39. Memorandum of a Conversation, Department of State, Washington, April 24, 19561


  • Guatemala: IBRD and Klein & Saks Missions


  • Mr. Burke Knapp, IBRD
  • Mr. Rollin Atwood, ICA
  • ARA—Assistant Secretary Holland,
  • MID—John W. Fisher, Guatemalan Desk Officer

Mr. Knapp said that Mr. David Gordon, IBRD representative in Guatemala, had been there about a year and a half. Things had gone smoothly until recently, when the Embassy began to show signs of dissatisfaction and to push the Klein & Saks Mission forward, presumably to be the U.S. Government voice in the National Economic Planning Council.

Mr. Knapp said he had discussed the question of the two missions and their respective functions with Ambassador Sparks and Mr. Newbegin last November.2 At that time he gave every assurance that IBRD would welcome participation by the Klein & Saks Mission in the work of the Planning Council. Subsequently, Mr. Gordon even offered his good offices to Ambassador Sparks to pave the way for Mr. Tewksbury, Klein & Saks mission head, into the Planning Council work. Mr. Knapp said he was surprised that Mr. Tewksbury had never gotten into the Planning Council’s discussions.

Mr. Knapp said that Mr. Gordon’s function was more than merely to look out for IBRD interests; he was there to offer advice on broad questions of economic development. Mr. Knapp said Mr. Gordon had done excellent work, and had got the Planning Council off the ground, thus completing an initial phase of the work to be done. However, Mr. Gordon had received severe criticism, most of which Mr. Knapp said was unjustified. However, it might be that his usefulness in Guatemala was coming to an end. Coincidentally, there were other administrative and personal factors which made it desirable to take Mr. Gordon out of Guatemala around July 1956. The question was whether the Bank should replace him. Mr. Knapp inquired what the Department wanted the Klein & Saks Mission to do with respect to the Planning Council.

Mr. Holland asked Mr. Atwood’s views. Mr. Atwood said that the United States did not seek to direct or dominate the Economic [Page 114] Planning Council, which was an agency entirely under the jurisdiction of the Guatemalan Government. Mr. Atwood said that while the Klein & Saks Mission was in Guatemala to give badly needed technical advice in the specific fields of budget, taxation, etc., its primary purpose was to act as watch dog to help the new and inexperienced administration avoid making serious blunders in the economic field. Mr. Atwood agreed that Mr. Tewksbury had not put himself into a position to fulfill this mission to the extent desired. Although he closely followed the work of his specialists and undoubtedly had a wide knowledge of what was going on, he lacked time to sit with the Planning Council and to keep the Ambassador as fully informed as the latter wished. Last September Mr. Atwood instructed Mr. Tewksbury to get closer to the Guatemalan Government in order better to carry out the watch dog function. Mr. Atwood said that the Secretary General of the Planning Council refused to permit Mr. Tewksbury’s successor, Mr. Quinn, to participate in the work of the Council, and that Mr. Atwood was informed that this was because Mr. Gordon had stated that IBRD would pull out of Guatemala if the Klein & Saks Mission entered into the Council’s work.

Mr. Knapp denied that Mr. Gordon had obstructed the Klein & Saks Mission from getting into the Planning Council.

Mr. Holland asked Mr. Fisher for his views. Mr. Fisher said that his information was that President Castillo’s Office requested in writing on March 2nd that Klein & Saks assist the Planning Council and that the Council’s Secretary had subsequently informed Mr. Quinn that he opposed such assistance. We did not know exactly what was going on behind the scenes.

Mr. Holland referred to the Guatemalans Five-Year-Plan, and said he understood it was “poppycock”. He understood the Plan provided for a $250 million development program, and, without being consulted, the United States was put down for part of the cost.

Mr. Knapp said he did not consider the Plan “poppycock”, and that he thought Mr. Holland was misinformed. He briefly explained that the Plan only referred to a balance of $16.6 million for FY 57 not otherwise accounted for, and in a footnote stated that ICA was considering the question of this deficit. At this point Mr. Holland had to leave the meeting.

Mr. Fisher said that he would not himself describe the Plan as poppycock. He said that President Castillo had solicited the comments of this Government on it, which we had found exceedingly difficult to supply. At our request, Klein & Saks had prepared some comments, but this obviously was an ineffectual procedure, giving rise to unnecessary friction and misunderstandings. The best arrangement [Page 115] would have been for Klein & Saks to contribute the benefit of their knowledge and experience during the drafting stage.

Mr. Knapp said that his conception of Klein & Saks’ function was to follow up on Planning Council decisions, giving technical advice on the execution of agreed projects. In his view, their function did not include the offering of advice on the broad problems of economic development planning. He believed that if they were to undertake this duty, there would be no reason for the Bank to have a mission there.

Mr. Atwood said that Klein & Saks should be included in the Planning Council discussions, but that the mission would not have the same terms of reference that Mr. Gordon apparently had. Mr. Atwood said that people in Guatemala, including President Castillo, referred to the Five-Year Plan as Gordon’s Plan.

Mr. Knapp denied that Mr. Gordon had written the Plan himself or that the Bank had any responsibility for it, but conceded that Mr. Gordon had been very helpful to the Council. Mr. Fisher said that he still found contradiction between Mr. Knapp’s statement that IBRD would welcome Klein & Saks participation in the Planning Council work and the statement that Klein & Saks should perform only follow-up technical advisory duties. If that were the case, they would only continue doing about what they had done from the outset and would have little to contribute to the Planning Council’s deliberations.

Mr. Knapp said he disagreed, that there was plenty for Klein & Saks to do in the Planning Council without taking over the kind of work which Mr. Gordon had been doing.

Mr. Knapp said he was going to meet with Dr. Klein, of Klein & Saks, to discuss the functions of the IBRD and Klein & Saks Missions.

  1. Source: Department of State, Central Files, 814.00/4–2456. Confidential. Drafted by Fisher.
  2. See Document 37.