370. Telegram 1436 From the Embassy in Guyana to the Department of State, December 5, 1970, 1700Z.1 2

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TELEGRAM
Department of State
GEORGETOWN 1436

P R 051700Z DEC 70

FM AMEMBASSY GEORGETOWN
TO SECSTATE WASHDC PRIORITY 5169
INFO AMEMBASSY BRIDGETOWN
AMEMBASSY CARACAS
AMEMBASSY KINGSTON
AMEMBASSY LONDON
AMEMBASSY OTTAWA
AMEMBASSY PORT OF SPAIN
USINCO POLAD
AMEMBASSY PARAMARIBO UNN

GEORGETOWN 1436

SUBJ: BAUXITE NEGOTIATIONS

REF: (A) GEORGETOWN 1417; (B) 1389 (C) 1342

1. SUMMARY: ON EVE OF OPENING OF NEGOTIATIONS WITH DEMARARA BAUXITE COMPANY IN WHICH GOG PROPOSES ATTAIN “MEANINGFUL PARTICIPATION” IN BAUXITE INDUSTRY, LINES ARE NOW CLEARLY DRAWN. PROSPECTS FOR AMICABLE SETTLEMENT SEEM DIM, AND NATIONALIZATION OF COMPANY MAY WELL BE END RESULT. GOG MAKING TRANSPARENT EFFORTS GENERATE POPULAR BACKING. THESE INEVITABLY HAVE OVERTONES WHICH ENCOURAGE ANIMOSITY TO FOREIGNERS, ESPECIALLY WHITE FOREIGNERS, AND EMOTIONS MAY REACH LEVELS WHERE DEMONSTRATIONS AND/OR VIOLENCE COULD TAKE PLACE. END SUMMARY.

2. LATE ON SATURDAY, NOVEMBER 28, JAMES CAMPBELL, HEAD OF ALCAN’S GUYANESE SUBSIDIARY DEMBA, RECEIVED LETTER [Page 2] FROM PERMANENT SECRETARY IN OFFICE PRIME MINISTER, OSCAR HENRY, FORMALLY NOTIFYING HIM OF GOG INTENTION OPEN NEGOTIATIONS MONDAY, DECEMBER 7 AND SETTING TIME AND PLACE FOR INITIAL SESSION. LETTER STATED THAT “BY CABINET DECISION IN NATIONAL INTEREST FOLLOWING ARE NON-NEGOTIABLE” AND SET FORTH SIX POINTS COVERED ESSENTIALLY IN ALCAN’S STATEMENT TRANSMITTED REF A. GOG WILL ACQUIRE MAJORITY EQUITY; WILL PAY REASONABLE COMPENSATION; COMPENSATION IS TO BE BASED ON BOOK VALUE AS USED BY DEMBA FOR INCOME TAX PURPOSES; COMPENSATION TO BE PAID FROM FUTURE PROFITS ACCRUING TO GOG AFTER PAYMENT OF TAXES; MANAGEMENT CONTROL OF NEW COMPANY WILL BE COMMENSURATE WITH EQUITY HOLDINGS; AND NEW ORGANIZATIONAL AND MANAGEMENT ARRANGEMENTS TO BE CONSIDERED EFFECTIVE JANUARY 1, 1971 REGARDLESS OF WHEN NEGOTIATIONS CONCLUDED.

3. CAMPBELL WENT TO MONTREAL SUNDAY FOR MEETINGS WITH SENIOR OFFICIALS OF ALCAN TO DISCUSS STRATEGY AND PUT TOGETHER NEGOTIATING THEM. ACCOMPANIED BY HEAD OF ALCAN, NATHANIEL DAVIS, CALLED ON SENATOR PAUL MARTIN, WHO IN ABSENCE MITCHELL SHARPE SERVING AS ACTING SECRETARY OF STATE FOR EXTERNAL AFFAIRS. PURPOSE, OF COURSE, WAS TO ENLIST OFFICIAL GOG SUPPORT FOR COMPANY. AS RESULT THIS MEETING, CANADIAN HIGH COMMISSIONER GEORGETOWN INSTRUCTED SEND MESSAGE TO PRIME MINISTER BURNHAM THROUGH MINISTER OF STATE RAMPHAL, WHICH HE DID DECEMBER 2. TEXT FOLLOWS:

