Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

734.5 MSP/10–2253

The Ambassador in Paraguay ( Shaw ) to the Department of State

[Extract]

restricted
No. 217

Asunción , October 22, 1953.

Ref:

• Despatches: Totec 9, Aug. 21, 1953;¹ Emb 185, Oct. 6, 1953;² Tousfo A–37, Oct. 20, 1953;³ Emb 214, Oct. 20, 1953⁴

Subject:

• United States-Paraguayan Joint Commission for Economic Development

[Here follows discussion concerning the legal basis for the establishment of the Joint Commission.]

There were only two joint commissions set up in Latin America by the above provision of law.⁵ One was in Brazil which was organized for a specific purpose and which was eliminated as of July 31, 1953. The other is the commission in Paraguay which makes this organization unique in the Latin American technical assistance program. Technical assistance projects are developed, requested, considered, and approved or rejected in all of the other countries of Latin America by direct negotiation and through normal diplomatic channels.

As of Fiscal Year 1953 Paraguay had the third largest technical assistance program in Latin America, being surpassed only by Brazil and Peru. There is no doubt that this program in recent years became overdeveloped, or at least it developed more rapidly than the economic and political structure of Paraguay could absorb it. There is considerable reason for believing that the Joint Commission, originally designed as a neutral ground for developing technical and economic aid, may be partly responsible for the type of development of the program since 1950.

During the past year there have been considerable periods of inactivity, and those sessions that were called, mostly on the initiative of this Embassy, were for the purpose of requiring careful justifications of projects, which were not always forthcoming, and which, therefore, resulted in denials of applications or reductions in operations. The Commission up until recently has been considered by the Paraguayan Government as little more than a body where requests for technical assistance may be presented with almost a certainty of approval. The attitude of the Government on one occasion was illustrated by the comment of the late Minister for Foreign Affairs Dr. Bernardo Ocampos, who said in effect, at a meeting when the American Ambassador indicated that a request might not be approved, and with some surprise, “You understand this is an official request of the Paraguayan Government”, indicating that denial of the request was just out of the question. That was an attitude I took some care to alter.

On the other hand, the Commission has from time to time, and probably still could serve a useful purpose as a meeting place where projects could be discussed at length around a table at a high level and pretty well justified or rejected before ever coming in formal manner to the Embassy or to the Department of State. It is not believed, however, that the Commission has ever done much more, or is it equipped to do more now, than to follow out the first duty specified in the law; namely, to examine the requesting country’s requirements with respect to technical assistance. There has never been any budget or organization for making extensive studies of the country’s resources and potentialities. Such data as have been considered have been obtained from other sources, namely the Economic Section of the Embassy and certain research done by the Office of the Director of Technical Cooperation of IIAA (now USAOM). The detailed and careful examination of policies to remove deterrents to and otherwise encourage the introduction, local development, and application of technical skills and particularly the creation and effective utilization of capital, both domestic and foreign has not been done by the Commission. Neither have any useful studies or reports been prepared by the Commission as such, nor is any organization or funds available for that purpose.

At one point United States technicians were sent to Paraguay on the theory that they were being attached to the Joint Commission, but the Joint Commission had no budget and, as a matter of fact, the technicians were first carried on the Embassy payroll and later transferred to the IIAA local office.

The economic studies and planning contemplated in Section 410 of the Act are now being done largely by the National Planning Commission of the Paraguayan Government (through the UNTA) working under the Economic Council, which in turn is essentially the Cabinet. There was an effort to have the Director of Technical Cooperation sit in on the National Planning Commission, possibly with the idea of carrying out some of the original ideas of Section 410. But, due to the necessity of direct intervention in government affairs and the political repercussions that might have been expected, the Department disapproved such action. The National Planning Commission, however, went ahead under the direction, and largely on the initiative and energy, of the head of the United Nations public administration group. It has lately been stated that the National Planning Commission (UN) now contemplates obtaining background data and prepare justifications for technical assistance projects to be presented to the United States under its bi-lateral agreement. Presumably these requests, when prepared and documented by the National Planning Commission, would be referred to the United States-Paraguayan Joint Commission for Economic Development for approval, a rather second-hand procedure.

