UR–2. Letter from the Chargé in Uruguay (Espy) to the Assistant Secretary of State for Inter-American Affairs (Rubottom)1
I wanted to write you earlier but I thought I had best wait until we received the memoranda of the follow up conversations on March 6 and 12 which Ambassador Lacarte held with you subsequent to your meeting of February 21 with him. As I wrote you in my letter of March 25, copies of them were inadvertently delayed in reaching us. Now [Typeset Page 1142] they have been received and I and other officers in the Embassy have studied them carefully and are very happy to note that progress apparently has been made in Washington with respect to the assistance, or at least offer of assistance, we might be able to grant Uruguay economically and financially. I think that the possibilities offered by the Ex-Im Bank, the DLF and possibly PL 480 are most constructive. May I say here that we also understand and in fact reported as our concurrent view that a stabilization loan to Uruguay would be imprudent if not harmful at the moment without this country at the same time definitely and precisely committing itself to certain actions on its part. The likelihood is that it won’t do so, or at least not until after the national elections of November of this year. May I return to this subject a little later in this letter.
As you will see from our telegram 374 of April 1,2 the Government here through the Foreign Minister, Oscar Secco Ellauri, has expressed its agreement to the visit of Vice President Nixon from April 28–30.3 We hope that both the President and the Foreign Minister will be here, at least long enough in the morning of April 28 to receive Mr. Nixon, but if not, the Acting President and the acting Foreign Minister will do so on their behalf.
In my telegram 373 of March 31 I set forth some ideas which I have been thinking over for some weeks time.4 I would like to take the liberty to explain them to you more fully, hoping in doing so I am adding something constructive and helpful. I mentioned Bob Woodward’s mission here and I meant it personally for him but at the same time I think that the same criterion would apply to any other new and experienced ambassador arriving at this post.
[Facsimile Page 2]You know the situation here very well and so what I may be saying might not, in its entirety, be necessary. Yet I do believe I should write it down as best I can. As you will have observed from our Despatch 683 of January 30,5 on the crisis in Uruguay and again from our conversations with officials of the First National City Bank of New York who visited Uruguay about 10 days ago and which were reported in our Despatch 844 of March 28,6 the situation here is rather perilous and there has been little or no improvement in the two months interval of time. If anything, indeed, it has worsened because Uruguay has only been able to move half of its wool crop. Where the money will come to pay for essential petroleum supplies and other necessary imports still remains to be seen. What [Typeset Page 1143] the economy of this country obviously needs as we here in the Embassy recognize, is the same as that which the Department also appreciates. In summary, it is a definite and possibly drastic program for Uruguay to come to grips itself with its economic plight for which it almost entirely is solely responsible. The adoption of a free exchange rate for exports, the sale of its products at realistic world prices, the improvement of its production, the devotion of more of its efforts to the land rather than merely trying to build up more industry and create more uneconomic urban occupations, the restriction of its imports and the balancing of its budget are obviously the ways it ought to take to cure its economic ills. It still looks as though none of these will be done, at least immediately. Now the Government wants one or both of two things: The United States purchase at a high price of the remainder of Uruguay’s wool clip and/or a stabilization loan. We realize that our Government cannot in all probability do either and even if it did so, without drastic conditions attached we would only be postponing the inevitable day of reckoning.
However, the three possibilities that seem to have come out of the conversations in Washington are something concrete and seem to be along the lines of the suggestion made in our Despatch 683 that we at least express to Uruguay our willingness to help. We have heard that Ambassador Lacarte will be coming here next week or the week after and I certainly hope that he will be prepared to explain fully to his Government the whole situation.
By several communications, particularly our telegram 369 of March 31, we reported that Uruguay through its newly designated Ambassador to Venezuela, is going to attempt to persuade Venezuela to supply Uruguay with petroleum on a credit basis in the amount of approximately $40 million. If that does work out of course it will help to tide this country over its immediate difficulties. Naturally, we have no idea here what the reaction of the Venezuelan authorities would be to any such approach.
[Facsimile Page 3]Should all go well, with assistance from ourselves and from Venezuela to Uruguay, the picture here will certainly greatly brighten; but, of course, this is all still very “ify”.
Now may I refer back to Vice President Nixon’s visit and my telegram 373 of March 31. I mentioned therein that Battle’s newspaper “Acción” reported as a rumor that Batlle would take a leave of absence immediately after Holy Week which would mean he would be away from the official score here both over the Frondizi and Nixon visits. As I see his strategy, perhaps in the first instance he does not wish to play second fiddle to President Fischer when the president elect of Argentina comes here. In part there may be the same motive inducing him to be away when Vice President Nixon comes to Uruguay. On the other hand, however, I have a strong feeling that as regards to Vice President Nixon, [Typeset Page 1144] Batlle would be thinking of keeping himself free to jump either way as may suit his political purposes here. If the Nixon visit is a great success, particularly if it generates or is accompanied by economic and financial assistance from the United States, then he can jump on that band wagon. If, however, no assistance is forthcoming and it suits his political purposes to renew his attacks against the United States, he will be free to do so since he will not have been associated personally with the Nixon visit. You will recall your visit here last August and particularly the stand taken by Uruguayans at the Buenos Aires conference thereafter which put Secretary of the Treasury Anderson in a rather difficult spot.
It is too early to say what Battle will do; except we should keep constantly in mind that in all likelihood he wants to be president of Uruguay beginning next year. Should Ambassador Lacarte’s report here convince Batlle that he, Batlle, has something to gain out of the Nixon visit and that it would be to his advantage to be around when the Vice President arrives, he may not take his leave of absence or cut it short following Frondizi’s visit. Interestingly enough, since I have been here he has twice threatened to take leave of absence saying he was going to Europe. Neither time did he do so. So we cannot tell which way he is going to jump on this occasion.
In view of the foregoing, I think what we would want particularly to try to do and to lay our plans for in the best long term interests of our relations with Uruguay is to set the stage as well as we can for a successful mission of our new Ambassador. In this light I should like to pose the following three alternatives: (a) that we make known to the Uruguayans in one way or another the straight news before Bob arrives here or through Vice President Nixon’s visit that there are concrete proposals for assistance to [Facsimile Page 4] Uruguay. I think we may rest assured that the Uruguayans are bound to expect something tangible from the Vice President’s visit, their lack of reasonableness to the contrary notwithstanding. Perhaps even before he comes here the news can be gotten out so that Bob Woodward can get a large measure of the credit and the Vice President merely reaffirms such news. After all it will be Bob or any other Ambassador who will have to stay here to carry on the job and take the blame or the approval. (b) If there is nothing we can do for the Uruguayans the straight news be gotten out on this score before Bob Woodward arrives here so that none of the unpleasantness be attached to him for the same reasons as above; and (c) what may be a combination of the foregoing two alternatives, to avoid if at all possible to raise in the minds of the Uruguayans any false hopes which would later be dashed after Bob gets here and makes his already difficult task that much more so. In other words, if he comes here without any hopes or expectations on the part of the Uruguayans and if the Vice President merely generates a broader atmosphere of public good will but without pledging the [Typeset Page 1145] United States either by implication or outright commitments that may not be fulfilled, then our relations being pretty much at the bottom, Bob can weather them for this year without any stigma having fallen on him through no fault of his own and with the hope that later the skies will brighten so as to enable him to accomplish his mission eventually with success. In the meantime, we can quietly be working on the problems, trying to develop a sound basis for their eventual resolution.
Sincerely yours,
P.S. Enclosed is a copy of a letter I wrote to Chuck Burrows on the subject of the mission of the newly designated Uruguayan Ambassador to Venezuela.7