98. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Holland) to the Deputy Under Secretary of State for Economic Affairs (Prochnow)1
SUBJECT
- Nicaragua: Request for Limited P.L. 480 Sales
The Bureau of American Republics wishes to explore every means of assisting the Government of Nicaragua in obtaining surplus commodities in limited amounts under Title I of Public Law 480.
The background of the request is as follows: In January 1956, Nicaragua asked to make a dollar purchase of white corn and red beans from U.S. surplus stocks without reference to P.L. 480. Nicaragua was informed that there were no surplus stocks of these commodities available at that time. The Department was subsequently informed by the Nicaraguan Ambassador that the Nicaraguans were encouraged to apply again for the purchase of corn, beans and other commodities under Title I of P.L. 480.
[Page 206]The application was refused by the Inter-Agency Staff Committee on April 24. The ISC felt the program was not justified because of favorable dollar balances in Nicaragua up to this year, and because on most items requested there would be obvious interference with normal marketings. It was also pointed out by the ISC that Nicaragua’s predicament was partially the result of over-expansion in cotton as well as very bad corn and bean crops for two years.
Nicaragua is now anticipating an unfavorable dollar balance amounting to several millions of dollars because of expected decreases in coffee and cotton prices as well as decreases in crop quantities. Upon the urgent request of Nicaraguan Ambassador Sevilla Sacasa, who re-emphasized the potential danger to Nicaragua, ARA has decided to request that the ISC consider a smaller and more limited program that would be of benefit to Nicaragua. Agriculture has asked that the Department of State make a written statement of its views.
It has been decided to limit the request for P.L. 480 sales to white corn and red beans, which, the Department is informed, can now be made available. There is no conflict with usual marketings on these items since Nicaragua is normally self-sufficient and even an exporter at times. Any recent purchases by the Government of Nicaragua may be considered as emergency efforts.
A small sales program under P.L. 480 (in the neighborhood of US $700,000) would provide funds for U.S. uses and market development, but would probably not allow any funds for development loans.
This limited program would, however, provide Nicaragua with the opportunity to make this purchase with local currency, which is the basic reason for the request. It would not set any precedent that could not be followed with other nations requesting aid under the same restricted conditions. It is not anticipated that further aid would be necessary.
The views of ARA coincide with those of the Embassy at Managua which has succinctly summarized the conditions now pertaining in a telegram which is attached as an enclosure.2
It is believed that this very small and realistic program merits every possible consideration, and it is hoped that the earliest action can be taken.