153. Memorandum From Acting Secretary of State Irwin to President Nixon 1

SUBJECT

  • Pending Expropriation Cases Involving United States Property Abroad

A National Security Council memorandum of May 4 states that you have been informed that there are “200 expropriation cases pending [Page 393]involving U.S. business abroad,” and that you wish an individual report on each of these cases.2

Our records of expropriations and nationalizations indicate that there are currently pending 56 corporate cases, of postwar origin, in 16 non-Communist countries.3 This figure is based on a broad definition of “expropriation” to cover even cases where host country pressure falls short of nationalization of majority ownership of the affected corporations.

We have consulted with the Department of Commerce, the source of the original report,4 and have reviewed with them the 200 cases cited. The vast majority of these cases stem from trade complaints. They cover a variety of foreign governmental actions during 1970 which in some way—either actual or potential—affect adversely U.S. economic interests.

Individual and other known claims also are included in the attachment.5 There are also thousands of unsettled claims in Communist countries, which are summarized in the attachment.

Most of the 56 actual pending expropriation cases involve disputes now under negotiation or litigation. The only significant non-Communist corporate case with little present prospects for settlement involves the International Petroleum Company in Peru. In addition to that one, we anticipate that the compensation negotiations over the nationalization of United States-owned copper mines in Chile may also pose difficult issues, although the Allende Government has stated publicly its intention to negotiate with the companies.6

While every expropriation by a foreign government is a potential problem, the majority of such cases are small and are settled without United States Government intervention. Others are significant due to size and to their significant impact on our overall relations with the host [Page 394]country. The 56 current cases in which U.S. interests have been seized but for which compensation arrangements have not been implemented have an aggregate book value of $875 million, of which about $575 million is in Chilean copper mines.

To put these 56 cases in perspective, it should be noted that over a dozen cases have been settled since the beginning of 1970. For example, five cases were settled in Algeria alone, involving Mobil, Atlantic Richfield, Dresser Industries, Esso and Newmont Mining. Settlements on significant expropriation actions were also reached in Chile and Zambia—involving South American Power, a Boise Cascade subsidiary, and the 80 percent US-owned Roan Selection Trust. Finally, the enclosed list of 56 cases includes some—most notably Gulf Oil in Bolivia and Bethlehem Steel in Chile—for which settlements have been reached but have not yet been fully implemented.

John N. Irwin II
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 284, State, Volume XI. Confidential.
  2. Not found.
  3. On May 13, pursuant to Irwin’s request, the Department of State provided Kissinger a breakdown of the 56 cases, separated into four categories by country and company. (Memorandum from Nicholas Platt to Kissinger; National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 284, State, Volume XI)
  4. Not further identified.
  5. Entitled “Pending Expropriations and Other Takings of United States-Owned Property Abroad”; not printed. The attachment provided one or two paragraphs on individual cases; Section II included summary paragraphs of extant or possible claims in non-Communist countries.
  6. The May 13 Department of State memorandum noted: “as a technical point, it should be noted that the properties of the five U.S. copper companies concerned have not yet been nationalized, strictly speaking—although the legal process in Chile leading towards a nationalization is under way and the companies themselves are quite certain that the process of expropriation is irreversible. Thus, in a de jure sense, there are at present 51 pending cases with a book value of about $300 million.”