8. National Security Council Progress Report1


(Policy Approved by the President September 3, 1954, Amended by NSC Action 1270–b Approved November 16, 1954)

(Period Covered: July 15, 1955 through March 28, 1956)

A. Listing of Major Developments During the Period

Bulganin2 offer to Latin America was made January 16, 1956 to expand diplomatic, economic and cultural relations, extend technical assistance, and conclude trading arrangements (which lend themselves to propaganda exploitation as economic assistance). This was the Soviet Union’s most important policy statement on Latin America to date. It was followed by similar Hungarian and Rumanian offers. Even before these, Orbit propaganda, diplomatic and economic activities stepped up materially throughout Latin America. Several Latin American countries have since been approached informally by Soviet bloc representatives, and the first formal follow-up of Bulganin’s offer was made in March to Colombia through the Soviet UN Delegation.
Soviet Bloc reportedly offered to sell arms to Brazil, Argentina, Uruguay, Ecuador.
President’s conference at White Sulphur Springs March 26 and 27 improved basis for negotiations with Mexico on outstanding issues.
Overthrow of Peron removed source of inter-American friction and brought opportunities for reorientation of Argentine foreign, domestic, military and economic policies.
Inauguration of Kubitschek ended period of caretaker governments and provided an opportunity for development of political and economic stability in Brazil.
Ecuador–Peru tension was greatly reduced through prompt U.S. action with the other Rio Protocol guarantors.
OAS facilitated Nicaragua–Costa Rica friendship and nonaggression pact.
At Ciudad Trujillo Conference (see 15 below) United States succeeded in checking strong bid initiated by certain Latin American countries at recent Mexico City Meeting of Inter-American Council of Jurists for OAS support for their extreme claims to territorial waters.
Disaster relief operations were conducted by U.S. in the wake of hurricanes and floods in Costa Rica, Colombia and Mexico.
Castillo Armas, Kubitschek and Battle Berres visited the United States. Vice President Nixon attended Kubitschek inauguration.
Bilateral civil atomic energy agreements were signed with Chile, and initialed with Peru and Uruguay, bringing to seven the Latin American countries in this program.

B. Summary Statement of Operating Progress in Relation to Major NSC Objectives 3

The OCB considers that the policies of NSC 5432/1 are inadequate to meet the intensified Soviet challenge and new Soviet tactics in Latin America set forth in 35 below, and therefore recommends their review by the NSC, for the following reasons:

NSC 5432/1 was developed after the overthrow of the communist-dominated government in Guatemala and prior to the government-to-government across-the-board trade, diplomatic and psychological offensive now being waged in Latin America by the [Page 48] Soviet Bloc. The answer to that offensive is therefore not contained in NSC 5432/1. New policies directly geared to the present situation are required to meet that offensive. Such new policies probably would require changes in existing provisions of NSC 5432/1 and in other NSC policies, but such changes could not be itemized without an analysis of what the policy action should be. However, it is clear that at least sections 4d, 6a, 9, 11 and 12 do not provide adequate guidance to the operating agencies in dealing with this situation.4

The OCB also recommends that the NSC review the policies of NSC 5432/1 in the light of:

the contradiction inherent in fostering the concept in all Latin American nations of maximizing support of collective actions in other theaters by forces beyond the requirements of hemisphere security (Para. 13c, NSC 5432/1), which may have a tendency to stimulate a desire for arms and equipment beyond the abilities of some countries to maintain and beyond what the U.S. is prepared to furnish;
the failure to make acceptable progress toward standardization of military equipment along U.S. lines (see 33 below);
the tendency of some Latin American countries to devote to military expenditures resources which could better be devoted to economic development (see 33 below).

The policies in NSC 5602/15 have been reviewed and NSC 5432/1 is believed to be consistent therewith.

