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



  • Ecuadoran Relations with IBRD.
  • Participants: Ambassador Chiriboga of Ecuador.
  • OSA—Mr. Bernbaum
  • OSAEdgar L. McGinnis, Jr.
  • OSA—Mr. Atwood

Ambassador Chiriboga told Mr. Atwood that he sought this interview to inform the Department regarding his recent conversation with President Black of the IBRD. The Ambassador said that he visited Mr. Black on Friday at the latter’s request and was told that the IBRD wished to be Ecuador’s banker and that the IBRD would fulfill its announced intention to send a Mission to Ecuador in the middle of August. Mr. Black, according to the Ambassador, stated that the Mission would examine Ecuadoran loan projects and recommend such of those which appeared to be sound and that the Bank would then exercise its judgment as to which projects it could approve for the purpose of assisting in the economic development of Ecuador.

The Ambassador was also requested by Mr. Black to withdraw the airports loan now pending before the Export-Import Bank since, in the latter’s view this project was relatively unimportant. In this connection Mr. Black said that he had discussed the airports loan with Sr. Nebot, Ecuadoran Minister of Economy who had told him that Ecuador would be willing to withdraw the airports loan from the consideration by the Export-Import Bank and include it with those projects to be examined by the IBRD mission.

Ambassador Chiriboga stated that he told Mr. Black emphatically that while his Government was perfectly agreeable to having an IBRD mission visit Ecuador and appreciated the Bank’s interest in the country, it would not withdraw the airports loan from the Export-Import Bank. The Ambassador informed Mr. Black that the airports loan [Page 988] was not only of considerable economic importance to Ecuador but that it had political implications as well. He said the airports loan would be of strategic significance since it would improve transportation facilities at both Guayaquil and Quito which could be of advantage to hemisphere defense. He also told Mr. Black that because of the lengthy period during which the Export-Import Bank had this loan under consideration and the urgency of prompt action, his Government could not consent to having the application transferred to the IBRD. The Ambassador added that the Minister of Economy did not have authority to promise Mr. Black to withdraw the airports loan and said that this authority rested only with President Velasco. The President had very recently urged the Ambassador to press the ariports loan with all vigor with officials of the Export-Import Bank. Ambassador Chiriboga also said that he informed Mr. Black that Ecuador regarded the airports loan as a commitment of the U.S. Government since General Edgerton had promised in a recent letter1 to the Ambassador that the loan would be acted upon after the return of the Export-Import Bank mission from Ecuador which was recently sent there to study the project. The Ambassador mentioned also that the Export-Import Bank had approved this loan in principle in 1951. The Ambassador stated that it would be greatly resented in Ecuador if the IBRD were to force the withdrawal of the airports loan from the Export-Import Bank. Ambassador Chiriboga said that Mr. Black closed the conversation by expressing considerable doubt that the Export-Import Bank would ever approve the Ecuadoran application for the airports loan.

Ambassador Chiriboga then said that he regarded the possible assumption of a monopoly on foreign loans by the IBRD as a very unfavorable development. He said that the IBRD would be placed in a position where it could dictate economic policies without reference to the Department of State or the American Government. He asserted that, in any case, Ecuador was still a sovereign nation and that, while it would accept the advice and counsel of the IBRD it would not and could not permit the IBRD to dictate the economic development policies of the country. He asserted that, since Ecuador was a sovereign nation, this power could only be exercised by its President. He warned against the consequences in Latin America of the establishment of a single “monopolistic” loan authority.

Mr. Atwood thanked Ambassador Chiriboga for his views and said that it was his understanding that Export-Import Bank still had the airports loan under active consideration and would make a decision upon the loan in due course. He observed that he could see some advantage in centralizing development loans in the IBRD, but that he did not believe [Page 989] that the IBRD would assume complete authority for making loans to the total exclusion of the Export-Import Bank. He observed that the Department was naturally interested in this matter from the standpoint of foreign policy and would continue to watch developments with interest.2

  1. Not found in Department of State files.
  2. In a memorandum to Mr. Waugh, dated Aug. 14, 1953, Mr. Corbett stated that the Department supported the Ecuadoran Government’s refusal to withdraw the airport credit application from the Export-Import Bank for the following reasons: (1) the original credit of $1 million had been granted by the Export-Import Bank, (2) the present credit request was intended to supplement the original credit, and (3) the airports were of strategic interest to the United States (103 XMB/8–1453).