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

7963. Department for Oliver. Subject: Meeting With GOP Officials. Ref: A) State 252730;2 B) Lima 7923;3 C) Lima 7888.4

[Page 1070]

Summary: Ambassador and DCM met last night with revolutionary government Foreign Minister General Mercado and Foreign Office Secretary General in private home.5 Re questions transmitted in letter authorized by ref. (A) General Mercado indicated the following:

Revolutionary government referendum reported ref (C), which will put to people question whether they wish future elections under the present constitution, the present constitution amended or a new constitution, will take place during calendar year 1969. This is first step in electoral process but date for actual elections thereafter is indefinite;
The revolutionary government’s undertaking to carry out international obligations does include those under general international law as to the rights and property of foreign nationals. The question of compensation for IPC expropriation will be decided in Peruvian courts. [End summary.]
I met last night for about an hour and ten minutes in a private home with General Mercado. I was accompanied by the Deputy Chief of Mission and the General by the Secretary General of the Foreign Ministry, Javier Perez de Cuellar. The atmosphere of the meeting was businesslike and cool although not unfriendly as we have been closely associated for many years with Perez de Cuellar, a professional diplomat, and have also had some previous association with General Mercado on a friendly social basis. At the outset I referred to my informal letter of October 10 and said the USG was interested in knowing the revolutionary government’s position on the questions posed therein. General Mercado, in responding, spoke first about the second question regarding undertakings under international law.
With some passion he asserted that the IPC expropriation was a special case and that the government’s action was necessary to correct a long standing problem. He said the action had met with the unanimous approval of the Peruvian people and was completely irreversible. I replied that it was not my purpose to discuss expropriation since the United States recognized the right of a sovereign nation to take territory within its jurisdiction for public purposes. I said, however, that the US also expected fulfillment of the corresponding obligation under international law to make prompt, adequate and effective compensation. In this regard I referred to the notes no.’s 116 and 152 of August 8 and 21, 1967 which we had given the Foreign Ministry [Page 1071] making clear the US position on expropriation and compensation in specific case of La Brea y Parinas.6 I suggested General read them. General Mercado replied that as provided in the Expropriation Act, decree law number 4, the question of compensation would be established in the Peruvian courts. He said it would be up to the courts to place a value on the property expropriated and also to determine the amount of the debts which IPC owed the GOP. The question of compensation would be solved by the balance of these accounts. When it was pointed out that the company does not acknowledge any debts, General Mercado replied that the Peruvian people nevertheless unanimously believe the debt existed. The DCM then suggested that opinion and fact might not be the same thing and asked whether, if the courts found the debts not to be real, the GOP would be prepared to make direct compensation to IPC. General Mercado seemed shocked by such a concept, said he could not imagine any court making such finding, but finally said that the decision of the courts would be respected. To illustrate he mentioned a recent decision by the Supreme Court which found in favor of the Conchan Oil Company (Calif. Standard) in a habeas corpus suit against the government on a tax dispute. I then suggested that it was the responsibility of the GOP, having themselves initiated the expropriation, also to take the initiative with respect to compensation which is its obligation and not leave it to the dispossessed to seek redress.
In connection with the foregoing discussion on IPC, General Mercado sought repeatedly to give assurance as to the “special” nature of IPC case. He said the revolutionary government, while it is nationalistic, is neither statist nor leftist and that it recognizes the need to protect and encourage private capital and to attract foreign private investment. He said Peru did not have the resources for development in any other way. At the end of the conversation, in response to a direct question by the DCM, he vehemently denied that the revolutionary government was influenced by a group of “Nasserist” colonels. He asserted that the armed forces were unified as a single man in determination to carry out their obligations to their country as they saw them under the constitution and to bring about necessary revolutionary reforms, before return to constitutional government. In this connection, he said the era of “old liberalism” was gone and the state must interest itself in the development of the nation. It must therefore take a promotional interest and that it must establish the channels in which private enterprise could operate freely.
In turning conversation to question number 1 of my letter regarding human rights and return to constitutionalism I said it was perhaps more important fundamentally than the other question we had just discussed. I felt I should make clear, I continued, how deeply the USG regretted the interruption of constitutional government in Peru and how concerned it was to have assurances of an early return to constitutionalism. General Mercado nodded his understanding of US attitude but asserted that the revolution had been necessary and that in carrying it out the armed forces had been fulfilling their obligation under the constitution. He said the politicians had prevented the constitution from working (had made a joke of it) and thus had defrauded the people from achieving their aspirations and blocked progress. While the legislature was supposed to be the primary power of the state in representation of the people, it had not functioned as foreseen in the constitution and the politicians had prevented fulfillment of Article 89 of the constitution which called for a “functional” Senate. This had never been fulfilled, he said, and the Senate, in being politically based, was simply a duplication of the Chamber of Deputies. The revolution had been carried out, he said, in order to give the people a chance to restructure their political organization and to correct its weaknesses. The only way this could be done, including rewriting constitution, he said, (and in this he was strongly supported by the Secretary General) was through the armed forces as the politicians would never set politics aside long enough to make the changes. He implied that the trend in recent years had been toward chaos and if not checked would have led Peru into communism. He said the only bulwarks for stability in a society such as Peru’s were the church and the armed forces. In making these observations he asserted that we must understand that Peru is different from the United States and different from other L.A. countries and having its own character, it also has its own manner of resolving its problems. Referring to Chile and Venezuela, he expressed fear that failure of the democratic regimes there would open gates to communism.
On the specific question of a return to constitutionalism, General Mercado referred to the announcement of a referendum by the Prime Minister, General Montagne, on October 12. He said this was the first step and that the people would be asked in it whether they wanted to hold elections under the present constitution, under the present constitution amended or under an entirely new constitution. He said the referendum would be held during 1969, and that political parties would have full freedom of action in connection with it. He said the revolutionary government believes the people want to change the constitution, but that if the referendum should prove otherwise, it would be considered a rebuff (vote of no-confidence) and the armed forces would “go home”. Presumably he meant turn the reins of government back [Page 1073] to civilians although he did not specify. He said no other de facto government “had the courage” to consult the people through plebiscite. Assuming the people opt for a new constitution or a modification of the present one, General Mercado said a “broadly based” commission would be established to do the draft. Asked whether there would then be a constituent assembly he admitted possibility but did not consider it necessary. He was quite vague as to any plans beyond the referendum and the constitutional change, but asserted that the whole process was designed to move toward eventual elections. As an analogy he said the elections were like D Day in Normandy and that “even Eisenhower” did not know exactly when D Day would occur.
In response to my question, Secretary General said this informal “non-official” meeting constituted answer to my letter of October 10.7

