Office of the Historian

CO–21. Telegram from the Acting Secretary of State to the Embassy in Colombia1

46.
Washington, July 22, 1959, 6:03 p.m.

Embtel 40.2 In view economic record GOC, Department and Eximbank sympathetic problem raised reftel re development credits. If you believe further response by Embassy is necessary, or if question again raised by President or other officials, you should take sympathetic and cautiously encouraging line, being careful not to arouse exaggerated hopes.

Specifically, following points should be made in any further discussion this subject with GOC:

(1) Re “broad plan” mentioned by President, U.S. agencies appreciate value of sensible overall program but do not, repeat not, make practice of underwriting such programs or fixed percentage thereof. Long established policy is rather to consider development credits on project by project basis.

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FYI. In any case $200 million is overly ambitious in terms of available resources of U.S. lending agencies and current economic position of Colombia.

End FYI.

(2) Sound high priority projects within Colombia’s debt-servicing capacity will receive careful consideration on evidence of maximum self-help effort.

FYI. Eximbank has taken this position in contacts with Colombian officials for several months. End FYI.

(3) Re local currency requirements, Colombia must look to own resources, possibly supplemented by PL 480, Title I proceeds. Policy of DLF is to finance local costs “only if it is clearly demonstrated that there are no other ways to finance such local costs without seriously jeopardizing the economy’s financial stability” and to require dollar repayment when, in opinion of DLF, borrower’s situation warrants.

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(4) Stress no commitment can be made pending receipt and thorough study specific projects.

Dillon
Acting
  1. Source: Department of State, Central Files, 821.10/7–1359. Confidential. Drafted and signed by Alexander M. Rosenson of the Office of Inter-American Regional Economic Affairs; cleared with the Office of West Coast Affairs, the Economic Development Division in the Bureau of Economic Affairs, Treasury Department, Export-Import Bank, and in substance with the Development Loan Fund.↩
  2. Document CO–20.↩