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

GT–19. Memorandum from the Ambassador in Guatemala (Mallory) to the Assistant Secretary of State for Inter-American Affairs (Rubottom)¹

Washington, June 24, 1959

SUBJECT

• Reconsideration of Assistance to Guatemala.

At a meeting held in your office on Tuesday, June 16,² it was decided that the policy of supporting President Ydígoras of Guatemala and his Government should be actively pursued. It was decided that on my return to Guatemala I should fully assure the President of the interest of the Government of the United States in supporting him. It was also decided that I should seek an appraisal of requests for loan assistance and an appraisal of the existing aid program to the end of presenting an assistance package on such terms as would appear most attractive. I have consulted with appropriate officers of ARA, with officials of the Development Loan Fund, the President and officers of the Export-Import Bank, and with officials of the International Cooperation Administration. Subject to your approval, the following package has been agreed to.

1. The DLF will complete details on the $5 million rubber loan to be administered through the Bank of Guatemala.³ In this connection, [illegible in the original] is in agreement that rubber technicians may be maintained on the staff of USOM/G for the purpose of providing technical advice and assistance to the Bank of Guatemala.

2. The Eximbank is completing consideration of the request of the Government of Guatemala for a loan of $5 million for industrialization projects to be made to the Bank of Guatemala. The Eximbank has authorized me to state to President Ydígoras that consideration of this loan is well advanced, that there are certain functional information, and request that Dr. Mirón, head of the Bank of Guatemala, come to Washington opportunely for this purpose.⁴

3. It has been agreed that an offer be made to President Ydígoras to re-program the special assistance funds remaining unspent, that is, the so-called pipeline. It is realized that as a practical matter such will remain unchanged but there is an amount of perhaps up to $2.5 million which can be removed from present projects and other projects, whether new or old, which will provide some political attraction to the President.

4. In this connection, I intend to inform the President, although it may not be entirely in accordance with the facts, that the Department of State has been helpful in not having a repossession of funds made on the virtually non-operative Rural Development Program.

5. Respective the technical cooperation program, ICA is anxious for the termination of the agricultural portion which has been under fire by the Minister of Agriculture of Guatemala. We intend, therefore, to re-examine this program in detail and propose substantial modifications. The major modifications appear at this time to be abrogation of the agreement with the Ministry of Agriculture.⁵ We will offer at the same time to maintain certain specialized technicians in a strictly advisory capacity when their services may prove useful in furthering the purposes of the two Governments.

6. Upon return to Guatemala, detailed review of the program, their status, finance, etc. will be made and the proposals immediately submitted to ICA/Washington before final action. This final action appears desirable during the week of July 6 to 10 inasmuch as we have word that President Ydígoras is going to Panama on July 11. This will require close timing both in Guatemala and in Washington. If it cannot be done that quickly, it will have to be delayed until about July 22 which, in view of the strong interest which obtains concerning the future of the agricultural program, would appear to be rather long.

7. I have seen Ambassador-Designate Remirez and given him a broad outline of as much of the above as I think he ought to know. He expressed himself as grateful with the assistance and I hope that he will promptly report to President Ydígoras before my return as we need to make this look as good as possible. [text not declassified].

1. Source: Department of State, ARA/OAP Files, Lot 61 D 473, “Guatemala.” Official Use Only. The source text is an unsigned carbon copy.
2. No memorandum of this conversation was found.
3. See footnote to the memorandum by King, March 25, 1959, Document GT-16.
4. Eximbank authorized a $4.84 million credit on December 4, 1959.
5. By notes to Guatemalan authorities, July 8, the United States terminated the following agreements, effective August 31, 1959: (1) Agreement for a Cooperative Agriculture Program, January 20, 1955, as amended; and (2) Agreements for Agriculture Development, February 15, 1957, and April 30, 1958, as amended. The notes under reference were enclosed with despatch 14 from Guatemala City, July 9, 1959. (814.00-TA/7-959)