89. Despatch 419 from Quito, February 21
REF: Embassy D–411, February 2, 1961. SUBJECT: U.S. Economic Assistance Policy Towards Ecuador.
As reported [1 line not declassified] told Ambassador Bernbaum that henceforth the U.S. should use its economic assistance as a bargaining counter to induce President VELASCO to cooperate with the U.S. on the Cuban and Communist issues. [less than 1 line not declassified] Velasco is subject to manipulation by the U.S. in this way because he needs U.S. aid to carry out his promises to the Ecuadorean people of economic development and social reform.
Although the [less than 1 line not declassified] remarks provide a useful reminder that we should continously evaluate our economic assistance to Ecuador in the light of our overall policy objectives, they should not lead us to contemplate any abrupt change in our economic assistance policy, for the following principal reasons:
1. An attempt to use our economic assistance to pressure Velasco politically would almost certainly backfire.
2. Our economic assistance program in Ecuador is designed to serve a number of objectives, most of them of a long-term character; such a program cannot be readily turned on and off like water at a tap.
These two points are expanded in the following discussion:
1. While [less than 1 line not declassified] Velasco needs U.S. economic assistance and can be influenced by it is partially true, this does not necessarily mean that we can or should make blatant use of particular bits of aid to secure his cooperation on particular issues. It is doubtful that so sensitive and willful a man as Velasco would submit to such treatment, however desirous he may be of obtaining U.S. economic aid. Moreover, there is room for doubt that he considers the U.S. the sole and indispensable source of outside assistance. Faced with a U.S. policy of parceling out [Facsimile Page 2] aid bit by bit in return for corresponding political cooperation, we might well decide to turn—or threaten to turn—to the Communist Bloc for aid. We would then have either to accept aid [illegible in the original] of Bloc penetration of Ecuador or abjectly reverse our own aid policy to keep the Bloc out of this country.
[Typeset Page 227]While rejecting a policy of extending economic assistance to Ecuador with conspicuous political strings attached, we should realize that our aid is intended to (among other things) influence the Ecuadorean Government’s policies, both domestic and foreign. This could continue to be one of our purposes, but we should employ the lever provided us by our aid program as subtly and as indirectly as possible, using economic assistance as one means of gradually shaping Ecuador’s public opinion and national policies to suit U.S. interests. The thinly-disguised blackmail [less than 1 line not declassified] is not likely to have the intended effect on Velasco, as noted in the preceding paragraph, and it might well alienate other elements in Ecuador on which our aid might be expected to have favorable long-term effects.
2. A program of economic assistance seriously designed to be of long-term helpfulness to the recipient country cannot be turned on and off like water at a tap, nor can it be changed in direction or composition on short notice. Such a program derives its justification from the belief that long-run U.S. interests will be served by it. It may be argued that there will be no long run for us in Ecuador if we fail to surmount our short-run problems with Velasco. This argument contains an element of truth, but can be countered with the argument that heavy-handed use of our aid program to induce political cooperation offers little promise of resolving these short-run problems. Success is far more likely if the image we present to Velasco—and Ecuadoreans generally—is one of willingness to extend reasonable and justifiable economic assistance as a gesture of our genuine interest in Ecuador’s well being.
This posture is the most promising for the long-run and in relation to the variety of objectives towards which our aid program is directed. In a sense it may be said that we have bigger fish than Velasco to fry in Ecuador. We must accommodate ourselves to Velasco at the moment, to be sure, but our broad policies towards Ecuador—including our economic assistance policy—must be conceived with a view to furthering long-term political and economic trends favorable to U.S. interests.
In the Embassy’s view, this can best be done by continuing our existing economic aid policy, keeping in mind that we expect our aid to further economic and social development in Ecuador, create a favorable image of the U.S. in the minds of the Ecuadorean people, etc., as well as to influence Ecuadorean foreign policy at a given moment. While continuing our present aid policy, we should evaluate with meticulous care all aspects of our aid program. Each element of the program should meet two principal criteria: (a) It should fill an important Ecuadorean need to the satisfaction of which the Ecuadoreans themselves are willing to make a significant contribution in effort and resources; (b) It should show promise of contributing to the achievement of overall U.S. objectives in Ecuador.
[Facsimile Page 3] [Typeset Page 228]These criteria should be applied in a process of continuous reexamination of existing assistance projects and of new projects proposed. Ideally, thus, the program should undergo continuous, gradual reshaping to meet our shifting policy needs, but abrupt changes of direction and composition should be recognized as counterproductive in the absence of truly basic changes in Ecuador’s political situation.
As implied in the foregoing discussion, the Embassy does not believe there have been such basic changes, despite the [less than 1 line not declassified] pessimistic remarks of February 1. It seems to the Embassy that Velasco is less inclined toward Castro or the Communists, than he is desirous of not making any unnecessary enemies for Ecuador. It would be naive to suppose that he is a confirmed friend of the U.S., but it would be equally foolish to conclude prematurely that he is on the verge of allying himself with Castro. The Embassy could be mistaken in this analysis, of course, and will continue to follow developments closely.
SUMMARY COMMENT
The [less than 1 line not declassified] remarks of February 1 should be taken as a timely reminder to continue to evaluate carefully the usefulness of our economic assistance program in Ecuador. For the time being at least we should not contemplate modification of our economic assistance policy. Especially, we should avoid any appearance of foot-dragging on pending Ecuadorean requests for loans, technical assistance, etc. Our posture should continue to be one of standing ready to give aid which is sincerely desired and genuinely needed. This does not imply that we should seem to importune Ecuador to accept economic assistance from us. On the contrary, we should be quick to withdraw our aid—or offers of aid—in any area where the Ecuadoreans indicate it is not desired.
For the Ambassador:
cc: Amcongen GUAYAQUIL;
Ecuador Desk; USOM/E.
Clearances:
Mr. Rogers
Mr. Little
- U.S. economic assistance policy toward Ecuador. Confidential. 3 pp. DOS, CF, 822.10/2–661.↩