Office of the Historian

GT–28. Telegram from the Secretary of State to the Embassy in Guatemala1

Washington, May 26, 1960, 6:34 p.m.

482. Cruz Salazar now in Washington trying to prevent substitution of long term loan to Guatemala for grant aid he hoped to obtain through Congressional action.2 Guatemalan Chargé yesterday made similar representations to us in Ydígoras’ name saying President had heard interest-bearing fifteen year loan was envisioned instead of grant aid and that he considered terms onerous.3 Cruz pressed argument grant aid indispensable for psychological reasons to demonstrate strong USG approval Ydígoras administration.

We have told Cruz and Guatemalan Chargé that while strongly desiring to help Guatemala resolve its current financial difficulties we cannot honestly regard its problems as drastic in same sense as Bolivia and Haiti, only grant aid recipients, nor more serious than those of several other Latin American countries. Accordingly, we could not justify making Guatemala exception to firm policy of restricting grant aid to emergency conditions. To do so, we have explained, would involve Department in serious difficulties with other nations that can argue forcefully they are entitled to as much consideration as Guatemala. We also pointed out anti-Ydígoras elements would seize on grant aid at [Typeset Page 711] this time as alleged evidence his laudable position on Cuba was sell-out to U.S.

Cruz and Chargé were told yesterday final approval of $3.5 million [Facsimile Page 2] long-term loan to Guatemala was imminent. Approval now has been granted and you may so inform Ydígoras.4 Telegraphic instruction will follow with terms to be subject to further negotiation.5

Herter
  1. Source: Department of State, Central Files, 714.5-MSP/5–2660. Official Use Only. Drafted by Gorrell and signed by Rubottom.↩
  2. A memorandum of conversation by Gorrel on Cruz’s meeting with Stewart, May 25, is in decimal file 714.5–MSP/5–2560.↩
  3. The memorandum of this conversation between Sáenz and Stewart, May 25, is in decimal file 714.5–MSP/5–2560.↩
  4. Ambassador Muccio informed Ydígoras about the loan on May 30. (Telegram 487 from Guatemala City, May 30, 1960; 714.5–MSP/5–3160).↩
  5. Telegram 481 to Guatemala City, May 26, 1960, authorized Ambassador Muccio to reply to a letter of March 31 from Gustavo Mirón Porras, President of the Bank of Guatemala, with an offer of a $3.5 million long-term loan to Guatemala and by agreeing to earmark quetzal proceeds from a CCC Wheat Credit as the Guatemalan contribution toward joint projects during the 12-month period beginning July 1, 1961. (714.5–MSP/5–2660). The loan agreement was signed on June 29, 1960; a copy of the agreement is in Department of State file 714.5–MSP/7–2860.↩