213. Telegram From the Embassy in the Philippines to the Department of State 1

1912. For Asst Secretary Green from Ambassador Byroade. Subject: U.S.–Phil Economic Bilaterals. Ref: State 25196.2

Your Feb 20 cable causes very grave concern on my part. It comes as quite a shock to learn six months after my arrival (and three months after we reaffirmed our willingness to renegotiate the Laurel–Langley Agreement first expressed in September 1966) that we are prepared to do nothing about our economic arrangements here except let nature take its course. It may be nice theory but it hardly fits the practical world of things, in which the Philippines is presently passing through several long-term crises at the same time (foreign policy, constitution, balance of payments, and economic relations with the U.S.). I also think it is a callous view as regards the degree of protection we should accord to U.S. business abroad, which I feel is a legitimate part of our national interest.
I don’t think I can accept this without a considerable effort on my part to try to change our position. I realize, however, one doesn’t win any cases with Washington when things still seem to be on a theoretical basis. Unfortunately, although it may not seem so on the surface, we are in a very real sense even now at the time of decision. The continued uncertainty is exacting an ever-rising toll in the economic realm. If we let things slide, this will mean that sooner or later we will confront the Phils across the table with the news that we really don’t have anything to talk about. Their natural reaction will presumably be to take strong punitive measures against U.S.-owned businesses to force us off this position, where upon the latter will descend on the Washington scene in force. I know that there is a feeling in the Department that there is considerable difference in the thinking of local business leaders here and their home offices. Now that I am getting to know both, I think this has been greatly over-exaggerated. Not a week goes by here that I don’t see several visiting bigwigs from home offices. I [Page 453]believe when the issues become defined that New York will at least try to push us to attempt to defend what seems to them to be fair and reasonable.
I predict that we would then develop a more flexible and imaginative position. The problem will then be, however, that, because of the nature of these issues, the need for legislation, etc., many months will thereafter be required for firm positions to be developed.
This would I believe be the wrong approach. It would of course exacerbate our military as well as our investment problems. I still hope we can to avoid adhering to such an approach which, I might add, appears to be widely at variance with the approach we are contemplating taking with the Latinos.
I wish to make clear that I do not recommend anything that might properly be termed a prolonged extension of “special relations.” I do believe however that there is need for general recognition throughout the U.S. Government of the importance and delicacy of the issues involved and of the essentiality of our managing this creeping crisis in the Philippines as painstakingly as we know how. Some flexibility on timing of the phase-out, and ad hoc problems, may be required. In any case, I am convinced that the approach in your message will only increase the perils already inherent in the situation.
If the position outlined in your message eventually remains firm in spite of these considerations, then I think the Department will have an obligation to inform U.S. industry. It would not be fair in my opinion to withhold this position from them and let many of them, who are still hopeful we will get a fair deal for them in negotiations, end up in a fire-sale atmosphere too late to make better arrangements.
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 556, Country Files, Far East, Philippines, Vol. II. Secret; Exdis.
  2. Telegram 25196 to Manila, February 19, clarified Green’s position to Byroade. Green stated that he was aware that any duty reductions granted to the Philippines “could be made available to other countries.” However, Green stated: “we do not believe this is a desirable course to pursue” for a number of reasons, the first of which was that the “Filipinos, in their own interest, must come to realize that the development of a sound economic base for their economy is essentially up to them.” (Ibid.)