740.00112A European War 1939/35265: Airgram
The Secretary of State to the Ambassador in Bolivia (Boal)
A–710. Reference your despatch no. 2083 of August 1352 and the memorandum of conversation enclosed therewith. From Espejo’s53 remarks that $2,000,000 will not get very far in the replacement program, it would seem that he has the expectation that the replacement program is to be financed by United States funds substantially to the full amount of the purchase price of the Axis properties to be transferred. It is probable that this expectation is being reflected in the Bolivian Congress. While your exposition of the financing procedure may have largely revised Espejo’s expectations, the Department believes that it should be made entirely clear to the Bolivians that this Government sees no necessity for financing to that extent with United States funds.
It will be recalled from the conversations held while you were in Washington that the Department favors the exercise of considerable caution in making immediately available Export-Import Bank funds where a stand-by credit would be adequate to meet the exigencies of the replacement program. However, it will also be recalled that as a result of those conversations the Department agreed that various factual situations might arise requiring a flexible approach and that, therefore, the Department and the Export-Import Bank are ready to give sympathetic consideration to proposed financial arrangements in specific cases of replacement, even if such proposal should involve some immediate advance of Export-Import Bank funds beyond the amount that might theoretically be absolutely necessary over and [Page 604] above a stand-by credit, provided that the proposed financial arrangement is recommended by you and is satisfactory to the appropriate officials of the Development Corporation from the angle of securing adequately the Bank.
The Department does not anticipate that in each specific case of replacement actual cash from the Bank will be advanced (beyond the needs of such payments as must be immediately or presently made to the vendors) simply to create a frozen account of an amount roughly equivalent to the aggregate value of all properties being transferred. It is believed that it might be worthwhile to clarify this point with the Bolivians to avoid the danger of a misapprehension on the part of the Bolivian Congress which may lead to recriminations and failure to push the replacement program in the event that the mistakenly expected financial aid is not forthcoming.
You are authorized to clarify the above point of view with the appropriate Bolivian authorities in event that you should feel that, despite the explanations which you have already made, some possibility of misinterpretation on their part still exists.