Modest progress has been made toward most of the U.S. objectives in NSC 5432/1, but we have lost ground in our efforts to standardize military equipment along U.S. lines, because we have for various reasons been unable to satisfy requests for military equipment with the result that Latin American countries have obtained equipment in Europe. In the same measure we have lost our ability to restrain excessive military purchases by some countries which tend to absorb limited resources which might otherwise have been used for economic development projects (see 33 below).
Hemisphere Solidarity. The success and promptness of the action of the OAS and the Guarantor Powers of the Rio Protocol in the most recent revival of the Ecuador–Peru boundary dispute further enhanced the prestige of the Inter-American system. The Guarantors acted with a degree of initiative not seen heretofore in their deliberations, [Page 49] leading to hopes that a mutually acceptable solution to this current principal source of friction within the hemisphere may be found. This development, taken together with the Costa Rican-Nicaraguan friendship pact (7 above) has contributed significantly to strengthening hemispheric solidarity.
At the Inter-American Specialized Conference on Conservation of the Natural Resources of the Continental Shelf and Oceanic Waters (Ciudad Trujillo, March 1956),6 the United States succeeded in restoring OAS consideration of important problems concerning conservation of the resources of marine waters and the continental shelf to the customary procedures of full and frank discussion and accommodation of differing views traditional in the Inter-American System, after a serious deviation from this pattern at the Mexico City Meeting of the Inter-American Council of Jurists (January 1956).7 In contrast to the Mexico City Meeting, the Conference was dominated by a spirit of Pan-American cooperation which led the delegates to seek a conciliation of views of all countries represented. This spirit is reflected in the “Resolution of Ciudad Trujillo”8 which advances conclusions on issues where agreement among the American Republics was possible and leaves aside for further study those issues where basic disagreement remains. The Conference also provided a valuable interchange of scientific and technical knowledge in the various fields covered by the agenda.
Despite opposition from the dictatorships, Jose Mora of Uruguay was elected Secretary General of the OAS.
The high-level visits (10 above) and the visit of senior officials of State, Eximbank, Defense and ICA to six countries of South America, did much to reassure Latin Americans as to the continued and sympathetic interest of the United States in them and their problems.
The appearance in Mexican gulf ports of United States naval vessels on an errand of mercy, together with the effectiveness of the disaster relief supplied by the U.S. armed forces, were major events in cementing friendship with the people of Mexico and softening bitter memories of alleged U.S. aggression.
Increased Action Against Communist Penetration. OCB recommendations for improvement of the internal security apparatus of Bolivia, Brazil, Chile and Guatemala are in process of implementation. A Civil Police Administration Branch, established in ICA, has initiated [Page 50] action to survey the police services in Bolivia and Guatemala, and about 30 Latin American police officers have been or are now in training in the U.S. Attributed and unattributed U.S. action, including expansion of USIA programs to expose the dangers of communism, has been stepped up throughout the area, and has had specific successes in many countries, especially Brazil, Mexico, Chile, Colombia and Cuba. Spontaneous indigenous anti-communist action has grown in many countries—e.g., in Mexican labor, and in the formation of anti-communist committees. The communist problem, however, remains serious in Brazil, Chile, Ecuador, and Bolivia, and also has potentials for damage to U.S. objectives in Cuba, Guatemala, Uruguay, Argentina and to a lesser extent in other countries. Local communists played an important role in the Brazilian elections, and the extent to which the new government will be disposed to move against them remains to be seen. The opportunity of Kubitschek’s visit to this country was taken to impress on him the seriousness of the problem and the necessity for energetic action.
Development of Responsible Organized Labor Movements. The development of backward or government-dominated trade unions of Latin America into organizations conscious of the communist menace has been slow in the light of its long-term educational nature. Of importance in this connection is the labor leader training program under which 118 Latin American labor leaders were brought to this country for orientation and training during the period (most of them, as well as Lechin of Bolivia, saw democratic unions in action at the AFL-CIO Convention). The USIA is expanding its labor educational program through publications, translations, moving pictures and broadcasts; and ICA is continuing to provide training for labor technicians. Limited U.S. cooperation with ORIT, the free trade union regional organization, contributed to the progress of free unions and the reduction of communist opportunities for influence among workers. The visits of Castillo Armas and Kubitschek to the U.S. and that of Vice President Nixon to Brazil were used to suggest the need for appreciation of intelligently led free trade unions in Latin America and to strengthen understanding between U.S. and Latin American trade unions. Several of the International Trade Secretariats, in some cases inspired and assisted by U.S. representatives, undertook, in cooperation with ORIT, to extend their organization and activities in Latin America. ORIT continued through its work in the field of organization and education, to promote effective trade unionism, and to resist communism and dictatorship. During the period the Peronista regional organization, ATLAS, virtually ceased to function. The communist regional organization, CTAL, continued to operate at a very low level. The communist-led central labor organization in Chile, CUTCH, was severely weakened by [Page 51] internal dissension and the failure of its strike against the stabilization measures.
