825.5045/11–2846: Telegram
The Ambassador in Chile (Bowers) to the Secretary of State
[Received November 29—2:50 a.m.]
1041. Mytel 1040, November 27, 8 p.m.27 At yesterday’s meeting between Justice Minister Correa and Braden officials it was thought area disagreement narrowed. Last night Stannard met again at Government request with Correa and Foreign Minister Juliet. Juliet attempted obtain Stannard’s agreement to full arbitration, but without success. Today Braden officials were asked by President to Moneda and he also asked for full arbitration which Stannard again refused after trying explain reasons why compliance not possible. Stannard says President told him two courses open: either agree to arbitration or Government would have to occupy mine. President asked for yes or no answer on arbitration and Stannard replied that if forced to give yes or no answer the answer was “No”.
This afternoon President urgently asked me to see him. I went to Moneda with Dunn. González said Braden mines must resume work and if no agreement could be reached Government would have to operate mines for time being “as you have done in the United States”. President said negotiations now narrowed down to one small legal point. I told him that we are much preoccupied by the fact that the Communist policy in South America is to attack the [Page 617] United States and all men in South America favorable to United States; and that we fear that the success of the Communist-inspired strike at Sewell would encourage a general attack in Chile on American interests generally.
He said he would name as arbitrator the Chief Justice of Appeals who would instantly strike out all the illegal points and asked for faith in him.
Tonight Stannard and party requested conference with me and I went over the ground with them. They again said they simply could not delegate their responsibility to their stockholders on crucial principle to any outsider and pointed out that the only Chilean official they had been able to make progress with was Correa. They complained that various Chilean officials who have talked with them have not had full powers and in most cases no powers. I then suggested I see President again and suggest to him that he delegate Correa to handle negotiations. Stannard said he would sleep on this and let me know in the morning. He said this might be acceptable provided Government eliminated beforehand point on which they could not negotiate, namely, non-observance of existing Chilean labor code provisions (desired by Communists) which would destroy all discipline and company’s power to operate. President complained bitterly of what he termed fulfillment of previous threat to cut off credits and assistance to Chile in the midst of negotiations which he said was reflected in telegram received yesterday from their Embassy in Washington stating that sale of five merchant vessels and two tankers to Chile had been turned down and that Export Import Bank would make no further credits to Chile until further notice. He asked me to inquire whether this was true and if so the specific reasons for such action, saying that this was tantamount to treating Chile like Central American country. I shall appreciate telegraphic reply on this point. I replied to his question that the Embassy had received no confirmation.
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