Foreign Relations of the United States, 1955–1957, American Republics: Multilateral; Mexico; Caribbean, Volume VI

247. Letter From the Deputy Assistant Secretary of State for Inter-American Affairs (Snow) to the Ambassador in Mexico (Hill)¹

Washington, September 6, 1957.

Dear Bob: This will acknowledge your letter of August 20,² (received on August 29) inviting comment on developments which we must anticipate in connection with negotiation of a PL 480 sale of corn to Mexico.

The Department is the agency primarily responsible for such negotiations, but practically speaking does rely heavily upon ICA and Agriculture in the conduct of negotiations. Both have expressed strong preference for negotiation in foreign capitals, not only for administrative reasons but because they feel application of standard terms can best be achieved away from Washington. Accordingly, the Inter-Agency Staff Committee specified Mexico City as the locale for this negotiation in approving the transaction. The responsible agencies here are now preparing negotiating instructions for the sale and loan agreements which will be supplied to the Embassy as soon as possible. You may find it of interest in the meantime to review the Department’s CA–8787 of May 8, 1956,³ which describes the role of the Department, Agriculture, ICA and other agencies in Title I PL 480 negotiations.

As you point out, projects to be undertaken by the Mexicans with the proceeds of PL 480 loans must have the approval of the United States. Each project is made the subject of an individual Project Agreement which specifies the use to be made of the loan fund and the degree of United States surveillance or control to be applied. These agreements are normally negotiated by the USOM after accord has been reached on the sales and loan agreements. However, we will want to have a clear understanding on the general nature of the projects the Mexicans have in mind as well as on the degree of ICA surveillance before the sales and loan agreements are concluded in order to avoid future trouble with individual project agreements. I am sure the Mexicans will also be interested in handling the matter in this manner to avoid embarrassment, particularly during an election year.

The only information the Department has indicative of the use which Mexico may want to make of loan funds is that which has been received through the Embassy. Projects are listed in Mr. Lodwick’s letter to Mr. Gwynn Garnett dated March 12, 1957,⁴ and the Embassy’s telegram No. 1870 of April 5, 1957.⁵ Those covering public power installations, particularly if the development is in a field or area where private capital is available on reasonable terms, would present problems for us depending on individual circumstances. Nor would we want to finance irrigation projects that could directly result in increased Mexican production of agricultural commodities in competition with our own on the world market, such as wheat and cotton. On the other hand, I understand that projects in tropical agriculture or farm-to-market roads probably would not be objectionable from our standpoint. As I recall it, Sr. Carrillo Flores was aware of the difficulties that could be created for both our Governments in this respect and indicated at the time of his initial approach to the Embassy that he would try to eliminate any projects that might be of a contentious nature.

Now comes the still more important matter of the advantages we may seek in the favorable climate created by our acquiescence in Mexico’s request for the sale of corn under PL 480. This must in some respects remain uncertain, at least for the present, because whatever we may hope to accomplish will have to be geared to the degree of “favorable climate” that persists on conclusion of the several agreements incidental to this transaction. While the Mexicans have been given a fairly clear idea of the nature of the proposal we will offer, the fact does remain that they were initially thinking in terms of repayment in pesos and the use of 85% of the proceeds. This is some distance from repayment in dollars and use of only 45% of the proceeds. We can justify our proposal in the light of changing circumstances and special considerations such as Mexico’s stronger financial position, but the Mexicans can be expected to compare the deal with those made in the past with other Latin American countries such as Brazil, even though Dick Rubottom during his last visit took pains to discourage any undue expectation the Mexicans might have. The election period which Mexico is just entering also has a definite bearing on what might be possible of accomplishment, regardless of the outcome of the corn negotiations.

The primary objectives which might lend themselves to active pursuit in a favorable atmosphere include the Chamizal and related border and boundary problems, fisheries and territorial waters, the Sabalo claim and certain defense objectives, including radar sites, loran installations and military overflight rights.

Aside from other considerations, it seems unlikely that Mexico would or could conclude a settlement acceptable to us on the Shamizal matter during the remainder of the present administration. However, we might be able to get them to accept our now dormant proposal to initiate discussions through the Embassy and the International Boundary and Water Commission of the detached tracts, including Chamizal, moving in the direction of an eventual settlement.

With respect to fisheries and territorial waters, opinion here in the Department is nearly unanimous that our chances of reaching any solution acceptable to us prior to the 1958 U.N. conference on the law of the sea are slight if not nil. This results from our own unwillingness to prejudice in any way our already difficult position on the 3-mile limit as well as Mexico’s desire similarly to preserve all of the weight of her own position. If you believe this is too pessimistic an outlook, you should by all means make your views known.

Defense objectives would also seem difficult if not impossible of attainment during the remainder of the present administration because of current Mexican domestic political considerations as well as the basic Mexican attitude on such matters. Further, the Department of Defense has not yet determined its requirements for radar sites in Mexico nor identified the financial resources available to support any request we might decide to make.

This leaves the Sabalo claim as the only objective we might reasonably expect to achieve. The claim has been advanced considerably over the past several years, as the Embassy’s files will reflect, and President Ruiz Cortines led Ambassador White to believe that he wished to settle it during his administration. Any settlement in the foreseeable future, however, would presumably have to be kept secret because of domestic Mexican political considerations. Sr. Carrillo Flores has provided you with a convenient entree by connecting the Sabalo claim with the PL 480 transaction in his confidential conversation with Dick Rubottom on August 6, 1957. Although Carrillo Flores did not think it would be possible actually to settle the claim during the present administration, this is at least counterbalanced by President Ruiz Cortines’ assurances to Ambassador White that he desires to affect a settlement before the end of his term. It seems possible that Carrillo Flores is not fully aware of the stage to which discussions between Ambassador White, President Ruiz Cortines and Mr. Padilla Nervo had advanced.

I hope that the foregoing will be useful to you and that you can take as much advantage of the corn transaction as possible in our national interest. The views I have expressed represent those current here in the Department. We would of course appreciate hearing from you if they are in any way at variance with your own appraisals.

Sincerely yours,

William P. Snow⁶

1. Source: Department of State, Central Files, 411.1241/8–2057. Secret; Official–Informal. Robert C. Hill presented his credentials as American Ambassador to Mexico on July 25.
2. In this letter Hill wrote: “It seems that we might attempt constructively to capitalize in tactful and appropriate ways on the favorable climate created by our sympathetic and helpful attitude in the corn agreement.” (Ibid.)
3. Not printed. (Ibid., 120.171/5–856)
4. Not found in Department of State files.
5. In telegram 1870 from Mexico City, April 5, the Embassy informed the Department of the background to the Mexican request for corn. (Department of State, Central Files, 411.1241/4–557)
6. Printed from a copy which bears this typed signature.