Office of the Historian

18. Circular Telegram From the Department of State to Certain Diplomatic Missions in the American Republics1

Washington, August 13, 1958—8:27 p.m.

163. 1. Advise other Govt soonest US authorized by PL 532,2 this Congress, make available vessels specified herein (Depcirtel 808, May 22, 1956)3 on terms described alphabet paras below, substance to be embodied exchange notes concluded early date. Dept fully aware economic position other Govt considerably worse than 2 yrs ago when this program first presented Congress. Therefore and in view financial burden imposed by rehabilitation and maintenance costs, Emb shld scrupulously avoid any implication US urging acceptance offer.

(a)
Ships transferred under flag recipient country on 5 yr renewable loan basis. US to retain title and right recover ships for own use prior termination loan period. In latter case US would reimburse recipient country on pro rata basis for rehabilitation costs.
(b)
Ships utilized for hemispheric defense and (except in case Argentina) otherwise subject provisions existing MAP Agreement.
(c)
Recipient country to pay rehabilitation costs estimated (in millions) $3.5 (DD), $2.5 (SS), $1.8 (DE). Under dependable undertaking procedure described sec. 106 (b) Mutual Security Act substantial initial payment required when rehabilitation commenced followed by progress payments and liquidation total costs prior delivery. About 5 months required rehabilitate DD, 6 months SS, 3 months DE.

2. Emphasize and insure other Govt understands US expects ships to replace obsolete vessels. Details re rehabilitation new and retirement old ships to be discussed naval channels.

3. Explain that if foregoing acceptable US Navy team desires visit other country after Sept 1 discuss technical details program local navy. Because law requires transfer ships by Dec. 31, 1960, US Navy must develop firm rehabilitation plans earliest date.

If other Govt expresses strong desire acquire ships but states unable meet financial terms offered, discreetly sound out without making US commitment of better terms whether three-year credit terms would enable it accept ships. Make this inquiry only where country strongly desires ships. In accordance injunction para 1 above take no action which other Govt can in any way consider US pressure accept offer.

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Although info not disclosed publicly, other Govt may know through non-US channels US plans bear rehabilitation cost ships transferred Brazil and seven countries outside hemisphere. If (repeat if) other Govt raises subject, Emb may informally state: (a) in response US inquiries through diplomatic and naval channels prior enactment ship legislation LA countries expressing interest in ships stated they prepared assume rehabilitation costs, hence program presented Congress that basis; (b) implementation special and urgent hemispheric defense arrangement between Brazil and US necessitated Brazil receive ships on non-reimbursement basis.

Do not volunteer numbers and types ships offered other LA countries but provide info informally if requested. In latter event, state US offer to Cuba being withheld pending stabilization Cuban political situation to avoid charges US involvement Cuban internal affairs. Countries and ships included program are: Argentina (1 DD, 2 SS); Brazil (4 DD); Chile (2 DD, 2 SS); Colombia (2 DD); Cuba (1 DE); Ecuador (1 DE); Peru (2 DD); Uruguay (1 DE).

Cable soonest reaction other Govt re offer and retirement obsolescent vessels. Do not conclude exchange notes mentioned para 1 until further instructed.

Herter
  1. Source: Department of State, Central Files, 720.5–MSP/8–1358, Confidential. Drafted by George O. Spencer. Sent to Santiago, Bogotá, Lima, Montevideo, and Buenos Aires; repeated to Havana and Rio de Janeiro.↩
  2. This law, approved July 18, 1958, authorized the transfer of naval vessels to friendly foreign countries; for text, see 72 Stat. 376.↩
  3. For text, see Foreign Relations, 1955–1957, vol. VI, p. 265.↩