Created: 5/21/1954

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The following views were submitted by the field onay forby the Department of State.

In taking an overall view of the preaent Central American situation, it is believed that many present and forseeeble factors warrant Department of State considerationrompt and. Government aid program for all tbe Central American countries,on-Coomunist Guatemala, when lt becomes so. The factors on which this suggestion ise aa followst

crises in Mexico over devaluation, which makesmore amenable. guidance

unrest in Rondures end the need to strengthenin Honduras prior to the October elections

conflict. business interests in Costathe Costa Rican Government; the animosityRica and Nicaragua; and the latent or real aidCoDanmiete by the Corta Mean Government (thisbeing dealt with by the Department of Stete)

aprropriateness of recognizing. Government end the advisability ofSOMGZA'a position in Nioarsgue

reluctance of El Salvador in aiding. Government.

difficulties between. Government andagreement on matters dealing with the Panama Canal

The above-mentioned factors could be deelt with through early initiation of an Economic Aid Conference, perhaps in Mexico City, attended byof the above six countries end. Government. tipulations for extension of "id would bei

on snrmunist position

of present Central American rivalries

treatment. coBPwrclol interests in the orea

onference vould accomplish three objeotiveai

criticisms Toloed at the Ceracaa Conference. eld would diminish

conference vould appear to be thohe Guatemalan problem, and thua could helpcovert activities

e. With alignment of support forthere will be more rapid, wholehearted Central American endorsement for any neww lin Government should the situation in that ccuntry change suddenly

The Conference wouldacant chair symbolically reeerved for tbe OuatemalnnB,ear or implied statement that an antl^ommunlat Guatemala could share in the program. This mightositive effect on publlo opinion in Guatemala. Alsot the oonforonoe wouldtrong contrast between suoh. Government ection and the militaristic aspeots of Communism aa ahovn by the recent shipment of arms to Guatemala from an Iron curtain country.

Early launching ofonference could alao ponnibly cushion any unfavorable Central American reaction to extension of aid to Guatemala ehould the situstion In that country change rapidly, since aid to Guatemala alone in mich on instance would possibly alienate tho other Central American countries, but would seem only logical If the presently anti-Communist Centre1 American countries are offered aid first.

It la suggested that an early convocationf an exploratory conference could be effected whJoh would reap the benefits ofositive gesture by. Government, and yet be sufficiently general to avoid controversy. rogram will probably be neeeaaary anyway even should the present situation in Guatemala change suddenly to the advantage of.

Original document.

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