Miller files, lot 53 D 26, “Chile”

The Assistant Secretary of State for Inter-American Affairs (Miller) to the Ambassador in Chile (Bowers)

[Extract]

1
secret

Dear Ambassador Bowers :

. . . . . . .

I think that the decision that we have taken in this Government is the correct one and, in fact, I think that it was the only one that was open to us. For us to have meekly negotiated a new “agreement” with the gun at our heads (or as President Truman put it to Nieto, with our feet being held to the fire) would have been just as miserable and craven an act as that of Gonzalez Videla in caving in to the communists. Furthermore, we would have been the victims of (1) attacks from all interested parties in this country for participating in the fixing of a higher price for copper, and (2) continued dissatisfaction with the agreement on the part of the Chileans since there would probably continue to be a world market premium over any new price and (3) disillusionment on the part of the Chileans when the higher price contract would eventually terminate. In other words as the Embassy so clearly grasped in its telegram2 last week, it was incumbent on us to get off the hook now and to get off it not only in regard to price but in regard to the relations between the Government of Chile and the copper companies. No doubt the Chileans now feel that they have scored a great victory but even already the sober-minded ones like Nieto and Burr are clearly worried. Nieto has several times asked me in the two meetings I have had with him this week whether or not our note was a “proposición” or a “negociación”. I have told him that we had taken a unilateral decision which seemed to us to be the only act which we could take consequent upon Chile’s unilateral decision of May 2. He got the point perfectly and yesterday said that our decision was “muy inteligente”.

. . . . . . .

I am glad that you have been so concerned over the anti-Yankee attacks which have become the fashion in Chile and that you took the time to discuss this frankly with the Foreign Minister3 in connection with the military agreement. Yesterday after our meeting on the copper agreement, I asked the Ambassador to stay on alone and I read him most of my letter to you of January 74 in which I listed the things that we had done for Chile and the things that they had failed to do for us. I read him verbatim the last two paragraphs in which I had expressed the fear that the Chilean Government would eventually become the [Page 687]victim of its own anti-Yankee propaganda (or of its own failure to defend us in their negotiations with us) and that the consequence would be that they would get in a vicious circle and would have to take action in regard to the copper agreement which is ostensibly anti-Yankee but is really against Chile’s own interests.

In any case we will try not to let this hurt our relations with Chile too much and you will note that all of us have refrained from any provocative public statements. In fact I thought that all of the statements which have been made up here have been models of restraint and correctness.

. . . . . . .

As I said above we will not impose sanctions on Chile and after due deliberation I have decided to tell the International Bank to go ahead with the cellulose loan.5 … As to the two coal projects, there are still the usual technical difficulties and studies. We are also going ahead with the priority for a large crane for Huachipato since this had already been scheduled but I am afraid that Roberto Vergara 6 is going to run into pretty rough weather when he gets here looking for additional priorities.

In my conversations with Nieto I have strongly stressed the importance of Chile behaving itself in regard to copper sales and the need for them to get ahead now with fair treatment to the companies in regard to exchange and taxes. I have also expressed concern over Gonzalez Videla’s proposal in his speech on Wednesday7 about the creation of a copper sales corporation. This seems to me the height of ingratitude after what the companies have done to develop markets for Chilean copper in Europe and elsewhere.

I also hope that our action on copper will contribute to a more favorable ambiente for the military agreement. Even though your more recent reports have been more hopeful, I shall keep my fingers crossed until it is through.

. . . . . . .

With kindest regards,

Sincerely yours,

Edward G. Miller, Jr.
  1. The deleted portions of this letter contain either personal remarks or references to the tin situation in Bolivia.
  2. Not identified.
  3. Eduardo Yrarrázaval Concha.
  4. For text, see p. 666.
  5. On Sept. 10, 1953, the International Bank for Reconstruction and Development (IBRD) authorized a loan of $20 million to the Corporación de Fomento de la Producción and the Compañia Manufacturera de Papeles y Cartones, S. A., to help in financing the construction of a paper mill and a pulp mill in Chile. For additional information, see International Bank for Reconstruction and Development, Supplement to the Eighth Annual Report (Washington, 1954), pp. 4–5.
  6. General Manager of the Huachipato Steel Mill in Chile.
  7. Reference is to President González Videla’s speech to the Chilean Congress on May 21, 1952.