ETA–51. Memorandum of Conversation, by the United States Representative on the Inter-American Economic and Social Council (Turkel)1
PARTICIPANTS
United States
- Under Secretary Dillion
El Salvador
- Sr. Dr. Pedro Abelardo Delgado, Deputy Minister of Economy
- Sr. Dr. Luis [illegible in the original] Representative of Central Bank
Mr. Mann
- Ambassador Turkel
Guatemala
- Sr. Dr. Alberto Fuentes Mohr, Chief, Office of Integration, Ministry of Commerce
Honduras
- Sr. Jorge Bueso Arias, Minister of Economy
- Sr. Roberto [illegible in the original] President, Central Bank of Honduras
Nicaragua
- Sr. Juan Jose Lugo Morenco, Minister of Economy
SUBJECT
- Proposed Central American Development Bank
Sr. Bueso presented a memorandum2 on how the U.S. could help in the integration of Central American economies by the establishment of a Central American development bank. Such a bank could finance roads of common importance, the linking up of electric power networks, industrial loans of a regional character, and loans to enterprises requiring help because of readjustments of tariffs. It would be a mixed bank of government and private capital, reinforced by external loans. Each Central American country would put in $2 million; there would be a total of $2 million private capital. They request a ratio of 3 to 1 of external resources to Central American resources. There would be an open door for Costa Rica and Panamá, but since this is an integration movement these two republics would have to be members in the trade area, as well as in the bank.
Mr. Dillon said that we are warm supporters of Central American economic integration and recognize the need for a bank. The U.S. believes that once it has started the situation will rapidly improve. Heretofore, we have had no very definite project for such a bank, but at the time of the Bank/Fund meeting in Washington at the end of September3 we would be ready to work out a draft charter. The Inter-American Bank might serve as a supervisory trustee for U.S. funds. Certainly it would be a good thing to work closely with that Bank.
Mr. Dillon observed that President Herrera said he was very much interested in this bank and would like to give technical help.
Mr. Dillon said that we can’t tell how much the U.S. is ready to do until we sit down and discuss it. The figure of $80 million mentioned in a table at the end of the memorandum is much more than we had hereto discussed. The important thing, however, is to get started. As in the case of DLF experience, we found that some national development banks require successive loans after the initial loan. He also said that where major projects are concerned the parties might consider assistance from organizations other that the proposed bank.
Mr. Mann suggested that, in order to save time, it would be best for the U.S. to do its preparatory work with someone (perhaps Mr. Rochac) between now and the end of the Bank/Fund meeting and we could all meet thereafter, say September 25. Sr. Mohr said that it is true that the important thing is to get started, but in order to have the psychological impact that the Central American common market is here to stay the new [Typeset Page 130] bank would need a good push to assure that it would succeed. As of now, the Central American trade amounts to only 4% and it won’t be significant until it reaches 25%, and investment is needed to achieve that figure.
Mr. Dillon agreed that it doesn’t do much good to take away barriers to trade unless you have investment for production. The Coal [Facsimile Page 3] and Steel Community in Europe needed a balancing fund but they found out that the problems were not as great as they had feared.
Mr. Dillon asked if there was any reason why the Inter-American Bank can’t loan some of its own funds to the Central American bank. The answer was given that President Herrera was well-disposed to the Central American Bank and had offered a secretariat and a meeting place in his bank.
Subsequent discussion brought out the information that while the World Bank has been thinking of a private Central American bank, the World Bank had aimed at $10 million worth of private Central American capital, and there was general concurrence among the Central Americans present that this was far too much to expect. Moreover, the World Bank was thinking of another private bank operating in five countries.
The conclusion was reached that Mr. Mann would arrange for U.S. technicians to talk to Mr. Rochac to discuss a charter and that a meeting would be held at the close of the Bank/Fund meeting at the end of September.4
- Source: Department of State, Secretary’s Memoranda of Conversations, Lot 64 D 199. Official Use Only. The conversation recorded here took place in the Hotel Tequendama at 5:30 p.m.↩
- Not found in Department of State files.↩
- Reference is to the annual joint meetings of the Boards of Governors of the IMF, IBRD, and IFC, held in Washington, September 26–30, 1960. For text of a message from President Eisenhower to the representatives at the meetings, and statements by Secretary of the Treasury Anderson, Under Secretary of State Dillon, and Assistant Secretary of the Treasury Upton concerning the problems of a developing world economy, see Department of State Bulletin, October 17, pp. 607–617.↩
- Apparent reference to the meeting held on September 30; for the memorandum of conversation at that meeting, see Document ETA–53.↩