662


FOREIGN RELATIONS, 1950, VOLUME I


to meet their specificrequirements. The fact that the financial require-
ments for Latin America are on a more modest scale and that the
major part of our participation is in the form of loans rather than
grants does not modify the requirement that we have a definite pro-
gram for that ,area. In order to present effectively such a program and
to make its implementation possible, bo6th congressiona Iand a drninis-
trative decisions are required. In addition toa decision by the Admin-
istration to present the aid requirements to Congress, other decisions
by the Administration which should be taken include the following:
   (a) The determination by the National Advisory Council of five-
year loan absorption figures for each Latin American country. This
has already been done in the case of Mexico, a precedent thus having
been established.12 This determination is necessary to provide concrete
evidence to the individual Latin American country of our willingness
to assist them provided meritorious projects are presented. Secondly,
it is necessary to provide such a basis for the joint programming of
economic development for our participation in assisting in the prepa-
ration of specific projects. Finally, such a determination will serve
as an incentive to the Latin American countries to take the necessary
internal, fiscal and credit measures required for local currency par-
ticipation and necessary fiscal reforms and for us directly or't hrough
international agencies to have the leverage to suggest actions in these
fields.
   (b) It will also be necessary for the effective implementation of
this program for the two lending institutions, the ExImBank and
the International Bank, to work out an agreed formula of categories
for their respective loan operations so that the current confusion in
this matter may be eliminated..
  (c) :Finally, in view of the current 1an'd -prospective supply situa-
tion in the United States, it ismost important that almaterials pro-
gram be formulated parallel to the financial program so that the
latter may be made effective. This means a basic policy determination:
       (i) 'That the civilian requirements of the Latin American
    countries will receive parity treatment with the civilian require-
    ments of the United Statesin allocations; ,and
       (ii) That materials required to expand essential production
    and transportation in Latin America will receive priorities treat-
    ment similar to that in -the United States for.comparative
    projects.
  If the foregoing decisions are made:it will be possible, in conjunc-
tion with the authority referred to in the stockpiling section below,
to present a package program to the Latin Americas at an OAS
meeting and thus give new lifeto our program of economic coopera-
tion in this hemisphere. While this may not eliminate.all criticism
based: upon Latin American exclusion from !heavy grants-in-aid, it
will be the best approach w7hich we ven honestly present.

  For pertinent documentation,-see vol. ii, pP. 936 f.