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

PA–7. Memorandum of a Conversation¹

Washington, September 25, 1958

SUBJECT

• United States-Paraguayan Relations; the Paraguayan Foreign Minister Visits the Department.

PARTICIPANTS

• Dr. Raúl SAPENA Pastor, Paraguayan Foreign Minister
• Dr. Juan PLATE, Paraguayan Ambassador to United States
• ARA - Mr. R. R. Rubottom, Jr., Assistant Secretary of State for Inter-American Affairs

COPIES TO:

• EST - Mr. Maurice M. Bernbaum, Director, EST, Bureau of Inter-American Affairs
• EST/P - Mr. Charles C. Carson, Officer-in-Charge, Paraguayan Affairs

Following the usual pleasantries, the Minister and Mr. Rubottom alluded to their earlier friendship in the days when the latter was on duty at our Embassy in Asunción during World War II. Mr. Rubottom told the Minister that in the course of informal meeting of Latin American Foreign Ministers just ended² Secretary Dulles spoke to him of the Paraguayan chancellor in highly complimentary terms. This pleased the Minister immensely.

Getting down to business, the Minister said he wished “to lay all the cards on the table.” Mr. Rubottom cordially invited him to make himself at home.

The Minister said he was happy to note that general conditions in Paraguay today are quite good—both economically and politically. The national budget for the first half of 1958 had showed a surplus of some 150 million guaraníes, and although this did not represent a huge amount of money, the surplus was a sign of improved economic health. The Minister said that evidence of the nation’s economic advancement also appeared in the current annual report of the International Monetary Fund, a draft of which he had just read.

Politically, the Minister noted, the Stroessner Government is moving ahead in its determination to accommodate democratic processes in Paraguay: the Liberal Party had been allowed to hold a convention last July, and subsequently to reorganize itself throughout the country; municipal elections, with opposition participation, would be held soon; the electoral laws were to be liberalized; and constitutional reform would be carried out.

Mr. Rubottom commented that Mr. Herbert L. Matthews, editorial writer of The New York Times was planning to visit Paraguay for several days in mid-October. Mr. Rubottom suggested that Mr. Matthews’ presence would afford an excellent opportunity for the GOP to demonstrate its sincerity about liberalizing the regime. Mr. Rubottom pointed out that the press of this country is wont to describe the GOP as one of the three remaining dictatorships in the hemisphere. Mr. Rubottom said that he knew the Paraguayans would accord Mr. Matthews their renowned hospitableness; but he hoped the government would also encourage Mr. Matthews to go beyond official circles and out among the people of Paraguay, and even among the political opposition. The Minister intimated that the GOP has nothing to hide, would warmly welcome Mr. Matthews and would be glad to have him know, and to publish the truth about, Paraguay. Mr. Rubottom said he thought that it would be extremely important to Paraguay at this juncture for it to become widely known that the GOP is seriously working to eliminate its authoritarian character.

The Minister noted that the August 15 inauguration of President Stroessner for a five-year term went off smoothly except for one discordant note which disappointed the President considerably. The opposition Liberal Party directorate had been invited to participate in the ceremonies. Instead of graciously accepting like good Paraguayans, or at least sending calling cards to the Presidential Palace, they had transmitted a long, rude, manifesto denouncing the Stroessner government. The Minister implied that while the government is ready to do its part toward establishing political harmony in the country, it cannot go far without the cooperation of the opposition.

Returning to economic matters, the Minister said that he wished to express, in behalf of President Stroessner and himself, Paraguay’s heartfelt gratitude for what the United States has done to assist the country. However, Paraguay desperately needed, and had to have, more help. While remarkable economic progress had been achieved in recent years, Paraguay was still lacking adequate roads and river transportation facilities to get her products on the markets of the world. Besides acquiring better transport, the country also needs to increase production, and in order to do this its people must have farm implements, machinery, fencing material, silos, warehouses. Paraguay had every reason to be proud of its unfaltering effort, with U.S. aid and guidance, to carry out a currency stabilization plan. However, stable currency, desirable though it may be, is meaningless to the average Paraguayan unless there is also visible and tangible economic progress. The Minister pointed out that, by using due-bills, or IOU’s, the rural folk can and do manage somehow without any currency at all.

