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

BL–41. Telegram from the Secretary of State to the Embassy in Bolivia¹

Washington, November 23, 1960, 5:15 p.m.

171. JOINT STATE/ICA. Reference: Your 257.² 264.

1. Department accepts Embassy conclusion that aside from offer contribute long-term solution COMIBOL, immediate short-term assistance to Paz, primarily in budget support field, appears necessary.

2. We propose that $5 million be made available immediately to Central Bank consisting of balance of calendar year 1960 cash grant $1,850,000 and advance of $3,150,000 of U.S. fiscal year 1961 funds presently planned for use periodic cash releases in calendar year 1961.

3. EMBTEL 257 proposes grant aid while EMBTEL 264 proposes aid in form of loan. In view of (a) nature financial crisis and limited prospects sufficient recovery in foreseeable future to permit repayment and (b) in view expectation Bolivian Government that budget support funds would be available on cash grant basis, we inclined favor asking $5 million available to Central Bank as cash grant. However, Embassy if it believes there are significant reasons for doing so may offer make funds available part loan, part grant or all on loan basis at its discretion. You may also require such prior approvals of disbursements by Central Bank as you believe in U.S. interest. (In any event such portion of funds as appears desirable may be advanced by Central Bank on a loan rather than a grant basis. If this arrangement followed repayment would be made to the Central Bank but not RPT NOT to U.S. If there appeared to be advantages to U.S. such repayments could be earmarked for use for purposes mutually agreed). In summary Embassy may make $5 million available on such basis as it determines most desirable and effective.

4. FYI and for use if question asked, $3,150,000 advance from calendar year 1961 budget support would be made without prejudice to amount finally provided for this purpose, although we assume that subsequent cash grants for budget support in calendar year 1961 will be smaller than it would otherwise be necessary to make.

No objection to provision $5 million on piecemeal basis as indicated EMBTEL 257 and to obtaining such quid pro quos as early increase in gasoline prices (EMBTEL 264) or some or all of actions enumerated EMBTEL 257.

Herter

1. Source: Department of State, Central Files, 824.10/11–2060. Top Secret; Niact. Co-drafted by Dennis A. Fitzgerald, Deputy Director for Operations, IGA, and Joseph S. Kyle of the Office of the Deputy Coordinator for Mutual Security; cleared by Mann, and signed by John O. Bell, Deputy Coordinator for Mutual Security.
2. Co-drafted by Dennis A. Fitzgerald, Deputy Director for Operations, IGA, and Joseph S. Kyle of the Office of the Deputy Coordinator for Mutual Security; cleared by Mann, and signed by John O. Bell, Deputy Coordinator for Mutual Security.