504. Despatch From the Chargé in Paraguay (Carter) to the Department of State1

No. 54


  • Visit of Assistant Secretary Rubottom to Asuncion

Assistant Secretary Roy R. Rubottom, Jr., visited Asuncion August 10-12 on the invitation of the Paraguayan Government, stopping here en route to the economic conference in Buenos Aires. During his visit, the Assistant Secretary, who lived in Asuncion twelve years ago as Naval Attaché assigned to the American Embassy, was accorded honors reserved for the most distinguished visitors who come to this capital. He received an especially warm welcome from his old friends, among whom are scores of the principal officials of the Government and leading members of the business community.

Mr. Rubottom arrived by air Saturday, August 10, at 2:55 pm and departed Monday, August 12 at 6:30 am by air for Montevideo. Despite a crowded schedule, the Assistant Secretary had the opportunity for lengthy discussions on important Paraguayan-U.S. topics with the President and the Foreign Minister, and in addition held conversations with many other Ministers and officials of the Government. He also talked with influential American and Paraguayan businessmen.

During a one-hour private conversation with the President, he heard General Stroessner lay emphasis on the friendly sentiment felt by the Paraguayan Government and people for the United States, with assurances from the General of his own desire to see that this friendship was strengthened even further in the future. The President then brought up several items concerning which he said Paraguay needed assistance in the shape of loans from the U.S. or support from the U.S. for the loans. Among these matters were the completion of the construction of the Trans-Chaco Road to the [Page 1015] Bolivian border; the completion and asphalting of the highway from Coronel Oviedo to Puerto Presidente Stroessner on the Alta Paraná; the acquisition of 600 tractors to be used in agricultural development and assorted other items for this purpose. In addition, he mentioned the need for new PL 480 financial assistance involving 10 million dollars in a triangular deal with a European country to enable the Paraguayan Government to finance part of the construction of the proposed Trans-Chaco oil pipeline and petroleum refinery.

The Assistant Secretary assured the President of the warm friendliness of the United States toward Paraguay and recalled to the President that he, twelve years before becoming Assistant Secretary, had lived in Asunción as Naval Attaché here and that one of his children was born in Asunción. While stating that he had a particularly sympathetic interest in Paraguay’s problems, the Assistant Secretary gave the President no encouragement regarding additional loans at this time.

Before ending the cordial interview, the President stressed his personal conviction that the present Argentine Government is opposed to him personally and to his policies. He was emphatic in voicing his suspicions of officials of the Buenos Aires Government. (See Embdespatch 16, July 12)2

Mr. Rubottom shortly afterward had a two-hour conversation with the Foreign Minister, Dr. Raul Sapena Pastor. The Foreign Minister brought up the same economic subjects as had the President, but went into them in somewhat more detail. At the conclusion of the talk, the Foreign Minister handed a memorandum on these matters to Mr. Rubottom (translation attached3). It will be noted that the total amount desired is more than $23 million.

The memorandum requests the U.S. to arrange $10 million for the financing of an oil pipeline to be constructed from the Bolivian border to Asunción and a simple refinery to be built near Asunción by means of performing a “triangular” operation with foreign currency counterpart funds derived from the sale of U.S. surplus agricultural products in one or more foreign countries other than Paraguay. While no particular country was indicated, presumably the Paraguayan Government had France in mind, since the contract for construction of the pipeline and refinery facilities has just been [Page 1016] awarded to a French firm (see Embdespatch 43, August 5).4 It also asks the U.S. Government to promote the construction and operation in Paraguay of an aircraft maintenance base for the overhauling of engines and instruments, without giving an estimate of the cost. Beyond these two items, the U.S. is urged to support Paraguayan applications to the Export-Import Bank for $7 million for road construction; to the International Bank for Reconstruction and Development of $5 million for grain storage facilities, sugar refining equipment, agricultural tractors and implements and maintenance shops for them; and to the International Finance Corporation for $1 million to recondition a Portland cement plant, and for constructing plants to can fruits and vegetables, pasteurize milk, produce starch from mandioca root, and process wood to produce plywood and pulp for papermaking.

The Foreign Minister prefaced his remarks with an exposition of Paraguay’s long isolation and the need for the nation to take every means within its power to get in step with the economic progress that is stirring other countries of the hemisphere.

He referred to what he called the “four-power agreement” to help the rehabilitation and development of both Bolivia and Paraguay following the Chaco War. He complained that there was a great disparity in the amount of funds made available to Bolivia and to Paraguay by the U.S. The Assistant Secretary pointed out at some length the difference of the situation in the two countries. In Bolivia, he stated, the U.S. was engaged in an effort to prevent an economic collapse that could have the gravest political consequences affecting the entire continent. The U.S., he said, was acting in the interest of Paraguay and all other American nations in this instance. The Foreign Minister then agreed that the situations were very different indeed, and devoted most of the remainder of his remarks to presenting an economic justification, in general terms, of the projects mentioned in the memorandum which he had prepared.

He stated that the list had been drawn up with great care and pointed out that no funds were being requested for the improvement or expansion of the river barge line and merchant fleet. This, he said, was because arrangements were being completed with Venezuela for a loan of up to $20 million which would include ample support for river transportation purposes.

The Assistant Secretary advised the Foreign Minister that it would be extremely doubtful that any “triangular” arrangement could be worked out involving PL 480 funds. He assured the Foreign Minister of his Government’s continued deep interest in the progress [Page 1017] of Paraguay and promised that the most sympathetic consideration would be given to the needs of Paraguay. The Assistant Secretary encouraged the Foreign Minister to direct his thoughts to the practical benefits that would accrue to Paraguay in the near future through the exploitation of the resources of private enterprise. The Foreign Minister stated that he was thinking along those lines in some respects already and said that insofar as the aircraft maintenance establishment mentioned in the memorandum was concerned, he thought that a commercial firm could set up such an enterprise and that his Government would give it every support. He added, however, that he thought that the project could be facilitated by the assistance of the U.S. Department of Defense.

The Foreign Minister said that he would be deeply appreciative if the proposals could be studied carefully and if assistance could be provided as requested. The conversation ended with the Assistant Secretary cautioning Dr. Sapena Pastor about being too hopeful but assured him again that projects submitted in detailed form would receive friendly and careful attention.

In addition to his almost constant contact with government officials, the Assistant Secretary held a press conference (see clippings attached5) and had an opportunity to meet many acquaintances of a non-official nature at social functions.

The Assistant Secretary’s visit was in the opinion of the Embassy most worthwhile in every respect. It helped point up the interest of the United States in Paraguay at a time when much publicity was being given to the forthcoming arrival of numerous important foreign guests for the celebration of the 420th anniversary of the City of Asunción, chief among them the President of Chile. It also helped bring into sharper focus Paraguay’s present aspirations, particularly in the economic field, and the assistance it would like to receive from the United States in this regard.

Albert E. Carter
  1. Source: Department of State, Central Files, 110.15–RU/3–2057. Confidential.
  2. Despatch 16 from Asunción enclosed a memorandum of a conversation between Carter, Stroessner, and Paraguayan Foreign Minister Sapena Pastor, in which Stroessner discussed what he considered to be a campaign by the Argentine Government to discredit him and force him to leave office in order to make Paraguay subservient to the wishes of Argentina. (Ibid., 634.35/7–1257)
  3. Not printed.
  4. Despatch 43 contained a report on various petroleum developments. (Department of State, Central Files, 834.2553/8–557)
  5. The clippings and an enclosed copy of the speech given by the Paraguayan Foreign Minister at a dinner honoring Rubottom are not printed.