BL–40. Telegram from the Secretary of State to the Embassy in Bolivia1
170. For Strom from Mann
Department agrees every reasonable effort should be made to support Paz regime and understands that downfall of government may lead to extreme leftwing and possibly communist takeover. (Embtel 247)
For this reason in addition to special assistance program Dept has endeavored to work out practicable program for putting Comibol [Typeset Page 214] operation on sound basis as prerequisite to economic and political viability of any Bolivian Government. We estimate the cost of this program (apart from $10 million for modern concentration plants and facilities) somewhere in neighborhood of $10 million. This is in addition to approximately $4 million which is needed for separation pay for 5000 excess employees and which would be partially met from PL 480 program. Inter-American Bank mission now in Bolivia and there is reason to hope Bank will give favorable consideration to loan possibly in neighborhood of $5 million and will be in position to negotiate late January or early February. Department encouraging Bank give this first priority. Department has also urged German Government extend exporter credit and conclude private management contract with Comibol.
[Facsimile Page 2]In addition Department understands Williams Harvey considering $2 million loan for purchase of machinery and equipment. Department realizes it may be necessary to fill gap if one or more of these plans fall through. We do not consider it prudent, however, given our own balance of payments situation and other problems, to address this aspect of problem in advance of knowledge of outcome of these plans.
Second part of problem is need for concentration plants and attendant facilities (Deptel 165). Dept. intended to help Paz by announcement of willingness to make loan not to exceed $10 million for this purpose under conditions set out in that telegram.
[text not declassified]
Please telegraph urgently your estimate whether program as outlined above is inadequate and if so specifically what you consider Department should do. Specifically Department wishes to know whether, re concentration plants, offer should be made to Paz. If $5 million needed for immediate aid in lieu of $10 million offer for what purposes and projects would $5 million be used? Also could situation be alleviated by immediate release frozen budget support and counterpart funds?
Your recommendations urgently requested.
- Source: Department of State, Central Files, 824.10/11–1660. Top Secret; Niact. Drafted by Mann and signed by Barall.↩