723.56/10–2254
The Special Assistant to the Secretary for Mutual Security Affairs (Nolting) to the Director of the Foreign Operations Administration (Stassen)1
Dear Mr. Stassen: I have been informed that the Government of Peru has requested that it be sold United States Air Force equipment, at a price of approximately $6 million, on terms which would permit payment by installments over a three year period, as provided for in Section 106, Public Law 665, approved August 26, 1954.2
The Department of State is of the opinion that the present Peruvian Government has a satisfactory record of making payments on loans extended by United States Government lending institutions, that it is [Page 1530] financially able to assume an obligation of $6 million and that it would comply with the terms of an agreement providing for payment of that amount by installments over a three year period. Although the Government of Peru is at present in arrears in payments on its lend-lease account, the Department of State has been advised by the Peruvian Government that Peru is prepared to initiate payments, beginning June 30, 1955, looking toward the liquidation within five years of that debt.
The Department of State approves the sale to Peru of military equipment in the amount of approximately $6 million on credit terms and understands that the Defense Department favors the sale for important military reasons. The Department of State believes that other Latin American governments may request the purchase of military equipment on credit terms during the present fiscal year and assumes that it will be possible to offer them credit, provided that:
(1) the equipment can be made available for sale by the Service Departments; (2) it is determined politically and militarily desirable to comply with the request; and (3) from the economic point of view, taking into account the credit standing of the other government, the extension of credit is considered desirable and justifiable.
Sincerely yours,