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

3720. Ref: Under Secretary’s Memorandum of Feb 16 to me and Tabs.2 Subj: Conversation with President Belaunde on Military Expenditures and IPC Case. From Oliver.

1.
With Ambassador and Fowler, had talk with President Peru on above subject over period ninety-five minutes afternoon February 26. Conversation with President based on reference and tabs, especially talking points in Spanish to which I had added introductory paragraphs designed to highlight (I) genuineness wish USG to be of development assistance to Peru (II) my interest in “opening interior” programs, and (III) explanation that theme my presentation was to be “Obstacles To Beginning New Aid Negotiations.” President met us alone; was cordial throughout; showed some physical tension during periods I was trying to read out or paraphrase talking points; intervened repeatedly during my presentation, speaking more in sorrow than in anger about USG incomprehension Peru’s military needs and casual effects past failures aid to assist Peru effectively.
2.
Symington and Conte–Long amendments.
(A)

Military Budget.

I explained fully to President that Executive Branch USG was under legal obligation apply these amendments effectively and fully proposed do so. Sketched upcoming legislative session. Tendency of President (as Ambassador had predicted) was to interrupt in defense of importance of military to Peru and to blame policies of “State Department” for denying Peru assistance. With persistence I eventually got President to focus on point that US Executive has law to enforce; this was done by getting him to read Symington amendment in Spanish. [Page 1047]In summary (see detail below) President promised us a memorandum tending to show that for Peruvian FY 1968 (begins April 1, 1968) budget just now being voted under leadership PM will present reduction overall budget from dollars 1.3 billion to 1 billion (“… a superhuman effort whose repercussions may be far reaching…”); total military portion Peruvian FY 1968 budget will be down slightly from 1967; additions to new military budget being made in Congress not only do not reverse downward trend but represent mainly allowance increases designed to keep up with price rises following devaluation; identification portions military budgets going into civic action, pay, uniforms, food, training, and “services to public.”

(B)

Unnecessary Military Equipment.

President was not forthcoming with assurances. While not objecting on “intervention” grounds, he firmly denied validity foreign opinion on subject. (At one point I offered to prepare for his personal consideration a list of what I would consider tentatively to be “unnecessary” and/or “sophisticated.” He did not take me up.) I did get it out that missiles, supersonics, certain naval vessels in these categories. (Comment: CT will be following very closely and reporting developments as to weapons categories, especially with regard to extent to which we might be able to hold Peru off from certain naval acquisitions during immediately critical year ahead.)

President said a number of things related to this subheading. Most worthy of reflection is this: United States unfortunately sees South America through twin veils of Mexico and Caribbean countries. Therefore does not see it clearly. United States does not stop to think that Mexico has enviable low military expenditures, because “… as Diaz Ordaz told me, Mexico is the primary defense orbit of the United States and knows it.” USG would inevitably and immediately respond if international aggression or aggressive subversion should threaten the security of Mexico. Would US surely and under all circumstances respond if Peru were similarly threatened? Even during a Vietnam? Could the US response come soon enough? The President said that no Peruvian chief of state could take the risks that these questions imply.

3.

Other presidential observations: as to “jet aircraft” (he did not use “Mirage”); “they are just a few to experiment with. Flying is like making love, one does not learn how to do it from a manual.”

As to Canberras: “You (USG) also said they had no internal security effectiveness, but they do; and they fly slower than even the passenger airplanes subversives could fly in on. Is it not illogical to expect that the military aircraft of Peru should be slower than the commercial planes that come into our airports?”

The Washington Post called the aircraft our air force wants ‘playthings’; well, when someone is in the market for a new automobile, he does not buy a 1960 model in 1968.”

[Page 1048]

“De Gaulle and Lubke while visiting here got nothing from Peru. Peru buys more from the US than it sells to her. When Vietnam is over you will be looking to your markets even more seriously than now.”

4.

Belaunde on USAID: (He never used “Alliance”; I always did.) For one reason or another AID has never given Peru the capital assistance it gives to Brazil, Chile, Colombia, all in the hundreds of millions of dollars. Peru has had to finance its own development by going to the commercial banks. It is this that caused Peru’s foreign exchange reserves to go down and forced devaluation. AID assistance has now become urgent, because AID can soften the burden of Peru’s development debt. We have spent what we borrowed on commercial terms wisely; we did not waste it. After 4-½ years as President, he had come to have more faith in Peruvians with pickaxes and shovels than in international lending agencies. What Peru cannot do for itself, AID should do with soft loans. (Paraphrased.)

