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

CO–3. Memorandum of Conversation, by the Officer in Charge of Colombian Affairs (Gerberich)¹

Washington, February 20, 1958

SUBJECT

• Colombian Economic Situation.

PARTICIPANTS

• Colombian Ambassador José Gutiérrez Gómez
• Assistant Secretary Rubottom
• OSA—Mr. Gerberich

The Ambassador said he first wanted to mention the visit of two officials of the Soviet Embassy in Mexico to Colombia. There has been a lot of loose newspaper talk about what happened and he wanted Mr. Rubottom to have the true facts. The Colombian Government is favorable to an arrangement whereby a sizable amount of coffee can be marketed behind the Iron Curtain, and there is talk of receiving wheat, fertilizers and certain construction materials in return, which would be very acceptable. But actually no agreement was reached between the Coffee Growers Federation and the Russians, although it is hoped that one can eventually be worked out. There is not the slightest truth in reports of permanent diplomatic and consular relations developing from these talks.

Mr. Rubottom thanked the Ambassador for this information and said he could see that the trade proposed by the USSR would interest the Colombians, if the Russians fulfilled their commitments. Past history unfortunately shows that the Russians do not always abide by their agreements and use trade talks as an opening wedge for attaining other objectives. He was glad to hear that the Colombians are aware of this and are taking precautions to prevent any such turn of affairs.

The Ambassador said the economic situation of Colombia is very bad, and it is natural for the Colombians to try to find new coffee markets wherever they can. The next two years are the critical ones. It will take $85 million to service the commercial debt in 1958 and $83 million in 1959. After that, they will be over the worst. But with coffee prices falling considerably below the budget estimates, it will impose an almost intolerable burden to meet all foreseeable obligations. Imports must be held to $18 million a month in order to come out even. The Ambassador did not see how this could be done. From 1953 to 1956 imports were in the neighborhood of $50 million per month; in 1957 they averaged $35 million; since October they have fallen below $30 million, and were only $20.5 million in January, but it is impossible to continue at this level. It would mean closing down some industries, it would not permit a sufficient supply of raw materials, it would restrain normal economic development. He assumed Mr. Rubottom had heard of the credit measures taken yesterday: this was a step in the right direction, but only a short step.

Mr. Rubottom said he was very conscious of the difficulties facing the Colombians, and could assure the Ambassador of our sympathy and desire to collaborate in solving them. It was unfortunate that when coffee prices were at their maximum a few years ago the Colombians continued spending at such an excessive rate. He said he would urge the Colombians to tighten their belts as much as possible, and he said he supposed the Ambassador is aware that we in the United States are going to have to do the same. He said he had confidence that over the long term we would both come out all right. He also referred to the evidence of our willingness to cooperate which was given quite recently by the Export-Import Bank when it made available, in conjunction with New York commercial banks, a credit of $87 million dollars to help in financing the commercial backlog. The Ambassador said that he would be the first to recognize this, and Colombia was grateful for it.

Mr. Rubottom said he wanted to mention another matter, for he felt that the Ambassador should understand the facts and inform the Foreign Minister accordingly. We have given consideration to the latter’s proposal that the U.S. finance the purchase of the two destroyers which have been built for the Colombians in Sweden², and he was sorry to have to tell the Ambassador frankly that there is no possibility of doing this, regardless of any merits that the plan might have. We still have hopes that the two destroyers allotted to Colombia in the “ship bill” will be made available before the end of the year, however.

Mr. Rubottom added that he plans to visit Caracas and Bogotá next week, leaving Washington on Wednesday, February 26, and arriving at Bogotá on Saturday, March 1.³ He said his plans were made somewhat hurriedly and he had not had an opportunity to inform the Ambassador sooner. The Ambassador said he was glad to hear that this trip was planned, and was sure it would have most beneficial results.

1. Source: Department of State, Central Files, 321.00/2–2058. Confidential. Gerberich drafted this memorandum on February 21; it was initialled by Assistant Secretary Rubottom.
2. Ambassador Cabot had transmitted the Colombian proposal to the Department in despatch 632, January 27, 1958, not printed; The Colombian Government suggested that of the total $27 million cost for the two destroyers the United States pay with grant aid funds $7 million still owed to Sweden and refund the $20 million Colombia had already paid to Sweden on account by paying off Colombian debts in the United States to that amount.
   A briefing memorandum on the military assistance program in Colombia, prepared for Assistant Secretary Rubottom’s visit by Weldon Litsey of the office of Inter-American Regional Economic Affairs, dated February 25, read in part as follows:
   “Defense and the Navy strongly oppose paying for the Swedish destroyers. They point out that the ships were purchased over strong United States recommendations against such purchase: that in no way can it be substantiated that we have any obligation to pay for the Swedish destroyers under our MDAP agreement with Colombia, as Colombia claims; that there would be no justification on the basis of current MAP objectives to use MAP funds in this way; and that we have two destroyers for Colombia in the pending Ship Loan Bill.
   “ARA agrees that the United States should not pay for the two Swedish destroyers with grant aid funds. If the Ship Loan Bill is passed, Colombia would do well to try to sell the Swedish destroyers (but not in the hemisphere) and should be encouraged to do so.” (ARA/WST Files, Lot 62 D 106, “Visits to Colombia”)
3. Assistant Secretary Rubottom visited Caracas, February 26-March 1, and he was in Bogotá, March 1–3, 1958. Documentation concerning his trip is in file 110.15–RU.