BL–37. Memorandum of Conversation by the Officer in Charge of Bolivian Affairs (Weise)1
SUBJECT
- The Critical Economic and Political Position of Bolivia
PARTICIPANTS
- Ambassador Victor Andrade
- Under Secretary Dillon
- ARA - Mr. Barall MA
- WST - Mr. Weise
Ambassador Andrade said that he wished to describe briefly the critical and uncomfortable situation in which the Paz Government was finding itself as the result of the new Soviet drive in Bolivia. During the past month, following Khrushchev’s offer of a tin smelter and tin concentration facilities to Bolivia, pressures from Communist and pro-Castro elements have been mounting to the point where these forces are now threatening the political stability and very existence of the Paz Government. Ambassador Andrade emphasized that the Bolivian revolution is a national revolution and that, unlike the Castro revolution of Cuba which has sold out to Khrushchev, the Government of the MNR has resolutely defended itself against Communist domination.
The Soviet offer of a tin smelter, Andrade said, has revived certain popular concepts regarding Bolivia’s dependence upon world marketing arrangements for the sale of tin, which although erroneous in some respects, were nevertheless widely spread. Considering that Bolivia is the largest producer of tin in this hemisphere and that the United States is the largest consumer of tin in the world, many Bolivians do not understand why their country must market its tin through Great Britain and be dependent upon British smelters. Many Bolivians also do not understand why the Texas City smelter was not built in or near Bolivia where its operation would have been more economical and advantageous to the Bolivian tin industry. Failure of the [Facsimile Page 2] United States to give a satisfactory answer to these and other questions relating to the Bolivian tin problem has led many Bolivians to feel that the United States is not interested in helping Bolivia free itself from outside international controls over the world tin market.
Bolivians also remember, Andrade claimed, that when the United States ceased to buy tin for its stockpile, world prices dropped, which [Typeset Page 212] resulted in substantial losses to the Bolivian mining industry. In regard to the U.S. stockpile purchases of tungsten, Andrade said, Bolivians recall that in 1953, following nationalization of the mines, the United States Government refused to allow GSA contracts signed with the former private mine owners to be subrogated to the Bolivian Government. Andrade said he recognized there may have been legal reasons which prevented GSA from agreeing to subrogate these contracts. However, in the minds of many Bolivians, the requirement that ore sales to the U.S. stockpile be consummated through the former companies meant only that the GOB had to pay to the private owners $10 out of every $54 per unit of tungsten shipped, even though these companies no longer operated the mines. Andrade said that most people were not aware of the legal or technical reasons for the U.S. position on these matters and that consequently the Communists had exploited public ignorance by accusing the United States of having failed to give Bolivia a fair return on its sales of tungsten to the U.S. stockpile.
Ambassador Andrade then emphasized that COMIBOL is presently confronted with grave and serious problems which have been aggravated by the mounting threats of Communist-led strikes in the mining sector. Andrade said he felt it necessary to “dramatize” the Bolivian situation in order to impress upon Mr. Dillon Bolivia’s urgent need for U.S. assistance. Andrade pleaded, “I do not wish Bolivia to become a guinea pig of the cold war.” He hoped that his government could avoid sending a mission to Moscow to discuss the Bolivian tin offer in view of the many political risks involved.
Mr. Dillon expressed interest in the Ambassador’s presentation and evaluation of the present Bolivian political crisis. He said that, according to studies of the Bolivian tin industry made by Bolivian and foreign technicians it appeared that a tin smelter was not needed. What these studies did point out was that concentration facilities and a rationalization of the Bolivian mining industry were urgently needed. Mr. Dillon also indicated that the Department was studying the effect a moratorium on retention payments to the former mine owners might have, both from the economic and legal standpoint. He said it was our understanding that the former mine owners had now received approximately $20 million in compensation through retention payments on ore shipped from nationalized mines. Ambassador Andrade said he felt that the alternatives mentioned by Mr. Dillon would be of interest to the Bolivian Government and would offer an appealing counter-proposal to the Soviet offer of a tin smelter. Mr. Dillon assured Ambassador Andrade that the Department would continue to give careful attention to the problems of Bolivia’s mining industry.
- Source: Department of State, Central Files, 724.00/11–960. Confidential.↩