79. Memorandum of a Conversation, Department of State, Washington, December 28, 19551

SUBJECT

  • Export-Import Bank Loans in Latin America

PARTICIPANTS

  • ARA—Mr. Holland
  • E—Mr. Kalijarvi
  • AR—Mr. Sanders
  • Export-Import Bank—Mr. Arey; Mr. Rowntree
  • Treasury—Mr. Overby

At the meeting this morning of the Sub-committee on the Buenos Aires Economic Conference Mr. Holland mentioned the reduced level of Export-Import Bank lending to Latin America thus far in fiscal year 1956, as compared with the rate of lending in fiscal year 1955. It was decided that this matter primarily concerns the Department of State and the Export-Import Bank, that it should be discussed between the two agencies, and that if a problem exists, it should be referred to the Sub-committee.

Immediately following the Sub-committee meeting the question of Export-Import Bank lending was discussed by Mr. Holland, Mr. Kalijarvi, Mr. Overby, Mr. Arey, and Mr. Rowntree.

[Page 361]

Mr. Holland outlined the objectives in Export-Import Bank lending: The level of lending should be at least the minimum amount necessary to keep the Latin Americans from complaining. We have led them to believe that “substantial results” will be realized, and if we do not live up to this, there will be intense complaints, and we will be confronted again with the problem of dealing with the extremists who have maintained so vigorously in the past that the United States is not providing enough investment funds for Latin America, It would not satisfy our political purposes simply to tell the Latin Americans that we have acted on all sound loan applications.

Reasons for delays in granting loans in certain countries were discussed. Mr. Arey said that a steel mill loan for Colombia is being deferred pending completion of an IBRD report. Following the completion of this report the Colombians presumably will tell the Export-Import Bank the amount they wish to borrow. In the case of a loan to Mexico for railway construction the loan is being held up for final determination of the amount; the Mexicans have thought that they may need $100 million instead of $23 million as originally contemplated. Loans for the Chilean nitrate industry are awaiting the enactment of certain legislation in Chile. Reference was also made to the steel mill loan to Argentina and its delay.

Mr. Holland stated his belief that it would be desirable to have the $25 million Santo–Jundai loan for Brazil approved by the NAC so that following Kubitschek’s2 visit to the United States his loan could be announced. Mr. Kalijarvi said that he will ascertain E’s position on this loan. Mr. Holland indicated that he would give Mr. Kalijarvi ARA’s views.

Mr. Arey pointed out that to achieve a level of lending sufficiently high to satisfy our political purposes it might be necessary for the Export-Import Bank to grant loans that otherwise would have been made by the IBRD. An example is a prospective $20 million loan for highway construction in Peru, which might not conflict with IBRD lending for roads in that country.

Mr. Rowntree stated that all Export-Import Bank Loans to Peru had been to American companies engaged in extractive industries. Mr. Holland pointed out that this provides an opportunity for communist propaganda. Mr. Arey expressed the possible desirability [Page 362]of doing something for the Government of Peru, particularly in view of the latter’s efforts in making payments on defaulted loans.

  1. Source: Department of State, Central Files, 820.10/12–2855. Confidential. Drafted by Sanders.
  2. Brazilian President-elect Juscelino Kubitschek de Oliveira visited the United States, January 5–6, 1956. For texts of a statement made at Washington National Airport on his arrival by Secretary Dulles, an address which the President-elect delivered before the U.S. Senate, and an excerpt from his address to the National Press Club in Washington on January 6, see Department of State Bulletin, January 16, 1956, pp. 86–88.