Miller files, lot 53 D 26, “Chile”

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

secret

Dear Ambassador Bowers : Naturally the results of the Chilean election have come as a severe blow to us. I say this even though you [Page 688]had prepared us for the shock through your brilliantly accurate reporting over the months preceding the election. In reporting to the Secretary’s staff meeting this morning1 about the Chilean situation, I referred to the fact that you had called the shots on the nose. In fact you knew the score better than many Chileans with whom I have discussed the elections. I want to congratulate you on your objectivity knowing as I do how distasteful Ibañez’ candidacy has been to you and how more distasteful it will be living with this new situation that we have to face in Chile. Needless to say the crowing that is emanating from Buenos Aires is sickening.

The press here is already expressing alarm about the situation in Chile and the Washington Post has gone so far as to imply that this is due to our neglect of Latin American affairs. This of course is representative of what I consider to be an alarming tendency on the part of our press here to consider the Department of State not merely responsible for conducting our relations with other countries but of guaranteeing good conditions in other countries. Actually I think that we have done more for Chile than for any other country in Latin America, at least proportionately. Our help to them on loans, on securing priorities, on the transfer of the cruisers, and the conclusion of the military agreement, under the Point IV program, and in relation to copper has been exemplary, and in addition we went out of our way to give Chile’s democracy a pat on the back by making Gonzalez Videla one of the two Presidents from Latin America to be brought up to the United States in the last three years. The only thing we did not do was force Matte and Alfonso to get together on a single candidacy, and I suppose someone with 20/20 hindsight will be telling us how we could have done that.

One of the saddest aspects of the Ibañez victory is its close parallel with the situation in Ecuador. There Velasco Ibarra without any party organization and after many years’ absence from the country swept through to an overwhelming victory against three moderate candidates simply through demagogic appeal. While Velasco did not go so far in attacking the United States, his irresponsibility in appealing to the discontent was along the same lines as that of Ibanez. In many respects also the pattern of victory is similar to that of Vargas’ election two years ago where he won against a divided moderate opposition. In all three cases you have demagogues who had been thrown out of office before, coming back without any party organization and scoring a tremendous victory simply through a personal appeal to the discontent. In the case of Vargas, he has fortunately surrounded himself by some good men and has been much more moderate (possibly because he is a Brazilian). But one adverse effect of the personalism of his candidacy is that he has no solid party strength to work with in the Congress, a [Page 689]fact which makes for ineffective government. In the case of Velasco Ibarra, the new administration has in its first week turned viciously on President Galo Plaza, completely disregarding that the latter had guaranteed free elections and pacifically turned over the power to the new group. Velasco has ruthlessly dismissed all the top Army officers, all the top men in government, and a substantial part of the diplomatic corps. These actions, particularly as they affect the Army, are typical of personalismo at its worst and constitute a lamentable barrier to the development of the constitutional forms which are so badly needed in Latin America. Of course in Bolivia and Argentina we have seen the wholesale dismissal of useful men from government office.

I have today signed a telegram2 to you in reply to one3 which came in over the weekend. We are of course distressed over Lira’s4 statement although it seems to conflict in some respects with what Ibañez told the American newspapermen. The most serious thing is the threat to nationalize the copper mines since this would constitute the gravest invasion of American property rights since the Mexican oil expropriations in 1937.5 In view of the changed climate of opinion in this country since then and the world-wide implications that the nationalization of copper would have, it would have the gravest kind of repercussions in this country, not only towards Chile, but towards the administration since we would be accused of having followed the same kind of policy towards Chile as we allegedly have had towards China. The termination of the military agreement would be less of a blow to us, except that our prestige would suffer as in the case of the collapse of our bilateral military negotiations with Mexico. The reestablishment of diplomatic relations with Russia and her satellites and the repeal of the law for the defense of democracy would be matters exclusively for Chile to determine but they would, of course, be unfortunate and they would likewise have bad repercussions in the press here.

