Office of the Historian

CH–34. Memorandum from the Officer in Charge of Chilean Affairs (Phillips) to the Assistant Secretary of State for Inter-American Affairs (Rubottom)1

Washington, May 2, 1960

SUBJECT

  • Balance Sheet on Chile

With reference to the note you attached to our memo of April 19, following is a brief compilation of what the U.S. and Chile want from each other.

Chile wants:

1.
Credit to cover cost of rehabilitating vessels earmarked for Chile under ship loan program.
2.
Economic development loans far (1) construction of Pudahuel airport, (2) termination of construction of University of Chile Medical School, and (3) survey of natural resources, particularly ground waters.
3.
A new PL-480 sales agreement, with local currency loan funds to be earmarked for financing a savings and loan system to stimulate housing construction.
4.
A U.S.-Chilean convention for avoidance of double taxation, including a tax-sparing provision.
  • U.S.-Chilean investment guaranty agreement (convertibility only).
    • 6.
    Additional U.S. support for a joint U.S.-Chilean program of scientific research in Antarctica.
    7.
    Continued U.S. backing for the Alessandri arms limitation proposal.

    U.S. wants:

    1.
    Maintenance of political democracy in Chile plus more affective action by Chilean Government to restore financial stability and affect basic improvements in national economy and distribution of income.
    2.
    Adoption of measures by Chilean Government to diversify Chile’s economy and encourage production through stimulation of private investment, including foreign investment. (We also want double tax convention and investment guaranty agreement.)
    3.
    Recognition by Chilean Government that its overly tolerant attitude towards international Communist activities is creating problems for Chile and rest of hemisphere.
    4.
    To assist in financing construction of Pudahuel airport, but not the medical school or resources survey.
    5.
    A consular convention with Chile, particularly to facilitate import privileges for non-diplomatic U.S. personnel.
    6.
    Chile to hold to a minimum its acquisition of new arms, particularly naval vessels.
    7.
    To support the Chilean arms limitation initiative in so far as practicable.
    1. Source: Department of State, ARA/WST Files, Lot 63 D 85, “Briefing Papers.” Confidential.↩