Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

611.25/1–1154

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

confidential

[Washington,] January 11, 1954.

Subject:

• US-Chilean Relations

• Participants: Tobias Barros, Chilean Foreign Minister-designate
• Ambassador Jara, Chilean Embassy
• ARA—Mr. Cabot
• OSA—Mr. Atwood
  • Mr. Barall

Following the luncheon given by Mr. Cabot at Blair House in honor of the Foreign Minister, the latter called on Mr. Cabot in his office for the stated purpose of obtaining a first-hand impression of the problems of the two countries and establishing a cordial relationship with US officials. He expressed his gratitude to Mr. Cabot for the warm reception he had received and for, the opportunity to discuss matters of mutual interest. He stated frankly that he was only generally familiar with the situation in Chile and, except for what he had heard from Ambassador Jara, did not have detailed knowledge of bilateral problems such as copper. Referring to the upcoming Caracas Conference,¹ the Foreign Minister said he had received word from General Ibañez that Chile was firmly and decisively on the side of the United States in its desire to root Communism out of the Western Hemisphere and preserve democracy. He explained his pleasure in receiving this information because it coincided with his personal convictions. He said he had observed the operations of Communists in Europe and was aware of the threat they posed.

Barros then referred to economic matters which would be discussed at Caracas, stating these will be of greatest importance to Latin American countries. He expressed the hope that the United States would be “generous” in its assistance to Latin America in solving economic problems. He feels it is urgent that the United States and the other American Republics cooperate at Caracas to come up with a constructive and cooperative program. He referred to Chile’s efforts to relieve its dependency on copper and mentioned the importance of developing uranium resources and agricultural production. He was particularly interested in the IBRD–FAO agricultural program² in Chile which he had discussed at the FAO meeting in Rome.³

The Ambassador added that the Communists, in Chile as in other Latin American countries, were trying to make the most of economic difficulties and to translate them into political difficulties. He expressed the fear that people were receptive to Communist propaganda and that Communism would progress rapidly in Latin America once it gets a foothold. He said a reasonable loan program by the United States, making sound loans only, could head off the menace. He and the Foreign Minister were optimistic about a solution to Chile’s immediate copper problem and felt substantial progress had been made by the government in eliminating the political difficulties which had been created by the Popular Socialists and the government now had the go-ahead signal to work out a copper program. Jara said the only questions still remaining concerned the level of production to be attained and the construction of a refinery. Barros said Communist propaganda had been taken care of by the President’s firm statement against sales to the bloc, even though a market exists there. He said it was his personal conviction that, willy-nilly, Latin America was in the “Lebensraum” of the United States and it would cause social and economic dislocation in Chile to try to reorient trade and traditional friendships.

Mr. Cabot said he was pleased to hear of progress in Chile’s plans for the diversification of its economy and was glad to have Chile’s collaboration in the struggle against Communism. He mentioned that Secretary Dulles was planning a factual speech⁴ for Caracas which would expose Communist methods of infiltration and point out the dangers of Communist operations. With respect to uranium, the Chileans were informed that US cooperation in this field was not contingent on Point 4 funds and that the AEC was prepared to proceed with assistance in development when conditions warrant.

Mr. Cabot stated that while the long-range outlook for copper is very good, there is the immediate problem of the unsold accumulation. He reviewed the copper negotiations in the United States and explained that there had been an unfortunate misunderstanding with respect to timing. There is no basic disagreement between Chile and the United States on what course of action should be followed but Chile wanted the United States to make the purchase before such a course was followed. Referring to the Ambassador’s note of August 6,⁵ Mr. Cabot said the United States, on the other hand, had always understood that Chile would take corrective action either prior to or in conjunction with the stockpile sale. He described US interest in a stronger Chilean economy and in improved operating conditions for the American companies. Approval of the stockpile purchase had been obtained only on the basis of achieving these two objectives and we would have to show evidence of substantial progress before the sale could be completed. The US did not need copper and stockpile requirements were taken care of by existing contracts. Mr. Cabot told the Foreign Minister that the United States was ready to renew negotiations in Santiago at the convenience of the Chilean government and that Ambassador Beaulac had been informed of this. Mr. Cabot made it clear, however, that the United States was prepared to buy at 30 cents only if this is market price at the time of the contract. He said a drop in the price would create enormous difficulties for us since, by law, purchases for the stockpile could be made only at the going price.

The Foreign Minister said he understood the problem. He described himself as a man of executive temperament, who likes to get things done. To the extent that he is included in the copper discussions and in the formulation of policy, he will work for a rapid solution.

With respect to economic matters at the Caracas Conference, Mr. Cabot said he recognized their importance but stated frankly that the US position had not yet been established. He said the Randall Commission⁶ had not yet issued its report⁷ and the role of the Eximbank and US loan policy had not been crystallized. He explained, however, that President Eisenhower’s point of view was favorable to increased international trade and expressed the hope that ultimate US action would be helpful to Latin American countries. Mr. Cabot mentioned that technical assistance to Latin America would not be cut in fiscal 1955. He also discussed the role of private investment in Latin America from a favorable point of view.

At the end of the meeting, Mr. Cabot said he hoped there would be further discussion and collaboration on the Caracas Conference, either in Washington or in Santiago through Ambassador Beaulac. The Foreign Minister said he was looking forward to a very friendly relationship with Ambassador Beaulac and he was sure they would be able to exchange information and opinions on mutual problems.

1. Reference is to the Tenth Inter-American Conference, held at Caracas, Mar. 1–28, 1954; for documentation concerning the conference, see pp. 264 ff.
2. The program is outlined in a study prepared as a result of a joint IBRD–FAO mission of technical experts to Chile conducted during 1951; the study is entitled The Agricultural Economy of Chile. Report of a Mission Organized by the International Bank for Reconstruction and Development and the Food and Agricultural Organization of the United Nations at the Request of the Government of the Republic of Chile (Washington, 1952).
3. Apparent reference to the Seventh Session of the Conference of the Food and Agricultural Organization of the United Nations, held in Rome, Nov. 23–Dec. 11, 1953; for additional information, see FAO, Report of the Seventh Session of the Conference (Rome, 1954).
4. Apparent reference to the statement made by Secretary Dulles before Committee I of the Tenth Inter-American Conference on Mar. 8, 1954; for text, see Tenth Inter-American Conference: Report of the Delegation of the United States of America With Related Documents (Department of State Publication 5692, Washington, 1955), pp. 51–58.
5. See footnote 2, p. 701.
6. Reference is to the Commission on Foreign Economic Policy (commonly called the Randall Commission after its chairman, Clarence B. Randall), established by President Eisenhower on Aug. 7, 1953. For additional information on the establishment of the Commission, see Department of State Bulletin, Aug. 31, 1953, pp. 279–280; for documentation concerning the Commission’s activities, see volume i .
7. Commission on Foreign Economic Policy, Report to the President and the Congress (Washington, 1954).