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

PE–18. Memorandum of Conversation, by the Officer in Charge of Peruvian Affairs (Pringle)¹

Washington, October 15, 1958

SUBJECT

• Peruvian Desire for Economic Assistance

PARTICIPANTS

• Dr. Raúl Porras Barrenechea, Foreign Minister of Peru
• Sr. Miguel Grau, Chargé d’Affaires, a.i., Embassy of Peru
• Sr. Guillermo Hoyos Osores, Counselor, Peruvian Foreign Office
• Admiral Luis Llosa, Naval Attaché, Embassy of Peru
• ARA – Mr. Rubottom
• WST – Mr. Siracusa; Mr. Pringle

Dr. Porras referred to his September 25 conversation with Mr. Rubottom on the subject of economic assistance and spoke once more of his need to take back to Lima some new and specific evidence of U.S. willingness to assist Peru. He said that President Prado had instructed him by telephone to call on Mr. Rubottom for this purpose and particularly to seek immediate approval of a credit to the Banco Minero for small loans to Peruvian mining companies.

Mr. Rubottom said the Department had received a message from Embassy Lima outlining this proposal in broad terms² and that the Eximbank was prepared in principle to consider such an application. He added, however, that considerable detail, including information on the types of loans the Banco Minero proposed to make, would be required in order for the application to be properly evaluated. Mr. Siracusa observed that the assistance should probably not be sought for lead and zinc, already in overproduction, but for other minerals.

Dr. Hoyos then gave a long, rapid-fire description of Peru’s exploding population, deep poverty, Indian problem, social unrest, communist agitation, and political instability, concluding with a plea for substantial U.S. assistance to help it overcome these problems. In the course of the description, he observed that Latin American dictators had happened to be in power during the good economic times of the post-Korean War period, while democratic regimes such as that of President Prado had to face, in addition to the other problems confronting democracy in Latin America, the handicap of an economic recession. He observed that many of Peru’s requirements for U.S. aid were shared by most Latin American countries but that Peru’s needs were particularly urgent.

Mr. Rubottom said that the U.S. was sympathetically aware of the problems facing Peru and other Latin American nations and that we wished to cooperate closely with Latin America in striving to solve them. He said that the economic development needs of Latin America obviously could not be met merely from U.S. economic assistance resources, but he expressed confidence that substantial progress could be made through U.S.-Latin American cooperation. In reply to a remark by Dr. Hoyos concerning a reference in his Santa Barbara speech of October 10³ to the importance of private capital in economic development, Mr. Rubottom pointed out the role which foreign private capital had played in the development of the U.S. economy prior to World War I. He also spoke of the vital role which domestic private capital could play in the economic development of Latin America and of the importance of creating conditions which would induce capital to stay in the country.

After some further exchange on economic development and basic commodity problems, Dr. Porras again referred to his need to take some concrete offer back to Peru with him and asked whether he could be given a commitment for a specific sum of money as a credit to the Banco Minero.

Mr. Rubottom said that he could not give such a commitment and, furthermore, that he did not believe such a step would be in the best interests of either the U.S. or Peru. He referred to the press statement released by Embassy Lima on October 1⁴ and to the sentence expressing the readiness of the U.S. to give careful and sympathetic consideration to any applications made by the Peruvian Government for loans to finance sound and constructive projects, especially projects designed to alleviate distress in the mining areas. Mr. Rubottom said that the Department and other U.S. Agencies stood fully behind that statement and that he believes it constituted an important assurance to the Peruvian Government that any sound loan applications made by it would receive prompt and sympathetic attention in Washington.

Dr. Porras asked whether he could assure the Peruvian Government and public that the United States was prepared to give expeditious, careful and sympathetic attention to any Peruvian Government loan applications for sound projects, and Mr. Rubottom said that he wished to give the Foreign Minister his personal assurance: that this was the case.⁵

1. Source: Department of State, Central Files, 723.5-MSP/10–1558. Confidential.
2. In telegram 217 from Lima, October 10, the Embassy reported favorably that the National Emergency Lead-Zinc Committee had proposed to Ambassador Achilles on October 10 that the Export-Import Bank of Washington extend credit to Banco Minero which would make loans for small mining companies to exploit mineral deposits other than lead or zinc. (411.006/10–1058)
3. For the text of Assistant Secretary Rubottom’s speech, see the Department of State Bulletin, October 27, 1958, p. 654.
4. The statement under reference is quoted in telegram 196 from Lima, October l. (411.006/10–158)
5. In telegram 188 to Lima, November 3, the Department of State informed the Embassy that the Export-Import Bank doubted the political value of a loan to Banco Minero if only an insignificant number of applicants could meet the Export-Import Bank’s criteria for loan approval. (823.10/10–2158)