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

ETA–50. Memorandum of Conversation, by the United States Representative on the Inter-American Economic and Social Council (Turkel)¹

Bogotá, September 5, 1960

PARTICIPANTS

• United States

  • Central American Republics

• Under Secretary Dillon

  • Sr. Fernando Eleta, Minister of Finance of Panamá, and spokesman for the Central American Republics

• Mr. Mann

  • Sr. Jorge Bueno Arias, Minister of Economy of Honduras.

• Ambassador Turkel

  • Sr. Juan [illegible in the original], Secretary of National Economic Council of [illegible in the original]
  • Sr. Juan José [illegible in the original], Minister of Economy of Nicaragua
  • Dr. Pedro Abelardo Belgado, Deputy Minister of Economy of El Salvador
  • Sr. Mario Dalpente, [illegible in the original] Representatives to IA-ECOSOC
  • Sr. Julio Prado, Minister of Economy of Guatemala.
  • Dr. Alberto [illegible in the original], Chief, Office of Integration, Ministry of Commerce of Guatemala.
  • Sr. Jorge Borbón, Minister of Finance of Costa Rica
  • Sr. Alfonsa [illegible in the original], Executive Director for Central America in the Inter-American Development Bank

SUBJECT

• Views of Central American Delegations on Social and Economic Development

Sr. Eleta began by stating that there was unanimous appreciation of the new U.S. plan. They agreed that it should be channeled through the Inter-American Development Bank. There is no need to have a new organization; the IA-ECOSOC can be strengthened. Any help given by the U.S. must be matched and surpassed by the countries themselves, but this ability to perform depends upon their economic development. The social help should not burden the Central American budgets; hence, there should be no requirement of repayment or else the new effort would simply be limiting the credit worthiness of the countries for other purposes. A study of the basic commodities is a matter of utmost importance to the Central American countries. Finally, he said that the six Delegations were now studying ways of getting together to augment the credit institutions in Central America for economic development. They also want to talk to the President of the new inter-American Bank.² He concluded by saying that he hoped Mr. Dillon would receive them one more afternoon where they could talk on matters of pure economic development.

Mr. Dillon stated that he appreciated their views; these were similar to our own. We had found misunderstandings among other Delegations as to the place of the new program in the over-all development of Latin America. We never intended, by suggesting the need for this program, to suggest any lessoning of economic development. We went to make even greater officers in the economic filed. Indeed, it is not possible to draw a very sharp line between social and economic development. It is our idea that the fund will be transferred to the new bank, loaned to the countries which will repay in local currencies under terms like those of the special fund of the new bank, and when these local currencies are repaid, they can resolve. Moreover, if the operation moves as we believe it will the U.S. would be willing to put in more money.

On the IA–ECOSOC, Mr. Dillon said our views are identical. As to commodities, we believe in effort to prevent violent swings in price. The producers should get together but should do so on a commodity-by-commodity basis. In some cases the same commodity is produced in other parts of the world and this means we must have a world agreement. As to coffee, efforts must be made to strengthen the existing arrangements, and to do it in the coffee study group. There should be some way of working out statistical collaboration between the U.S. and the coffee countries, and thus help the coffee countries police their own agreement. We will have to talk to the Africans, but feel they are getting closer all the time to full collaboration.

Sr. Eleta then proceeded to emphasize the limited credit potential of the Central American countries. If they are going to give priority to borrowings for hospitals, schools, and so on, they will put down on their ability to borrow for productive economic purposes. Even though they don’t like grants or endowments, Central America needs them.

Mr. Dillon replied that when he had presented the new plan to Congress he told them the bulk would be distributed through the Inter-American Bank on the basis described, but the U.S. would reserve the right to utilize part of it for schools and other projects of that nature. We would be prepared to look at these through our IGA mechanism. There was no objection to this so long as it was limited to non-productive projects. Education is, indeed, basic. There are tremendous accumulated needs in housing, but unless there are more job opportunities people should not be encouraged, through better housing to move to the cities. In the same way it is not a good idea to build hospitals if there are no doctors to man them and equipment to use. In this social development program we don’t intend to push the people to move too rapidly and get out of phase with economic development. The self-help type of housing is best.

Here Mr. Mann interjected that the first priority in housing would go toward fostering building and loan associations, and then mobilize local resources.

Sr. Eleta spoke once more, repeating himself on basis commodities.

Sr. Buess of Honduras then said that all six republics recognized that the main results would depend upon their own efforts. Some of these republics have been trying to inaugurate their own economics. It has required grant sacrifices and they have to be gaining momentum on a Central American common market, thus laying the basis of future development for greater production our greater consumption. Eventually they hope to became one political unit.

Mr. Dillon said the U.S. strongly supports that concept and will help Central America [illegible in the original]. Mr. Dillon will speak to Mr. [illegible in the original] who arrives this afternoon, to see if we can’t get help to launch the Central American Bank. Nevertheless, in every other way the U.S. will sympathetically support the integration movement.

Sr. Eleta then said that the six Delegations expect to hold further meetings and will ask for discussions with [illegible in the original] and with Felipe Herrera.

Sr. Fuentes Mohr of Guatemala then said the six republics fully agreed on the revolutionary new program prepared by the U.S. but hope Mr. Dillon will do something concrete to help launch the integration movement in Central America and these republics will sacrifice as much as their economies will permit. In planning, financing of the Central American Bank the U.S. should think of Central America as an economic unit. So far; the movement is proceeding with differing degrees if intensity down there and the movement needs acceleration.

1. Source: Department of State, Secretary’s Memoranda of Conversations, Lot 64 D 199. Official Use Only. The conversation recorded here took place in Under Secretary Dillon’s suite at the Chancery at 3:30 p.m. Dillon was in Bogotá to head the United States Delegation to the meeting of the Committee of 21. Turkel was also a member of the delegation.
2. Felipe Herrera.