466. Memorandum of a Conversation, Department of State, Washington, June 13, 19571
SUBJECT
- Eximbank position with regard to Colombia’s financial problems
PARTICIPANTS
- Ambassador John M. Cabot2
- Mr. Vance Brand, Mr. John C. Cady—Export-Import Bank
- REA—Mr. Turkel
- OSA—Mr. Gerberich
After a discussion of the situation in Colombia and the events leading up to the present financial chaos, Mr. Brand stated that in his opinion the Export-Import Bank would not consider giving Colombia a balance of payments or a budgetary loan. He said the Bank does not contemplate furnishing aid to meet a deficit in the Colombian budget.
On the other hand, he said, the Bank is prepared to consider a request for credits to enable Colombia to purchase essential imports. He did not use the expression “Exporters’ Credits”, and may have been referring to the establishment of a line of credit similar to that granted some time ago in the case of Brazil.
He said the Bank is at present waiting for three things: (1) a joint statement of the IMF and the private banks on stabilization; (2) a report of the Colombian Government on arrearages; (3) the arrival of Martin del Corral, Manager of the Bank of Bogotá, who has been sent here as a special agent to discuss liquidation of the commercial debt and obtaining financial assistance in the United States.
Mr. Brand said the Export-Import Bank is still interested in Colombian plans regarding the Paz de Rio steel plant. He personally takes a very dim view of the enterprise. Its cost will probably go to $300 million to $350 million. It lost $50 million year before last and according to the Colombians lost $5 million last year. The coal is low-grade; the iron ore has too much phosphorus, which causes the steel to splinter; the plant was not wisely designed in many respects (including the construction of a pit-type blast furnace, a fatal error); the administration has been terrible; and the markets are uncertain.
Mr. Brand said the Eximbank is still interested in the application for a loan for the fertilizer plant, which has been inactive for some time, but which may be revived.