The Minister said that there should be no doubt in the mind of anyone that Paraguay stands solidly on the side of the United States and the West. He said that President Stroessner fully recognizes the fact that the United States is a friend of Paraguay and has helped her in many ways; but, in his anxiety to see his people enjoy better times, the President constantly asks his advisors why the United States is not willing to do more. The Minister said the President wanted him to repeat in Washington what he had said many times before: Paraguay would give the United States of anything she has, including air bases. (At this point, Ambassador Plate remarked that when he is asked about Paraguay’s position in world affairs today, he replies, “Paraguay is the aircraft carrier of the Americas”.)

The Minister said that Paraguay’s anti-communist policy works against her. It is becoming increasingly difficult to explain to Paraguayan business people why they are not allowed to trade with communist countries. For example, an Asunción hardware merchant wishes to buy farm machinery from the United States, but cannot pay cash in dollars. A Polish manufacturer hears about this, and sends a letter offering a hundred tractors at an extremely low price, and on easy, long-term credit terms. What a blessing it would be if the merchant could get such attractive offers from the United States. Mr. Rubottom wondered about the good faith of the Polish offer; and the Minister seemed to agree that it might be questionable.

Mr. Rubottom indicated that it is not the practice of the United States to tell her friends among other sovereign nations whether they should or should not trade with the Sino-Soviet bloc. He suggested, however, that to his mind two important considerations are involved: (1) a nation’s principles and (2) the question of whether relations with the communist world are in that nation’s best self-interest. The Minister nodded assent, and pursued the matter no further.

The Minister then said he was constrained to mention Bolivia. Whereupon, he produced and read a telegram which President Stroessner had sent him urgently. The President noted that he had just learned with dismay that on the day after the Bolivian Government announced the United States would provide aid of $26 million, a large part of which would be an outright grant, the Bolivian parliament approved a motion recommending that the government establish diplomatic relations with Soviet Russia. Paraguay, said the Minister, found it most difficult to understand this sort of thing.

Mr. Rubottom pointed out that there is no comparison between the current situation in Paraguay and Bolivia. He said that present day Bolivia has been likened to a cancer in the body of America; and that it was to the interest of the entire hemisphere that the malignancy be speedily removed. Should Bolivia be permitted to fall into chaos and its evil effects spread, as they most surely would, Paraguay would probably be the first of Bolivia’s neighbors to suffer. Mr. Rubottom suggested that Bolivia was to be pitied, rather than envied, by Paraguay. The Minister was in agreement with both observations. He went on, nevertheless, to note that following the Paraguayan-Bolivian war over the Chaco, the various nations participating in the settlement had agreed to help toward the economic recovery of both countries; but those which had actually contributed anything had given much more to Bolivia. He said the United States had been particularly generous to Bolivia, to the discomfiture of Paraguay. The Minister emphasized that Paraguayan-Bolivian relations are good at present. There remained, however, the question of a border settlement on the northwest boundary. The Paraguayans fear the Bolivians will cause trouble if oil is discovered in the Chaco. Therefore, the United States should try to understand Paraguayan alarm when the United States grants large-scale assistance to Bolivia—including arms.

Mr. Rubottom said that he was under the impression that the subject of arms to Bolivia was cleared up when Paraguayan officials mentioned it to him and other U.S. officials who accompanied Vice President Nixon on his South American tour last spring. Mr. Rubottom recalled that earlier this year the United States had given Bolivia an insignificant amount of military assistance, solely for internal security, and consisting only of technical advice and a handful of weapons for the Palace Guard. He said he would be glad to provide the Minister with precise data in the matter if he wanted it. The Minister declared that he himself believed what he had been told, and had only wanted to point out that the Paraguayan masses, who are not acquainted with the facts, are naturally disturbed when they hear of U.S. arms and large sums of money going into Bolivia. The thought of U.S. arms and money falling into the hands of irresponsible Bolivians such as Juan Lechin, the leftist labor leader, was particularly disturbing to Paraguayans.