Increased Stability and Economic Development. As appeared most clearly in the U.N. Economic Commission for Latin America (ECLA) meeting at Bogotá, and during the visit to South America of high U.S. officials (see 17 above), there appears to have been an encouraging change in the attitude of many Latin American officials toward U.S. economic policy. Though the U.S. sugar quota (now in Senate-House conference) and U.S. surplus disposal serve as irritants in the countries which are or believe they are affected by them, Latin Americans appear increasingly convinced of the Administration’s sincerity in seeking to maintain consistent trade policies against continuing efforts by U.S. domestic interests to establish quotas or increase tariffs, better satisfied with the liberalized policy on Export-Import Bank loans, and pleased with the effectiveness of the technical cooperation program.
There were no important adverse developments during the period in United States efforts to develop stable trading policies. During most of the period, proposals to establish quotas or increase tariffs on Latin American products were largely dormant. The U.S. initiated tariff negotiations under GATT in which five Latin American countries are participating. Following a tung nut crop failure in the United States, Argentina and Paraguay were advised that voluntary restrictions on exports of tung oil to this country imposed at our request could be lifted. ODM found it unnecessary to ask the petroleum companies operating in Venezuela to impose any further controls on their exports to the U.S.
The Export-Import Bank authorized credits of about $110 million consistent with the liberalized policy announced at Rio in 1954. The IBRD authorized credits of about $50 million during the period. PL 4809 local currency loans for economic development were signed or negotiated during the second half of 1955 in amounts equivalent to approximately $57.5 million involving five Latin American countries, among which Brazil is the most important with $30 million.
The technical cooperation program was strengthened and diversified. The number of Latin Americans receiving training in the United States and Puerto Rico rose from 1,540 in FY 1955 to an estimated 2,000 in FY 1956, and there has been increased diversification in fields other than agriculture, health and education. Further strengthening and diversification was programmed. Program obligations in FY 1955 were $27.2 million; estimated obligations in FY [Page 52] 1956 are $28.4 million; and a planning figure of $32 million has been approved for presentation to the Congress. Eleven participants from five Latin American countries were trained under the Atoms-for-Peace program.
Programs, totalling roughly $39 million for FY 1956, have been approved for development assistance in Bolivia, Guatemala, and Haiti. Slightly over half of that sum was utilized to provide foodstuffs and related shipping costs; while the balance, together with a large percentage of the total local currency counterpart, was earmarked for various economic development projects. Pursuant to PL 129 (July 1, 1955)10 authorizing completion of the Inter-American Highway to Panama within three years, and Congress’ appropriation of $62.98 million therefor on June 30 and July 30, 1955, the House Public Works Committee made an inspection of the Highway’s progress November 18–December 6, and reported that the progress was impressive.
Although political and nationalistic factors continued to impede the flow of foreign private capital to the area, some encouraging developments occurred. A number of U.S. companies announced plans for large-scale expansion of their activities. The new Argentine government, while refusing for political reasons to sanction petroleum development by private foreign capital, permitted resumption of profit remittances by United States interests and expressed itself generally as in favor of free enterprise. Twenty-nine companies, mostly U.S. firms, have applied for petroleum exploration rights in Guatemala under the new petroleum code now in effect. Bolivia promulgated a new petroleum code drafted by an American expert retained by the Bolivian government for that purpose. President Kubitschek of Brazil has gone on record as favoring private investment for economic development. The Venezuelan Government threw open additional areas for concessions to foreign oil companies. The President of Guatemala stated that his country would be developed on the basis of private enterprise and the President of Costa Rica has indicated in recent speeches an increasing appreciation of the role of U.S. private enterprise in economic development. The U.S. investment guaranty program was extended to Bolivia and Paraguay.
Agreements under PL 480, totalling approximately $155 million at CCC cost, were concluded with Brazil, Ecuador, Peru, Argentina, Bolivia, and Chile.
Institution of Necessary Latin American Government Fiscal, Budget and Related Measures. The United States agreed to send a financial mission to Bolivia, at the latter’s request, to assist that country in developing [Page 53] sound monetary and fiscal programs. Efforts were made to impress the president of Brazil with the need for energetic action in this field while he was visiting this country. While no positive accomplishments are yet apparent, passage of a wage-price bill in Chile, based on recommendations of the Klein–Saks mission, suggests the possibility that progress may be made in stabilizing the economy. Use of PL 480 provisions was made by holding out the possibility of a surplus commodity agreement to Chile as an inducement to develop an economic reform program. The Treasury renewed for two years its $75 million stabilization agreement with Mexico, and for one year its $12.5 million agreement with Peru.
