518. Memorandum of a Conversation, Department of State, Washington, June 13, 19551


  • Financing of Purchase of Two Peruvian Submarines


  • Mr. Sullivan,2 Department of Defense
  • Mr. Thomas B. Klakring, Rear Admiral, USN (retired)
  • OSAEdgar L. McGinnis, Jr.
  • Admiral Roque A. Saldías, Peruvian Minister of Navy
  • Ambassador of Peru Fernando Berckemeyer

Mr. Sullivan explained to Admiral Saldías and to Ambassador Berckemeyer that he had been requested by Mr. Anderson, Deputy Secretary of Defense, to call upon them. Mr. Sullivan said that the [Page 1042] purpose of his visit was to clarify the position of the Department of Defense with respect to the financing of the Peruvian submarines. He said that neither Mr. Anderson nor other officials of the Department of Defense had raised this question at lunch with Admiral Saldías today3 because at that time Mr. Anderson was not acquainted with the matter in sufficient detail. Mr. Sullivan explained that Mr. Anderson and many other officials of the Department of Defense were very sympathetic with Peru’s desire to finance the construction of two additional submarines and that he was certain that detailed arrangements could be worked out providing for a United States Government loan of approximately $15 million to finance the transaction. Mr. Sullivan also stated that the Department of State was in full agreement with the Department of Defense as to the desirability of this transaction. Mr. McGinnis referred to the Peruvian Embassy’s note of June 2, 1955,4 raising the question of the financing of the submarines. He said that while a written reply had not yet been made he could assure Admiral Saldías and the Ambassador that the Department’s reply, which would be forthcoming shortly, would be favorable. Mr. Sullivan added that the Defense Department was quite anxious to facilitate the purchase of these submarines since they would be available, when completed, to assist in hemisphere defense tasks under the Bilateral Military Assistance Agreement.5

Ambassador Berckemeyer said that he was gratified to hear this. Admiral Saldías said that he was also pleased to receive this information and implied that he was surprised that the matter had not been raised at Mr. Anderson’s luncheon at the Pentagon, since the transaction regarding the submarines was the primary purpose of his trip. The Admiral then asked Mr. Sullivan various questions respecting interest rates and the terms of the loan. During this discussion, Mr. McGinnis made it clear that details regarding the loan should be worked out directly between the Department of Defense and Peruvian authorities. He mentioned that while the Department was very much interested in the transaction, time would be saved through direct contact between the Department of Defense and interested Peruvian officials. He added that the Department of State would, of [Page 1043] course, be delighted to be of any assistance in the matter if requested.

Admiral Saldías made it clear to Mr. Sullivan that he wished at least to reach a preliminary agreement upon this matter before his departure at the end of the week. Mr. Sullivan said that he believed this could be worked out and promised to go over the details in his office immediately upon his return.

  1. Source: Department of State, Central Files, 723.5621/6–1355. Confidential. Drafted by McGinnis.
  2. Apparently Charles A. Sullivan, Director, Policy Division, Office of the Assistant Secretary of Defense for International Security Affairs.
  3. Deputy Assistant Secretary of Defense Anderson had been host to Admiral Saldías at a luncheon at the Pentagon on June 13. In a memorandum dated June 10, McGinnis informed Holland that the Admiral was in the United States to arrange financing for the two submarines requested by the Peruvian Navy. (Department of State, Holland Files: Lot 57 D 295, Peru)
  4. Note 5–3–M/129, not printed. (Ibid., Central Files, 723.5–MSP/6–255)
  5. For text of this agreement, signed at Lima, February 22, 1952, and entered into force on April 26, 1952, see 3 UST (pt. 2) 2890.