  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL PERU–US. Confidential; Immediate; Limdis. Repeated to USCINCSO for POLAD and USUN.
  2. See footnote 2, Document 514.
  3. Dated October 14. (National Archives and Records Administration, RG 59, Central Files 1967–69, POL PERU–US)
  4. Dated October 12. (Ibid., POL 15–1 PERU)
  5. On October 11 Perez de Cuellar called Siracusa to propose a meeting between Mercado and Jones. Siracusa agreed to the meeting, subject to further instructions from the Ambassador and the Department. (Telegram 7896 from Lima, October 12; ibid., POL PERU–US) The Department gave its assent, suggesting, however, that Jones “merely listen and say only that you will transmit replies or views to Washington.” (Telegram 254614 to Lima, October 12; ibid.)
  6. The texts of the notes are in telegrams 15548 and 22415 to Lima, August 3 and 17, 1967, respectively. (Ibid., PET 6 PERU)
  7. In telegram 7994 from Lima, October 17, the Embassy judged that the assurances given by Mercado were sufficient to recommend prompt recognition of the new government. “Further delay in resuming relations,” the Embassy maintained, “could only damage our interests, and would deny us the opportunity to have contacts which might have a beneficial influence on the future action of the revolutionary government.” (Ibid., POL 16 PERU)