295. Memorandum From the President’s Special Assistant (Rostow) to President Johnson 1

Mr. President:

Last December you authorized Bill Gaud to negotiate with Chile a program loan ($35 million) and sector loans in agriculture ($20 million) and education ($10 million). The sector loans were to be submitted to you for final approval.

You will recall that because of the windfall from high copper prices, President Frei decided last December to forego the program loan as long as the price of copper remained high. He asked, however, that negotiations proceed on the sector loans.

Since then, the price of copper has dropped sharply. The Chileans are discussing with AID the possibility of a program loan covering the balance of 1967. Negotiations on the agricultural sector loan are proceeding. The education loan agreement has been completed.

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Attached is a memorandum from Bill Gaud 2 asking your approval of the educational sector loan. Charlie Schultze and Joe Fowler concur in the request, as does Covey Oliver .3

The loan is justified because:

  • —Chilean self-help this year has been good.
  • —Chile has agreed to two major steps for improving its overall economic performance as conditions for this loan.
  • —Chilean performance in education has been impressive.
  • —The loan will accelerate Chile’s own efforts.
  • —It is in line with the Punta del Este decisions to put increased emphasis on education.

I recommend approval.4

  1. Source: Johnson Library, National Security File, Country File, Chile, Vol. IV, 10/65–7/67. Confidential.
  2. Attached but not printed was a June 16 memorandum from Gaud to the President.
  3. Attached but not printed was a June 24 memorandum from Schultze to the President.
  4. The approve option is checked. A handwritten note on the memorandum reads: “Mr. Bowdler said he’d notify all concerned. RLN.”