Office of the Historian

258. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Under Secretary of State (Hoover)1

Washington, November 17, 1955.

SUBJECT

  • Proposed $10 million dollar Export-Import Bank loan financing oil pipeline in Bolivia

Discussion:

The Bolivian Government has approached the Export-Import Bank and the Department of State on a loan of approximately $10 million dollars to construct an oil pipeline to extend from producing areas in the country to Arica on the Pacific coast. I have told the Bolivian Ambassador that it is the firm policy of our Government not to make official loans in the petroleum industry, and that I see no hope for the application. On the contrary, Mr. Waugh at the Export-Import Bank advises that he is prepared to give consideration to the loan, and that he is going to Bolivia with “an open mind.”

When he and I reach Bolivia on November 25,2 we are going to be subjected to rather heavy pressure from the Bolivian Government on this loan. Obviously, we should tell the same story. It is my understanding that the firm policy of the United States Government is not to make official loans in the petroleum industry because we consider that this is an industry which has access to private sources of capital.

I am advised that private enterprise would be willing to finance this line under pledge of repayment out of oil transported.

As you know, the Mexican, Argentine and, perhaps, Brazilian Governments would like pipeline loans.

Recommendation

That, urgently you arrive at a policy decision in consultation with appropriate officials of our Government as regards the position that Sam Waugh and I should take when we arrive in Bolivia and this proposal is urged upon us. That policy decision should be cabled, if possible, to us at one of the missions that we visit before our arrival in Bolivia, and as quickly as practical.3

  1. Source: Department of State, Central Files, 824.2553/11–1755. Confidential. Prochnow initialed his concurrence and attached a supplementary memorandum, infra.↩
  2. This was part of a larger trip to five Latin American nations, November 17–December 3, 1955.↩
  3. Hoover initialed his approval of the recommendation.↩