433. Intelligence Note Prepared in the Bureau of Intelligence and Research1

RARN-30

BOLIVIA: PROSPECTIVE TIN SALES THREATEN US INTERESTS

Planned sales of US tin, temporarily in abeyance,2 could jeopardize our longer term interests in Bolivia. The Ovando regime may be expected to protest dramatically if this long-considered action is taken, despite its relatively minor economic impact, and extensive prior consultations. More importantly, such tin sales might endanger the Bolivian President’s precarious political position and seriously complicate financial negotiations with the Gulf Oil Company.3

US plans and Bolivian reaction. The United States has long considered making an orderly sale of excess stockpile tin in order to reduce surpluses, as well as to stabilize world price fluctuations. Under contemplated arrangements, the 6,000 ton disposal4 would be spaced out over a 12-month period and stopped whenever the London market price dropped below $1.50 per pound. The plan has the approval of the International Tin Council and would be implemented in consultation with producer nations.

Bolivians assert that these sales are insignificant to the US economy but vital to Bolivia. They also point out that tin prices have declined in recent months and that each one-cent drop reduces export earnings by some $750,000 (on an annual basis). At a late June press conference, the Mines Minister stated his country’s “intransigent opposition to [US] sales under any circumstances.”5

Potential for violence. We believe that the Bolivian Government will resort to a “counter offensive” if the US proceeds with the tin sales. A source indicated that the Government intends to support, if not incite, [Page 1066]anti-US demonstrations, if sales begin. Such a popular emotional issue would be of obvious value to Ovando who has repeatedly resorted to “anti-US” tactics in maintaining his precarious control over a political cauldron of extremists of the left and right, and diverse military elements. On July 10, the Finance Minister said in so many words that he is desperately searching for some outside factor on which to blame an inevitable devaluation and that he would instantly award that honor to the tin sales if they eventuate in the coming weeks or months.

Threat to US interests. The tin issue, however, has adverse implications for US interests in Bolivia going beyond the immediate local reaction. The disposal would present new opportunities for the USSR, whose recent purchases of Bolivian tin already have enhanced its standing in La Paz. Furthermore, US sales risk the reversal of Ovando’s recent clamping down on nationalistic extremists.

We see Ovando as a man probing for the political “center of gravity”. His first phase was “to the left,” exemplified by the Gulf Oil nationalization. His second and current phase is more to the middle (by Bolivian standards), with a strong push from certain military elements. The “gut issue” of tin sales, however, is so susceptible to exploitation by the nationalist extremists that Ovando would have to adopt the same stance, if not exceed it, to maintain his national-leader position.

Any resurgence of a common identity of interests between Ovando and nationalistic extremists carries two risks: the possibility of a revival of the voice of these forces in government circles; and, subsequently, the heightening of tensions between Ovando and the “moderate military” who would see their recent gains (e.g., dismissal of the leftist command-er-in-chief of the Armed Forces) jeopardized.

Finally, tin sales would seriously endanger the Gulf Oil compensation negotiations. It is doubtful that any Bolivian Government could negotiate a satisfactory settlement in an atmosphere of high tension created—in Bolivian eyes—by unjustified US tin disposals. And, the longer the Gulf issue goes unresolved, the greater is the danger that the issue will become a local political football as occurred in the IPC dispute in Peru.6

  1. Source: National Archives, RG 59, S/S Files: Lot 73 D 153, Daily Staff Summaries. Confidential; Limdis; No Foreign Dissem. Drafted by T.W. Sonandres (INR) and cleared by G. H. Summ.
  2. In a July 14 memorandum for record, OEP Director Lincoln noted that the Department of State, at Samuels’ request, had requested a 1-week delay in referring the tin matter to the White House so that the Ambassador to Bolivia could inform the Bolivian President that the United States was about to resume tin sales. Lincoln agreed to the delay on the understanding that sales would commence in a week. (Ibid., Nixon Presidential Materials, NSC Files, Agency Files, Box 267, Office of Emergency Preparedness, Volume II 11/69-12/71)
  3. See Documents 152 and 154.
  4. Annual world demands for tin is some 200,000 tons; the sales impact on the world price is considered minimal. [Footnote in the source text.]
  5. Brackets in the source text.
  6. See Document 148.