CR–5. Memorandum of Conversation, by the Officer in Charge of Costa Rican-Nicaraguan Affairs (Taylor)1
SUBJECT
- COSTA RICA: Visit of President-ElectMario ECHANDI Jimenez
PARTICIPANTS
- Roy R. Rubottom, Jr., Assistant Secretary
- William A. Wieland, Director Middle American Affairs
- C. Allan Stewart, Deputy Director Middle American Affairs
- Ambassador Whiting Willauer
- Ambassador Robert F. Woodward
- Herbert B. Leggett, Officer in Charge, Central America and Panama Affairs
- Henry L. Taylor, Costa Rica Desk Officer
- Mario ECHANDI Jimenez, President-elect of Costa Rica
- Jorge Hazera, Minister Counselor of Embassy of Costa Rica
- MEMBERS OF ECHANDI OFFICIAL PARTY
- Sr. Alfredo Hernandez Volio
- Sr. Jorge Borbon Castro
- Sr. Joaquin Vargas Gené
- Sr. Tomás Federico Guardia Herrero
Mr. Rubottom extended a warm welcome to Mr. Echandi and the members of his official group. He congratulated Mr. Echandi on winning the Presidential elections and commended Costa Rica for the democratic manner in which the Presidential and Congressional elections were held last February 2. Mr. Echandi replied that he was honored and pleased to be in Washington and expressed his appreciation for the magnificent attention he and the members of his group were receiving. The visit lasted one and one-half hours, during which time the following subjects were discussed.
Economic Conditions
Mr. Rubottom said it appeared in general that Costa Rica’s economy was in fairly good condition. He said, however, he realized a reduction in world market coffee prices—Costa Rica’s principal source of foreign exchange—could cause severe economic repercussions to the country’s economy. Mr. Echandi said this was correct and that he was concerned over the possible drop in coffee prices. Mr. Echandi expressed the [Typeset Page 399] need for his country to diversify its production, increase its production of basic food crops, and reduce wherever possible expenditures for imports. Mr. Rubottom pointed out that we are aware of the difficulties that a drop in coffee prices would cause to Costa Rica and other coffee-producing countries. He said that we were looking into what could be done to help increase the consumption of coffee, and that there were at present several [Facsimile Page 2] ways that a country could obtain aid if necessary. In this connection he pointed out that such institutions as the World Bank, the EXIM Bank, and the International Monetary Fund are available for giving objective advice and assistance upon request. He also stressed that a country should make efforts on its own behalf to take necessary steps to put its economy in good order, even if this involved some sacrifice on the part of the people.
Armaments
Mr. Echandi said that in keeping with Article 12 of the Costa Rican Constitution he desired to get rid of all excess armaments. According to him, he wants to keep only those arms necessary for use of the Guardia Civil for police purposes. He said that he would like to sell the arms to the United States and use the funds derived therefrom to buy tractors and other agricultural equipment. Mr. Echandi stressed that he had no personal reason for wishing to be rid of the excess armaments but since Costa Rica did not have any real Army of its own, and did not desire one, he could see no reason for keeping any excess armaments. Mr. Rubottom said he did not know how the United States Government could purchase the armaments but that the matter would be looked into. Mr. Echandi stated that he had no intention of selling the armaments to any country which would be likely to utilize them for causing trouble either within its own country or that of another. Ambassador Willauer stated that he in the past had had a great deal of experience with arms and that he had some ideas regarding the sale of the excess armaments which he would pursue when he took over his post in Costa Rica. Mr. Echandi also emphasized that his country was not an aggressive one and in keeping with Article 12 of its Constitution did not need arms for any other purposes than policing.
Inter-American Highway
Mr. Echandi said he wondered if a section near the Inter-American Highway, between El Coco Airport and San Ramón, covering approximately 40 kilometers could be included in the Inter-American Highway project. Mr. Rubottom informed him that at the present time it seemed best to concentrate on completing that part of the Inter-American Highway running through Costa Rica rather than attempting to reconstruct an additional road as part of this project. He pointed out to Mr. Echandi the difficulties of obtaining sufficient funds from our Congress in order to carry on the Inter-American Highway project [Typeset Page 400] without attempting to obtain more funds for the construction of another road not really a part of this project. Mr. Echandi did not press this request but said he wondered if a change could be effected in the present agreement for constructing the Inter-American Highway. He stated that it would be desirable for Costa Rica to control the awarding of the contracts for completing the unfinished parts of the road rather than to continue letting the Bureau of Public Roads control the awarding of these contracts. Mr. Rubottom pointed out to Mr. Echandi that when construction of the Inter-American Highway was first begun Costa Rica, owing to lack of an adequate Road Department, had requested that the Bureau of Public Roads assume the function of awarding the contracts. Mr. Rubottom indicated that it would be a poor time to change now as the final stages of construction are being entered into. He said that of course the United States, through the Bureau of Public Roads, is willing to give technical assistance to training Costa Rican road technicians.
