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

CR–25. Letter from the Assistant Secretary of State for Inter-American Affairs (Rubottom) to the Ambassador in Costa Rica (Willauer)¹

Washington, August 5, 1960

Dear Whitey:

I refer to your letter to me of July 18, 1960² in which you draw special attention to your despatch No. 14 of July 11, 1960.³ It is particularly convenient that you presented your ideas and suggestions on assistance to Costa Rica in despatch form since they can be given appropriate distribution among the various interested agencies of the government, which ultimately would be involved in any action based on your suggestions and recommendations. Naturally such distribution does not occur with letters addressed to the Secretary or me although these letters do serve to supplement and emphasize in a more personal way the ideas conveyed more formally in your despatches.

I agree wholeheartedly with you that we would like to have “the spontaneous support of Echandi toward our ends,” since the lack of such support appears to have been the crucial element in the recent failure to achieve the joint break with Castro. However, it does not seem to me that United States economic assistance should be the quid pro quo whereby the Costa Rican government would take measures which are in the long term interest of the Costa Rican people. The decisive factor should be whether or not the Costa Ricans are vitally interested themselves in maintaining the integrity of their political system against the encroachments of communism and are willing to adopt the measures necessary to that end. The United States is attempting to supplement the efforts of the Costa Ricans to maintain and improve their political and economic system but we are not attempting to supplant the efforts of the Costa Ricans themselves.

Having said the above, I also wish to say that we have by no means spared efforts in seeking to respond to president Echandi’s requests for economic assistance. I can personally verify that enormous efforts were spent in seeking the reapportionment of the United Fruit tax. Likewise, with reference to the loan project for the Juntas Rurales, I can say that this project has had the sympathy and support of myself and other officials in ARA. A major deterrent in the consideration of all or part of this loan was due primarily to the indecision and lack of clarity on the part of the Costa Ricans themselves, who never provided clear distinctions between this loan project (originally $5 million) and other projects for loan up to $30 million. The Costa Ricans apparently lost interest in this loan when they did not receive favorable consideration of their insistence on provision for a long term and a low interest rate for the loan. As an illustration of this lack of interest, a request in April 1959 to the Costa Ricans for information by the Export Import Bank for data in connection with consideration of the loan remained without reply until March 1960.

With specific regard to the four recommendations for assistance made in your despatch No. 14 I can make the following comments:

Suggestion No. 1. Water Works Project: As Allan Stewart informed you in his weekly OAP letter on July 15, we had already discussed such a loan project with Ambassador Escalante over a year ago and, by coincidence, had just received the Ambassador’s request for assistance in activating such a project. An informal discussion between Ambassador Escalante and officials of State and the DLF was held on August 1⁴ with the result that (1) the Costa Ricans agreed to prepare a formal application and (2) that DLF agreed to its engineers informally reviewing the report by Rader and Associates to see if any additional technical information would be needed in formulating such an application. It was informally agreed that the application would include only the first stage of development recommended in the Rader report for an amount between $4 to $5 million.

Suggestion No. 2. Rural Credit Loan: Allan reported to you in his informal letter of April 7, 1960,⁵ that Alvaro Castro, Manager of the Central Bank, during his visit to Washington, informed the Export-Import Bank that the Central Bank did not intend to press for the time being this loan application. The reason given was that that the Central Bank wished to see how the loan from Chase Manhattan would be applied. Castro indicated that the Central Bank might formulate a new project later this year. Approximately ten days ago Ambassador Escalante informed us that there was no plan to renew at this time the Juntas Rurales loan project since funds from the Chase Manhattan loan were being used for this purpose. Instead, the Ambassador stated the Costa Ricans wished to press the water works loan project. Until the Costa Ricans renew the rural credit loan project we are in no position to renew our efforts in its behalf.

Suggestion No. 3. Road Network (Plan Vial): Over a period of almost four years the IBRD has discussed with the Costa Rican authorities the possibility of a loan for road construction and maintenance. As Allan in his letter of March 3, 1960,⁶ indicated, on March 2, 1960, the IBRD sent a letter to the Costa Ricans inquiring as to their interest in discussing a loan of from $5–$8 million for the Plan Vial. Another letter was sent about a month ago.⁷ Thus far, the Costa Ricans have failed to reply to these IBRD requests for an indication of interest in pursuing negotiations on this loan project. We understand that budgetary difficulties have delayed approval of the generation of local funds for the Plan Vial but no official Costa Rican explanation of this delay has been received by the IBRD.

Suggestion No. 4. Additional Sugar Purchases: You have already been informed of the Department of Agriculture regulation of July 21, 1960, which resulted in an extraordinary opportunity for Costa Rica to market some 6,267 tons of refined sugar in the United States by September 30, whereas, the previous increased quota opportunity had applied only to raw sugar. This provides a special benefit to Costa Rica which we took pains to convey to the Costa Rican Sugar Board through Ambassador Escalante. Another “bonus” of 234 tons for Costa Rica was just announced on August 1 by Agriculture. Costa Rica was given special consideration in the recent Sugar Act,⁸ and I am sure you appreciate that additional special treatment to Costa Rica is not justified since Costa Rica has not been a traditional exporter of sugar on any appreciable scale. We shall continue, however, to consider Costa Rica in the context of its role as a marginal supplier.

I am sure you will agree that in this letter I have reviewed at length the suggestions contained in your reference letter and despatch. I hope you will agree, also, that on record we have not been lax or remiss in our efforts to offer every reasonable facility to the Costa Ricans in their requests for assistance on the specific points you have raised. Frankly, I am convinced that the Costa Ricans for one reason or another have failed to take full advantage of the facilities for economic assistance offered to them.

With best personal regards,

Sincerely yours,

R. R. Rubottom, Jr.

1. Source: Department of State, Rubottom-Mann Files, Lot 62 D 418, “Costa Rica, 1960.” Confidential; Official-Informal. Drafted by Godfrey, on August 3.
2. A copy of this letter is filed with the source text, but not printed.
3. See Document CR–23.
4. A memorandum of this conversation is in OAP Files, Lot 63 D 127, “Costa Rica, 1960.”
5. Not found in Department of State files.
6. Not found in Department of State files.
7. The IBRD letter under reference was not further identified.
8. Reference is to Public Law 86–592, approved July 6, 1960, which authorized the President to cut the quota of U.S. purchases of sugar from Cuba and to reassign these purchases to domestic and foreign suppliers. (74 State 330) Costa Rica’s final allocation for 1960 after the Cuban cut was 10,469 short tons. (Congressional Quarterly Almanac, 1961, vol. XVII, p. 126)