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  3. Foreign Relations of the United States, 1955–1957, American Republics: Multilateral; Mexico; Caribbean, Volume VI
  4. Document 343

343. Memorandum of a Conversation, Department of State, Washington, October 31, 19551

Washington, October 31, 1955

SUBJECT

  • Financing of the Artibonite Dam and Irrigation Project in Haiti

PARTICIPANTS

  • Mr. Hoover, Acting Secretary of State
  • Mr. Waugh, President of the Export-Import Bank
  • Mr. Brand, Director of the Export-Import Bank
  • Mr. Prochnow, Deputy Under Secretary for Economic Affairs
  • Mr. Holland, Assistant Secretary for Inter-American Affairs
  • Mr. Hill, Special Assistant for Mutual Security Affairs
  • Mr. Kalijarvi, Deputy Assistant Secretary for Economic Affairs
  • Mr. Hoyt, Officer in Charge, Caribbean Affairs

Mr. Waugh said this was one of several problems which the Eximbank would want to discuss with the Department, because of the fact that broad economic and political policies, as well as Bank financing, were involved.

Mr. Brand explained that funds for the Artibonite project in Haiti would run out sometime in December, and that the Bank estimated that additional funds amounting to $7,500,000 will be needed to complete the project. He pointed out that the Haitians feel it will be politically difficult to ask the Haitian Congress to approve a request for an additional loan, particularly since the Haitians believe the United States engineering firm is to blame for the additional costs. Haiti’s economic and financial difficulties arising from the hurricane and depressed coffee prices were discussed. Mr. Brand explained that because of these considerations the Eximbank was asking State’s advice and was making the suggestion that a grant be authorized.

Mr. Hoover felt that an outright grant for the Artibonite was probably not feasible, but suggested that the Bank look into the possibility of forgiving Haiti the remaining indebtedness on the SHADA loan (approximately $3.6 million) as one possible relief measure. Mr. Holland emphasized that this would be politically important to the Haitian Government in that President Magloire, while asking for a loan to complete the Artibonite, could point to the elimination of the SHADA loan as a political achievement of his Government, thus softening the Artibonite loan request.2

[Page 944]

Mr. Hoover also suggested that there be investigated the possibility of using P.L. 4803 funds to purchase as much wheat flour as possible for shipment to Haiti, thus releasing the $1.5—1.8 million of the emergency assistance of $3 million currently granted to Haiti. It was thought that possibly by using P.L. 480 Haiti would be able to sell the flour to regular importers and thus obtain cash which could be used for the Artibonite, thus diminishing the total amount of the loan needed.

A further suggested step was the re-financing of the present loans to Haiti, totaling $21 million, on a longer term basis and reducing the interest on such loans to 3½%. In this connection Mr. Kalijarvi said that the E area felt the re-financing of the present loans was a distinct possibility but that E questioned the advisability of helping countries to finance projects just because American firms had been the cause of the increased cost. He said E felt this was “conscience money” and that if we adopted such a policy it could provoke a chain reaction which could spread to other countries. Mr. Kalijarvi also pointed out that any change in the development assistance program would probably involve explanations to Congress since we had presented our budget for emergency aid on specific bases.

Mr. Hoover instructed the Bank representatives and the Department officers concerned to work out the details of the transaction. He felt that we should help Haiti in this situation and that the various plans suggested offered a basis for finding a solution to the problem.

It was pointed out that the advanced stage of negotiations for the projects which would be undertaken under the $3 million grant aid made it necessary to move quickly on this matter if the proposal concerned the use of P.L. 480 funds for the wheat flour is to be achieved.

  1. Source: Department of State, Central Files, 838.2614/10–3155. Confidential. Drafted by Hoyt.↩
  2. Telegram 49 to Port-au-Prince, December 9, reported that the Export-Import Bank Board had authorized refunding of the credit for the Artibonite project and increased the credit by $6 million to $27 million. (Ibid., 838.2614/12–955)↩
  3. For text of P.L. 480, the Agricultural Trade Development and Assistance Act of 1954, see 68 Stat. 454.↩