496. Telegram From the Embassy in Peru to the Department of State 1

1949. Subject: Program Loan and F–5’s. Ref: Lima 1886.2

1.
President received me this morning. I thanked him for having seen Siracusa during my absence in Trujillo last week to discuss new offer of program loan and sale of F–5’s.3 I had received full account of their conversation and of President’s reaction to terms and conditions of our two offers. Nevertheless, Washington had instructed me to follow up Siracusa’s presentation and to seek with President solution to present impasse.4 I admitted that our offer of F–5’s had arrived late and that if it had come earlier we might have avoided present situation. Unhappily this had not been possible for reasons which Belaunde was aware and I referred to harsh press and Congressional criticism directed at Department since announcement of its decision to make F–5’s available to Peru and Brazil. I referred to desire of President Johnson and his government in Washington to assist Belaunde administration, particularly in its present financial difficulties but reaffirmed that purchase of French fighters would make this impossible. USG could not be put in position of appearing to finance with large program loan Peruvian purchase of expensive supersonic aircraft in third country such as France.
2.
Belaunde interrupted about this point to say emphatically that what had been done was done and could not be changed. He said was waste of time to discuss Mirage deal further—that it was closed issue. If he were not absolutely frank with me [we] could pretend there were possibilities of reversing GOP position but this is not case and USG had best accept this as basis for future relations with Peru. If, Belaunde continued, this means end of economic relations between Peru and US, sooner he knew this the better.
3.
I said I hoped that over past few days he had given consideration to serious problem which had arisen between us and might have some suggestions to offer for mutually agreeable solution. I said I had [Page 1033]come as old friend and personal admirer of Belaunde to see if there were not some way of circumventing or avoiding Mirage problem and of getting his government and mine off this particular hook. I suggested that General Porter, CINCSO, might come to Lima to discuss possible solution directly with Peruvian military. Belaunde said this would be waste of time. I then suggested that French military might use Peruvian commitment and downpayment, if any, as credit against other military purchases in France, such as Allouette helicopters, as means of withdrawing from Mirage deal. Belaunde rejected this too as impossible, saying such action would only replace one problem with another, this time in ranks of the military. He said it would create “national scandal” if GOP should now cancel Mirage deal and not one Peruvian could be counted upon to approve such reversal of policy which would be made to appear as undermining of national defense.
4.
There then ensued long discourse on Peruvian armed forces’ responsibility to nation; to Peru’s disastrous experience in last century when she cancelled some arms purchases in England and subsequently lost war to Chile and rich potassium nitrate possessions in south. Peru is rich in natural resources and will defend them; he said and even referred to proximity of Toquepala (Southern Peru Copper Corporation) to Chilean border. He lamented fact that so many US Senators were ignorant of Peruvian history and public sentiment.
5.
I asked President for his suggestions as way out. He replied we should divorce French Mirage from program loan and go ahead with latter “quietly and without publicity” or that we might extend amount of some of our present loans such as one to CORPAC (Exim Bank loan for airports) for which GOP is having difficulty financing its counterpart.
6.
Belaunde seemed harassed by countless urgent problems arising from generally tense situation in country and specifically from yesterday’s disturbances Lima–Callao and to general strike in Arequipa which he fears might proceed to Puno and Cuzco. He complained of sleepless nights, of wrestling with salary tables when he should be working on new road projects, and of Communist agitators taking advantage of situation. He told me again that his refusal to appear on national television to explain present crisis to people was because, if he did, he would have to implicate US Government which had failed to support him in time of need. (He referred directly to program loan which he believes would have averted present financial crises.)
7.
On this second try I believe we must accept Belaunde’s rejection of Mirage cancellation as final within limits his capability and authority. I still think worthwhile Northrop representative come Lima and make direct contact with PAF in effort persuade them of superiority Northrop product and terms.
Jones
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, AID(US) 9 PERU. Secret; Priority; Limdis. Repeated to USCINCSO for POLAD.
  2. In telegram 1886 from Lima, October 20, Jones reported waiting for confirmation of his appointment with Belaúnde. (Ibid.)
  3. Judging it important to move “with greatest speed if Mirage purchase to be forestalled,” Siracusa requested and received an appointment with Belaúnde on October 19. (Telegram 1852 from Lima, October 19; ibid.)
  4. The Department instructed Jones to return to Lima immediately and “follow up with Belaunde in order to emphasize great importance USG at highest level attaches to our proposal.” (Telegram 56485 to Lima, October 19; ibid.)