The Ambassador in Chile ( Sevier ) to the Acting Secretary of State
[Received 5 p.m.]
109. Referring to my telegram No. 108, December 2, 2 p.m. [noon.] Because of Chilean holidays interview with the Acting Minister for [Page 148] Foreign Affairs has not been arranged. However, the Embassy again discussed the problem this morning. We reiterated our views but the Under Secretary said that the American proposal is unacceptable even as a basis for discussion and held out little hope of a counterproposal. He again stated that Chile is willing to give us a compensation agreement admitting, however, that this is unacceptable to us. He finally said he hoped the Minister would suggest some solution but felt it was almost impossible for Chile to work out a plan based on the principle of a percentage of imports. Later conversations may develop something more constructive but it seems clear that Chile is unwilling to give us satisfaction along the line suggested by the Department, probably discounting the possibility of retaliation because of the effect which restrictions placed on nitrate might have on our own interests in that industry. If after my conversation on Monday the Chilean attitude continues purely negative, I intend to state specifically that if an acceptable solution is not proposed my Government will be forced to consider taking appropriate steps to protect its interests.