342. Action Memorandum From the President’s Special Assistant (Rostow) to President Johnson 1

SUBJECT

  • IDB Loan to Ecuador
[Page 727]

Since Punta del Este no new AID loans have been given to the Arosemena Government in Ecuador. Disbursements on existing loans have been held up pending a review of which ones Ecuador wants badly enough to meet the self-help criteria. This process will be strung out for the remainder of Arosemena’s tenure (until September 1, 1968).

The Inter-American Development Bank (IDB) will shortly have to decide on a $3 million loan to resettle small farmers under the agrarian reform program. The loan will be on concessional terms from the Fund for Special Operations to which we are the principal contributor and where our vote is decisive.

The question arises whether your injunction against lending to Arosemena applies to the IDB as well as AID.

I recommend that you not carry the freeze to the IDB where our opposition to a small loan to improve agriculture which meets all IDB criteria will be taken as vindictive on our part.

Walt

OK to approve IDB loan2

Freeze also applies to him

Call me

  1. Source: Johnson Library, National Security File, Country File, Ecuador, Vol. I, 12/63–11/68. Confidential.
  2. This option is checked.