740.25112A/758: Telegram
The Secretary of State to the Ambassador in Chile (Bowers)
680. Reference your despatch 9641, May 6, and your telegram 928, May 29, concerning the “control pool” to handle insurance of Proclaimed List risks.
Department believes that the Embassy should not approve the pool arrangement until a commitment has been received from the Chilean Government on three points:
- (1)
- Department finds it difficult to reconcile the assurance given by the superintendent of insurance companies that any policy will be cancelled upon request of the Embassies with the Government’s apparent attitude that Listed firms will not be permitted to go without insurance. It is possible that the firms whose policies would be cancelled could gain protection through at least two methods: (a) through the Caja de Reaseguradora;9 (b) through a joint protective association formed by the ostracized firms. Therefore, in order to make the control effective we should require a commitment that any Listed firm insured through the pool which is denounced by the Embassies will be denied all insurance facilities.
- (2)
- An understanding in advance that immediately following formation of the pool the Embassies will request cancellation of the policies of all firms in category I, class I, as described in the enclosure to your despatch 9441, April 17.10 Under such a prior arrangement there would, of course, be no reason for allocating these risks through the pool in the first instance. Department believes that this commitment would greatly facilitate the accomplishment of our primary economic warfare objective in Chile in that the spearhead firms, upon finding themselves without insurance protection, probably would be more amenable to liquidation, either forced or voluntary.
- (3)
- A commitment that all funds which may become payable to a Listed person or firm as a result of a risk attaching will be blocked for the duration with the exception that such funds may be released for reconstruction of the property where the enterprise is found to be essential to the local economy.
In return for the commitments suggested above, the Embassy would be authorized to inform the Chilean Government that we will make no further attempts to deprive insurance protection to any Listed firms in Chile.
Even if it should ultimately be decided to approve the pool, the Department would not be prepared to authorize American insurance companies to participate. This Government has consistently refused to permit American firms to carry direct insurance on Proclaimed [Page 768] List risks except in a few instances where the early deletion of the insured party was assured. The program for liquidating and otherwise cleaning-up the Listed firms in Chile has not yet advanced to a point where a drastic revision in listing policy is possible, and therefore it is inadvisable to ease at this time any of the sanctions invoked by listing.
This instruction contains the Department’s preliminary views on the pool and should not be discussed with the Chilean authorities until the Department has had an opportunity to reconsider the subject in light of your comments, which you should cable as promptly as possible. The British Embassy here is in accord with this instruction and has cabled MEW for its views.