36. Memorandum From the Deputy Assistant Secretary of State for Inter-American Affairs (Lyon) to the Assistant Secretary of State for Inter-American Affairs (Holland)1

SUBJECT

  • Status of Major Military Problems—Progress to Date

This is to supplement my memorandum of April 11,2 on the status of our activities in the military field, and to give you further data. We have apparently made substantial progress.

In the context of our over-all military objectives and the programs for attaining them, as related to political and economic factors, we have obtained a cleared position within the Department and brought the military problems to the attention of the OCB, the NSC, the Dodge Council, the Treasury Department, and the Department [Page 262] of Defense. ARA has been severely handicapped because E would not clear outgoing correspondence on major policy and related operational matters. E still objects to established policy, but, with the help of Mr. Barnes (U/MSA), E has been over-ruled by Mr. Hoover.

More specifically, Mr. Murphy has sent to Mr. Overby, Treasury, a letter and accompanying memorandum, dated April 16, 1956,3 spelling out our policy objectives; describing the deterioration of US–Latin American military relations and the need for clarity of purpose and reform in our programs, especially that for cash and credit sales of equipment; and giving our specific recommendations. Copies went to Mr. Dodge and to Mr. Gray, Defense. The letter and the memorandum were prepared at the request of Mr. Hoover to set forth State’s views on the issue of military versus economic development in Latin America, as raised by Mr. Humphrey in a letter to Mr. Dodge, dated February 14, 1956, asking the latter to review the problem. The long delay, from February to April, in our getting this letter and memorandum out was due to E’s refusal to clear. That bottleneck has now been broken, for the time being at any rate.

We have also drafted, and Mr. Murphy has now signed a comprehensive letter to Mr. Gray,4 summarizing what we consider US military objectives in Latin America to be, our views on the proper use of established programs to attain the objectives, and asking for replies to specific questions. The letter, for example, raises the matter of the basis (military or political) for the grant programs; the need for determining the extent to which Defense has a military interest in the Central American programs (which were established for political reasons); and the requirements for the various Air Force programs (possibly replacing non-operational propeller craft with jets). The letter also emphasizes the need for criteria (Hemisphere defense and internal security) to govern cash and credit sales, and the need for a reliable source of a modest amount of funds to finance credit. The letter brings together and refers to the matters you raised with Mr. Gray on December 12, 1955, those I took up with Mr. McGuire (Mr. Gray’s deputy) on January 30, 1956, and the problems discussed in Mr. Murphy’s letter and memorandum to Mr. Overby. In the past we have been at a disadvantage in talks with Defense because we could speak only for ARA, because of E’s objections. Now that Mr. Murphy’s letter has gone out, I shall see Mr. McGuire again to follow up.

Meanwhile, the Department of Defense has taken some desirable steps:

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As a result of the letter, dated October 7, 1955, which ARA drafted for Mr. Murphy to send to Mr. Gray, and which Mr. Murphy and I followed up in a meeting with the Joint Chiefs of Staff on March 30, 1956,5 the JCS have approved a comprehensive naval program for Latin America, based on a determination of the over-all military needs for naval vessels. The Department of Defense is now asking the Navy Department to seek the legislation necessary to implement the program. Under the program the specified ships will be loaned, but the US will most likely bear the cost of rehabilitating them for service.

The Joint Chiefs of Staff also have under review the Army and Air Force programs in Latin America and are awaiting the recommendations of the Commander in Chief, Caribbean on these programs.

The Joint Chiefs of Staff, we understand, have reviewed the US requirements for bases in Brazil and are preparing recommendations on the grant military aid that the US should offer in return. Determination of the latter is necessary so that our Embassy at Rio can proceed with negotiations.

The Joint Chiefs are considering Venezuela’s request for credit in the amount of $180 millions to finance over the next seven to ten years the establishment of military units agreed in the recent military staff talks to be necessary for the protection of strategic installations in Venezuela.

  1. Source: Department of State, Central Files, 720.5/4–1156. Secret. Drafted by Sanders.
  2. See footnote 2, Document 32.
  3. Document 33.
  4. Supra .
  5. See Document 31.