Created: 7/25/1958

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'v.TJi" rUHi Office of the Oeneral 'ouns-1

S. .orinrfjord

Ihe documenta eoncemlnf the Spring fjord caae loanea you. oftusState; Seoartawnt Legal advisor, have been reviewed anc the following rcrnents are forwarded Tor your doss lbse in further discissions on the natters

dc. hafael Valla, attorney Tor thehis visit to ruatenala indicates that he was cordiallyPresident IDIttRAS, Mr. Koeel, the ^resident's orivate secretary, sndAide da Camp. Mr. Vails further states that FiOSAL and tbehim they ware anxious to arriveottleraent| >nd that he (Valla)

- .j- received by the foreign Ministerordial manner. Valis expresses surprise at being asked to leave the country as the apparent result of an unguarded remark nada to the resident fcrj tho local representative of the claimants. Several factors may be the cause of this aoparent reversal of attitude on the part of -'resident DUCtSaS. .Iret of all, uatemalan; are naturally polite, and lt is only to be expected that -alls received an initial friendly rocepUon. boceues of the CuatoMlan character, it is notlite lyis friendly reception aay have been for tne express purpose o" detemining the exact nature of Villi1 proposals enterlnp into negotiations. It should be kept In mind that deception ls common political and business oroceedure in Ouetemala. Another logical explanation for the apparent reversal is President TDBVRAfl' own nature. The .Teoldent is known tooody, .lnoat schisophrenic, Individual, vho Is extremely Anglophobic, rurther, althoughdvisors way wantettlement of the claim, they hove little or no control over the President vho regularly disregards the advice of his Cabinet an! other close associates.

proooees that the United States <overnwent take tbe leadrepresentations to oressureGuatemalan Covernwent into maklnc

ittlenent of the ho Anther nropoeea that the "nited States give this diplomatic claim first priority and that settlementondition to further US aid or loans. Several reasons exist for not having tho OS Government intervene in the -istteri

a. all dlplom-tic and unofficial rwpreoentatlons for settlement have thus far been at the initiative of, and conducted by, the british. Should the United States Government intervene in the natter officially at this time, the Gusteaalans will regard this aa Intervention ao

nresc>;re cn behalf of tha nritioh, not based on genuine niled .latea Interests, decease of the central animosity towards the -ritish,' Ji-rsonal dislike of titan,e^ree-nt-iticn ay tha ild be alnost foredooaen to failure, and would .rc.ur-nUfCnler; onrt of tiie Ouetanal*ns towards thr Hal tad states.

"dither corn pions arise out of tns fact thatt'-emalans admittedly arc av*re tbat the plane which bonoea tbe -jrln^fjord nayve been Ojateraalan. ea. Vails1bviously', the tes Covermtcnt is notTonltion to press vigorously or settlement of the claim since the Guatemalans cculd vise their knowledpe'tOlthough it way be limited, to embarTanr theed Slates* would limit anyonrre oro fonaaat to the Guatemalans.

c. ec States eeonoalc policy in Guatoaala is designed to strengthen the *conuay *nd raise the standard of living lc order to el rtiiwte tne climate Torovth of Coanunisa. If furtneror ltanr were- tc oe conditioned on orlor settlaaent ofringfjorat Inoortant economic orogran could be seriously affected, on behalf cf what ioinor financial clelsi. 'fani'estljf, no such precedence can be assigned to the -prinrfjord claim..

ISCestern :lemispht?re division

Original document.

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