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

BL–29. Despatch from the Ambassador in Bolivia (Strom) to the Department of State¹

No. 472

La Paz, March 18, 1960

REF

• Embtel 428, February 12, 1960

SUBJECT

• Formal Reply by Bolivian Government to United States Proposal of Assistance to YPFB

The Embassy has just received the official reply of the GOB, through the Ministry of Foreign Relations, to the United States Government’s proposal to grant economic assistance this year to Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), the state-owned oil entity.

Aside from the Ministry’s covering note of transmittal, the reply consists of memorandum drawn up by YPFB, which appears to be precisely the same as the memorandum received informally by USOM from YPFB last November.² To make the record complete and official, however, the following documents are being transmitted herewith: (1) copies of the original note of the Foreign Ministry along with the Spanish text of the YPFB memorandum;³ and (2) an informal translation of the memorandum into English.⁴ Enclosure No. 1 has been photostated to expedite transmittal.

The Embassy cannot account for the inordinate delay in receiving the official reply of the GOB, having obtained unsatisfactory explanations (documents having been lost, misplaced, etc.) from Foreign Office officials. In view of the delay it had been thought that possibly the GOB was redrafting the YPFB memorandum.

By now certain matters treated in the memorandum are outdated and no longer pertinent (this would apply particularly to the condition that YPFB purchase at least $3,000,000 from the Central Bank in 1959). The long discussion this point, as well as the terms for repayment of the proposed loan, is based both upon a misinterpretation of the conditions set forth the U.S. offer and upon conditions assumed by YPFB but not contained in the U.S. proposal.

Perhaps the principal point made in the whole memorandum is that YPFB cannot utilize $5,000,000 to increase production from proven oil reserves since at this time it does not have such known or proven reserves. In other words, the entity’s main need is to engage in further exploration with a view to discovering and developing other oil deposits. The Embassy, after having made many inquiries concerning this matter, is inclined to agree with YPFB’s position on this issue.

For the time being the Embassy has no further comments to add to those already set forth in the telegram under reference with respect to this matter.

This despatch bears a Confidential classification solely because of the reference made to the telegram of February 12.

For the Ambassador:

William F. Gray
Counselor of Embassy For Economic Affairs

1. Source: Department of State, Central Files, 824.25553/3–1860. Confidential.
2. The earlier memorandum, dated November 29, 1959, contained an informal response to the ICA proposal of October 23, 1959, to give Bolivia special economic assistance in 1960, which involved the release of up to $5 million in boliviano counterpart funds to the Bolivian Government for loaning to YPFB. In its memorandum, the Bolivian Government stated that YPFB could not utilize $5 million to increase production from proven oil reserves, because at that time it did not possess such known or proven reserves, and that the principal need was financial support for further exploration.
3. The referenced memorandum, dated March 7, 1960, was submitted under a covering note from the Bolivian Foreign Ministry, March 17, 1960; neither are printed.
4. Not printed.