Communism
President-elect Echandi said that he was concerned with communism in Central America, and on his recent trip through the Central American countries had discussed ways and means of combatting communist activities. He said that these countries desired to form [Facsimile Page 3] a united front to combat communism and were willing to cooperate with an exchange of information regarding movements and activities of known communists. Mr. Rubottom indicated that the common efforts of the Central American countries to eradicate communism had merit, but stressed that the first thing to do in this connection was for each country to concentrate on taking care of its own internal situation and establishing its own internal controls against communism. He said that the United States would be willing to exchange information on movements of communists and indicated that we would give assistance in combatting communism compatible with our foreign policy. He said that it was well known that we do not follow a policy of intervening in the affairs of other countries nor do we approve of other countries so doing. He then asked Mr. Echandi about communism in Costa Rican labor unions. Mr. Echandi said that there were some communists in the labor unions as well as a number of leftists, Mr. Rubottom then asked him whether there was much communism in the banana unions. Mr. Echandi replied that there was communist infiltration in the Federación Obrera Bananera y Anexos (FOBA) and indicated that it was something that had to be dealt with. Mr. Rubottom then said thought could be given to the role that ORIT could play in combatting communism in the labor unions.
Political Exiles
Mr. Echandi stated that he would follow a policy whereby political exiles could continue to reside within the country in keeping with [Typeset Page 401] Costa Rica’s democratic principles, but would not tolerate their engaging in subversive activities within or outside the country. He stated that political exiles could continue to find a place to live in Costa Rica and provided they lived there peacefully as law-abiding citizens they would not be molested.
Political and Economic Philosophy
Mr. Echandi stated that he was a strong believer in democratic principles and private initiative. He stated that it was his desire now to unite the various political parties within the country in looking towards the best interests of the country. He said he was making an effort to have his Cabinet composed of representatives of the various parties and in this respect he had offered Rossi (the Independent Party candidate for President) a Cabinet post. He said that it was not his intention to change any of the government autonomous entities already functioning, but that he hoped additional economic development would be carried out through private enterprise by both foreign and domestic capital.
Banks
President-elect Echandi said it was his desire to see private banks established in the country. He said that he hoped while in the United States to talk to some bankers with the idea of interesting them in setting up branches in Costa Rica. He thought that private banks within the country would help provide needed loans for the agriculturists, such as the coffee growers, and for small industrial enterprises. Mr. Rubottom asked him if it would be necessary to change the law of 1948 under which the banks were nationalized before private banks could function within the country. Mr. Echandi said changes in this law would have to be effected.
[Facsimile Page 4]Larger Share in Taxes of the United Fruit Company
Mr. Echandi said that he had talked with Treasury officials this morning in regard to his desire to obtain an increase in the portion of United Fruit Company profits subject to Costa Rican taxation. He spoke appreciatively of the way he had been received by the Treasury officials and seemed pleased to know that his request would be given every possible consideration in accordance with United States tax laws. He indicated that the United Fruit Company would endeavor to work out this matter with the Treasury.
Conditions in Other Central American Countries
Mr. Rubottom asked Mr. Echandi if he had any comments he would like to make concerning observations of the Central American countries he had so recently visited. Mr. Echandi said that in [Typeset Page 402] El Salvador the situation looked fine to him and that the government was well in control of political conditions and definitely appeared to be stable. With regard to Honduras he believed that Villeda Morales [illegible in the original]. He said that there were two governments in existence—Villeda’s and the Army. He also remarked that as far as he could determine subversive activities were being carried on by political exiles and that apparently Villeda was not able to control them to the extent he should. In connection with Nicaragua, he said everybody was aware of the situation there, that the government was stable and anti-communist. He appeared to believe that Nicaragua offered no political problem. In regard to Guatemala he said that Ydígoras was getting his government well organized, that he appeared to have things under control, and was very much aware of the leftists within the country. In connection with the latter, he said Ydígoras had already expressed himself against communism and believed he would in the near future take appropriate action to curtail communist activities. With the exception of Honduras he apparently felt the Central American countries had stable governments.
Attitude Towards Development of Electrical Power
Mr. Echandi said that he favored the development of electric power by Instituto Costarricense de Electricidad (I.C.E.), leaving the distribution to private companies such as the American and Foreign Power’s Subsidiary.