82. Memorandum of conversation, August 13, among Ambassador Facio, former Ambassador Esquivel and Edwin M. Martin 1
SUBJECT
- Costa Rican Budget Problem
PARTICIPANTS
- His Excellency Gonzalo Facio, Ambassador of Costa Rica
- His Excellency Mario Esquivel, former Costa Rican Ambassador to the United States and a former Foreign Minister
- ARA—Assistant Secretary Edwin M. Martin
- CAP—Mr. John W. Fisher, Deputy Director
Budget Problem
Mr. Esquivel, former Costa Rican Ambassador to the United States and a former Foreign Minister, said that he is now a private citizen of his country, and as such he would like to give Mr. Martin his views on the budgetary situation there. While he left the Administration political party (PIN) several years ago, he is in contact with leaders, and Costa Rican President Orlich knew about and approved his coming to Mr. Martin about the fiscal situation.
Mr. Esquivel said the present Administration inherited a serious budget deficit from the outgoing Government in May of this year. He said the deficit was not the result of dishonesty, which the Costa Ricans do not tolerate in Government, but of some irresponsible fiscal management, together with a variety of economic reasons. In the event Costa Rica is unable to obtain the emergency help needed from the United States, it will have to resort to dangerous inflationary internal credit operations to stave off bankruptcy.
Mr. Esquivel said he understood that the American Embassy had forwarded to Washington a memorandum on the Government’s budg[Typeset Page 214]etary difficulties, and he hoped that the Department would be able to act promptly on the Costa Rican request.
Mr. Martin said the Department had received the Embassy’s report on the budgetary problem. It seemed to reflect a few suggestions which he had offered during his recent visit to Costa Rica. He said the Department was giving intense study to the Costa Rican budget matter. Mr. Fisher added that several experts are [Facsimile Page 2] working out the best means of reaching early decisions on the issues raised. He said the Department and AID may seek certain additional information from our Embassy.
Mr. Esquivel dwelt on the success of Costa Rica in maintaining itself as a democratic stable Republic, and said failure to meet this fiscal emergency would be a step backward. He wondered whether he should feel optimistic about the prospects of help. Mr. Martin said he should probably be somewhat optimistic, and said he hoped that the Department would be in a position to give definite answers in the near future.
Coffee
Mr. Esquivel and Ambassador Facio said that the news from the Coffee Conference in New York was not encouraging except for the fact of the strong position which the United States was taking. They thought that much of the difficulty came from lack of agreement among the producers themselves, and from the practice of giving undue representation to the coffee industry on the national delegations. The businessman was certainly entitled to have his interests considered, but the decisions must be taken and negotiations carried out by Government representatives if the larger interests at stake are to be protected.
Mr. Esquivel said a difficult problem for the high quality coffee producers is their inability to segregate their product from the low quality coffee of Brazil, whose big crop depresses the market. He thought the U.S. Food and Drug Administration should have jurisdiction over coffee imports and would surely exclude large quantities of inferior Brazilian coffee if it did. Central American and other high quality producers should find ways to keep their fine grades from disappearing in soluble coffee products where quality differentiation is hard to detect.
- Serious budget deficit in Costa Rica; coffee conference in New York. Official Use Only. 2 pp. DOS, CF, 718.00/8–662.↩