Mr. Rubottom returned to the idea that Paraguay is not, and would not want to be, in the same position in which Bolivia finds herself. A for Bolivia’s Lechin,³ he said he understood that his influence in Bolivian affairs had been on the wane for some time [and amounted to practically nothing at present.] Mr. Rubottom stressed that U.S. activities in behalf of Bolivia are solely for the purpose of helping a member of the Latin American community that has fallen into dire distress, and that to bring that country back to economic health and self-respect would mean strengthening the hemisphere, and indeed the free world, as a whole. With regard to any Paraguayan fears of an armed attack by Bolivia, Mr. Rubottom pointed out that under today’s inter-American system we simply do not resort to arms as a means of settling divergencies. Mr. Rubottom found it incomprehensible that Latin American countries should ever again wage war against one another.

Turning again to Paraguay’s urgent need for economic development, the Minister observed that hitherto the United States had adopted a strict banker’s attitude when considering loans to Paraguay. Although the banker’s attitude was understandable, it meant that the have-not countries can borrow practically nothing, while the have countries can go on unlimitedly borrowing and adding to their grandeur. The Minister thought that the United States lending institutions were a bit heartless in their dealings with Paraguay. He said the GOP is thinking in terms of a loan from the United States of some 25 to 30 million dollars . . . . .

Mr. Rubottom said that it was now his turn to speak frankly. He began with a reference to the report Dr. Milton Eisenhower made to the President following his recent fact-finding tour of Central America.⁴ He said that foremost among Dr. Eisenhower’s findings in the area visited was the need for bankable loans-not grants.

The Minister quickly replied that Paraguay is not at all interested in grant–aid, the very thought of which is repugnant to her. He spoke of the reputation Paraguay enjoys for paying her debts and of her intention to maintain her good name. She does not ask for charity. The Minister said he had not necessarily meant an immediate loan of $30 million, but something approximating that sum to be spent over a period of time—perhaps on a five-year economic development plan. He then inquired about the possibility of the United States sending an economic planning mission to Asunción to make a complete survey of Paraguay’s economy; to study her necessities; to find out what Paraguay is doing that is wrong; to suggest projects that might be undertaken, and generally to show the Paraguayans the pathway to some of the better things of life. Paraguay, he said, sorely need a well-ordered plan.

Mr. Rubottom indicated interest in the idea of such a mission and agreed, without making any commitment, to look into the feasibility of the United States sending one.

Mr. Rubottom told the Minister that Paraguay is not alone in her problems. He referred at some length to the multifarious problems confronting the United States, both at home and abroad, and suggested that relatively speaking, Paraguay’s worries are no more severe than those of this country. He mentioned the tremendous cost to the U.S. public of our foreign aid efforts since the last war and the fact that protests from the overburdened taxpayers are making it increasingly difficult as the years go by for the government to secure Congressional appropriations to continue the assistance programs. Mr. Rubottom stressed that we are together in the hemisphere and in the free world. He also stressed the gratitude which the United States feels toward Paraguay, a valued and respected partner, for her cooperation and support toward the realization of common ideals. Mr. Rubottom praised the high moral standards of the hard-working Paraguayan people and their ability, in the face of adversity, to uphold the good name of their country. Mr. Rubottom thought the Minister would agree (and he said he did) that in the past the United States had demonstrated its willingness to help Paraguay solve her problems. Referring to the Minister’s earlier allusion to what Paraguay regarded as slowness on the part of the Development Loan Fund in attending to Paraguay’s requests, Mr. Rubottom pointed out that the DLF is a new organization which has encountered a number of delays in getting under way. Nevertheless, the DLF had already definitely committed $6.1 million for use in Paraguay which placed Paraguay in the forefront among the Latin American countries which had obtained benefits from the DLF. Furthermore, the DLF was actively considering additional loans for Paraguay. Mr. Rubottom said that there is no doubt in his mind that Paraguay will, in the coming years and as she grows, continue to qualify for loans from the United States, although we naturally could not commit outselves to any projects or amounts in advance of dear justification by cases.

