Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

PE–30. Memorandum of Conversation, by the Officer in Charge of Chilean Affairs (Phillips)¹

Washington, October 26, 1959

SUBJECT

• Acquisition of Vessels by Peruvian Navy

PARTICIPANTS

• Assistant Secretary Rubottom, ARA
• Ambassador Fernando Berckemeyer of Peru
• Mr. Miguel Grau, Minister-Counselor, Peruvian Embassy
• Admiral Luis Llosa, Naval Attaché, Peruvian Embassy
• Robert M. Phillips, WST

After the usual amenities, Ambassador Berckemeyer stated that he had come on orders of his Government to explain with complete frankness the attitude of the Peruvian Government (i.e., the President and his Cabinet) with regard to the purchase of a cruiser from the U.K. Many units of the Peruvian Navy were becoming obsolete and needed to be replaced, and the most convenient and economical way this could be done was to take advantage of the availability of a cruiser from the U.K. The price of the vessel was only L–1 million sterling, payable in five annual installments of L–200,000. Payments would be made from funds available only to the Navy on the basis of a special law, and the Navy’s funds might be supplemented by a special public collection of voluntary donations which might total as much as 1 million soles annually. Therefore, the proposed purchase would have no effect on the Government’s general budget and no particular effect on Peru’s balance of payments position, especially since Peru has a favorable sterling balance of payments. The Peruvian Government was, of course, aware of the other implications of its acquisition of this cruiser and wished to assure us that these had all been carefully considered.

Mr. Rubottom said he was grateful to Ambassador Berckemeyer for coming in to explain the Peruvian position. Three years ago, he had talked with the Ambassador and with Admiral Llosa regarding the possibility of transferring a U.S. cruiser to Peru, and he regretted that it had not been possible to arrange for this. Nevertheless, speaking as a representative of a country which has enjoyed particularly close relations with Peru and which has wanted to give maximum assistance to Peru’s economic development, Mr. Rubottom said we were very much surprised by the present proposal for the purchase of a cruiser, even if we accepted the logic of the agreements advanced by the Ambassador. What Peru should consider was the psychological impact in the U.S. and other countries of this transaction. As the Ambassador undoubtedly knew, a strong current was developing in the U.S. against our military aid programs. It would be extremely difficult for him (Mr. Rubottom), in testifying before Congress, to justify our military and economic assistance to Peru in the light of the proposed purchase of the cruiser. In view of Peru’s difficult financial position, we had tried to do everything possible to accommodate the Peruvians on the question of releasing the soles frozen in the submarine purchase account, making funds available for the highway project, and arranging for grant assistance in rehabilitating the vessels offered under our ship loan bill. While we recognized Peru’s sovereign right to take any measure it considered necessary for its own defense, we could not but feel that the cruiser purchase would make cooperation between our two countries more difficult.

Ambassador Berckemeyer agreed that there would be some unfortunate repercussions from this deal, but he pointed out that it would be very difficult for Prime Minister Beltrán, despite his austerity program, to oppose a national defense measure which had been approved many years previously, especially since the special laws like that setting up the Navy fund were “untouchable.” Actually, the purchase of the cruiser was economically justifiable on the basis of the high cost of maintaining the obsolete units which it would replace. Also, we should take into account the important role of the Navy in educating the young men of the country, training them in modern techniques and teaching them to be good citizens. Further, we should consider the fact that the Peruvian Navy had had thirty years of cordial relations with the U.S. Naval Mission.

When Mr. Rubottom asked whether the Peruvian Government had already contracted for the cruiser, Ambassador Berckemeyer replied in the affirmative. Mr. Rubottom then asked whether there was any truth in rumors we had heard that Peru might acquire a second cruiser from the U.K. Admiral Llosa said that there appeared to be some substance to these rumors and that it was his understanding that if the U.K. were to offer a second cruiser on the same conditions as the first, the Peruvian Navy would probably make an effort to obtain the second ship. He indicated that a specific vessel—not named—now in service under the British flag was involved. Ambassador Berckemeyer, however, said he wished to make it clear that he had received no official notification regarding the second cruiser.²

