PA–1. Letter from the Ambassador in Paraguay (Ploeser) to the Assistant Secretary of State for Inter-American Affairs (Rubottom)1
It is generally understood that Paraguay is certainly in a transitional period. Paraguayan politics, as you know, are rarely dull.
At the moment, the Colorado Party has a factional fight, and the Liberals and Fehreristas and elements of the Catholic Church are all showing activity which tends to cause unrest and uncertainty. In each of these segments of activity, we find active support of the Communist groups, even in the case of the Priest Ramón Talavera. He has had among his principal advisors a well-known Communist, Miguel Chasse Sardi. These have all been reported to the Department, and there will be more to come. All of this puts the political sagacity and astuteness of President Stroessner to the supreme test.
It is our opinion here that any disorderly change in the Government might, at least for a substantial period, be an open door for Communist infiltration of the government, and that the Communists, by their infiltration technique, are in a position to act quickly. The Stroessner government believes, and so do we, that there are some Communists who have already infiltrated. While we have some suspicions as to who they may be, the Government of Paraguay is not always in a position to have documentary proof or adequate evidence to make a dismissal in the face of opposition to such dismissal. The pattern has been clear in certain instances. The action of the President in some of his very important decisions shows a total unwillingness to yield to the influences of these people.
[Typeset Page 992]President Stroessner [text not declassified] has supported our Government in three important aspects:
First, he has refused to recognize the Soviet or any of the Iron Curtain countries, and in this refusal has carried it to the [Facsimile Page 2] extent that any and all of their missions or individual visitors have been refused visas. This has been true during my experience.
Second, he has given us consistent support in international organizations, even when this has put him at certain times in sharp opposition to some of his Latin American neighbors.
Third, he has supported the stabilization program instituted by the International Monetary Fund and supported by the U.S. Treasury. He has done this in critical moments against the opposition of influential members of his own cabinet and the military. Since the first of November, the exchange rate of the guaraní to the dollar has not varied more than one point.
In addition, he has assured my deputy, Ralph Hilton, and myself upon the occasion of our last visit, that the program for his next term of office is one of gradual democratization of Paraguay. This is good to hear, but we are well aware of the lack of tradition of democracy in Paraguay and of the questionable readiness of the people for full democratic government.
It seems to be our interest to do those things which will maintain a stable government in Paraguay. [text not declassified] This is my policy, within the framework of our basic policy documents relating to this hemisphere. When I use the first person, I do it only on the assumption of my responsibility. This Embassy which is operating in complete agreement, based upon its individual and collective opinions, works as a team.
There are several things we could do which could in no way put the U.S. in an embarrassing position but which would certainly demonstrate our friendship for the people of Paraguay and would be sound and durable economically under whatever government the future may bring. I think I state them in the order of their time importance and of our ability to do them.
If all the recommendations here could be authorized to this Embassy, we could bring about their announcement in their proper timing as only we can judge it.
The recommendations are:
(1) Authorizing DLF private loan sector two and a half million dollars credit to be extended through a local Development Loan Bank [Facsimile Page 3] which would carry a label to indicate that these are American funds. This Development Loan Bank can be organized under the joint management of the two privately owned banks in Paraguay, the First National City of New York and the Bank of London & South America (British). The announcement should be made and such Development Loan Bank should be organized forthwith under private management for private [Typeset Page 993] enterprise operation only. In my opinion, the government of Paraguay would give this their blessing.
(2) A grant which would complete the Chaco Road connecting Bolivia and Paraguay to be done as a U.S. gesture to the economic benefit of the two nations – Bolivia and Paraguay. This should be tied into the use of whatever funds are to be extended to Bolivia so that the road (a portion of the Pan-American highway) properly ties into the capital of Bolivia and the capital of Paraguay. Bolivia imports a substantial part of her food. Paraguay has fertile soil and could well feed many times its population. The economy of the two countries are in many ways complementary. They are also the only two land-locked nations in South America and should pose no problem to those in the Department who might be understandably concerned over the problem of precedence insofar as grant aid to Paraguay is concerned. This is an international, two-nation plan. I want to make clear that there is no present request on the part of Paraguay for grant aid or charity in any form. If we make such a grant, it should be done in adequate amount, in a manner to emphasize the international aspect, and with every precaution to avoid the appearance of being a reluctant giver. I am not talking about an exorbitant amount of money. I believe that with the start that has been made on the Chaco Road, with the help of the ranchers in the area and of the Mennonites, and with the use of the military, which is important, on the construction, that the amount would not be excessive. I would want to get these figures for you; perhaps $5 million could accomplish what we want insofar as the Paraguayan end is concerned.
This gesture might well be timed with the Nixon visit,2 probably just prior to his arrival so that he may take the bows when he gets here. This is particularly beneficial to Bolivia because it means cheaper food and a higher standard of living as a result. As it is now, I understand that most of Bolivia’s food is imported from the Argentine, none competitively. While this would not be detrimental to the economy of Argentina, which has a worldwide market, it would be a new life line for Bolivia and Paraguay. Storm and the other solid people within the government of Paraguay are extraordinarly strong advocates of access to the Bolivian market and the use of Bolivian minerals.
(3) The quick approval of the public works program which we have presented to the DLF, (Additional supporting technical information is being prepared.) (a) The Brazilian road, (b) the Ayala-Oviedo road, [Facsimile Page 4] (c) telecommunications. All three of these projects are of equal economic growth benefit and constitute the unlocking of Paraguay to other sections of the world – not Bolivia.
[Typeset Page 994]It is toward the accomplishment of our aims that we have political and economic stability in Paraguay. I believe with this little added effort, we can achieve great things for these two nations. I believe we will strengthen our defense against the Soviet efforts in this area.
These matters are respectfully recommended as matters urgent to our very important self interest.
With warmest personal regards, I am
Very sincerely yours,
- Source: Department of State, Rubottom Files, Lot 60 D 553, [illegible in the original]. Secret; Official-Informal. The source text is a carbon copy bearing [illegible in the original] Ploeser’s typed signature, [illegible in the original]: “[illegible in the original] sent [to] USA [?] for reply.”↩
- Vice President Richard M. Nixon visited Paraguay, May 3-5, 1958, as part of a larger goodwill tour of South America. For documentation on the Nixon trip, see Documents BL–5–9, 12; CH–5; CO–9; EC–3–7; NI–4, 7; PA–1; PE–5–6, 8–11; UR–23; VE–9–10, 13, 16, 22.↩