550. Memorandum of a Conversation Between President Batlle Berres and the President of the International Bank for Reconstruction and Development (Black), Washington, December 13, 19551

(The following was given by Mr. Sandelin2 to Mr. Havemeyer by phone reporting a private conversation which took place after lunch December 8, 1955, in Mr. Black’s office. Also present were: Ambassador Lacarte,3 and Mr. Sandelin.)

President Batlle raised the matter of the Uruguayan request for a loan to improve the State-owned railroads. Mr. Black replied that two years ago the Bank had stated that the railroads could initiate bids for the equipment Uruguay desires to purchase with the loan when granted. Mr. Black continued that since the previous study made by the Bank of the creditworthiness of Uruguay was made two years ago, the Bank now would not authorize the Uruguayan Government to secure bids for the needed equipment until a new study had been made of the creditworthiness of Uruguay. Mr. Black also alluded to the increasing mal-administration of the railroads and the excessive number of personnel working for that organization.

Mr. Black stated that the Bank had been working in Mexico with the Southern Pacific of Mexico which had found itself in similar difficulties to the Uruguayan railroads. Mr. Black said that the Bank would be willing to send a Bank Mission to Uruguay to again investigate its creditworthiness, and also to pay for one-half the cost of a team of experts, to be selected later, to investigate the administration of the railroads. Mr. Black also stated that he understood that a report made by the railroad experts might be politically undesirable for President Batlle Berres, particularly in view of the political aspects of the railroad board and the difficulties between the board and the general manager of the railroad. President Batlle replied that he would be able to assume the political responsibilities if this mission arrived in Uruguay and thought that they would be most helpful.

President Batlle then expressed his desire to obtain loans for the land reclamation in the Department of Rocha and improvements for the Port of Montevideo. Mr. Black replied that he understood these projects should receive serious consideration but the Bank could make no commitments at this time. Mr. Black said that the present [Page 1101] negotiations for the Uruguayan electric and telephone company for a $25.0 million loan for hydroelectric installation at Baygorria, and the negotiations for a loan for $5.0 or $6.0 million are well underway but the Bank does not wish to go into negotiations for the land reclamation and port improvement loans until the previous two loans were almost ready for signature.

President Batlle then asked Mr. Black if he would make a public release with respect to the President’s request for the land reclamation and port improvement loans. (The Bank had already issued a press release with respect to Mr. Black’s luncheon. The Bank is averse to making a release with respect to loans being considered and under negotiation.) Mr. Black agreed to make a press statement which was cleared with Batlle and Ambassador Lacarte (Enclosure A).4

(The Bank offered the Uruguayan Government an expert in bond floating and funding of government funds several months ago.) President Batlle then asked if it were possible to send a bond expert to Uruguay. Mr. Black said that he understood that there were local political problems involved were the Bank to send a bond expert to Uruguay which might result in political difficulties for President Batlle. President Batlle replied that he was able to shoulder this responsibility and hoped that the Bank could send an expert of this kind to Uruguay.

(With Enclosure A it appears that Batlle at least has received an indication of the IBRD’s willingness to consider his two pet projects which should assist Batlle in his political problems in Uruguay.)

  1. Source: Department of State, Central Files, 103–XMB/12–1355. Confidential. Drafted by Havemeyer.
  2. Officer of the International Bank for Reconstruction and Development.
  3. Julio A. Lacarte Muró, Uruguayan Ambassador to the United Nations.
  4. Not printed.