266. Memorandum From the Deputy Under Secretary of State for Economic Affairs (Samuels) to President Nixon 1
- Statement on Chile
The Inter-Agency Expropriations Group in a meeting today on the Chile expropriation situation unanimously recommended that the United States Government make a statement tomorrow expressing its deep disappointment at the determinations which have been made on compensation for expropriated U.S. investments in Chile.2 The Group agreed that the statement should underline the violations of international law which the Allende government has committed in taking its position. The Group also agreed that we should stop short of announcing or giving warning of retaliatory measures by the United States.
We take this view for tactical reasons. Fundamentally, we want to concentrate public attention on Allende’s wrongs rather than our reaction. We will be free to take further steps at the time most suitable to [Page 708] our own interest. These may include suspension of U.S. assistance programs for economic development (about $20 million), military assistance ($5 million in FMS), Eximbank disbursements on outstanding credits (about $30 million), and pressure on multilateral and third country lending agencies. Another important consideration arguing against retaliatory measures at this time is that there remains an appeals process to a special tribunal, the utility of which we must yet evaluate in consultation with the companies. To react with specific actions before the appeals procedure is completed or demonstrated to be inadequate would give Allende the opportunity to accuse the United States of prejudging the legal process and of attempting to coerce Chile, thus providing him an effective rallying point for consolidating his position in Chile and elsewhere.
An additional short-range tactical consideration is our desire not to prejudice the position of ITT, which has yet to complete negotiations with the GOC on a possible buy-out of its properties which it values at $153 million.
The proposed statement continues to serve the purpose set forth early in our dealings with the Allende regime of insuring that he and not the United States bear the onus for his own decisions and for his failures. It also expresses unmistakably our dissatisfaction with Chilean actions thus far on compensation, and provides a basis for taking whatever actions we find advantageous in the coming weeks.
It was the consensus of the Inter-Agency Expropriations Group that you should not make a statement at this time. If you agree, the Secretary would propose to issue a statement tomorrow along the lines of the attached draft.
If you approve this approach, you may wish, in view of impending Congressional action on the replenishment of the international lending institutions, to consult now with key members of the Congress to explain the tactical nature of the proposed statement.
The attached draft statement reflects the views of the Inter-Agency Expropriations Group, with the Treasury representative reserving his position pending the return of Secretary Connally tomorrow.
- Source: Nixon Presidential Materials,
NSC Files, Box 776, Country
Files, Latin America, Chile, Vol. VI. Confidential. Drafted by
Fisher and cleared by
Crimmins. Typed at the
top of the page is “Approved by President with changes per
Memorandum from Gen. Haig to
Mr. Eliot dated 10/13/71.”
The changes to the attached draft statement were the addition of a
penultimate paragraph which reads as follows: “Should Chile fail to meet its international obligations, it could jeopardize flows of private funds and erode the base of support for foreign assistance, with possible adverse effects on other developing countries. The course of action the Chilean Government appears to have chosen, therefore, could have an adverse effect on the international development process.”↩
- The Chilean Controller General rules on October 11 that Anaconda and Kennecott would receive no compensation after deductions for excess profits and Cerro would receive about $14 million. (“Chilean Aide Rules Against Payments to 2 U.S. Concerns,” New York Times, October 12, 1971, p. 7)↩
- For Rogers’s statement read to reporters by the Department Spokesman on October 13, and which included the paragraph in footnote 1 above see Department of State Bulletin, November 1, 1971, p. 478. For the reaction abroad to the Secretary’s statement, see Foreign Relations, 1969–1976, vol. IV, Foreign Assistance; International Development; Trade Policies, 1969–1972, Document 174. ↩