823.00/11–253
Memorandum of Conversation, by Edgar L. McGinnis, Jr., of the Office of South American Affairs
Subject:
- Various Peruvian Economic and Political Problems
- Participants: Rear Admiral Roque A. Saldias, Peruvian Minister of Marine
- The Peruvian Ambassador
- ARA—Mr. Cabot
- OSA—Mr. McGinnis
Admiral Saldias said that he was taking advantage of his visit to the United States to attend the launching of the new Peruvian submarine Tiburon at Groton, Connecticut, to discuss various important economic and political matters with Mr. Cabot at the suggestion of President Odria.
The Admiral said that Peru was undergoing a period of economic strain resulting from the decline in world market prices of its principal exports. He said that while the Government had the situation in hand, there was always the possibility that Peru might have to resort again to governmental control of foreign exchange which it had previously abandoned. He said that Peru wished to avoid this since it was ever mindful of the example it had set for other Latin American countries in freeing its economy of official controls.
The Minister then referred to various economic problems in which he thought the Department could be of help and said that while he did not ask for any commitments from Mr. Cabot, he bespoke his serious and favorable consideration of them. Admiral Saldias said that the [Page 1510] principal economic problems were sugar, the Toquepala copper project and the IBRD’s refusal to consider further loans until Peru had settled its sterling indebtedness. Both Admiral Saldias and the Ambassador bespoke the Department’s aid in obtaining a larger sugar quota for Peru under the International Sugar Agreement.1 They explained in detail Peru’s reasons for refusing to sign the Sugar Agreement and indicated that there were means to increase Peru’s quota if United States support were forthcoming. With respect to the Toquepala project they described its importance to Peru and urged serious consideration of its merits. The Ambassador then spoke out strongly against the IBRD’s refusal to act upon Peruvian loan applications until Peru had reached a settlement with British holders on its sterling debt. He regarded this as unfair since it required Peru to negotiate with the British under a tremendous handicap. The Ambassador asserted that Peru had made a fair offer to the British which included payments on the principal at the rate of $4.86. Moreover, pending settlement of the matter the Peruvian Government is setting aside funds regularly to meet these obligations.
Mr. Cabot replied that insofar as the sugar question was concerned, this appeared to be a multilateral problem. He pointed out that it would be almost impossible for the Department to take the position that the International Agreement and the Sugar Act2 be amended but that he would look into the possibility of providing some relief for the Peruvians through the use of unused quotas.
Regarding the Toquepala project, Mr. Cabot said that he continued to be very much interested in it and hoped that an appropriate time might soon come to bring this project forward again. He indicated that Dr. Eisenhower’s report3 is shortly to be distributed to the interested agencies of the Government and that this might afford a good opportunity. He said that he considered the project a sound one, but that due to its magnitude it was necessary also to think of the question of timing in pressing for its execution.
As to Peru’s relations with the IBRD, Mr. Cabot observed that the international character of that institution placed limits upon our ability to intervene in individual cases. He expressed his regret that it had not been possible to have a meeting of minds between the Peruvian Government, the American Bondholders Committee and the British [Page 1511] Bondholders Committee and said that he would again ascertain whether anything could be done to hasten the granting to Peru of the IBRD loans which had been delayed pending the completion of Peru’s foreign debts settlements.
The Ambassador then stated that he was leaving with Mr. Cabot three formal communications4 relating to sugar, forthcoming United States tariff hearings on lead and zinc, and Peru’s relations with Colombia and Ecuador. Regarding its relations with Colombia and Ecuador, the Ambassador stated that Peru was seriously concerned over unfriendly statements made by Colombian and Ecuadoran officials in connection with the recent meeting of Presidents Velasco and Rojas Pinilla which were directed at Peru. More particularly, Peru regards indications of a Colombian-Ecuadoran military alliance as a serious threat to Peru. Admiral Saldias added that he was leaving with Mr. Cabot a copy of his Groton speech5 made upon the occasion of the submarine launching. The Admiral said that in his speech he made it clear that the strengthening of Peru’s naval forces represented a sincere desire to cooperate with the United States in the maintenance of peace and to insure this Hemisphere against outside aggression.
Mr. Cabot replied to the Admiral that we appreciated this attitude of his Government and observed, with respect to the Ambassador’s remarks, that he was confident that neither Colombia nor Ecuador harbored aggressive designs against Peru.
- For text of the Agreement, concluded at London, Oct. 1, 1953, and entered into force, May 5, 1954, see 6 UST 203, or TIAS No. 3177.↩
- Reference is to the Sugar Act of 1948 (Public Law 388), approved Aug. 8, 1947; for text, see 61 Stat. 922.↩
- Reference is to the report submitted to President Eisenhower by Milton Eisenhower after his factfinding trip to South America during the summer of 1953 as the Personal Representative of the President. The report was published as “United States-Latin American Relations: Report to the President” (Department of State Publication 5290, Washington, 1953). Regarding the trip and the report, see the editorial note, p. 196.↩
- None printed.↩
- Not printed.↩