259. Memorandum From Secretary of State Rusk to President Kennedy 0
SUBJECT
- Guinea Aid Program
In your memorandum of July 5,1 you asked whether we could finance the big dam in Guinea if we omitted all other elements of our aid program for that country and what it would cost in dollars to do this.
The big Konkoure hydro-electric project would cost about $180-200 million, but it would serve no purpose unless it were associated with an aluminum smelter to use most of the power generated. Depending upon the size of the installation, a smelter would cost anywhere from $115 million to $160 million. The entire project would, therefore, cost from a minimum of about $295 million to a maximum of about $360 million and would take about five to six years to complete.
[Page 400]The projects in the aid program which Ambassador Attwood proposed to the Guinea Government involve a total cost of about $45-50 million over a period of two to three years. This program is composed of $34-40 million for a small version of the Konkoure Dam plus about $10 million for other projects such as industrial development, a school for public administration, and English language training.
Therefore, if the United States were to undertake only the dam and related smelter the total cost would be $250-310 million more than we presently contemplate undertaking, assuming Sekou Toure accepts our package program.
In addition to the preceding, however, we are also considering financial assistance for the development of the Boke bauxite resources by a private Western consortium. Here the amount of the United States commitment could be as much as $130 million in loans plus a guaranty of equity investment for which we would have to reserve as much as $15 million, or a total of $145 million. The entire complex—Konkoure, smelter, and Boke—could cost us anywhere from about $440 to about $500 million.
If we were to undertake the big Konkoure project, we would, of course, seek participation by the IBRD and third countries. We have as yet no assurances that Guinea would join the Fund and Bank, and the chances are that other non-US Government participation will be limited. If the US were to undertake financing this complex (or even the small dam), we would be obligated to provide the entire sum, reduced only to the extent we could get participation by others.
The sums involved would appear to require a disproportionately large amount of US aid to Guinea relative to other demands on our limited aid resources. More friendly African states would react adversely if the US were heavily involved in the financing of a large dam and other extensive facilities in Guinea especially following announcement of our support of the large Volta project in Ghana. Several of these nations have also requested or indicated they will be seeking US assistance to construct large dams, (i.e., Kouilou, Sotuba, Inga and Niger dams). We have, therefore, concluded that we should not make any offer on the big Konkoure project at this time, but should permit Ambassador Attwood to continue exploring our current proposals with Sekou Toure, and await the results before developing any alternative programs in Guinea.
- Source: Department of State, Central Files, 770B.5-MSP/7-561. Secret. Drafted by Logan and Habib on July 11.↩
- Document 258.↩
- Printed from a copy that indicates Rusk signed the original.↩