16. Memorandum From the Director of the Office of Inter-American Regional Economic Affairs (Turkel) to the Assistant Deputy Chief of Staff for Military Operations for International Affairs, Department of the Army (Trapnell)2
SUBJECT
- Collection of Certain Funds from Latin American Countries
Reference is made to your memorandum of October 16, 1957 concerning the payment by Latin American countries of expenses incident to permanent change of station of members of the U.S. Army Missions in those countries, in accordance with provisions of U.S. Army Mission Agreements now in force.3
You indicate that the Department of the Army usually pays such expenses and submits the bills to the country involved for reimbursement. When payment is not forthcoming, reminders are submitted to the Embassy of the country concerned two or three times a year. You state that the United States Army Audit Agency has recommended a more aggressive collection policy providing for more frequent reminders when payments have not been made, and request this Department’s comments and recommendations as to whether a more aggressive collection policy should be pursued or the present practice be retained in attempting to collect unpaid balances.
After careful consideration, this Department is of the opinion that a more aggressive collection policy providing for more frequent reminders would be unlikely to result in prompter payments. Our recommendation therefore is against a more aggressive collection policy at this time.
[Page 145]You submitted with your memorandum a list of eleven Latin American countries with amounts owed by them. It is assumed that none of these countries has questioned the statement of accounts rendered by the Department of the Army or any items contained in the statement. After receipt of your memorandum, a member of my staff discussed informally with representatives of the Department of the Army the circumstances surrounding the delinquency of these countries. It appears that of the eleven countries, six have made payments from time to time and are not seriously delinquent. Of the five remaining, only two—Ecuador and Bolivia—are seriously delinquent. While we do not believe more frequent reminders would be productive, we do feel that in the case of these two countries means should be sought to accomplish payment of these bills.
According to the latest figures furnished us, Ecuador owes the Department of the Army, and has been billed for $186,010.20 and the Department of the Air Force $137,210.69—or a total of $323,220.89. Bolivia owes the Department of the Army, and has been billed for, $169,146.31 and the Department of the Air Force $67,080.68—or a total of $236,226.99. Both countries are presently experiencing financial difficulties and would not, without adverse effects, be immediately able to meet these obligations in their entirety. Bolivia is making serious efforts to maintain a stabilization program in which the United States is most interested and toward the success of which we are contributing materially. We would want to take no action which might jeopardize the success of this program. Nonetheless, we believe that Bolivia, as well as Ecuador, can and should meet these obligations provided some schedule of payments can be worked out for them to liquidate their indebtedness over a reasonable period of time.
We should like to propose that our American Embassies at La Paz and Quito approach the Governments of Bolivia and Ecuador and attempt to work out with them such a schedule. The details of such schedule would, of course, have to be negotiated. However, our proposal might contemplate payment over a period of five years, with smaller payments during the first years to allow for present financial difficulties. It might be proposed, for example, that during the years 1958–62 inclusive they make annual payments of 10%, 15%, 25%, 25% and 25% successively of the outstanding amounts. Bolivia would then pay approximately $23,623 during the first year, $35,434 during the second, and $59,057 annually during the last three years. Similarly, Ecuador would pay approximately $32,322 and $48,483 during the first and second years and $80,805 annually during the last three.
Such an arrangement would contemplate that future bills for transportation of Mission members and effects would be paid promptly and that backlogs should not be allowed to develop, as in the past. (This would not be an important problem in the case of [Page 146] Bolivia, since under present Mission agreements Bolivia no longer pays transportation costs other than the cost of shipment of one automobile per Mission member.)
If you concur in this proposal,4 this Department will request the opinion of the American Embassies at La Paz and Quito as to the feasibility of attempting to obtain the agreement of the Governments of Bolivia and Ecuador to some such schedule. (The Department of the Air Force has already informally indicated its concurrence in the proposal.) Should our Embassies consider such a step feasible at this time, they will be requested to approach the Governments of Bolivia and Ecuador on the subject.