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

UR–4. Memorandum of Conversation, Department of State¹

Washington, May 27, 1958

SUBJECT

• U.S.-Uruguayun Relations

PARTICIPANTS

• The Secretary
• Ambassador Lacarte
• ARA—Mr. Rubottom
• OSA—Mr. Watrous

The Ambassador opened the conversation by referring to Vice President Nixon’s recent visit to Uruguay, and noted that he, the Ambassador, had been there during the visit. He said that he was convinced that the visit had been a “smash success”, and that he felt that it set the stage for increased U.S.-Uruguayan cooperation.

He explained that the visit coincided with a period of economic difficulty for Uruguay, about which he had been holding discussions in Washington with U.S. Government officials, and that Mr. Nixon and members of his party had been able to discuss the same problems in Montevideo. He pointed out that the basis of Uruguay’s difficulties was its inability to sell to the U.S. as much as it bought from that country. For example, he said, in 1957 Uruguay bought from the U.S. over four and one half times as much as it was able to sell in the U.S. market. This condition, he added, had produced a balance of payments problem which had now become serious.

The Ambassador then outlined the manner in which he said the Russians were attempting to take advantage of this situation. He described the Russian procedure as that of purchasing Uruguayan goods and of increasing Russian demands in return for these purchases. He said that this trend was of course disturbing to Uruguay, which preferred to be oriented toward the U.S.

The Ambassador then said he would like to inform the Secretary about the various conversations concerning economic cooperation that, on instructions from his Government, he was undertaking in Washington. The most important item under consideration, he went on, was a forty million dollar balance of payments loan about which he was talking with Mr. Waugh of the Eximbank. He noted that this subject had been raised when Mr. Waugh was in Montevideo, at which time it had been discussed in terms of loan with full gold collateral. The Uruguayan Government now felt, however, that for political reasons it would be impossible to offer this collateral, and he was exploring the possibility of an unbacked loan such as he understood had been granted other, including Latin American, countries. He pointed out that Uruguay’s financial affairs were in the hands of responsible people, and that Uruguay’s reputation for the payment of obligations was excellent. Moreover, he said, he hoped that the present period of exchange stringency would be resolved toward the end of this year, at which time Uruguay would have for sale abroad a full year’s wool clip plus one half of this year’s currently unsold clip.

The Ambassador mentioned also that he was holding discussions on the possible financing of different proposals with the Development Loan Fund, and indicated that he thought some of those discussions might bear fruit. He added that Uruguay was also currently hoping for some U.S. actions which would permit increased U.S. imports of certain Uruguayan products, such as wool tops, canned meat, and woolen textiles. These items, he said, would in due course be the subject of communications to the Department.

In conclusion, the Ambassador again stressed the friendly atmosphere engendered by the Vice President’s visit to Uruguay, and said that he believed that this atmosphere was an excellent one in which to proceed to greater U.S.–Uruguayan cooperation.

The Secretary commented that he could not, of course, give immediate answers to the questions raised by the Ambassador. If the answers could come from the heart, he said, it would be simple enough, but the questions raised had of course to be considered thoroughly from a financial viewpoint by various U.S. Government agencies. He said that, as he had mentioned in an OAS meeting recently, the U.S. Government was aware of the marketing problems faced by countries producing a few basic commodities, and that he was also aware of the evident Communist intention of making capital out of these difficulties. Moreover, he continued, this awareness ante-dated some of the less pleasant incidents which took place during Mr. Nixon’s tour of South America. He mentioned that the free world had experienced cycles of prosperity and depression for a long time, and commented that some governmental attempts to counteract depression conditions, as in the case of agriculture in the U.S., had raised additional problems. Now, however, there was the added danger that the Communists, who could implement their policies without regard to factors such as costs and profits, were obviously endeavoring to take advantage of cycles of depression to destroy both the economic and political structures of free world countries. Finding a solution to this problem was not as easy as diagnosing it, he said, but the U.S. Government is giving more thought to it now than ever before.

The Secretary concluded by thanking the Ambassador for giving him this personal account of the present situation, and assured him that the efforts he was making to increase economic cooperation between the two countries would have the sympathetic consideration of the Department.

1. Source: Department of State, Rubottom Files, Lot 60 D 553, “Uruguay 105.” Confidential. Drafted by Watrous on May [illegible in the original]. Information on the source text indicates that the conversation took place at 11:00 a.m. The source text is an unsigned carbon copy.