WESTERNr HI-EMISPHERE DEFENSE                    661:

factor in speeding up production of manganese. In Peru, the lack of
highway communication can seriously impede developments designed
to increase the production of zinc. In-Mexico a 30 Kmi. road .will 'open
up another source of iron ore. The Rllma road in Nicaragua should be
finished without any furtherde'lay. In view of the importance attached
to better highway transportation by the Inter-American Defense
Board, ARA proposes that the sum of $100-million be made available
to be use4 mainly to defray the dollar costs on a grant basis over a
four-year period to provide for 'transport required for defense produc'-
tlon. We can also foresee the necessity to close some of the gaps' inthe
Inter-American Highway south of Panama, for example, the difficult
stretch south of Turbo in Colombia which when finished will connect
the upper and lower parts of the system.
  c) It is estimated that the $64 million for the upper section of the
Inter-American Highway down to the Canal Zone and $100 million
for other highwaypurposes will be invested during four fiscal years as
follows: 1
                          1951-$40 million
                          1952-$45 million.
                          1953-$45 million
                          1954-$34 :million.
  4. Other essential elements to an adequate approach to United

States economic cooperation with Latin America.
  As I have already stated, it is essential that ,in view of the existence
of concrete' United States aid programs to other areas we present a
concrete program   to6 the 0other American republics as one designed

  11Annex 2 to NSC 68/3, December 8, 1950, contains this projected allocation
for nonmilitary grant aid: fiscal 1951, $44 million: fiscal 1952, $28 million;
;fiscal
years 1953,And ,1954, $44 million- each;- al fiscal 1955, $28 million. Loans
re-
mained at $225 million per-, year as in Annex 2 to NSC 68/1. The program
was
explained ias follows:
  I"LatinAme'rica': The program o6f economic assistance which is projected
for
Latin America is primarily one-of production for defense purposes. The objectives
are to increaise the availability of critical materials which the U.S. will
need for
in~dustrial and defenseoutput, to maintain production of food and other items
at a level adequate to meet: theessential requirements of western:Europe
from
this traditional source lof sUpply, and to develop production which will
minimize
the dependence ,of Latin American States on imported food and other essential
supplies in 'case-pofiemergency.,In addition, it-will be necessary to, speed
up the
construction of the Inter-American Highway. This Highway is of strategic
value
in itself and the goodwill w hich will resul-t from its completion: -will
be of great
political value and of indirect military value to the U.S.
  Increased U.S. procurement and higher raw material prices will increase
Latin
America's dollar 'receipts andd her capacity to service further dollar debt.
Con.
sequently the major part of U.S. assistance to Latin America is scheduled
in the
form of loan 'aid (largely' for transpiortation, fuel and power facilities).
It is
estimated- that Latin-Americahwil require fareign capital for investment
at a
rate of about.$350 million a year, ,of which the International Bank may.be
able
to- finance ab~out $125 million a year, leaving abUt $225 million a year
for U.S.
Government loans.
  Grant aid for Latin America includes $G4 million oyer folur years for comple-
tion 0f the Inter-American Highwayand about $28' million a year for an-ex-
Panded technical assistance program, with particulaf' stress on aid to increase
indigenous food PrOduction.", (SiS-NSC Files: Lot 63D361- NSC 65 Series)
  For the full ,text of Annex 2 to XSCO 68/3, see p. 433.
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