Foreign Relations of the United States, 1961–1963, American Republics; Cuba 1961–1962; Cuban Missile Crisis and Aftermath, Volumes X/XI/XII, Microfiche Supplement

6. Memorandum of conversation, October 18 among Rusk, Andrade, and Fitzgerald (ICA)¹

October 18, 1961

SUBJECT

• Bolivia’s Request for Emergency Assistance

PARTICIPANTS

• The Secretary
• Ambassador Andrade
• Dr. Fitzgerald—ICA
• Mr. Turnage—ARA/REA
• Mr. Weise—ARA/WST

The Ambassador opened the discussion saying that during his visit to La Paz last September he had been asked by President Paz to see the Secretary of State and to convey to him the urgency of the Bolivia situation. The Ambassador referred to the visit of the Thorp Mission to Bolivia last March and to the Bolivian Government’s request for an emergency loan of $11 million submitted to Ambassador Stevenson during his visit to Bolivia last June. He said that the United States Government had responded to these requests by authorizing loans of $2.6 million to COMIBOL for working capital, $10 million to YPFB for equipment ($4 million of which is contingent upon the increase in local gasoline prices), and $2 million for the rehabilitation of the Bolivian railways (subject to the GOB arriving at a satisfactory arrangement with the former British management).

The Ambassador said that the future outlook for Bolivia was good and that with the increase in world tin prices, the prospect for an upswing in mineral exports, the expansion of domestic agricultural production now being realized, and the encouraging reports of Gulf Oil Company on Bolivia’s petroleum reserves, it now appeared that Bolivia was on the verge of economic recovery.

Despite these encouraging signs, the country’s internal financial situation was still desperate, and given the extreme political pressures to which President Paz is being subjected from the extreme left and Communist elements, it is most important that the Bolivian Government be able to buy time to prevent imminent collapse. The Ambassador said President Paz wished the Secretary to have this background against which to assess the urgency of the requests set forth in the President’s two letters to President Kennedy.

The Secretary then asked the Ambassador what the prospects were for bringing order into the Bolivian labor movement. The Ambassador replied that considerable progress had been made. He said that the Bolivian Revolution of 1952 had brought about drastic changes in the social order and that organized labor in Bolivia had taken advantage of its newly gained position of power by demanding a voice in and veto over the decisions of management. The Government of President Paz, the Ambassador said, has been trying to operate in a democratic framework and to be responsive to democratic procedures without compromising the social democratic structures and processes. He said that labor procedures are being changed and that the situation is improving, but that all abuses could not be corrected overnight. The Ambassador cited as an example the current chauffeurs and teamsters strike in which labor demanded that it continue to have the right to name the municipal and national Director General of the Bolivian traffic police and violently opposed the Government’s proposal to incorporate the Traffic Police into the National Police Organization (Carabineros). Andrade claimed that the Government had now won the first round in this fight and that the GOB would hereafter name the directors of traffic police.

The Secretary then said that the Department had received President Paz’s two recent letters to President Kennedy, one of October 4, 1961 setting forth an emergency development program, and one of October 6, 1961 requesting an emergency credit. The Secretary said that these two letters were being carefully studied by the appropriate offices in the U.S. Government concerned with economic aid, that it was expected that some conclusions would be reached quickly. The Department of State, the Secretary said, would see that these matters are expedited.

The Secretary then asked Dr. Fitzgerald when it might be expected that an answer could be given to President Paz, to which Dr. Fitzgerald replied that he thought it would be possible to get some initial reaction within two weeks on major parts of the program. Ambassador Andrade said there already had been long delays in getting action on the promised assistance. In the case of the Bolivian railways there was an urgent need for interim financing. The GOB was trying to get the IBRD to undertake a study of the Bolivian transportation systems with a view toward obtaining long-term financing from IDA for rehabilitation of the Bolivian railways. In the meantime the GOB was negotiating with the private British management to resume operation of the railways for an interim period of two years. Dr. Fitzgerald responded by saying that the U.S. Government was awaiting a reply from the Bolivian Government as to steps being taken to fulfill conditions requisite for U.S. assistance to the railways.

The Secretary thanked Ambassador Andrade for his visit, assured him that prompt consideration would be given to President Paz’s letters and that President Kennedy would respond as soon as he had had an opportunity to study the new proposals.

1. Bolivian request for emergency assistance. Confidential. 2 pp. DOS, Secretary’s Memoranda of Conversation: Lot 65 D 330.