147. Telegram 68 to Tegucigalpa, September 201

[Facsimile Page 1]

Deptel 51 Embtel 141.

For your background the following sets forth some considerations pertinent to US policy on assistance to American private interests abroad and problems arising from some anticipated provisions of Honduran agrarian reform law.

1. USG traditionally acts to support American private interest abroad or espouse private international claim when concrete case justifying it arises. Justification usually rests on fact of specific injury suffered by claimant for which he is unable obtain redress through usual means. Conversely USG normally refrains from actions on behalf specific private interest on basis hypothetical injury.

2. Foregoing is distinct from situations where USG may take position on measures considered undesirable on general policy grounds.

3. With particular reference to Honduran situation, it seems clear that provision in original draft agrarian law for compensation for expro[Typeset Page 358]priated land by 20-year bonds, deliverable on re-distribution of land, would at least raise the question of possible invocation of section 620(e). Foreign Assistance Act, not because of fact that payment to be made in bonds but because of particular arrangements surrounding transaction in this case. [Facsimile Page 2] It is true that section has not yet been invoked with respect any country and that in any case it is impossible to determine in advance of legal study of facts in each separate concrete case whether section might or might not be considered to apply. Nevertheless, the possibility that compensation provision would bring to the fore in our relations with Honduras the question of application of section 620(e) was in itself sufficiently important to warrant action which was taken, namely to furnish GOH text of section and advise it of that possibility.

4. If original draft law has in fact been changed to provide for prior cash compensation for expropriated land, we concur with your view that this would cause section 620(e) to recede from picture. There does remain the question of judicial review of the evaluation procedure, and possibly justification for expropriation because of lack of proper economic use. On basis of information available it would seem unreasonable to expect president’s veto of an otherwise acceptable law on this point, if he announces his intention of asking for suitable amendment at an early opportunity. However on basis of what we know now such amendment would appear highly desirable and you should continue to press President to hold to promise he now appears ready to make. We would of course appreciate information soonest on any amendments recently made in draft law which would bear on method of determining amount of compensation to be given.

[Facsimile Page 3]

5. It is important in general in handling problems involving US investment abroad to avoid allowing defense of legitimate interests by USG to become distorted in ways which would convey to foreign peoples the mistaken impression that the US opposes sound land reform, which is a keystone of the Alliance.

  1. Transmits considerations pertinent to U.S. policy on assistance to American private interests abroad and problems arising from provisions of Honduran agrarian reform law. Confidential. 3 pp. DOS, CF, 815.16/9–1962.