834.51/5–2546: Telegram
The Ambassador in Paraguay (Beaulac) to the Secretary of State
[Received 3:55 p.m.]
225. Minister Foreign Affairs told me yesterday Paraguayan Govt thru Embassy in Washington had requested additional one million dollar Eximbank credit for highway extension to Encarnación.
Pending details Paraguayan request I am prepared in principle to support additional one million dollar credit for purpose stated. While my view which I have communicated to Dept as well as informally to Paraguayan Govt has been that military expenditures should be reduced before additional credits requested I believe that in present international situation, having in mind Perón election in Argentina, [Page 1202] we should refrain from commenting to Paraguay on size and cost of its military establishment, particularly in view of apparently successful effort being made by President to cleanse army of politics.
I consider rather that at this stage consideration of any request for additional loans should be based on Paraguay’s credit which I and the Commercial Attaché consider to be excellent and on use to which funds are to be put.
Foregoing is not yet a definitive recommendation. I hope, however, Dept and bank will not reject Paraguay’s request without first consulting Embassy.