Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

BL–17. Memorandum from the Operations Coordinator (O’Connor) to the American Secretary of State for Inter-American Affairs (Rubottom)¹

Washington, January 28, 1959

For your information or action, there is quoted below an excerpt from my preliminary and informal note on the OCB meeting of January 28:

“BOLIVIAN OIL SITUATION

“The Weekly Activity Report, prepared by the OCB staff, stated Ambassador Bonsai’s view on the importance of obtaining U.S. public credit to permit YFPB (Bolivian government oil company) to enable it to (1) maintain increased field production, (2) free funds for exploration, and (3) give it greater freedom of action in negotiations with private companies. The Ambassador underlined the important political impact which the granting of such credit would have.

“Mr. Smith (ICA) said an International Monetary Fund team² had made an economic study of Bolivia six months ago and had suggested raising the price of gasoline and use of greater care in granting credit, particularly in the light of the company’s unfavorable position in accounts receivable.³ With some caution, Mr. Smith said the U.S. gives advice and when the country doesn’t take it ‘we help them anyway—this must stop.’ Governor Herter said he did not have sufficient knowledge of the factors which support the granting of U.S. credit and would inquire. Under Secretary of Treasury Scribner noted that Argentina, Mexico and Brazil will be considered for aid in the petroleum sector of their economies and suggested the desirability of not discriminating against them in our treatment of the Bolivian state-owned enterprise.”

Jeremiah J. O’Connor

1. Source: Department of State, OCB Files, Lot 61 D 385, “Latin America.” Confidential.
2. Reference is to the IMF mission, headed by David Finch, which visited La Paz, June 10–17, 1958. Documentation concerning the mission is located in ARA/WST Files, Lot 62 D 16, “Grant Aid.”
3. Another IMF team, consisting of John Clark, Edison Zayas, and G.A. Constanzo, visited Bolivia between January 14 and 24, 1959. The team’s objective was to negotiate renewal of an IMF Stand-by Agreement, which provided a cash grant budgetary support program for the Bolivian government, and was scheduled to expire on February 28, 1959. Documentation concerning the visit is in ARA/WST Files, Lot 62 D 429, “Grant Aid.”