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

CR–26. Memorandum of Conversation, by the Officer in Charge of Costa Rican Affairs (Feldman).¹

Washington, October 7, 1960

SUBJECT

• Meeting of Costa Rican Minister of Finance and Economy with Mr. Mann, Assistant Secretary to Discuss Various Loan Applications Made With the DLF and EXIM Bank.

PARTICIPANTS

• Minister Jorge BORBON Castro, Minister of Finance and Economy
• The Honorable Manuel ESCALANTE Duran, Ambassador of Costa Rica
• ARA – Mr. Thomas C. Mann, Assistant Secretary
• OAP – Mr. Charles E. Higdon, Acting Director
• OAP – Mr. Carwell
• OAP/C – Mr. Arthur W. Feldman, OIC, Costa Rican Affairs

Minister Borbon opened the meeting by stating that he was in Washington to discuss the Rural Credit Loan Application with DLF and the Water Works Project and a loan application for the export of U.S. cattle to Costa Rica with EXIM Bank. He was pleased with the sympathetic receptivity shown by the agencies in discussing the loan applications.

He referred to the letter President Echandi had sent, via his person to Mr. Mann² and to the serious situation faced by President Echandi in obtaining suitable legislation on agrarian reform from the Legislative Assembly, which is now considering the matter. Several radical amendments have been tacked on to the bill which would counter the policy of the Echandi administration by getting the Government directly involved in the distribution and exploitation of land. The Administration would prefer that the supervision and distribution of rural credit be handled through existing agencies, which have made an outstanding record in this operation over the past 10 years. Minister Borbon stressed the importance of his returning to Costa Rica with some written assurance of general agreement on the Rural Credit Loan Application which President Echandi could then use in obtaining the legislation he desires. Mr. Mann replied that he was in full sympathy with President Echandi’s position and would see what could be done to obtain such written assurance. Mr. Mann also indicated how pleased he was to be considered a friend by President Echandi, a feeling which he sincerely reciprocated.

Minister Borbon briefly mentioned the Water Works Project loan application which he had discussed with EXIM Bank officials and that he had provided them with the documentation they had requested. He stated that Ambassador Escalante had raised with DLF the question of the local money component which would amount to about 50% of the loan requested. Mr. Mann expressed interest in this project and asked to be kept informed of the status of the loan application.

Minister Borbon referred to a new loan application he had made at his meeting with EXIM Bank officials to enable Costa Rica to import U.S. cattle for breeding purposes and thereby raise the quality and quantity of local cattle. Minister Borbon believed that the export of cattle and cattle products from Costa Rica would serve to somewhat diversify the production of exportable products and thereby lessen the country’s dependance on coffee and bananas. Mr. Mann agreed that this was a worthwhile objective and expressed confidence that such a project would receive a sympathetic hearing by the EXIM Bank.

Mr. Borbon then brought up the question of augmenting the U.S. sugar quota assigned to Costa Rica. He stated that such an increase would assist Costa Rica in its efforts to lessen its dependence on coffee and bananas for income, and would complement the agrarian reform program since the new farms could then augment not only the dairy but also the sugar production as well. Mr. Mann explained that the setting up of new sugar quotas was a function of the U.S. Congress, and that the quota assigned to Cuba could not realistically be cut too deeply since a new Cuban regime would require assurance of U.S. sales to support the Cuban economy. Mr. Mann pointed out that if sugar quotas were increased for some countries at the expense of the Cuban, that the time might come when the Cuban sugar quota might require revision upward and this might have to be done by appraising and cutting back the newly established quotas. Such action would have a deleterious economic effect on those countries which had expanded sugar production to meet the larger quotas assigned them. Minister Borbon agreed with the seriousness of the problem. Mr. Mann suggested that Representative Cooly³ might be the appropriate person with whom to discuss the assignment of a larger sugar quota to Costa Rica, and he expressed his willingness to favorably support such apportionment.

Minister Borbon informed Mr. Mann that the Costa Rican Government is having to pay a $500 a day penalty because the Pan American Highway was not completed by a certain specified date. (Date not mentioned). He stated that Panama, in a similar position, had not had to pay the penalty. Mr. Mann was informed that an investigation had already been started and that a report would be forthcoming in a couple of days.

Minister Borbon expressed his pleasure at having had a frank discussion of Costa Rican economic problems with Mr. Mann. Mr. Mann in turn requested that he be informed of any obstacles which might arise in the consideration of the loan applications by the DLF and EXIM Bank and reiterated his intention to reply promptly to President Echandi, giving a report on the status of the Rural Credit and Water Works Project loan applications.

1. Source: Department of State, Central Files, 718.5-MSP/10–760. Official Use Only. A briefing memorandum by Feldman of October 6 on this meeting for Assistant Secretary Mann is in decimal file 033.1811/10–660.
2. The referenced letter, dated October 1, 1960, is not printed. (718.5-MSP/10–160)
3. Harold D. Cooley (D–N.C.), Chairman, Committee on Agriculture House of Representatives.