725.00/12–2354
Memorandum by the Operations Coordinator (Bishop) to the Deputy Assistant Secretary of State for Inter-American Affairs (Sparks)
For your information, there is quoted below an excerpt from my preliminary notes on yesterday’s OCB meeting which is of interest to your office:
“Courses of Action in Connection with Current Developments in Chile
“Mr. Hoover reported that Ambassador Beaulac would be coming to Washington early in January and that he would be invited to the OCB to discuss Chilean problems with the Board. He remarked that the paper before the OCB was a valuable one but that, because of the proposed visit of Ambassador Beaulac, the State Department requested that the paper be tabled with the OCB pending Ambassador Beaulac’s discussion of these problems.
“Mr. Atwood gave a brief résumé of the situation in Chile. Mr. Stassen said that, while FOA would go along with State’s request that this matter be tabled for a few weeks, FOA doubted that Prat would be able to carry through on his program and that strikes and trouble are to be expected. FOA sees a deficit in the balance of payments of about [Page 764] $90 million this year. If Chile were near the USSR and facing a situation as serious as this, Mr. Stassen said that the risk would be too great and would be unacceptable. However, because of the remote location of Chile, Mr. Stassen felt we probably would be able to solve this problem over a period of time with some difficulty. Mr. Hoover pointed out that many of the proposals in the staff paper before the OCB were long-range and that, therefore, it would be wise to wait until we could staff them properly within the respective departments and agencies and until we could discuss them with Ambassador Beaulac. The most important proposal, he pointed out, is that, if the President decides to take over the government without Congress, would the President be faced with a revolution and would he be able to carry on. Mr. Overby of Treasury injected that the planned program was not really the full or final answer to Chilean difficulties and that even if they do carry out this program they will be ‘by no means out of the woods’. Whereas last year there had been a 75 percent increase in prices, the best that Prat hopes for this year is not more than a 30 percent increase in prices.
“Mr. Streibert, USIA, wondered if it would be possible to get full cooperation of the Government of Chile, somewhat similar to the arrangement we have with Spain, so that the United States would get full credit for whatever help we give Chile and so that we could work together with Chile in a public relations program. The difficulties in achieving such a relationship in Latin America were briefly pointed out by Mr. Hoover who added that there are plans going forward for certain discussions with CIA and that these discussions will be developed while Ambassador Beaulac is here.
“Mr. Staats raised the question of the possible coal crisis in Chile. Mr. Atwood pointed out that, after investigation, the Department of State had informed the Government of Chile that no government agency could handle shipments of coal to Chile and that they should handle their coal purchases through commercial channels. Mr. Stassen said that FOA does have a coal program and that, if it is agreed that it is a desirable thing to do, FOA could make coal shipments to Chile in a manner similar to the PL 480 shipments for surplus agricultural products. The local currency generated by the coal shipment is loaned to the local government and control kept in United States hands.
“Mr. Overby of Treasury indicated that Treasury has serious reservations and questions regarding item 6, ‘Creation of Anti-Inflation Advisory Committees’ but he did not wish to bring them up at this time because of the postponement of consideration of the whole paper.
“In response to Mr. Dulles’ question whether the present policy is to build up the existing Chilean Government or not, Mr. Hoover replied in the affirmative and described briefly some of his discussions with Mr. Prat at Rio.
[Page 765]“General Cutler asked whether the program which had been described by Mr. Atwood envisaged placing requirements on Chile. It was pointed out that, to the extent that such requirements were practicable, this was true. Mr. Stassen said that he would describe FOA’s program as ‘walk together’ instead of the ‘short tether’ which was the term used by Mr. Atwood. Mr. Rockefeller said that, while he agreed with the program which had been described under the term ‘short tether’, he felt that the description ‘walk together’ was psychologically a better one and that, because catch phrases had a way of leaking out of meetings, we should avoid a catch phrase which might be embarrassing. It was the general consensus that ‘walk together’ was a more acceptable terminology than ‘short tether’ although they both had almost the same meaning.”