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

BL–28. Telegram from the Ambassador in Bolivia (Strom) to the Department of State¹

La Paz, February 2, 1960, 4 p.m.

402. Reference: Embassy telegram 399.²

In course discussion reference telegram I raised matter of funds in new Foreign Ministry budget for Moscow Embassy, noted increased Communist subversive potential which establishment Soviet Embassy here would entail and said such exchange of Missions would certainly raise questions United States Congress re our relations with Bolivia whose outcome I could not predict.

Paz said he had not discussed matter with President Siles. He noted possibility funds might never be used for this purpose saying this common Bolivian budgetary practice. However, he said fact that anti-Communists Siles, Guevara and Moreno³ have taken this action indicative they under great pressure; greatest Communist public opinion gains have come on issue aid to YPFB; happily, “we” have been able calm down campaign against private oil companies and for acceptance Soviet loan (He had talked personally to union leaders Cochabamba refinery who pushing campaign that area, explaining his experience difficulties negotiating with Soviets); nevertheless, fact remains “United States doors appear closed” on possibility loan to state oil enterprise; meanwhile YPFB continues be regarded with pride by all Bolivians who determined not let it fail and Soviets, whether seriously or not, hold out possibility of assistance; YPFB has just received invitation from Soviet Embassy, Buenos Aires, send six engineers to USSR inspect newest Soviet drilling equipment; this is other side of coin which United States must consider.

I said we had considered this aspect problem and are awaiting formal GOB reply own proposal assist YPFB. Urged him use influence obtain such reply promptly.

Comment: Embassy has already transmitted to Department GOB reaction to our YPFB proposal on basis information received informally from GOB officials. I shall continue press for official reply⁴ but in meantime I recommend that State again urge on Treasury necessity of making adequate loan to YPFB in amount determined by study already proposed. I believe adequate loan is crucial for our relations with Bolivia over next five years and our ability protect investment and opportunities of ten American oil companies in Bolivia with which YPFB cooperating fully. Our failure assist YPFB gives Soviets opportunity they can exploit at will. If United States attitude remains unchanged, I believe Bolivia will ultimately accept a serious Soviet aid offer. This will involve establishment Soviet diplomatic mission in La Paz with all the opportunities for subversion that it will entail. Acquisition Soviet machinery and equipment for use YPFB oil fields will most likely bring swarm of Soviet “technicians” with most serious problems for United States.

If we are really serious about resisting Soviet economic penetration in this country, I believe we should make use of the obvious means available to us, especially when we can at same time protect opportunities made available to American companies here.

Strom

1. Source: Department of State, Central Files, 724.00/2–260. Confidential
2. Not printed; 724.00/2-260.
3. Hugo Moreno Cordova, Minister of Finance and Statistics.
4. See despatch 472, printed as Document BL–29.