Information and Related Activities. The information program concentrated 67% of its field resources on seven priority countries, Ecuador having been added to the pre-existing priority list: Argentina, Bolivia, Brazil, Chile, Guatemala, Mexico. Accordingly the programs in other countries were focused on short-term goals and on selected area-wide long-term projects. U.S. financial support was extended to four additional binational centers, financed chiefly by local members, and the formation of many other organizations of a binational character was stimulated by USIS personnel and they are receiving material though not financial assistance from field posts. Binational center activities were more closely integrated with USIS country programs.
Major emphasis was placed on the President’s Geneva proposals to promote world peace and security, and U.S. leadership in this field was generally acknowledged and supported in Latin America. The “Atoms-for-Peace” program was thoroughly publicized and enthusiastically acclaimed. Sustained attention was given to the task of exposing the dangers of communism, and this threat and the necessity of cooperative counter-measures were recognized by an increasing number of government and labor leaders in several countries, although prevailing attitudes on this subject still are cause for concern (see 19 and 20 above). The values and advantages of private enterprise were constantly stressed, U.S. economic and technical cooperation was extensively publicized, and a growing awareness was noted throughout the area of the constructive contribution made by foreign and private investments. The visits to the U.S. of the heads of state of Guatemala, Uruguay and the Brazilian president-elect, and Vice President Nixon’s visit to Brazil, were thoroughly exploited by all informational media in the three countries. The demonstration of democratic values as exemplified by the society and cultural achievements of the United States was a primary responsibility of the information and binational centers and this theme was supported steadily by press output, motion pictures, radio and TV programs.
A Fulbright educational exchange agreement was signed with Chile; negotiations for similar agreements are in process with Ecuador, Argentina, Colombia, Brazil, and Peru. A two-way flow of 423 people (325 to the U.S., 98 to Latin America) in FY 1956 was scheduled under the PL 402 leader program. Aid to American-sponsored schools under PL 402 continued, the International Exchange Service contribution for FY 1956 being $175,000 and its request for FY 1957 $250,000. The bringing of three groups to this country under the Latin American Journalist Project proved successful, as evidenced by 75 articles appearing in the most important newspapers of Brazil, Chile, Colombia, Guatemala, Honduras, Mexico, and Peru. President’s Fund Projects included tours of “Porgy & Bess” and the Ballet Theatre.
Military—General. The United States has continued to provide grant military assistance on a very limited scale, to maintain missions in 18 countries, and to provide increased training to Latin Americans in U.S. Service schools. Closer relations with the Latin American military have been fostered by such activities as visits to the United States of the Chiefs of Staff of the Ecuadoran and Paraguayan armed forces, and of the Nicaraguan, Honduran, Guatemalan and Haitian Air Forces, the visit of the Minister of Marine of Peru, and attendance of IADB delegates at U.S. military training exercises.
Efforts to achieve standardization of military equipment on U.S. lines have continued to be unsuccessful as previously reported. Some Latin American countries are pursuing a military procurement policy which is adversely affecting their economic stability by diverting substantial portions of their limited resources from economic development to military expenditure. The acquisition of modern arms has taken on great importance for Latin American countries and most of them appear determined to obtain such arms even though there may be some question as to whether all the items they procure are required for military purposes including the carrying out of agreed military missions. The predominant trend in this period has been toward further large orders of Western European aircraft and naval vessels, demonstrating that if modern equipment is not made available from the U.S., Latin American countries will modernize their armed forces by purchases of arms from other sources, possibly including the Soviet Bloc. Extensive military penetration of the area by nations other than the U.S. could prejudice the maintenance of U.S. military missions and the U.S. orientation of Latin American military leaders which is essential to the attainment of U.S. political and military objectives. The U.S. has been unable to satisfy Latin American requests for modern arms because: (1) we have assigned a relatively low priority to Latin America in the [Page 55] allocations of available equipment (NSC 5517/1)11 and also in the allocation of the appropriated funds available for loans or grants and (2) unless equipment is declared excess, we charge the “replacement” or “acquisition” cost for obsolescent or used items. If a higher priority were assigned to Latin America in the allocation of available equipment and appropriated funds (loan or grant), the policy of standardization would be more successful. There is no assurance, however, that this action would eliminate the adverse effect on economic stability, because some of the countries might continue to devote to military expenditures resources which could better be devoted to economic development. This situation suggests the need for review of the priority assigned to Latin America in NSC 5517/1 in the implementation of Para. 20e, NSC 5432/1, in order to advance the attainment of that objective and to compete with Western Europe (and possibly the Soviet Bloc) in the provision of military equipment to Latin America. Exploration of possible measures designed to curtail excessive military expenditures by Latin American countries would be desirable.
General—Outline Plans. Implementation of the OCB Outline Plan of Operations for Guatemala (approved June 1, 1955) has continued. The OCB Outline Plan of Operations for Brazil was approved July 26, 1955, and a revision prepared by the OCB Working Group for Latin America to bring it up to date is with the Embassy for comment. OCB Outline Plans for Mexico, Colombia, Ecuador, Bolivia, and Chile, and Against Communism in Latin America, are in process of preparation.