In response to my comment that while Fowler and I were in Colombia, with lending program absolutely stopped for 15 months, I had envied Ambassador Jones and had looked with longing at Peru’s flourishing export trade, Belaunde said: In those days when things were going well financially in Peru, you (USG) told us we were too prosperous to qualify for aid and now when our reserves are running out, you say we do not qualify because of poor fiscal performance.

5.
Belaunde on Chile: “Peru has lost its national territorial treasure in considerable part to this neighbor. My own family suffered greatly (his ancestors came from Arica) and Peru was set back financially until only recently by the loss of territory to Chile. But we are not revanchists. We have our military system for domestic protection. We would never move against another country. We respect our international obligations. But if out of this country there should come further aggression or subversion against Peru, we must be able to defend ourselves.” (Paraphrase of three statements, each substantially along above lines.)
6.
Belaunde on development and public services by military: The President’s first interruption of my presentation was to sound this theme. He ranged from civic action to disaster relief and dealing with urban disorder. (Comment: At no time did Belaunde allude to his political situation in relationship to armed forces. He did roundly castigate Odriista group in Congress for irresponsible obstructionism and stressed the accomplishments of his administration in establishing democracy.)
7.
IPC Case: In closing minutes I finally got to IPC case as “second obstacle,” stating that I had had a good lawyer-to-lawyer talk with his Prime Minister about case (septel ).3 Belaunde began complaining that company did not want to negotiate, that it was continuing to be [Page 1049]intransigent. Went on to say that only two ways to handle this case: either do nothing (“company has not had one can of gasoline taken from it”) or settle it completely with a “good situation”. Ambassador and I both weighed in on side definitive settlement now, I saying that seemed to me all elements needed for a complete and fair solution now at hand. Ambassador pointed out that conversations between company and EPF most encouraging and asked President to support actively director of EPF in these negotiations. President said he would.
8.
Toward end of conversation Belaunde said he had only 18 more months to serve. On whole he was pessimistic. He had not had the US support that would have permitted him to lead Peru where it ought to go. Later at dinner in honor our traveling group he seemed tense at first but mellowed as we talked of University of Texas days we had shared (without knowing each other), mildly insulted Texas A&M and Rice, exchanged warm toasts to President Johnson and host. Despite my expectation based on my suggestion at afternoon meeting, Belaunde did not initiate further substantive talks after the dinner. Both at dinner and in earlier meeting Belaunde spoke warmly of President Johnson: said he realizes President Johnson has problems of world to cope with and that Congressional situation sometimes did not permit a US President to do what he wanted or knew was desirable.
9.
Ambassador’s comment: The President had obviously been briefed on subjects to be broached by Assistant Secretary and at first mention of “military” interrupted Oliver’s presentation to expound on virtues and constructive role of armed forces in Peru. (Using authority Deptel 115825 we had already informed Quintanilla, President’s private secretary, of nature of Oliver’s mission.)4 While President continued to interrupt in defense of military, of his democratic administration and of Peru’s position in hemisphere, Assistant Secretary patiently persisted in making full presentation his case based on instructions referred to above. At end of one hour and 35 minutes I am satisfied Belaunde understood our problem and issues involved despite his reluctance to discuss military expenditures and particularly military equipment items. President maintained his composure throughout though there were signs of emotion when defending role of military or complaining of lack US support for his development programs. Although evasive in his replies throughout President did not cut us short—as he might have done—on grounds of “national dignity” or unwarranted interference in Peruvian internal affairs. On balance conversations went well considering President’s position vis-à-vis military here and delicate nature of subject discussed.
Jones
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 1 Peru. Confidential; Immediate; Limdis. Repeated to USCINCSO and La Paz. Retyped and sent to the White House as an attachment to a memorandum from Oliver to the President, March 4; Rostow forwarded the memorandum to Johnson the next day. Oliver recommended that the President postpone any decision as to whether the Symington or Conte–Long amendments would apply to Peru. “An official finding,” he argued, “could well provoke a crisis of confidence in the Belaunde Government leading to a military takeover.” (Johnson Library, National Security File, Country File, Latin America, Vol. VI, 10/67–4/68) Oliver also gave a brief account of his trip, including his conversation with Belaúnde, at a meeting of the NSC on March 6; see Document 69.
  2. The February 16 memorandum from Katzenbach to Oliver contained instructions for Oliver’s trip to Peru, including talking points for his discussion with Belaúnde. An unsigned copy of the memorandum is in the National Archives and Records Administration, RG 59, ARA Files, 1967–69: Lot 74 D 467, Peru 1968. See also Document 66, and footnote 5 thereto.
  3. Telegram 3716 from Lima, February 27. (National Archives and Records Administration, RG 59, Central Files 1967–69, DEF 1 LA)
  4. Dated February 15. (Ibid., AID(US) 5)