834.51/312½
The Minister in Paraguay (Howard) to the Secretary of State
[Received September 13.]
Sir: I have the honor to inform the Department that matters are developing along the lines indicated in the last paragraph of my confidential despatch No. 1257 of August 22.2 Some persons in the government feel that President Estigarríbia acted somewhat prematurely in gratuitously offering to go the whole road with us in the matter of hemisphere defense without first having assurance that the main weakness of his administration—its difficult financial position—could be remedied.
I understand unofficially that to meet this situation some members of the cabinet have been attempting to elaborate some sort of plan for further financial assistance from our Government, each one throwing into the pot such ideas as particularly appealed to him.
A few days subsequent to President Estigarríbia’s remarks mentioned in my despatch above cited, Mr. Pablo Max Insfran, the Minister of Public Works, and Dr. Justo Pastor Benitez, Minister of Hacienda and Acting Minister of Foreign Affairs, requested an opportunity to discuss the matter and explain their points of view. I replied that I would be glad to listen to anything they had to say as it was always a pleasure to me to be of assistance to Paraguay when possible. I cautioned them, however, that in so doing I would be acting in a purely personal capacity as a friend of the family and that nothing I might do or say would imply any opinion or course of action on the part of my Government. I added that this could be ascertained when a definite plan was formally presented.
They discussed general conditions in Paraguay for the better part of an hour, pointing out the desire of their government to cooperate with our own in defensive measures. They emphasized the fact that Paraguay could not render effective cooperation unless the Estigarribia [Page 1125] Administration were firmly maintained and that this depended in large measure upon its financial stability now seriously threatened by conditions resulting from the war.
They then went on to mention in a general way several projects which in their opinion would tend to bring about the desired stability but they did not present any proposition in detail. I questioned the feasibility of some of the projects mentioned and stated that as to others I would want to have more detailed information before attempting to form an opinion even in my own mind. They stated that they would consider the matter further, doing a little checking up and formulating a more definite plan.
On August 30 I was again requested to meet with the two Ministers in informal conversation. At that time a rough draft of a plan for financial assistance and an accompanying memorandum were read over. Several projects which had been previously suggested and which had seemed somewhat fantastic to me were not included in the discussion. I pointed out that this plan was still in a nebulous state in that they had not presented full or detailed information showing the necessity or advisability of the various projects nor as to a feasible manner of carrying them to successful conclusion. I asked them to tell me frankly just what they had in mind and what they expected of me. They admitted the vagueness of their plan stating that it did not pretend to be more than a general summary which they desired me to know and to inform the Department of what they were trying to do. They stated that a definite plan with supporting data would be formally presented through the Paraguayan Legation in Washington and that during the present month someone from here, probably Dr. Pedro Espínola, would be sent with full information to assist their minister in the presentation.
I inquired as to whether they had discussed this matter with their financial adviser, Mr. Eric Lamb, suggesting that he could probably be of assistance to them in whipping the plan into shape. They told me that the matter had not yet been discussed with Mr. Lamb since a request for financial assistance in conjunction with the project for hemisphere defense was still a secret between the President and the three of us there present.
The following day the so-called financial plan and accompanying memorandum were delivered to me. In compliance with the request of the Ministers to inform my Government of what they were trying to do, a copy and translation of each are enclosed. Due to the summary nature of the plan and the absence of supporting data, and also the fact that a detailed plan with such data is to be presented to the Department through the Paraguayan Legation in Washington, no comment as to the individual projects is being made at this time.
[Page 1126]From my previous conversations with President Estigarribia, from the memorandum submitted by the Ministers and from the general tone of their conversation it is evident that Paraguay is ready and willing to actively cooperate with us in defensive measures, even to the extent of granting such naval, military or air bases as we may desire. In fact, Mr. Insfran stressed the idea that an air base in Paraguay would best serve for the protection of both coasts and all this section of South America. He stated that such a base should be prepared and ready for emergencies even though for the time being no planes might be stationed here. He further remarked that the establishment of such a base in Paraguay could not be objected to and would not be open to the same criticisms which might ensue in Brazil or the Argentine were it to be established in either of those countries.
I do not mean to imply that the raising of a question of financial assistance at this time is solely a case quid pro quo for I am convinced that President Estigarribia and his government, as well as a great majority of the Paraguayan people, are friendly to us, opposed to the totalitarian powers, and disposed to join with us in defensive measures of protection against them. However, I do believe that they hope and expect financial assistance from us to strengthen the internal position of the government if they are to cooperate effectively with us.
If I read the situation here aright, the financial difficulties of the Estigarribia Administration constitute its greatest weakness and may well become acute.
The Administration’s point of view, as I interpret it, may be summarized as follows:
If the present Government of Paraguay is willing to go along unreservedly with us in political and military defense measures, we should be willing to grant the financial assistance necessary to support it in carrying out that program.
Respectfully yours,