C. Major Problems or Areas of Difficulty

Stepped-up Soviet Bloc and local communist activity is increasingly apparent, especially efforts to expand diplomatic, trade, military, technical and cultural relations and contacts with Latin American countries, to foster the development of National Front governments, and to capitalize on such matters as a) Latin America’s surpluses of products difficult to sell, b) Latin America’s real and imagined need for capital equipment, c) Latin American desires for arms, d) shortages in Latin America of certain goods, e.g., newsprint, and e) Argentine, Brazilian and Mexican efforts to develop their petroleum resources without participation of foreign private capital. An offer to renew diplomatic relations and to expand trade has been made to Colombia by the Soviet UN delegation, which explained that this was the first such approach to implement Bulganin’s statement of policy (see A.1. above) vis-à-vis Latin America. The number of Latin [Page 56] Americans receiving free trips to the Soviet orbit, efforts to increase further the size of existing Soviet Bloc diplomatic and military representation and trade missions, and Soviet propaganda aimed at Latin America, seem sure to grow. Although the immediate reaction in the Latin American press to the Bulganin statement was negative, some Latin American governments have already responded favorably to Soviet Bloc offers to expand trade. As this occurs, these governments are apt to become more receptive to expanding diplomatic relations with the Soviet Bloc. While U.S. policy calls for selective expansion of Free World-Communist Bloc contacts, including peaceful trade, the Soviet offensive lends urgency to the need to stimulate among the Latin American governments and people an understanding of the threat to them posed by international communism and a determination to control it. It emphasizes the need for the 1290–d program12 and the other stepped-up anti-communist action noted in 19 above. It will require more concentration on key elements (e.g., labor and students) in the information program, which, even including private U.S. activity in Latin America, lacks the resources of local and international communists. These measures, though desirable, are not, however, considered adequate to defeat the new Soviet challenge.
The necessity to associate the United States with the aspirations of the Latin American people to a greater extent continues. Part of the problem comes from the communist drumfire of propaganda portraying the United States as the imperialist exploiter of the peoples and resources of the area. In the economic field, problems of U.S. trading policies, and of stability and development in the area, may be expected to continue. Latin American countries will continue to exert pressure on the United States to bear a larger share of their financial burdens than the United States is prepared to bear. They may try to capitalize on Soviet offers of trade arrangements and technical assistance in this connection. In this event, it may be more difficult for the United States to make its credits, its PL 480 sales and similar economic cooperation measures dependent on self-help actions by Latin American countries.
Further efforts to consolidate our position with the new Argentine Government will be required. Depending on the program Argentina develops, decisions will be required on the nature and extent of possible military and economic cooperation with that country.
Decisions on the nature and extent of economic cooperation with Brazil and Chile will have to be made.
Recent political developments in Bolivia, indicating that the trend toward control of the regime by moderate elements may have been reversed as a result of recent increasing leftist control of the government party, could necessitate a review of our policy of cooperation with that government.
Latin American views on jurisdiction over territorial waters have created serious problems for the United States involving, in addition to legal principles, arbitrary enforcement of unilaterally asserted jurisdiction over American fishing vessels on the high seas. At the Mexico City Meeting of the Inter-American Council of Jurists (January 1956) the proponents of the extreme claims to territorial waters extending as far as 200 miles from the coast succeeded in putting through a resolution favorable to their position over the strong objections of the United States. At the Ciudad Trujillo Conference, the United States obtained adoption of a resolution embodying conclusions much more favorable to the U.S. position than those contained in the highly objectionable Mexico City Resolution. However, in the “Resolution of Ciudad Trujillo” the American Republics also agreed to disagree on certain basic issues on which it was not possible at this stage to reconcile widely differing positions, including the juridical status of the waters superjacent to the continental shelf, the nature and scope of the special interest of the coastal state in the fishery resources in the high seas off its coast and the breadth of the territorial sea, recommending that the American Governments continue to study these matters with a view to reaching adequate solutions. Hence, the Resolution of Ciudad Trujillo did not alter the extreme claims to jurisdiction over the waters off their coasts advanced by several Latin American states.
A U.S. position in IA ECOSOC is required on whether we believe there is a basis for proceeding with the preparation and negotiation of an international coffee agreement, and if so, under what auspices.
New efforts of domestic interests to restrict the import of oil and other primary commodities of particular interest to Latin American countries can be expected during the current session of Congress. Moreover, several bills to establish general import quota legislation are pending.
Latin American criticism of U.S. agricultural surplus disposal programs (see 21 above) will increase to the extent that those countries have difficulty in marketing their own production.
Venezuela’s reservations in approving the General Military Plan of the IADB contain major political implications relating to restrictions of the principle of collective defense and involve colonial possessions of European nations.
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(Figures are approximate only; in millions of U.S. dollars)

