413. Letter From the Assistant Secretary of State for Inter-American Affairs (Rubottom) to the Ambassador in Chile (Lyon)1
Dear Cecil: Billy and I leave tonight for Central America and Panama to be gone two weeks. In haste, I wish to take up two matters with you.
First, you have received two letters regarding President Ibañez’ visit which were discussed with me, but you should have my views. Frankly, I am reluctant to approve a visit by him although it is still scheduled for December and I shall take seriously your final recommendation, not later than July 15. Much better reasons can be adduced for inviting President Siles of Bolivia or President Lemus of El Salvador. I believe that we can sell the Secretary and President on a change if we decide to recommend it. However, I definitely want to keep Ibañez as a bird in the hand rather than give up a Latin American visit entirely at least until you make your recommendation. If that is negative, we shall redouble our efforts to have a substitute approved.
[Page 839]Harry Turkel has carefully prepared the groundwork for a 20 million dollar Export-Import Bank credit to Chile to be advanced against demonstrable progress in tightening up her efforts in the stabilization program. The magic figure of 40 million dollars can be reached by adding an IMF drawing or a new PL–480 deal to the above mentioned Export-Import Bank credit. He has several ideas and the approach is flexible enough to meet the Chilean needs, in my opinion. It would be entirely unwarranted to state that the 20 million dollar Export-Import Bank figure had been approved but I believe that we can put such a deal across.
Prescott Carter, who knows of our plan, and Ambassador Puga, who has been warned that the 40 million dollar figure is too high to hope for, both argue for the full amount requested. Carter also says that the Chileans will not agree to any additional tightening of the screws.
Frankly, I like Turkel’s approach to the problem and have given him plenty of rope to try to get it across. I never could quite accept first Puga’s and then Carter’s flat insistence on 40 million dollars, especially since Puga arrived at that amount within less than a week after the March turbulence.
Our approach to Chile should be something like this: we are sympathetic to your problem; we are prepared to help to this extent; this extent, or even a larger amount, would be wasted and Chile’s credit further extended unless, concomitantly, Chile takes certain steps to reduce the inflationary trend, especially in the tightening of credits; by doing this we hope that Chile could avoid having to come to the United States next year for additional extraordinary assistance.
We have given both of these matters; the presidential visit and the credit, the most careful study, as we have all matters relating to your great good friends, the Chileans. They are among the most attractive people I have ever met and, in spite of the disillusionment which you have come to feel, we do not have a more attractive post.2
[Here follow brief personal remarks.]
Very sincerely yours,
- Source: Department of State, ARA Files: Lot 59 D 573, Chile 1957. Secret; Official–Informal.↩
- In a letter to Rubottom, dated July 10, Lyon strongly recommended that President Ibañez be invited to visit the United States. He believed that an invitation to Ibáñez “would indicate that we stand ready to support those countries which have the courage to embark upon sound, badly-needed programs of economic rectification.” “If the anti-inflation fight is as important to Chile and to the rest of Latin America as I have been led to believe it is,” he stated further, “I really believe that public recognition of the man who has carried the burden of it is in order.” (Ibid.)↩
- Printed from a copy which bears this typed signature.↩