823.51/1279: Telegram
The Secretary of State to the Chargé in Peru (Dreyfus)
37. For the Chargé d’Affaires from the Under Secretary.10 I discussed with the Ambassador of Peru11 on May 3112 the observations reported in your telegram no. 42, May 29, 2 p.m. The Ambassador will communicate to President Benavides the substance of our conversation but since the observations were made to you, I deem it important that you also confirm my statements as soon as possible.
I informed the Ambassador that it is the policy of this Government to cooperate with the other American republics to the fullest practicable extent and that we are desirous of establishing satisfactory bases upon which an arrangement with Peru might be negotiated. To date no discussions have been possible since an approach has not been made by that Government.
I pointed out that President Benavides has been misinformed with respect to the negotiations which have taken place with Brazil and those now contemplated with Chile. In both cases the initiative came from the interested countries and the invitations were issued after determining that bases existed for positive economic cooperation between those countries and the United States. The fact that Brazil gave assurances that it would at an early date resume payments on account of interest and amortization on dollar bonds, thereby affording evidence of good faith in meeting financial obligations, materially facilitated the conclusion of a mutually advantageous arrangement for economic cooperation and financial assistance. In the case of Chile, assurances have been received that it is not the intention of that Government to modify the existing debt settlement plan. The reference to Colombia is not clear since there have been no negotiations of the character in mind between that Government and the United States.
I also pointed out that this Government is desirous of improving the commercial relations between the two countries by the conclusion of a trade agreement if mutually satisfactory bases for negotiations can be found. With that end in view exploratory conversations were initiated last year. However, the whole question is in abeyance awaiting the list of products requested last November which Peru would like to except in such agreement in favor of Chile.
The Ambassador was reassured that this Government entertains a keen desire to cooperate in every practical manner with Peru. Furthermore the belief was expressed that with these explanations President [Page 775] Benavides would recognize that the United States has not been discriminating against Peru.
In the event that the President should make reference to the financing of the sale of hospital equipment to the National Social Insurance Institute requested in the early part of this year, you may say that the decision of the Export-Import Bank not to participate was predicated on the understanding that the Government of Peru was unwilling to work out an arrangement for the resumption of service on its present bonded obligations held in the United States. You may add that this action was not intended as an effort to exert pressure on the Peruvian Government with regard to any specific proposals or terms of settlement of that debt; but rather it was the logical inability of the Bank to undertake new financing pending a clarification of the attitude of the Government of Peru with respect to previous obligations now in complete default. [Welles.]