825.51/6–447: Telegram
The Ambassador in Chile ( Bowers ) to the Secretary of State
us urgent
436. My conversations with President Gonzalez reveal deep concern over attitude toward Chile encountered by Pedregal mission and fear lest door has been closed to further economic cooperation between our two countries. President even states they may be forced to withdraw from all Bretton Woods70 commitments unless better understanding can be reached.
Chile is key country in struggle against Communism, and I feel that we should make every effort to overcome present impasse. Following my instructions Dunn71 has sounded out Minister of Finance Pico Canas, as to possibility of implementing program here which would tend to inspire confidence in US financial circles and rehabilitate Chile’s admittedly vulnerable debt record. Pico Canas stated that he was ready to take concrete steps to this end and expressed confidence that a mutually satisfactory agreement could be reached with bondholders. He hinted that he would be disposed to undertake negotiations personally if given encouragement by Department directly or indirectly. He undoubtedly desires invitation to visit US some weeks hence for this purpose.
If Department approves, Embassy will continue exploratory conversations with Pico, but before doing so, I should appreciate information as to feasibility of further negotiations with bondholders and what Chile must do to reopen loan negotiations with International Bank. I believe Pedegral mission was constructive in opening eyes of Chilean authorities to real situation in US and that they will be more readily disposed now to put their financial house in order. Please instruct.