by Edgar L. McGinnis, Jr., of the Office of South American Affairs



  • Visit of Minister National Economy; Economic Matters.
  • Participants: Ambassador Chiriboga of Ecuador
  • Ecuadoran Minister of Economy, Jaime Nebot Velasco
  • Ecuadoran Minister of Defense, Carlos Julio Arosemena
  • OSA—Mr. Atwood
  • OSA—Mr. Bernbaum
  • AR—Mr. Jamison
  • AR—Mr. Spencer
  • OSAEdgar L. McGinnis, Jr.

After the discussion of other questions Ambassador Chiriboga stated that the Minister of National Economy, Nebot, wished to say a few words respecting economic matters. Sr. Nebot thereupon launched upon a highly generalized review of the Ecuadoran economy. He spoke of efforts of the Velasco administration to promote economic development of the country. He said that this could not be accomplished by Ecuadoran resources alone and the economic aid of the U.S. was, therefore, required. The Minister observed that Ecuador had done everything possible to improve its credit abroad referring to increased exports, rising foreign exchange reserves and effective and beneficient economic controls exercised by the Banco Central. The most recent development along these lines was the successful negotiation with the British Bondholders Protective Council of a settlement providing resumption of service upon the defaulted Guayaquil and Quito Railway bonds.1 Despite all this, the Minister said, the Export-Import Bank had not seen fit to aid Ecuador except to an extremely minor degree. On the contrary, while virtually ignoring Ecuador, the Bank had made substantial loans recently to Peru, Colombia, Brazil and other countries. He indicated with some feeling that Ecuador was beginning to believe that U.S. promises of economic aid were not to be fulfilled and that it would have to reduce the tempo of its economic development to a level which could be supported by its own meager financial resources.

Mr. Bernbaum asserted that the Department was sympathetic with Ecuadoran aspirations for fuller economic development and referred to [Page 983] past loans including the earthquake rehabilitation loan2 and highway loans. He remarked that Ecuador had not yet fully utilized the earthquake credit. In reference to highways loans he said that it appeared now that the Quevedo–Manta highway was on the right track. Mr. Bernbaum then stated that the Department had been disappointed over the slow progress of the airports credit application at the Export-Import Bank, but related that the Bank’s desire to go very slowly in this matter arose from the Bank’s past experiences with Ecuadoran loans. He said that he would not specify difficulties arising under the highway maintenance credit, as well as certain other credits, but the fact remained that the Bank wished to have these difficulties ironed out before proceeding with the airports credit. He added that the Bank also required further data on the airports project before making a final decision. Summing up, Mr. Bernbaum observed that in all frankness, these past experiences had perhaps made the Bank more careful and exacting in its dealings with Ecuador, than with some other countries. In conclusion he asserted that difficulties arising from past credit operations had confronted Ambassador Chiriboga upon his arrival in Washington and that the Ambassador was to be congratulated upon the excellent progress he had made in clearing up many of these matters.

Mr. Atwood spoke of the Department’s willingness to cooperate with Ecuador in working out any outstanding problems and of our sincere desire to aid Ecuador in any appropriate manner to bring to a successful conclusion its plans for the economic development of the country.

Sr. Nebot indicated that he understood this, but felt that early and favorable consideration should be given to Ecuadoran loan applications by the Export-Import Bank. In the light of the recent bond settlement, the Minister related that Ecuador intended to apply to the IBRD for a number of development loans, including highways and port development. The Minister indicated that in view of Ecuador’s strong credit position currently, it would wish to borrow money in this country from the IBRD and from the Export-Import Bank without the necessity of detailed project justification. He said that the receipt of a lump sum loan from the Bank which could be applied to such development projects as Ecuador selected, would permit of more flexible operations and eliminate time-consuming negotiations regarding details.

Ambassador Chiriboga stated that he would escort the Minister of National Economy to the Export-Import Bank and to the IBRD on Thursday, June 11 for talks3 with officials of those institutions.

  1. For information on the bond settlement, see Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, 1953 (Washington, 1954), p. 68.
  2. Reference is to the $7 million line of credit in favor of the Republic of Ecuador authorized by the Board of Directors of the Export-Import Bank in December 1949 to assist Ecuador in reconstruction work in the area damaged by the earthquake of August 1949.
  3. No memoranda of these conversations were found in Department of State files.