140. Telegram From the Department of State to the Embassy in Bolivia1

3634. Subject: FMS for Bolivia. Ref: Bolivia 10394.2

1. Confidential entire text.

2. We share your views on the desirability of encouraging the evolution of an appropriately apolitical and constructive role for the Bolivian military, as the process of return to civilian rule continues. As you point out, our FMS program can be useful in this regard. At the same time, however, we do not wish to encourage Bolivia, in its present strained economic circumstances to set aside large sums for military materiel. We would be prepared to consider, within limitations discussed in paragraph 3 below, modest Bolivian requests for FMS credits to cover sensible needs, including especially equipment with civilian as well as military uses. The hospital and the Italian transport aircraft are cases in point.

3. As you know (Dept’s 328029),3 proposals for FY 1980 security assistance programs which we are submitting to the congress (probably in February) included a figure of 5.5 million dollars for FMS credits for Bolivia. Although this is a drop from 6 million in 1979, all other Latin American programs (with the exception of Panama) are taking considerably larger proportionate cuts from FY 1979 levels. This is a reflection of White House and OMB determination to hold down overall security assistance spending.

4. If elections are held in Bolivia and a civilian led government is installed this would reflect the development of the democratic process and Bolivia would have a high priority among Latin American countries in the unlikely event that any FY 1980 FMS funds become available for reprogramming. Obviously, however, nothing can be promised to [Page 436] the GOB at this point. The Bolivians would have to demonstrate solid, reasonable needs which could not be met within their 5.5 million dollar allocation (bear in mind that credit terms for military equipment in FY 1980 may not be as favorable as those we hope to get for their hospital in FY 1979).

5. In short, you were correct in telling Azero and Herrera that (1) a return to elected civilian rule in Bolivia and (2) the presentation of a modest, reasonable shopping list would facilitate a positive US response on FMS, but prospects for more than 5.5 million dollars are limited. Even that sum will require congressional approval, and should not be communicated to the Bolivians until our proposal is formally sent to the congress, probably in February 1979.

6. We are concerned by renewed reports that the GOB is examining tempting offers from other suppliers. At some early opportunity you should caution the GOB against embarking on an arms purchasing spree. Peru’s experience is instructive in this regard, with orders now being cancelled because of severe economic straits which require massive debt rescheduling. Bolivia is in a rapidly deteriorating economic situation, facing a BOP deficit of more than $100 million, and the IMF is urging belt-tightening measures. It can ill afford the luxury of new and expensive weapons systems. Bolivia has an excellent record on avoiding heavy military expenditures, which is one of the reasons that foreign donors and international financial institutions have been able to assist to such a large degree in financing Bolivia’s needs for investment in economic development. Were the Bolivian government to divert substantial sums from urgent economic needs to impractical arms purchases, it would become more difficult for us to argue to the congress that the US should use its scarce resources to alleviate Bolivia’s difficult economic circumstances. In our view, the GOB would be well advised to continue its policy of restricted arms purchase, not trying to compete in an arms race with Bolivia’s neighbors and relying more on the OAS system and the Rio treaty for its security than on the force of its own arms.

  1. Source: National Archives, RG 59, Central Foreign Policy File, D780008-0038. Confidential; Immediate. Sent for information to Lima, Quito, Santiago, DIA, and USCINCSO. Drafted by Johnson; cleared in ARA/AND, PM, AID/LA/SA, by Bushnell, and in draft by G. Jones (ARA/RPP); approved by Johnson.
  2. In telegram 10394 from La Paz, December 27, 1978, Boeker reported on a discussion with Bolivian Army officials who pressed “the need for the Bolivian Army to acquire adequate equipment for its training, conventional military and civic action roles if the military was to stay happy out of government.” Boeker replied that he “recognized a problem and sympathized with the need to address it in a sensible way that would have broad impact on the army’s sense of military professionalism.” (National Archives, RG 59, Central Foreign Policy File, D780535-0292)
  3. Telegram 328029, December 30, 1978, to multiple diplomatic posts. (National Archives, RG 59, Central Foreign Policy File, D780540-0018)