99. Memorandum From the Deputy Under Secretary of State for Economic Affairs (Prochnow) to the Assistant Secretary of State for Inter-American Affairs (Holland)1
SUBJECT
- Nicaragua: Request for Limited PL 480 Sales
The Bureau of Economic Affairs has cooperated conscientiously with officers of the Department of Agriculture and of the Bureau of Inter-American Affairs in efforts to persuade the Inter-Agency Staff Committee on Agricultural Surplus Disposal (ISC) on two occasions to agree to a Title I, PL 480 program for Nicaragua.
When the Nicaraguan request was considered at the second ISC meeting on April 24, it became necessary to call attention to the view of the Nicaraguan Minister of Economy, expressed in a letter to the Embassy at Managua dated April 12,2 to the effect that while grain production has been traditionally sufficient to cover domestic consumption requirements, adverse crop conditions plus balance of payments difficulties have made it necessary to ensure that (lack of) imports do not aggravate the situation. On this point the Embassy at Managua observed that the Nicaraguan Government was apparently making no distinction between “imports to be made through usual commercial channels” and purchases to be made in case a PL 480 agreement were to be concluded. Moreover, since the Nicaraguan request for a Title I PL 480 program was presented, Nicaragua has purchased for dollars substantial quantities of several of the commodities requested, notably white corn from the United States and wheat flour from Canada, and can be expected to continue to make such purchases to meet its essential domestic requirements for which it has the necessary dollars.
After careful consideration of the memorandum of the Bureau of Inter-American Affairs of May 14, in conjunction with Managua’s telegram No. 252 of May 9,3 we believe the supplemental information and arguments in favor of a limited PL 480 program for Nicaragua would be insufficient to overcome objections to the program previously raised in the ISC on two previous occasions.
Aside from the substantive objections to the Nicaraguan proposal, a further procedural difficulty has arisen to obstruct the reopening of this case in the ISC, even on the limited basis proposed by [Page 208] ARA. Largely on account of the adoption of a new price policy for cotton exports, the Department of Agriculture is temporarily confronted by a shortage of appropriated funds with which to finance outstanding Title I, PL 480 programs to which the United States has committed itself by opening negotiations with certain countries or otherwise. Hence, it would appear untimely to request the ISC to reconsider at this juncture a program which has already been twice rejected due to a variety of objections difficult if not impossible to overcome. As a tactical maneuver, it would probably be necessary to defer action on a request to the Department of Agriculture to reopen the Nicaraguan case until additional Title I, PL 480 funds have been voted by the Congress. This might involve a further delay of as much as a month or six weeks before the Nicaraguan program could be presented to the ISC for reconsideration, even assuming that there were some assurances that the substantive objections to the program could be overcome. We question whether such a further delay would be in the best interests either of Nicaragua or the United States.
In view of these considerations, we are of the opinion that the Department should explain to the Nicaraguan Ambassador (and to the Nicaraguan Minister of Economy presently understood to be in Washington) that, in addition to the substantive objections previously raised which have prevented us from agreeing to the Nicaraguan request, the United States has unexpectedly encountered difficulties in financing the sale of the commodities requested by Nicaragua which might entail a delay of a month to six weeks before their request could opportunely be reopened. Accordingly, rather than to delay the acquisition of the commodities desired by Nicaragua by pursuing the Nicaraguan request for a Title I, PL 480 sales agreement, it is suggested that it might be more expeditious to obtain the commodities desired “on credit” by exploring the possibility of arranging with such sellers in the United States as Mr. C.B. Fox of New Orleans to handle Nicaraguan purchases under the CCC export credit program, initiated by the Department of Agriculture on April 25, 1956, i.e., after the request by Nicaragua. This suggestion has been made by representatives of the Department of Agriculture who believe that the Nicaraguan Government should have no serious difficulties in providing such guarantees as their buyers might require in order for the latter to qualify under the CCC export credit program.
It is suggested that ARA may wish to give the Nicaraguan representatives the attached press release of the USDA covering the CCC export credit program.4
- Source: Department of State, Rubottom Files: Lot 59 D 573, P.L. 480, Nicaragua. Official Use Only.↩
- Not further identified.↩
- See footnote 2, supra.↩
- Not attached to the source text.↩