74. Telegram 133974 From the Department of State to the Embassy in Bolivia1

133974. Subject: FY 1975 FMS Allocations. Ref: La Paz 3718.

1. Defense message 090304Z May 75 informed MILGPs/MAAGs of tentative FY 1975 FMS credit allocations. Embassy may now proceed on basis of dols 4.0 million FMS level for Bolivia and inform GOB that USG currently processing FMS credit justification for this amount. FYI. Assuming interagency approval of this credit, which we believe will [Page 208] be forthcoming well before June 30, 1975, DOD will proceed with signature of credit agreement in Washington before that date. End FYI.

2. Department appreciates fact that dols 20.5 million credit level for Peru may give rise to some concern on part of GOB. Following are points which can be used with GOB officials. Our Military Assistance Programs in a given country include various component parts. Bolivia has traditionally had, and continues to have, a MAP grant matériel program in addition to FMS credits, while Peru receives no MAP grant for matériel. While the Bolivia MAP grant program is not large in absolute terms, it represents 50 percent of the Latin America MAP program. As the MAP grant program in Bolivia is phased out, we expect to increase the level of FMS credits in order to continue to be responsive to Bolivian Armed Forces needs. Additionally, one cannot ignore the fact that countries with larger military establishments, and the economic base to support them, would normally expect a commensurate proportion of FMS credits, i.e. Argentina, Brazil and Chile, among others. As a policy matter, however, USG discourages purchases of weapons systems which would significantly increase offensive capabilities. FYI. For this reason, we are holding Peruvian requests for 280 additional APCs and four missile systems “under review”. Thus, besides the purchase of A–37B aircraft (which were offered to Bolivia), the bulk of Peru’s FMS credits will be used to purchase non-combat vehicles, a water barge, and medical equipment. End FYI.

  1. Summary: The Department provided talking points for the Embassy to use in explaining FY 1975 FMS allocations for Bolivia.

    Source: National Archives, RG 59, Central Foreign Policy File, D750200–1009. Confidential; Immediate. Drafted by Williams; approved by Bloomfield, Weber, Weany, and Karkashian; and cleared by Ryan. In telegram 3718 from La Paz, May 31, Stedman requested “guidance as to how to answer any queries about $20.5 million [FMS] allocation to Peru in light [of] that country’s major arms build-up, relations with Chile, and sharp public differences with USG on several fronts, which have been well publicized here.” (Ibid., D750191–0451)