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

EC–18. Memorandum of Conversation, by the First Secretary of the Embassy in Ecuador (Rogers)¹

US/MC/2

Quito, August 31, 1960

PARTICIPANTS

• United States

  • Under Secretary Dillon
  • General Robert Cutler
  • Mr. John Leddy, Special Assistant to the Under Secretary
  • Edward S. Little, Charge d’Affaires a.i.
  • J. L. Hummel, Director of USOM/Ecuador
  • J. T. Rogers, First Secretary, Embassy Quito

• Ecuador

  • Minister-Designate (Foreign Affairs)
  • Jose Ricardo CHIRIBOGA Villagomez
  • Minister-Designate (Development)
  • Jaime NEBOT Velasco

SUBJECT

• Ecuador’s Economic Development Needs

Minister-Designate Nebot repeated in part remarks already made by Chiriboga on the nature of the social revolution of June 1960 elections. If their aspirations are not satisfied, people of Ecuador would take a road other than that of peaceful election to achieve their objectives.

Nebot pointed to the deterioration in Ecuador’s terms of trade over the past 20 years and the decline in the annual increase of the Gross National Product. The problem of unemployment is increasing, he said, with a 3.1 percent annual increase in population, which meant 50,000 new jobs required annually. This number of new jobs are simply not available. He said Ecuador needed help particularly in medium industries which complement Ecuador’s basically agricultural economy. He mentioned specifically electric power, highway construction, and social needs such as housing. Nebot emphasized that effective help is needed quickly and that not a great deal of time is available. He added that at the moment there is no Communist representation in Congress and no major division in Congress as regards economic cooperation with the U.S.

In response, the Under Secretary reviewed U.S. economic aid policy over the past twenty years, pointing out that through the experience of the Institute of Inter-American Affairs and of Point IV we have learned a good bit, including the fact that in order to make development and assistance programs work, much more than money is required. Trained personnel are absolutely essential to the success of any program, whether in industry or such fields as public administration. We have also learned, said the Under Secretary, that programs can be successful only if their benefits are visible to the people.

The Under Secretary said that the recently announced Program for Social Development in Latin America was initiated particularly because of our feeling of hemispheric solidarity with Latin America and because it appears that most Latin American Governments shared U.S. views in this field and believe that effective cooperation is possible.² The program will probably be carried out largely through the Inter-American Development Bank and the United States is ready to work with Ecuador in the fields of agriculture, road construction, credit, power supply, training of personnel, urban housing, etc. Much of this will be organizational help since it is beyond our capability to do everything. We need to begin work where we can—where good planning exists—before the Program for Social Development becomes effective next spring. Other cooperative arrangements have been made recently, on the basis of excellent planning, with Peru for development of its eastern area and with Colombia (to be announced shortly) in the field of housing, land settlement, education and general development after careful study by ICA.

The Under Secretary emphasized his belief that this type of development, on the basis of adequate preparation, is much better than the other road for the people of Ecuador, the road of giving up their freedom in return for promises. He said that President Eisenhower had asked him to express his best wishes to the new President of Ecuador and his associates, and to say that the United States wants very much to cooperate with Ecuador. Naturally we must operate under certain laws which require that we know what we are doing before we do it. Speed in fact results from good planning, frequently based on studies made by DLF or other missions.

The Under Secretary mentioned that the Geodetic Survey mapping program is obviously very fundamental in Ecuador’s development program. An application to the DLF for this program could be handled very quickly. The Under Secretary also referred to ICA, DLF and other missions which are to visit Ecuador shortly and to the future role of the Inter-American Development Bank. The Bank, he said, would be helpful in technical assistance fields as well, and in many ways the use of bank personnel might be more advisable than the use of U.S. technicians.

Minister-Designate Chiriboga responded by saying that Ecuador was very much impressed that the United States—after having benefitted from its earlier mistakes—had concluded that more help must be given to Latin America. He said Ecuador is working hard on specific, clear-cut projects and that a number of these would be ready in early October, some of which would be worked out by U.S. companies. Minister-Designate Chiriboga mentioned a number of missions—World Bank, Exim Bank, housing etc., and emphasized the need for speed, saying he was frankly somewhat afraid for the future. He thought the housing project was especially urgent and mentioned the arrival of the ICA technician Baruch on September 10. He said he had spoken recently to Vance Brand about a $5,000,000 loan for housing³ and that the firm of Klein-Saks is sending a mission on September 15 to make a survey of taxation problems and to reorganize the Banco de Fomento.

The Under Secretary referred back to the growth of Ecuador’s Gross National Product and said he hoped Ecuador could avoid the two extremes of stagnation and inflation. He said there had been an evolution in U.S. thinking the past two or three years with regard to the problem of commodities. We now realize that it is not simply a problem of buying in the cheapest market available. Some success has been achieved in the case of coffee and now it is not only the U.S. Government which supports the international coffee agreement but also U.S. importers. There are difficult problems in other fields—cotton, lead and zinc—but despite limitations the U.S. is interested in and working on these problems on a case-by case basis.

Minister-Designate Nebot brought up briefly the problem of price discrimination against Ecuadorean bananas, with Central American bananas receiving higher prices. This is a matter of life and death. He said he hoped some control over price discrimination might be possible.

The conversation was broken off at this point because of other engagements and no response in substance was made to Nebot’s statement.

1. Source: Department of State, Conference Files, Lot 64 D 559, CF 1750. Confidential. Information on the source text indicates that this conversation took place in the U.S. Ambassador’s residence at 3 p.m.; it described a continuation of the conversation reported in Document EC–17 on a different subject.
2. For documentation on the referenced program of aid to Latin America, see Documents ETA–34, 36–37, 39–40, 44–45, 49.
3. The Development Loan Fund entered into a loan agreement for $5 million with the Ecuadoran Housing Bank on October 31, 1961; for further information, see Agency for International Development, Office of the Controller, Status of Loan Agreements as of December 31, 1964, p. 15.