340. Telegram From the Embassy in Ecuador to the Department of State1

1422. To be delivered 8:00 a.m. October 17, 1967. Subject: Meeting with FonMin2

Chargé called on FonMin Coerr, GOEUSG relations, and U.S. assistance policy to Ecuador. Other topics (LA armaments developments, Plaza OAS candidacy, Ecuador–Peru relations) will be treated in septels.3
ForMin asserted GOE request for Ambassador Coerr’s recall based on “undeniable fact” that he had become “obstacle” to continued friendly relations between GOE and USG. FonMin said President Arosemena could not be expected sit down and talk in frank and cooperative spirit with Ambassador who had ridiculed him in public speech (FonMin referred to humorous anecdote about $350 allowance and to analogies to football contained in speech as particularly offensive to President). In view this situation, FonMin said, President and he decided best way to put GOEUSG relations back on right track was to request “removal of obstacle as soon as possible”. FonMin then stated at length that the GOE had always sought and would continue to seek only the closest and most cordial relations with USG.4 (He then shifted to other matters treated in septels.)
Chargé responded that USG position re recall Ambassador Coerr had been made amply clear in Department’s note of October 8 to Ecuadorean Embassy, and that there was nothing further to add except to reiterate as stated in note, USG also desired maintain traditionally friendly relations with GOE.
Stating that USG sincerely wished USAID loan agreements with GOE to constitute basis for fruitful cooperation rather than discord, Chargé then proposed bilateral review of existing loans, and suggested that GOE designate reps to meet with USG reps to consider each loan in detail. Purpose of review would be to determine specific GOE objections to terms of any loans. After GOE objections specified, USG would attempt satisfy these objections, or, failing this, would propose that loan or loans be terminated by mutual accord.
Re new loan applications to AID, Chargé stated that in interest clarifying situation, USG believed review of existing loans should be completed Prior to any consideration new applications. Chargé emphasized that new loans would then be examined from standpoint AFP criteria, but that none would be approved unless GOE gave Prior assurances re their acceptability.
FonMin replied that in principle review seemed sound method to arrive at differences and to attempt solve them. He asked Chargé put proposal in writing, after which he would consult with President Arosemena, who he thought would agree with idea (Embassy recommendation on how to put proposal in writing to follow).5 FonMin did not show concern about postponement new loan applications. He added that if review existing loans proved successful, same method could be applied to new loan applications thus ensuring beforehand their acceptability to GOE. Re meeting AFP criteria, FonMin said that GOE largely endorsed these, and recalled that President Arosemena had refused to sign Presidents’ declaration at Punta del Este not because he disagreed with contents (which FonMin said GOE supports completely), but because declaration did not go far enough.
Chargé said Embassy understood GOE performance vis-à-vis AFP criteria would be subject of Oct 20 CIAP meeting. FonMin said he aware of meeting, but confessed he did not know who GOE rep would be since Intriago had resigned as FinMin. Chargé stressed importance of meeting and of GOE attendance. FonMin said he intended check to make sure GOE competently represented.
Re recent negotiations between GOE and European commercial lenders, Chargé mentioned dangers inherent such borrowings on short-term, high interest-rate conditions, and pointed out obvious contrast with concessional terms offered by AFP lending agencies. FonMin replied he first to admit AFP agency terms much more favorable, but asserted that urgency Ecuador’s needs might oblige GOE to seek loans on harder terms. He said country could not always wait the “months and years” required to negotiate loans from AFP agencies. In reply to Chargé’s question if GOE had projected its future debt-servicing burdens if it indulged in long-scale borrowing on hard terms, FonMin asserted that if proceeds wisely invested, loans could pay for themselves in increased productivity. Alluding to domestic political factors, FonMin said “government which expects some day to return must show results when first in office.” He referred to President Arosemena’s promise to build one school a day for rest of his term, and implied that promise had to be kept no matter where funds came from.
Status PL 480 authorization was not raised during meeting.
Comment follows.6
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, AID(US) 9 ECUADOR. Confidential; Immediate. Repeated to Guayaquil and USCINCSO for POLAD.
  2. In telegram 51806 to Quito, October 10, the Department forwarded instructions for the meeting with Prado. If Prado raised the issue of AID in Ecuador, the Embassy should propose a joint review to determine whether any loans required termination. In this event, the Embassy should also “make clear that we are suggesting this action as a result of President Arosemena’s statements of September 26 and that it is not in retaliation for Ambassador Coerr’s recall.” (Ibid.)
  3. Telegram 1444 from Quito, October 17, reported discussion on the candidacy of former President Galo Plaza as OAS Secretary General. (Ibid., OAS 8–3) No telegram has been found reporting discussion of “LA armaments developments” or “Ecuador–Peru relations.”
  4. Wym and Otto Arosemena, it seems likely that the evil genius behind the demand for Wym’s recall was Foreign Minister Prado, who apparently took full advantage of Otto’s vanity and his impetuousness.” (Letter from Phillips to Lubensky, December 21; ibid., ARA/EP/E Files: Lot 70 D 247, POL 17 Persona Non Grata)
  5. In telegram 1443 to Quito, October 18, the Embassy forwarded its recommendations. (National Archives and Records Administration, RG 59, Central Files 1967–69, POL 17 US–ECUADOR) The Department instructed the Embassy to submit for approval any written communications to the Ecuadorian government regarding economic assistance. (Telegram 56494 to Quito, October 19; ibid., AID(US) 9 ECUADOR)
  6. No further comment from the Embassy has been found.