227. Memorandum of a Telephone Conversation Between the Assistant Secretary of State for Inter-American Affairs (Holland) and the Ambassador in Mexico (White), June 14, 19561

SUBJECT

  • Loans for Mexico and Aviation Agreement Problem.

At 11:30 p.m. on June 14, the Ambassador called me and made more or less the following statements:

He had just come from a conference with the President of Mexico. The Export-Import Bank had revealed to the Mexican Government that the Department of State had instructed that action on loans for Mexico be held up until the Department of State authorized further action. The President of Mexico said he had read this in “Hanson’s Newsletter”. The Ambassador knew that the report had come from the Bank Staff.

As regards the Aviation Agreement the Ambassador said that we had met the wishes of the Mexican Government on every point, and that we should be able to reach an agreement now.

The President “got truculent” at the end of the conference. He said that he was holding up action on the Aviation Agreement until he determined whether we were using Mexican applications for [Page 723]loans as a means of exerting pressure on him to get an Aviation Agreement.

The Ambassador assured him that this was not the case. The President was primarily interested in the railroad loan.

The Ambassador had had a two hour talk with Carrillo Flores on the preceding Friday and a one and one-half hour talk on the preceding Monday. The same question arose, i.e., whether the State Department had instructed that action on Export-Import Bank loans be held up until further instructions. The Ambassador had assured Carrillo Flores that this was not the case.

The President told the Ambassador that Mr. Pape of Altos Hornos, the Mexican steel mill in Monclova, had told the Mexican Government that he had been informed at the “technical level” of the Export-Import Bank that the State Department had taken the position stated above. The President told the Ambassador that he would not thus be under pressure to approve an Aviation Agreement.

He said that he was the President of Mexico and that he would not be put under pressure.

As regards his failure to reach a decision on the Aviation Agreement, the President said that he had not gone into the matter yet. The Ambassador said that in 1947 and again in 1950 the United States had been assured that if it made certain specific concessions to the Mexicans we would be given an Aviation Agreement. We had made the concessions and nothing had happened.

The Ambassador said that he felt that the President of Mexico was playing for time in order to determine whether the United States is attempting to exert pressure on him.

. . . . . . .

The Ambassador said he had asked the President whether he should report to Washington that the Mexican Government was linking an Aviation Agreement to our favorable action in its loan applications. Must we give the loans in order to get an Aviation Agreement. The President replied that this was not the case, but that he wanted to know whether the United States was drawing such a connection.

The President told the Ambassador to discuss the matter with Minister Carrillo Flores on Monday. The Ambassador told me that he would not ask for the meeting until he had received Washington’s instructions as to what course to follow. He said that he saw two courses between which we could choose:

1.
To grant the Fundidora loan as evidence that we are not using the loans as a means of exerting pressure; then ask the [Page 724]Mexicans what they are going to do about the Aviation Agreement. In the meantime, we could hold up on all other loan applications.
2.
We could tell the Mexican Ambassador frankly that we would not do anything on any Mexican loan applications until the Mexicans took action on the Aviation Agreement.

The Ambassador said he had told the President that the action of Mexico at the Jurists’ Conference in Mexico City had made the worst impression in the United States of anything that had occurred since the Caracas Conference.

He said that the President was most interested in the railroad loan; that if we gave in on the Fundidora loan we could study the railroad loan and other applications for a long time.

I told the Ambassador that any report that the United States was using the loans as a means of exerting pressure for an Aviation Agreement was incorrect; that we had been following the course of the study of the Aviation Agreements; that we felt sure that they would reach a decision in due course; that we here in Washington had heard the same rumor; i.e., that the Department of State had instructed the Bank to hold up on all loan applications until we told them to go forward; that this was completely inaccurate, and that we had so advised the Mexican Ambassador. I said that the Mexican Government would simply have to understand that these matters took quite a while for their study and decision. We, on our part, had heard reports that the Mexican Government was holding up its decision on the Aviation Agreement as a means of exerting pressure on the United States Government to act favorably on the loan applications. We had rejected these reports as being completely untrue, and the Mexican Government would simply have to accord to us the same good faith that we accorded to them.

The Ambassador said that he would undertake to see the President of Mexico on Friday, June 15, and report my statements to him.

  1. Source: Department of State, Central Files, 812.10/6–1456. Confidential. Drafted by Holland.