825.2542/4–252

Memorandum of Conversation, by Milton Barall of the Office of South American Affairs

secret
  • Participants: Señor Felix Nieto del Río, Chilean Ambassador
  • Mr. Atwood, Director, OSA
  • Mr. Brown, Director, OMP
  • Mr. Barall, OSA

The Ambassador stated that he had received instructions from his government to call off the “informal” talks in which he had been engaged [Page 676]with Assistant Secretary Miller, Mr. Charles E. Wilson, Mr. Larson, Mr. Fleischmann, Mr. Atwood, Mr. Brown, etc. He offered an opinion that the reason for the change might be the possibility of adverse political repercussions in Chile. He said that the Chilean public was more interested in what happened to the 20 percent than in the bulk of copper shipments and if action were taken to establish a 33½ cent price for all of Chile’s copper this might be misconstrued by the public as a negotiation which lowered the price of copper instead of raising it.

He said the President had informed him that the Banco Central was having no difficulty in selling Chile’s 20 percent at the high price established (54.4 cents per pound as opposed to 27½ cents for the 80 percent) and agreed that, if this is so, the urgent necessity for discussions of a possible increase to 33½ cents no longer existed. He did not raise the question of eliminating the two-price system which had been used as the basic argument for initiating the conversations. The Ambassador added that, of course, if the US had a proposal to submit with respect to a new copper price, the Chilean Government would be glad to consider it at any time, even a year or two from now, thus implying that the copper agreement would remain indefinitely in effect.

The Ambassador expressed his personal opinion that the termination of the copper talks did not mean that Chile was prepared to take unilateral action and impose an export tax. He said the President would not take such action because of his high respect for international agreements and because of his loyalty and friendship toward the United States. In answer to a specific query on the stories which had appeared in the Government’s newspaper, La Nación, concerning the possibility of a 10-cent export tax, the Ambassador stated that there had been considerable discussion in Congress and in the press on the subject of an export tax, but that within the government itself there was no desire for this type of action.

The Ambassador stated that he had received word from President Gonzalez yesterday that the nitrate strike was settled satisfactorily and that the possibility of a copper strike had been averted, with the situation well in hand. Mr. Atwood commented that this was certainly good news for Chile since with a good market for both copper and nitrate at this time Chile stood to lose large amounts of dollar exchange if exports were curtailed. The Ambassador agreed and added that Chile had lost about 100,000 tons of nitrate sales as a result of the strike. He asked Mr. Brown to express his thanks to Mr. Wilson, Mr. Fleischmann, Mr. Larson, and the others who had dealt with him very sympathetically on the subject of copper. He also expressed his personal satisfaction that the talks had been called off. Mr. Brown promised to convey the Ambassador’s message to the other gentlemen concerned. Mr. Atwood [Page 677]thanked the Ambassador for informing the Department promptly of the decision of the Chilean Government.1

  1. In telegram 496, to Santiago, dated Apr. 9, 1952, Mr. Miller stated that he had reason to believe that Ambassador Nieto del Río had misconstrued his instructions to suspend the copper negotiations, and also that Chile had no intention to abandon its efforts to obtain a higher price for its copper. He further stated the following: “I am worried about Chile’s tactics since Nieto and Muller began their informal conversations with us several weeks ago. They have been very careful keep conversations on ‘informal’ basis and to put responsibility on us for proposing solution to their problem. I am very much afraid they may be maneuvering us into position where they cld justify imposition substantially higher price. Naturally in view anti-inflation program in Govt and gen softening raw material prices, it is extremely difficult for us, in absence specific Chil proposal, give serious consideration to price rise. Coming on top of Chile’s peculiar tactics, Nieto’s apparent misconstruction his instrs may put us in difficult position inviting drastic action by Chil Govt.” (825.2542/4–252)