475. Memorandum of a Conversation, Department of State, Washington, December 29, 19551
SUBJECT
- Ecuador—Contingent Lend-Lease Accounts2
PARTICIPANTS
- Ambassador Chiriboga of Ecuador
- Francis T. Murphy, OFD:LL
- Byron E. Blankinship, ARA:OSA
- Bainbridge C. Davis, ARA:OSA
- Charles W. Kempter, OFD:LL
In response to Ambassador Chiriboga’s request that, in order to aid him in his “efforts” to influence the settlement of Ecuador’s contingent lend-lease debt to the United States, he be furnished with sufficient substantive evidence proving the existence of that debt, the Department had secured, with Treasury cooperation, photostatic copies of various letters, statements, etc. covering relevant fiscal operations. The Ambassador, who had expressed a desire to have such information as soon as possible, was immediately apprised of the receipt of the documents and invited to visit the Department to discuss them this afternoon. He was accompanied by Messrs. Blankinship and Davis of OSA.
The Ambassador opened the talks by saying that, during his recent visit to Quito, he had made earnest representations to his Government in an effort to have it come to settlement terms with the United States for the contingent lend-lease debt now amounting to about $540,000. [The actual figure is $546,549.82.]3 He said that, because it had been impossible to locate any records of the matter in the Government files, he was told that something in the way of tangible documentation would have to be received and considered before any decision could be reached. He, therefore, had ventured to request the Department to make the necessary data available to him.
The Ambassador was told that the Department had been very happy to help in furthering his settlement aspirations but had to remind him that, in addition to a routine series of progressive [Page 960] statements covering the contingent accounts sent over the years to the Ecuadoran authorities by the fiscal office of this Government, full retroactive statements had been previously requested by Ecuador on three separate occasions and, in each instance, the requested information had been assembled and sent to the Embassy of Ecuador by the Department.
Mr. Murphy then went over the new set of items received from Treasury with the Ambassador, one by one. Admitting that he had seen copies of some of them in his files and casually noting others, the Ambassador remarked that there was no question either in the minds of his Government nor his own that Ecuador had contracted this obligation. They and he wanted to pay it but, in order to justify the budgeting of the funds to do so, it was imperative that they have documents to back up any action to have payment made.
The Ambassador was told that copies of the documents shown to him would be made available to him. He might wish to use them, along with the Department’s very explicit note of last June 10, to acquaint his Government of the facts related to these accounts. The Ambassador said that he would do so at once and would recommend that a payment plan, over a four year period, as agreed with the Department in a previous meeting, be authorized. Mr. Kempter called his attention to the fact that his statement was not quite correct for the Department had not committed itself to any form of settlement and merely had told him that any reasonable proposal he might make for his Government would be given sympathetic consideration by the Department and other interested agencies such as Treasury.4 Ambassador Chiriboga assented.
He proceeded, in his remarks, to say that he would recommend that the account be paid in four annual installments of 2 million sucres each as that would be a total of eight million sucres or about $540,000. He was asked if that meant the sucres thus budgeted would be used to make payment to the U.S. in dollars. Greatly surprised, he said “No,—the whole settlement would be in sucres.”
It was explained that, during the last previous talks, it had been the Department’s view that while a proposition to pay in four years, half in dollars and half in sucres, might encounter resistance, the Department would see what it could do to get it accepted. However, [Page 961] anything less reasonable would stand little if any chance of being accepted and would end only in further delaying a final settlement.
The Ambassador launched into a lengthy dissertation concerning Ecuador’s economic plight and emphasized that it would not only be quite impracticable for Ecuador to pay any dollars but that its balance of payments position would make it impossible to do so. He thought that in a few years it might be possible to find some dollars, after these critical years had been surmounted and, with that hope in mind, he then suggested that half of the amount due be paid in sucres in two annual payments in 1956 and 1957 and, thereafter—following a gap of a couple years—the other half of the account would be paid on an installment basis in dollars. The Ambassador said that Ecuador couldn’t do better than that and he felt sure that the Department wasn’t going to ruin Ecuador by asking for a full dollar payment. He was told that, in the Department’s view, Ecuador could pay off the debt in dollars and without imperiling either its financial or economic status.
The Ambassador was assured that the Department has consistently taken a very sympathetic attitude toward this case and has been distressed by the variety of circumstances which continually had put off the settlement of this ten-year-old account for, regrettable as it may be, the fact must be known to Ecuador that the nonpayment of those accounts which ante-date many other Government obligations can only have an unfavorable effect upon the credit standing of the Government of Ecuador in American and international financial and economic circles.
It was impressed upon the Ambassador by Mr. Murphy that, so that the action would be shown in the records of both Governments, the documents shown to him would be sent to him at the Embassy under cover of a formal note. In closing Mr. Murphy stressed the inadvisability of submitting any form of settlement proposal calling for payment entirely in sucres or for payment over a period of 4 to 5 years, pointing out that such proposals would stand no chance of being accepted by U.S. Government authorities.
The Ambassador’s parting remark, made to Mr. Kempter, was “You are quite a lot of fighters”. He was assured that we were friends, only trying to help his country help itself.
- Source: Department of State, Central Files, 822.10/12–2955. Confidential. Drafted by Kempter.↩
- Documentation on Ecuador’s repayment of its lend-lease debt to the United States in 1951 and the liquidation of its surplus property account obligation in 1953 is printed in Foreign Relations, 1952–1954, volume IV, pp. 966 ff. Further information on the subject is in Department of State, Central Files 722.56. On June 10, Chiriboga was handed a note requesting payment of $546,549.82 owed as contingent lend-lease. (Ibid., 722.56/6–1055)↩
- Brackets in the source text.↩
- In telegram 125 to Quito, October 11, the Department informed the Embassy that “Chiriboga acknowledged debt and regretted unable in absence instructions reply Department’s note of June 10 requesting settlement. In answer Chiriboga’s plea payment in either dollars or sucres within year impossible, Department stated it would consider possibility obtaining agreement of interested US agencies to payment in dollar installments extending period not over four years, as an absolute maximum.” (Department of State, Central Files, 722.56/10–1155)↩