302. Record of Discussion at the 32nd Meeting of the Senior Interdepartmental Group1


  • Under Secretary of State, Chairman
  • Deputy Secretary of Defense
  • Chairman, Joint Chiefs of Staff
  • The Director of Central Intelligence
  • The Administrator, Agency for International Development
  • Mr. Akers for the Director, United States Information Agency
  • Special Assistant to the President
  • Under Secretary of Treasury
  • Deputy Under Secretary for Political Affairs
  • Counselor of the Department
  • SIG Staff Director
  • DOD
    • Mr. Lang
    • General Orwat
    • Mr. McGiffert
  • State
    • Mr. Oliver
    • Ambassador Korry

[Omitted here is discussion of future meetings.]

II. Chile

The Chairman said that he had asked Mr. Oliver to present several of the particularly difficult problems in Latin America to the SIG prior to SIG discussion of the Joint State/Defense Study.2 He thought that this would be useful to SIG members in giving them a more detailed knowledge of particular country problems.

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Ambassador Korry then gave a presentation on the general situation in Chile and the problems faced by Frei as he approaches the coming elections. Ambassador Korry stressed his conclusion that Chile’s long history of democratic evolution would continue. He felt that this might very well mean however, a more left-wing group coming to power, possibly with the active cooperation of the Communist Party. This would obviously present special problems in our relationship with Chile. He thought that the record of the Chilean Government in agricultural reform and anti-inflation measures was reasonably good but that the test, particularly on inflation controls, was only now coming. A major factor in Chilean elections, aside from the personality of the candidate in the presidential election, is the rate of inflation.

Ambassador Korry also described the copper situation and the windfall benefits that the copper companies have gained because of the strike in the United States and its effect on world copper prices. Ambassador Korry pictured the political party structure and mentioned the status of current aid discussions.

Mr. Katzenbach summed up the discussion by saying that our choices in terms of US actions were narrow. In essence, we were trying to take out insurance which would in some way strengthen the moderate forces in the coming 1969 congressional elections. We could do this through applying additional resources, particularly where they helped achieve economic stabilization. But we had to make a choice at some point about whether to apply pure IMF doctrine with the risk of seriously damaging moderate forces or taking a less rigid stand. The central problem remained, however, how to hold inflation in controllable limits. He agreed with Ambassador Korry that whatever we did in Chile, we should conduct ourselves in as unobtrusive a fashion as possible and not allow US prestige to be completely tied to one personality.

[Omitted here is discussion of Panama.]

AA Hartman
Staff Director
  1. Source: National Archives and Records Administration, RG 59, S/SSIG Files: Lot 70 D 263, SIG/RA #34, 3/26/68, Future Meetings. Secret. Drafted by Hartman on March 26. ARA prepared a discussion paper for the meeting in which it reviewed the current political and economic situation and recommended that the United States support the anti-inflationary program of the Frei administration while encouraging “the development of a moderate political consensus in Chile of which the Christian Democrats would be the main element.” (Ibid., SIG/Memo #57, 3/20/68, 32nd SIG Meeting)
  2. Reference is to a study entitled “Latin America: A Recommended U.S. National Strategy,” prepared under the direction of Ambassador Edwin M. Martin. The SIG discussed the Martin study at its meetings on May 2 and June 13. At the latter meeting, Katzenbach directed that the country teams consider the study “in their policy/program planning and development.” (Ibid., SIG/RA #41, 6/26/68, Chairman’s Summary at Discussion and Decision)