In response to your question as to whether you should seek Ibañez out, we all think here in the Department that it would be far better for you to let any initiative come from Ibañez or anyone else in his entourage who wants to discuss matters with us. In the first place, and strictly technically, Ibañez has not yet been confirmed by the Chilean congress and, in the second place, he is not yet President. However tactically it would seem in our advantage for them to come to us and not to show undue alarm. Our feeling would be to take the attitude that matters will develop normally and in the meantime we up here [Page 690]will try to refrain scrupulously from giving information even for background on Chilean developments so as to avoid getting them frozen into any undesirable positions as a result of premature speculation emanating from Washington. If and when an opportunity should present itself, I think it would be good to review what we have done for Chile in the last twelve years or more as indicating our sincere interest in the welfare of the Chilean people and the ridiculousness of the claims of our enemies that we are imperialistic. With regard to the military agreement, you could take exactly the same line that you took so effectively with Yrarrázaval 6 when you made the point that it was entirely up to Chile and that Chile obviously has more to gain than to lose from the agreement. No doubt Perón has made great efforts to get Ibáñez turned against the agreement. The reason for this is that Perón was not included in any agreement, a decision which was reached by us as a result of Perón’s attacks not only on us but on the Rio Treaty7 and the OAS and his repeated statements to the effect that he would not join in hemisphere defense efforts. With regard to reestablishment of diplomatic relations with Russia, the situation is somewhat complicated by the fact that we still have relations with them but there would be no reason why you should not point out that a Soviet diplomatic establishment is nothing more than a center of espionage and refer to the recent action on the part of Cuba and Venezuela in closing them down. The main difficulty is, of course, the threat to the nationalization of copper. It would be well on this point to point to the very fair treatment that we have accorded to Chile including the $25 million balance of payments loan in October 1949 when the price of copper had dropped to 16 cents; our strenuous and successful efforts to get the copper tax eliminated; our very fair agreement of 1951 which gave Chilean producers 3 cents a pound more than domestic producers; and finally our action in what amounted to decontrolling copper after Chile denounced the agreement. You could point out the tremendous capital investment of the American copper companies in Chile; the technical and managerial skills which they have brought to that country; the tremendous investment programs which are now underway and will have the effect of devising new methods for mining copper and thus keep these industries alive for the benefit of the Chilean economy and the Chilean workers who are employed in the copper industry. Above all you should stress the fact that while Chile has complete sovereign dominion over its national territory, we will expect any act of expropriation to be met by prompt, adequate and effective compensation. The investment of the copper companies is so large that the obligation on the part of the Chileans to indemnify the [Page 691]companies added to their present privately held dollar debt and their obligations to the Export–Import Bank, International Bank, etc. will obviously add up to a total debt so staggering as to be far beyond Chile’s capacity to pay. Only one of the immediate consequences of this will be the ending of all lending activities to Chile for any purpose.

You have a very difficult problem ahead but we have every confidence that you will handle it with skill and patience and with the interests of the United States always uppermost in your mind. I cannot help hoping that even though the prospect is a dark one, your great personal prestige and your reputation for complete integrity and for friendship with Chile will help to prevent disaster from overtaking that great country.

[Here follow personal comments.]

With kindest regards,

Sincerely yours,

Edward G. Miller, Jr.

P.S. If an opportunity should present itself to talk of Aníbal Jara, you might, if you think it wise, refer to my own personal friendship with him and my gratification over the fact that he has apparently returned to a position where he can lend his great talents to the maintenance of good relations between our two countries.

P.P.S. In regard to Lira’s announcement about the prospective termination of the military agreement, this raises the immediate question of whether the Department of Defense should continue to process the equipment to be sent down under the agreement. The Department of Defense has asked us whether they should take the various steps which have to be taken in the way of placing orders, etc., before any shipments could leave this country. We have told them for the time being that it is premature for us to make any decision on this point. Do you believe that any useful purpose could be served in discussing this problem some time with President Gonzalez Videla or to have our own military discuss it with the Chilean military? Of course, if the agreement is eventually to be terminated after the new administration comes into power, we could save ourselves a lot of trouble at this end by immediately holding up any further processing of the equipment.

EGM
  1. The notes of the referenced staff meeting, designated SM N–65, and dated Sept. 9, 1952, are contained in Secretary’s Staff Meetings, lot 63 D 75.
  2. Reference is to Department of State telegram 79, to Santiago, dated Sept. 9, 1952, in which Ambassador Bowers was instructed not to request an interview with President-elect Ibáñez, but also not to refuse a meeting if offered by the President-elect or one of his intermediaries (725.00/9–652).
  3. Apparent reference to telegram 79, from Santiago, dated Sept. 6, 1952, not printed (725.00/9–652).
  4. Javier Lira, a member of the Chilean Chamber of Deputies and Secretary General of President-elect Ibáñez’ Presidential campaign.
  5. For documentation on this subject, see Foreign Relations, 1938, vol. v, pp. 720 ff.
  6. Chilean Foreign Minister Yrarrázaval Concha.
  7. Reference is to the Inter-American Treaty of Reciprocal Assistance (Rio Treaty), opened for signature at Rio de Janeiro, Sept. 2, 1947, and entered into force for the United States, Dec. 3, 1948; for text, see TIAS No. 1838, or 62 Stat. (pt. 2) 1681.