386. Telegram From the Secretary of State to the Embassy in Chile1
279. FYI Preliminary conversations with Vassallo indicate importance Chileans attach to domestic political impact of early announcement that ample quantities of basic agricultural items are available to prevent shortages or price rises. Department favorably impressed this reasoning but wants Embassy comment by return cable before discussing with other interested agencies. In absence reasons to contrary Department disposed toward prompt sale maximum feasible quantities surplus commodities consistent with attainment above objectives and US desire not to disturb normal trade patterns but wants insure PL 480 program affords maximum incentive for adoption effective anti-inflation program. We can reach prompt accord on quantities to be sold and general terms of repayment. However urgently need Embassy advice whether agreement should be withheld until legislation finally adopted or announced before adoption as lever to obtain Senate approval. Department recalls unfortunate precedent of copper legislation but understands Chilean Senate must act this week on anti-inflation legislation. Department also considering asking for informal understanding that Chile make serious efforts eliminate commercial arrearages.
By including “usual marketing” (i.e. dollar sales) portion of deal in total to be announced, quantities of some commodities which might be furnished could approximate Chilean request. Embassy comment desired on Chilean capacity absorb following amounts without interfering normal marketings usual suppliers so far as they may be able to deliver. Edible oils—40,000 tons; cotton—more than 60,000 bales, 30,000 of which to be for dollars; wheat—150,000 tons, 40,000 of which to be for dollars; dried milk—20,000 tons; clover and alfalfa seed—5,000 tons each. End FYI.
Vassallo plans return Chile January 7.
- Source: Department of State, Central Files, 411.2541/1–456. Confidential; Niact. Drafted by Belton, cleared with the Department of Agriculture and in substance with the International Resources Division (IRD) of the Bureau of Economic Affairs, and approved by Bernbaum.↩