536. Telegram From the Chargé in the United Kingdom (Barbour) to the Department of State 1

992. Deptel 851, repeated Lima 47,2 Lima’s 92, repeated London 2.3 In accordance Deptel 851, Embassy raised subject sale destroyers to Peru with Foreign Office. Foreign Office agreed review British position in view Embassy’s representation, and inform Embassy later on UK final decision.

During conversation Foreign Office stated informally considerable irritation exists among some British agencies over recent cases where United States has thought [sought?] to block UK commercial deals. In particular Centurion tank matter in Germany was cited and Foreign Office felt certain quarters HMG now extremely reluctant to [Page 1078] give United States prior notice of pending deals, particularly in small equipment, for fear United States will block them.

Foreign Office reiterated UK had unfavorable balance of trade with Peru and Peru had large sterling balances unexpended. Continued that other suppliers small military equipment existed such as France and Italy which might fill Peruvian order if United Kingdom and United States refused.

Foreign Office felt HMG moving towards position agreeing inform United States in advance about sale large capital items equipment but on smaller items would negotiate deal without bothering check with United States.4

  1. Source: Department of State, Central Files, 723.5621/8–857. Confidential. Repeated to Lima.
  2. Not printed. Telegram 7119 from London, June 20, reported that Peru had expressed interest in buying two destroyers from the British. It asked whether the Department wanted the Embassy to discourage the Foreign Office from continuing discussions with Peru. (Ibid., 723.5621/6–2057) Telegram 851 to London, July 27, instructed the Embassy to discourage the sale of British destroyers, as well as smaller vessels, to Peru. It added that Congress was considering legislation to enable the United States to loan some destroyers to Peru. The final paragraph reads: “You should explain Foreign Office our objection is however economic. For instance under PL 480 US has in past year granted Peru 135,000 tons agricultural products valued about $12 million for drought relief because of difficult fiscal position GOP. Purchase of British destroyers instead of waiting for loan of ours would add unjustifiable fiscal load and would contribute to weakening country’s economic and financial position.” (Ibid.)
  3. Dated August 1, telegram 92 reported that Peruvian negotiations with the British for destroyers had been dropped. The Peruvian Finance Minister believed he had persuaded the Navy to abandon the idea of obtaining a cruiser from the United States or elsewhere. (Ibid., 723.5621/8–157)
  4. Telegram 118 from Lima, August 9, informed the Department of State that Ambassador Achilles felt this telegram indicated progress. He said that he had served in the United Kingdom long enough to understand British foreign exchange problems and their irritation when they felt the United States was trying to block them on minor matters. He added that he would be glad to help explore other uses in Peru for sterling balances, and suggested that engineering and road-building equipment would be preferable to military equipment. (Ibid., 723.5621/8–957)