493. Telegram From the Embassy in Peru to the Department of State1

1469. For Oliver from Ambassador. Subj: Supersonic Aircraft and Peruvian Stability.

[Page 1026]
[less than 1 line of source text not declassified] of 24 and 26 September,2 cites parallel information from several good sources to effect that Peru has signed contract for twelve Mirage jets costing $28 million. While this is not documentary evidence of a purchase, we have long believed that some commitment to French company has been made and consider the sources good enough to constitute confirmation of purchase short of documentary evidence or official announcement.3
We have made abundantly clear in reporting recent developments our belief that a prompt negotiating of US program loan assistance will be an imperative element for the restoration of confidence so sorely needed if Peruvian situation is to be stabilized and economic recovery and continued progress thereafter initiated.4 If this is not done, and unless there is a restoration of confidence in the next few months, it is our judgment that authoritarian intervention in one form or another is highly likely. Yesterday we reported General Doig’s remark that unless situation improved there would be no elections in 1969.5
Since we assume the single most inflexible impediment to our providing program loan assistance is the reported purchase of Mirages, I urge that every force be used at this time to achieve a decision permitting us promptly to make a firm and specific counter-offer of F–5’s. I cannot assure that such a counter-offer would be sufficient to undo what has probably already been done to acquire Mirages, since it is likely that a substantial down-payment has been made. However, unless we have authority to counter the French deal with a firm offer now and then go ahead with a program loan, it is our considered opinion that Peru’s fine democratic experience under President Belaunde is not likely to survive to end of his term. A military intervention in Peru [Page 1027] would be such a blow to our general policies under the Alliance for Progress that an all-out effort to save the situation is now imperative.
I know you will do everything possible to obtain the kind of authority we request with regard to F–5’s and thus give us a chance to resume our constructive policies of support for Belaunde administration and Peru’s other democratic institutions.
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 12–5 PERU. Secret; Limdis; No Distribution Outside Department.
  2. Not found.
  3. In telegram 1508 from Lima, September 29, the Embassy reported that Peru had agreed to purchase 14 Mirage fighters from France, including the delivery of two training aircraft, before the end of 1967. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 12–5 PERU)
  4. On July 27 the parliamentary coalition supporting the Belaúnde administration refused to attend sessions of Congress, citing the controversial election of an opposition candidate to the presidency of the Senate. The resulting constitutional crisis was further aggravated by a crisis in the government’s finances; a run on the foreign exchange reserve eventually forced the administration to devalue the currency on September 1. The immediate political effect of devaluation included: (a) the installation of the new Congress on September 4; and (b) the formation of a new Cabinet on September 7. An INR analysis of the crisis is in a memorandum from Denney to the Secretary, September 14; an Embassy assessment is in telegram 1359 from Lima, September 20. (Ibid., FN 17 PERU and POL 15–2 PERU, respectively)
  5. As reported in telegram 1444 from Lima, September 26. (Ibid., POL 15–1 PERU) General Julio Doig Sanchez was the new Peruvian Minister of Defense.