480. Memorandum of a Conversation, Department of State, Washington, October 3, 19561

SUBJECT

  • Ecuadoran Mission Seeking Financial Assistance from the United States.

PARTICIPANTS

  • Minister of Economy Intriago
  • Minister of Public Works Duran Ballen
  • Former Ambassador José R. Chiriboga
  • Sr. Perez Chiriboga, General Manager Central Bank
  • Dr. Benjamin Peralta, Ecuadoran Chargé d’Affaires, a.i.
  • Sr. José Cardenas, Department Director, Central Bank
  • ARA—Mr. R. R. Rubottom, Jr., Acting Assistant Secretary
  • REA—Mr. A. Rosenson
  • OSA—Mr. Bragonier

At 11:00 A.M. the visitors called by appointment on Mr. Rubottom.

In making the first presentation of the Mission’s objectives Minister Intriago seemed anxious to dispel an impression that the Mission had come to the United States primarily to seek a “bail-out” loan with which his Government could meet its current fiscal crisis.2 He explained that the previous Administration had been “attracted” by the economic development of such neighboring countries as Colombia, Peru and Chile and had indeed spent more than it should. The Ponce Administration on the other hand, was not only bent on keeping its program within bounds but prepared to make the necessary sacrifices, if need be, to resolve by its own means the problems which it had inherited. He ventured the hope, however, that Ecuador might find some outside assistance at this juncture, and pointedly observed that the Department of State was in a position to appreciate the political as well as fiscal problems involved. He went on to say that while here he hoped to conclude a new PL 480 Sales [Page 967] Agreement3 and later to utilize the sucres generated from the sales for the agricultural development of the country, along with a dollar loan he hoped to obtain from the IBRD.

Mr. Rubottom replied that the Department appreciated the gravity of the situation in Ecuador. As for negotiating a PL 480 Sales Agreement it was his understanding that no problem of substance stood in the way.

The Minister of Public Works next spoke. He referred to the call he and former Ambassador Chiriboga had just made at the Eximbank and stated that he was somewhat surprised by the cool reception they had received. He then reviewed the various applications for loans the Ecuadoran Government has planned to make at that bank and at the IBRD, which applications are described in despatch 177 of September 28, 1956, from Embassy, Quito.4 (It was gathered from Minister Duran Ballen’s remarks that the Eximbank had perhaps received a bleak impression as to conditions in Ecuador from the Embassy’s reports and that Minister Intriago, fearful that the same attitude might be encountered in the Department, sought from the beginning to give the impression that things are not quite as bad as they have been painted.)

Mr. Rubottom observed that the applications for a $250,000 loan to meet the extra costs of the Quevedo-Manta highway and for a $300,000 loan to construct a taxi-way at the Quito airport appeared to have merit. As for utilization of a portion of the $800,000 loan already granted to meet the local currency costs of the Ambato electric power project, there was some doubt in his mind as to whether the Eximbank would consider overruling its policy of not making dollars available to meet the local currency costs—with which policy, he observed, he was personally in agreement.

Former Ambassador Chiriboga then recalled with appreciation the assistance the U.S. Government has extended Ecuador and voiced his certainty that the Department fully appreciated the political and social implications of the present fiscal situation.

The two Ministers and former Ambassador Chiriboga were about to rise and leave when Mr. Rubottom turned to Sr. Perez Chiriboga and asked him for any opinions he might have. The latter explained that he had been attending the annual meetings of the IMF and IBRD. He emphasized that the Central Bank would continue to pursue its cautious course to maintain internal stability and Ecuador’s credit abroad.

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In answer to an indirect question by Mr. Rubottom, the Ecuadorans implied that they are not at this time interested in a stabilization loan.

Mr. Rubottom thanked the Mission for the call, assured the visitors that the Department would give sympathetic consideration to their problems and stated that he was looking forward to seeing them at luncheon tomorrow.

  1. Source: Department of State, Central Files, 822.10/10–356. Confidential. Drafted by Reginald Bragonier. Initialed by Rubottom, indicating his approval.
  2. In a memorandum dated October 2, Bragonier informed Rubottom of the background to the Ecuadoran application for a stabilization loan. Bragonier wrote in part: “The Embassy has requested our urgent consideration for a loan to assist the Ponce Administration to meet the critical situation it has inherited from the Velasco Administration. The Embassy in one place refers to a $10–12 million ‘bail-out loan’ and in another to a ‘stabilization loan’ of some $15 million. It is not entirely clear just what type of credit the Ecuadorans will seek. However, it appears that the main purpose of the credit would be to provide the administration with sucres with which to pay off past due obligations on contracts and back wages to civil service employees and army personnel.” Bragonier stated further that at preliminary meetings in the Department of State “the feeling was that if the Ecuadorans must have dollars for this purpose they should try, at least in the first instance, to get it from private banking sources, as the Peruvians did.” (Ibid., 822.10/10–256)
  3. For text of P.L. 480, the Agricultural Trade Development and Assistance Act of 1954, see 68 Stat. 455.
  4. Not printed. (Department of State, Central Files, 822.10/9–2856)