Mr. Rubottom told his callers that he could only say that the news of the cruiser purchase contract had been very badly received by himself and all his colleagues in the Department, including Secretary Herter and Assistant Secretary Mann. He was also sure that Undersecretary Dillon, presently away from the Department, would not be pleased by this development. Even taking into account all the arguments advanced by the Ambassador, it would be impossible for the Department to attempt to reconcile the cruiser purchase with the policy of austerity proclaimed by Prime Minister Beltrán. It was paradoxical that Mr. Beltrán, who was well-known and well-liked in the U.S., had often criticized our Government before U.S. audiences for giving military assistance to Latin America. Mr. Rubottom himself had debated this issue in public with Mr. Beltrán.

Ambassador Berckemeyer said he agreed but pointed out that Sr. Beltrán was in a most difficult position. In any event, there was no escaping the fact that the obsolete vessels had to be replaced. When Mr. Rubottom asked whether we had been advised concerning just which ships would be replaced, Admiral Llosa said that this information had already been supplied to the Department.

Admiral Llosa then went on to say that one important factor remained to be considered. This was that as a consequence of the lack of support for the Peruvian Navy by our own Navy and the Department of State, particularly in relation to the aid extended to the navies of neighboring countries, the naval equilibrium in the area had been upset. In fact, the situation was continually becoming worse due to the unequal treatment received by Peru. National pride, and the Navy’s pride, had been wounded by the favoritism shown to Chile, Ecuador and Colombia. Even the continental defense program was working against the interests of the Peruvian Navy. Since the Peruvian Navy had much of its strength in submarines, it resented the fact that we were training navies of neighboring countries in anti-submarine warfare. Peru had, in fact, bought the submarines on U.S. advice. Peru now considers itself menaced by an “adventure”—not a war but a surprise raid—on the part of the much more powerful Ecuadoran Navy. For this reason, the purchase of the cruiser was desired by the entire nation.

Admiral Llosa continued that Peru had not necessarily asked to be considered among those countries unable to pay rehabilitation costs of the vessels offered under the U.S. ship loan act. Peru had first offered to pay these costs in installments over a period of five years. When it appeared that it might be difficult for us to arrange five-year credit, the Embassy had sent a formal note asking for the two destroyers and offering to pay the rehabilitation costs within three years.³ Since then, Peru had been happy to learn that the U.S. would be able to rehabilitate at least one destroyer under grant military aid,⁴ but the Admiral wished to remind us that even in the ship loan program Peru was the subject of discrimination. Peru had originally asked for three destroyers but had been limited to two. Chile had first asked for two submarines and then for two destroyers and had received approval for all four vessels. Chile’s acquisition of the submarines in particular was very dangerous as far as Peru was concerned.

Admiral Llosa said he wished to make the further point that Peru’s economic progress would depend largely on the establishment and maintenance of a climate of political stability and that the restoration of the strength of the Peruvian Navy would make a very significant contribution in this direction. Thus the purchase of the cruiser should be considered as economically justified.

Mr. Grau said it was very important that any attitude which might be taken by the U.S. with regard to the cruiser purchase not be one that could be interpreted in Peru as a “reprisal” against the Peruvian Government. Mr. Rubottom assured Mr. Grau that the question of reprisals would never be considered.

1. Source: Department of State, Central Files, 723.5621/10–2659. Confidential.
2. In telegram 392 to Lima, December 1, the Department of State reported to the Embassy in Peru that Peruvian Minister Counselor Grau informed the Department on that day that Peru had purchased the second British cruiser. (723.5621/12–159)
3. The note under reference was not further identified. In telegram 138 from Lima, September 12, 1958, the Embassy informed the Department of State that Peruvian Navy Minister Tirado instructed Rear Admiral Llosa, the Peruvian Naval Attaché in Washington, to inform the Department that Peru would accept two destroyers on three years credit and that it would pay rehabilitation costs of $2.8 million each. (723.5621/9–1258)
4. In a memorandum of conversation of October 19, Ambassador Achilles reported that he informed Minister Tirado that the Departments of State and Defense had approved rehabilitation of one destroyer plus the carryover of $850,000 in fiscal year 1959 funds for rehabilitation of other vessels. (723.5621/10–2159)