The Minister laughed and said, “There you go, speaking as a banker!”

The Minister then described what Paraguay is doing with regard to the problem of river transportation. He told of a $1.9 million agreement signed recently with Spain for the purchase of three river steamers and five barges; and of current negotiations with Japan over a proposed $3.8 million deal for the purchase of five cargo ships, a refrigerated barge and a cattle boat. He stated that if an agreement is consummated as expected, it will mean the entry into Paraguay of 50-to 75,000 Japanese immigrants over a 30-year period. Paraguay, he noted, had decided against the earlier proposals for a $12 million agreement involving some 150,000 immigrants over a 30-year period. The Minister said that the foregoing items would give a tremendous boost to Paraguay’s river fleet; but the craft would still be insufficient for Paraguayan requirements. He referred to the memorandum which the Paraguayan Foreign Ministry had presented to our Embassy at Asunción under date of September 10, 1958, setting forth a request for a $5 million loan from the United States for use in a second agreement with Spain to purchase river boats. The Minister said he had talked with President Waugh of the Export-Import Bank about the possibility of that institution financing such a loan. The Minister indicated that he found Mr. Waugh sympathetic to the idea.

Mr. Rubottom said that while he had not yet had an opportunity to study the Paraguayan proposal at length, he had gained the impression that it involved a triangular transaction with Spain which the United States might find it difficult to agree to. The Minister explained that what Paraguay has in mind does not actually have the three-cornered feature which the United States finds objectionable. The loan would be made directly to Paraguay, which would purchase steel plate and motors from the United States and send the material to Spain. Construction costs would be paid out of a combination of Paraguay’s favorable pesetas balance and P.L. 480 pesetas which the United States holds in Spain. Mr. Rubottom said that this, and any other Paraguayan loan proposal, would receive careful attention in Washington but that naturally he could not commit the United States then and there.

The Minister said two items of business remained. The first was the Minister’s information copy of a lengthy telegram which President Stroessner had just sent directly to President Eisenhower. The Minister rendered an eloquent reading of the telegram.⁵ Stroessner, saying that his message was inspired by the traditional friendship between Paraguay and the United States and was a reaffirmation of Pan-American ideals and principles, urged that the United States lend its whole-hearted cooperation in the current gathering of the Foreign Ministers of the American Republics who had met to discuss the proposed “Operation Pan-America” of Brazilian President Kubitschek. Stroessner noted that a united America, closely bound by ties of friendship and understanding, can serve as an example to the world.

The second item was the Minister’s request that Mr. Rubottom arrange an appointment for him with Secretary Dulles. He wished to make a courtesy call, and had no intention of discussing Paraguayan problems with the Secretary. Mr. Rubottom said he was very sorry, but the Secretary had left that afternoon for Boston and would not return before the Minister’s scheduled departure for Paraguay.

The Minister said he would be remiss should he fail to call attention to the fine work of Ambassador Ploeser who had created so many friends for himself and his country in Paraguay. Mr. Rubottom said he knew the Ambassador would be pleased to hear this.

The conversation ended in the same cordial atmosphere in which it began.

1. Source: Department of State, Rubottom Files, Lot 60 D 553, “Paraguay 1958.” Official Use Only. Drafted by Carsen on October 9. The source text is an uninitialed carbon copy.
2. The Foreign Ministers of the American Republics conferred informally in Washington, September 23–24, to consider and approve measures to strengthen Inter-American economic cooperation. For documentation relating to the meeting, see Documents ETA–14, 48.
3. [illegible in the original].
4. Apparent reference to the statement made by Milton Eisenhower and released by the White House upon his return from Central America on August 1; for text, see Department of State Bulletin, August 25, 1958, pp. 309–310. For documentation on Milton Eisenhower’s trip, see Documents ETA–7; CO–1; CR–6–9; ES–2, 5–6; GT–8, 24; HO–3; NI–4, 7–9; PM–3; PA–7.
5. [illegible in the original].