The late Minister for Foreign Affairs Dr. Bernardo Ocampos early in 1953 presented the American Ambassador with an informal memorandum⁶ suggesting that the functions and operations of the Joint Commission be overhauled and redefined. I did not think the time was opportune for such reorganization at that moment and Dr. Ocampos did not press his suggestion. He has since died and in view of the considerations mentioned above, it is believed that action should now be taken on defining the future policy of the Commission.

[Here follows discussion of the administration of the Joint Commission.]

It will be seen that the Joint Commission has never been taken very seriously by either government. It simply has been a meeting place to discuss technical assistance projects, and nothing more. Offices were set up in the Parfina Building, consisting of a secretary’s office and a conference room. These are paid for by the Paraguayan Government (the rent was to be raised in July). The conference room is not used except on the rare occasions when there are meetings. The secretary’s office has for at least the past year been occupied and used by the secretary of the Director of Technical Cooperation, at present it is used by the Program Officer, and the conference room is used principally for the frequent meetings of the Program Planning Committee (now USAOM).

In the meeting of April 17, 1951, the Minister for Foreign Affairs requested monthly reports from the technicians who were presumably attached to the Commission, and the United States technicians not included in any one of the three servicios did make more or less regular reports in Spanish of their activities each month. These reports were frequently late in being submitted and there is no evidence that they were ever read or any action taken there. In the meeting of January 27, 1953, I pointed out the above fact and suggested that the reports be discontinued, which the Minister readily agreed to do, at the same time indicating that he had never been very interested in the first place.

The meetings of the Joint Commission were frequently called by the Foreign Minister who refused to state the reason for calling the meetings and who sometimes sent out word that he was calling them as “President of the Commission”. It was evident that the Foreign Minister considered the Commission as desirable more for building up political prestige for himself than for any constructive action the Commission itself might take. It was with some difficulty during the past year that I convinced the Paraguayan members of the Commission that notices should be sent out in writing in the name of the Secretary General and that an agenda should be prepared so that the members on both sides should know why the meeting was being called.

The meetings had customarily been held in the office of the Minister for Foreign Affairs. The group simply sat in a number of chairs and there was no table or other facilities upon which to place papers, the meeting being dominated completely by the Minister for Foreign Affairs. During the year, I succeeded in having the meetings held in the conference room of the Joint Commission. While this was agreed to the Minister for Foreign Affairs was never enthusiastic about going to the conference room to attend the meetings or to the implication that the Paraguayan and United States Sections of the Commission were meeting on an equal footing. This was illustrated by the fact that on January 27, 1953, the Minister called a meeting (really citing us to appear), not in the committee rooms, but in the Foreign Office, and although I made repeated inquiries of the Secretary General he, on the instructions of the Minister for Foreign Affairs, refused to state why the meeting was being called. Upon arrival it was found that the Minister cared to discuss the possibility of having Point IV technicians serve as advisors on Planning Commission sub-committees. On another occasion the Minister called the meeting and would not state the reason, although it was held in the conference room of the Commission. Upon arrival on March 19, 1953, it was found that the Minister for Public Works desired to announce his impending trip to the United States and his proposal to solicit a loan for $7,200,000 to finance the Asunción water works. It occurred to the American Section of the Commission that the high-handed manner of calling the Commission together and informing them of the intention to solicit a loan, without having given any previous inkling of the reason for calling the meeting, was a poor approach for enlisting sympathetic consideration of the project. It appeared later, when I mentioned this fact in private conversation, that the President was given credit for the idea. I am of the opinion that it originated with the Minister himself.

It will thus be seen that many political considerations have entered into the negotiations of the Joint Commission and it might be well at this time, and in view of the now radically changed situation, to make the Embassy less vulnerable to direct pressures from the Government and to allow the technical assistance organization, under the direction of the Director of the Operations Mission to work out its projects directly with the various ministries and governmental organizations and to get full justifications before even allowing them to come up for consideration and approval by the Embassy policywise.

There have been since its inception thirty meetings of the United States–Paraguay Joint Commission for Economic Development. The record of its meetings were not kept in an orderly manner and finding and organizing them has been a difficult task. However, in the past few months these minutes have been completely rewritten in the orderly form established by the present Commission and are now on file in the Embassy and in the office of the Country Director of USAOM.

