Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

114. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon¹ ²

Washington, June 15, 1972

SUBJECT:

• Economic Assistance to Bolivia

Secretary Connally, during his visit to Bolivia, discussed with President Banzer Bolivia’s economic plight. Banzer made clear that he needs $20 million urgently to cover a budget deficit and cannot devalue Bolivia’s currency at this time in view of the serious domestic political effects of such a move.

Secretary Connally believes that we should not continue to press for devaluation as a condition of the loan as we had up to now (largely at Treasury’s insistence). He recommended that we move immediately to provide the $20 million program loan before the end of FY 1972 and without the requirement for devaluation.

We agree with Secretary Connally’s assessment. As you know, Banzer is trying to bring order out of Bolivia’s chaos. If he does not survive, the alternative will most certainly be a strongly leftist government. The program loan will help tide over Bolivia and give Banzer more time to work out the steps which can lead to the needed long-term economic reform.

At my request, AID has earmarked the $20 million for a program loan and is sending a team to Bolivia to work out the modalities immediately.

Secretary Conally’s Latin American trip has been an unqualified success and the fact that you sent him at this particular time has been reassuring to the leaders he has seen.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 770, Country Files, Latin America, Bolivia, Vol. II, 1970–1974. Secret. Sent for information. A stamped notation on the memorandum indicates the President saw it. Haig initialed the memorandum for Kissinger. In a June 14 covering memorandum, Jorden and Kennedy recommended Kissinger send the memorandum to the President. The President underlined the last paragraph of the memorandum, and wrote at the bottom “Haig—Cable Connally from RN—my decision—plus send him the underlined portion as the summary of the reaction we have had from our embassies and other sources—to date.” Haig wrote “done” and initialed next to Nixon’s note. Nixon wrote “OK” next to Haig’s initials. The cable to Connally is ibid.
2. President Nixon agreed with Secretary of the Treasury Connally that Bolivia should receive a $20 million loan before the end of FY 1972 without the stipulation of devaluation.