Expenditures by Fiscal Years

Activity or Program 1953 Actual 1954 Actual 1955 1956
NSC Est. Actual NSC Est. Actual Current Est.
MDAP (1) (10) 10.9 35.0 37.5 31.7 23.2 8.3(2) 13.4
Direct Forces Support
Defense Support
Development Assist. 2.1 9.1 6.9 11.9 10.4(7) 28.0(3)
Technical Cooperat. (4a) 19.7 17.3 29.2 20.8 34.0 14.4(7) 31.0(5)
Information Servs. (6) 6.3 5.0 4.7 5.2 6.8 3.2(4) 6.3
Educational Exchange .8 .8 1.1 1.1 2.8 .9(7) 1.6
Shipments-Excess Stocks (Acquisition cost) 58.2 5.8 10.0 10.0 .6 .7(2) .7
Reimbursable Military Aid (8) 9.6 8.4 12.5 2.2(2) NA(9)
Offshore Procurement
Other (e.g., Mil. Pay; Procurement; Contract Services) 32.7 23.9 19.7 —(2) 21.2

Notes and Comments (keyed to figures in above table):

Value of material shipments plus expenditures for training, packing, handling, crating, transportation and rehabilitation of “excess stocks”. The current estimate for FY 1956 includes the amount shown as delivered during the first quarters.
To November 30, 1955.
$52.6 million available for expenditure in FY 1956, for Bolivia, Guatemala, and Haiti, including $13.6 million unexpended carry-over from prior years.

As of December 31, 1955.

(4a) Including U.S. contributions to the technical assistance program of the OAS.

$50.1 million available for expenditure in FY 1956, including $22.6 million unexpended carry-over from prior years.
These figures include mission allotments, American salaries and travel, direct media support, and reimbursable administrative support.
As of January 31, 1956.
Under Sec. 106, Mutual Security Act of 1954. The total paid for equipment and material obtained under reimbursable aid has amounted to $49 million, which had an original or replacement cost, as applicable, of $181 million. The latter amount includes $147 million of excess stocks which was paid for at approximately 10% value.
Not available.
Military grant aid in the amount of $190 million was programmed through fiscal year 1956, of which $159 million or about 84% was delivered by 30 September 1955. The program and performance by country are shown below: (in millions of dollars)

Country Program Thru 30 Sept. 1955 MDAP & Excess Deliveries Thru 30 Sept. 1955 MDAP & Excess % Completion
Brazil 103.3 97.6 94
Chile 22.4 18.2 81
Colombia 17.6 13.4 76
Cuba 6.0 3.2 53
Dominican Republic 3.6 3.1 86
Ecuador 8.7 6.8 78
Honduras .5 .5 100
Nicaragua .5 .5 100
Peru 17.4 13.6 78
Uruguay 10.1 2.1 21
Total 190.1 159.0 84

Loan Data (Million U.S. Dollars)

Loans By 7/1/55–1/31/56 As of 1/31/56
Disbursements Repayments New Loans Authorized Undisbursed Commitments Outstanding Debt
IBRD 45 8 48 228 552
EX-IM BANK 41 74 73(1) 401(1) 892

Notes and Comments (keyed to figures in above table):

(1) In addition about $39 million was authorized for steel mill projects in Brazil and Chile early in February 1956.

