117. Telegram 391 to San Salvador, April 151
EMBTEL 651.
Dept recognizes sensitivity of situation and concurs regime should be given moral encouragement. You are authorized make informal statement in press interview commending Directorate’s demonstrated determination improve standard of living, promote social reform and develop nation’s economy. To extent possible draw on public statements already made to reduce disadvantage personal attribution. Avoid specific reference to exchange restrictions or reference to measure as “useful means of encouraging economic development”. If pressed for comment you might say that such restrictions have in [Typeset Page 282] emergency situations been helpful in some cases in meeting specific problems.
FYI Dept concerned that GOES considered it necessary to impose exchange restrictions departing from historical convertibility of colon. Experience other countries has shown that such restrictions once imposed may become difficult to remove, may lead to economic distortions, black market corruption and discourage foreign capital investment. In general if domestic capital desires to go abroad it finds means evading controls. END FYI.
[Facsimile Page 2]While encouraging GOES officials seek outside expert assistance soonest in reform tax structure you should discreetly caution against seeking advice from multiple advisers. Problem reviewed here with Nathan who will discuss further with you on return Salvador on Monday. Salvadoran Embassy advises GOES intends work closely with IMF and that Fund representatives arriving next week.
- DOS authorization to commend Directorate’s determination to improve standard of living, promote social reform, and develop economy. Confidential. 2 pp. DOS, CF, 816.10/4–1361.↩