611.2531/212: Telegram
The Chargé in Chile ( Frost ) to the Secretary of State
[Received 5:34 p.m.]
69. British Embassy states London Foreign Office recently learned that ratifications Franco-Chilean Treaty will be exchanged Santiago November 19. London consequently decided to sign brief modus vivendi with Chile omitting exchange clause with intention of negotiating a full treaty during coming months. London now notified by Chilean Government latter wishes also include in British modus vivendi the exchange clause drafted by García reported in Ambassador Philip’s telegram No. 65, October 29, 10 p.m. British idea still is to sign brief modus vivendi without exchange clause unless a really strong clause is offered by Chile. Ambassador Philip asks me to report to Department his opinion that a clause containing a slightly stronger assurance than García’s last offer might possibly be accepted by the Chilean Government. My view Department might make early counter-proposal on García clause, with the possibility that something worth accepting might be worked out before November 19, but I should not shrink from signing merely a brief last minute modus vivendi containing simply most-favored-nation clause on tariff rates and quotas, unless Chilean exchange clause offers during next fortnight are unexpectedly favorable. This would obviate feeling by [Page 409] Chile that the exchange situation had been cleared up, and would leave an impression that something basic must still be done. My impression exchange situation could well be dealt with in conjunction with negotiations for full treaty, as Chileans have at least a fairly strong desire for such a treaty to peg nitrate on free list, et cetera.
Commercial Attaché and Ambassador favor accepting and including in modus vivendi whatever best offer may be obtainable prior to Franco-Chilean exchange of ratifications, in order to give Chilean Foreign Office some hold on Exchange Control Commission. They fear that full treaty negotiations may be indefinitely delayed or come to nothing. I still favor omitting exchange clause from modus vivendi unless the Chileans make a much better offer; and believe there is a real chance for a broader settlement in relatively near future. The British seem to have the same ideas as I had reached.