[Here follows an extensive list of Joint Commission meetings and brief summaries of matters discussed at the meetings.]

Suggested Policy and Procedure

The new Minister for Foreign Affairs, Dr. José Antonio Moreno González, appears to be an active and intelligent man. When the matter of possibly dissolving the Joint Commission was mentioned to him a few days ago his first reaction was that of opposition. He stated that he thought the Commission should continue and that it would be useful as a place where the technical aid program could be discussed at a high level, more or less informally and, as he expressed it, “face-to-face”. His point of view was that while it would place an additional burden on the Minister for Foreign Affairs, “he had to work anyway and had to eventually consider these matters; therefore, he might as well do this in the most convenient place and manner”. It was pointed out to him that there has been a change in the concept of the technical aid organization now known as the United States of America Operations Mission, and that the Ambassador will be available for policy guidance on important matters but that he is not desirous of sitting in regularly on meetings that handle current operations, and thereby having to assume responsibility for following through on them.

Experience has shown that despite good intentions, such as those expressed by the Minister for Foreign Affairs, Paraguayan officials seldom follow through on programs involving steady and concentrated work. It will be noted that the Paraguayan Government has not shown any interest in having a meeting of the Joint Commission since last May and as there were a number of matters the Embassy desired to avoid, it took no action. The result was that there were no meetings. Such matters as have come up in the meantime have been handled by direct negotiation. This includes lengthy discussions with all of the Ministers involved in technical aid matters and consideration of such important subjects as detailed budget figures. This situation could continue.

It is recommended that the United States Government do not name formally another U.S. member to the Joint Commission but allow the Country Director and the Deputy Chief of Mission of the Embassy, who is an alternate, to attend if the Government should initiate a meeting. If the Ambassador should miss a meeting or two it is quite probable that the Minister for Foreign Affairs would promptly lose interest in the proceedings.

It is recommended that the Embassy continue to point out to the Minister for Foreign Affairs the feasibility of handling technical aid requests and negotiations directly rather than through a Joint Commission.

It is recommended that as soon as possible these points of view also be conveyed to the President who takes a personal interest in this matter.

It is recommended as a final step that as soon as the President and the Minister for Foreign Affairs can be convinced of the desirability of doing it, the Commission be dissolved by exchange of formal notes, and with suitable preparation of the public through the press.

It is recommended further, however, that if the United States Government does not decide to work towards the dissolution of the Commission, the Ambassador of the United States in Asunción be named by President Eisenhower as the senior member of the U.S. Section of the Commission; and, that the Paraguayan Government be required to take the same action regarding the Minister for Foreign Affairs so as to put the Commission on a formal and effective basis for constructive work.⁷

Geo. P. Shaw

1. Not printed (MSA—FOA Message files, FRC 55 A 374).
2. Not printed; it reported on the operation and status of Mutual Security Programs in Paraguay for the fiscal quarter ending Sept. 20, 1953 (734.5 MSP/10–653).
3. Not printed (MSA–FOA Message files, FRC 55 A 374).
4. Not printed; it contained a recommendation by the U.S. Operations Mission for dissolving the Joint Commission for Economic Development (734.5 MSP/10–2053).
5. Reference is to the Foreign Economic Assistance Act of 1950 (Public Law 535), approved June 5, 1950; for text, see 64 Stat. 198.
6. Not printed.

7. In instruction A–39, to Asunción, dated Nov. 12, 1953, the Secretary stated that the Department agreed with Ambassador Shaw’s recommendations, and he instructed the Embassy to initiate the formal steps necessary to terminate the Joint Commission (834.00 TA/11–1253). On Feb. 5, 1954, Chargé Shillock notified the Paraguayan Government that the United States desired to terminate the Commission, and on Feb. 20, the Paraguayan Government expressed its agreement (Despatch 365, from Asunción, dated Feb. 25, 1954, 834.00 TA/2–2554).

   For text of the exchange of notes signed at Asunción, Feb. 13 and 24, 1954, entered into force on the latter date, terminating the Joint Commission, see Department of State Treaties and Other International Acts Series (TIAS) No. 3129, or United States Treaties and Other International Agreements (UST), vol. 5 (pt. 3), p. 2731.