PL 480 Agreements. Agreements under PL 480, totalling approximately $155 million at CCC cost, were concluded with Brazil, Ecuador, Peru, Argentina, Bolivia and Chile.

  1. Source: Department of State, S/PNSC Files: Lot 62 D 1, NSC 5432 Series. Top Secret. A covering title sheet and a transmittal memorandum from OCB Acting Executive Officer Roy M. Melbourne, dated April 6, are not printed. This progress report, the third on NSC 5432/1, was drafted by the Working Group on Latin America on February 24, and reviewed at the Board Assistants meeting on March 9. At the meeting, the Board Assistants recommended changes, in part to resolve questions arising from certain deletions and additions proposed by the Treasury Department representative in the Working Group. Subsequently, a new draft was prepared under date of March 13. The differences between the two drafts are described in a paper attached to a memorandum from Staats to the Board Assistants, dated March 13. (Ibid., OCB Files: Lot 62 D 430, Latin America—1956) The Board Assistants discussed the March 13 draft on March 16 and recommended additional revisions, which were incorporated into a new draft under date of March 20. They finally concurred in the submission of this version of the report to the OCB.

    In a memorandum of March 21 to Hoover, cleared with Kalijarvi, summarizing the contents of the draft progress report, Lyon noted that Treasury wanted to add a recommendation to the report requesting NSC review of the policies contained in NSC 5432/1 on the grounds that some Latin American countries tended to expend resources on military equipment which could be better devoted to economic development. He also stated: “The Treasury has the support of E in this desire. It is the opinion of the Working Group and of ARA that such a review of policy would be premature at this time. Efforts are currently under way within the Department to develop a program within existing policy which would tend to limit unnecessary expenditures for military equipment by Latin American countries.” Lyon recommended that Hoover move OCB approval of the progress report without the addition of a recommendation as proposed by Treasury; the Bureau of Economic Affairs recommended that he move approval with such a recommendation. (Ibid.) The OCB discussed the draft progress report on March 28, and on that date concurred in its transmission to the NSC on April 6.

  2. Nikolay Alexandrovich Bulganin, Chairman of Council of Ministers, Union of Soviet Socialist Republics.
  3. Latest NIE for the area is 80/90–55, Conditions and Trends in Latin America, December 6, 1955. [Footnote in the source text.]
  4. The Treasury Dept. reserves its decision concerning the adequacy of the policies of NSC 5432/1 to meet the Soviet political, economic, and diplomatic offensive and the need for NSC reconsideration of policies to deal with this offensive in Latin America, until it has examined the forthcoming report of Mr. Joseph Dodge, Special Asst. to the President, on the subject and the global review by the NSC of basic policies toward the less developed and uncommitted areas which is scheduled to follow. [Footnote in the source text.]
  5. NSC 5602/1, “Basic National Security Policy,” dated March 15, 1956, was approved by President Eisenhower on that date.
  6. This conference was held March 15–28.
  7. Reference is to the Third Meeting of the Inter-American Council of Jurists, held January 17–February 4. Nineteen resolutions were approved at the meeting, one of which was entitled “Principles of Mexico on the Juridical Regime of the Sea”. For text of this resolution, see Annals of Organization of American States, 1957, pp. 22–23.
  8. For text, see ibid., pp. 70–71.
  9. Reference is to the Agricultural Trade Development and Assistance Act of 1954, enacted July 10, 1954; for text, see 68 Stat. 454.
  10. For text of the Inter-American Highway Appropriation Act, see 69 Stat. 244.
  11. NSC 5517/1, “Priorities Relative to Pre-D-Day Allocation of Military Equipment,” dated July 13, 1955, was approved by President Eisenhower on August 11, 1955.
  12. Reference is to the action taken at the 229th meeting of the NSC, December 21, 1954, establishing a program aimed at improving internal security and destroying Communist apparatus in freeworld countries regarded as vulnerable to Communist subversion. The record of action is printed as part of the memorandum of discussion at the 229th meeting of the NSC, see Foreign Relations, 1952–1954, vol. ii, Part 1, p. 832.