4. QUOTE: PRIME MINISTER BURNHAM’S STATEMENT OF NOVEMBER 28 CONCERNING THE POSITION OF THE GOVERNMENT OF GUYANA IN FORTHCOMING NEGOTIATIONS WITH DEMBA WAS OF COURSE CARRIED IN THE CANADIAN PRESS. I READ THE STATEMENT WITH CONSIDERABLE INTEREST AND, WOULD LIKE TO RECONFIRM THE KEEN INTEREST OF THE CANADIAN GOVERNMENT IN THE FORTHCOMING NEGOTIATIONS. YOU HAVE KEPT OUR HIGH COMMISSION WELL INFORMED ON THIS MATTER AND I HOPE YOU WILL BE ABLE TO CONTINUE TO DO SO. YOU WILL RECALL THAT AT THE TIME OF MY VISIT IN OCTOBER I SAID IN REFERENCE TO NEGOTIATIONS, THAT IT WAS OF COURSE UP TO THE GUYANESE GOVERNMENT TO DECIDE ITS OWN INTERNAL POLICIES AND THAT I WAS CONFIDENT GUYANA WOULD TREAT CANADIAN COMMERCIAL INTERESTS FAIRLY AND IN ACCORDANCE WITH THE LAWS OF GUYANA. I ALSO MENTIONED [Page 3] CANADIAN EXPERIENCE WITH NEED FOR SUBSTANTIAL AMOUNTS OF FOREIGN INVESTMENT AND THE FACT THAT CANADA HAD FOUND IT DESIRABLE TO KEEP THIS IN MIND WHEN DRAFTING DOMESTIC LEGISLATION AND REGULATIONS AND SAID I PRESUMED GUYANA WOULD BE FACED WITH A SIMILAR SITUATION. I WOULD LIKE TO REITERATE THAT THE CANADIAN GOVERNMENT RECOGNIZES THAT GUYANA, AS AN INDEPENDENT SOVEREIGN NATION, HAS THE RIGHT TO SET CONDITIONS WHICH WOULD SERVE ITS OWN INTERESTS FOR THE OPERATION OF FOREIGN COMPANIES WITHIN ITS TERRITORIES. THE CANADIAN GOVERNMENT IS MOST CERTAINLY INTERESTED IN SEEING THAT THE CANADIAN FIRM GETS FAIR AND EQUITABLE TREATMENT AND IS NOT DISCRIMINATED AGAINST IN RELATION TO OTHER COMPANIES. THE CANADIAN GOVERNMENT WOULD HOPE THAT A SATISFACTORY SETTLEMENT BASED UPON MUTUALLY ACCEPTABLE ARRANGEMENTS COULD BE REACHED. PAUL MARTIN. END QUOTE.

5. COMPANY NOT SURPRISINGLY FEELS THIS MESSAGE “MUCH TO WEAK”.

6. CAMPBELL WILL HEAD DEMBA’S NEGOTIATING TEAM SUPPORTED BY ASSISTANT AT MACKENZIE, ROBERT E. ROSANE (WHO INCIDENTALLY IS US CITIZEN) AND D.F. MACORQUODALE, ALCAN FIDUCIARIES LTD., MONTREAL. ADVISERS, ALL FROM MONTREAL, WILL BE PAUL H. LEMAN, PRESIDENT ALCAN CANADA LTD; D.D. MACKAY, PRESIDENT ALCAN ORE LTD; GERALD CLARK, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, ALCAN ORE LTD; AND R. GRIMES-GRAEME, CHIEF, RESOURCES DEPARTMENT, EXPLORATION DIVISION, ALCAN RESEARCH AND DEVELOPMENT (WHO IS DEEPLY INVOLVED IN DEVELOPMENT NEW FINDS IN BRAZIL). W.R.A. PILGRIM, PUBLIC RELATIONS OFFICER FOR DEMBA AT MACKENZIE, WILL BE IN ATTENDANCE.

7. MINISTER WITHOUT PORTFOLIO HUBERT JACK WILL HEAD GOG NEGOTIATIONS. (MINISTER STATE RAMPHAL TOLD ME HE HAD MISGIVINGS AND DID NOT THINK JACK GOOD NEGOTIATOR ALTHOUGH CONSIDERED HIM ABLE.) ALSO ON TEAM WILL BE MOHAMMED SHAHABUDDEEN, SOLICITOR GENERAL, SOBHARAN SINGH, DIRECTOR OF GEOLOGICAL SURVEY, AND BERNARD CRAWFORD, PERMANENT SECRETARY IN MINISTRY OF ECONOMIC DEVELOPMENT. (SHAHABUDDEEN IS ABLE AND RELATIVELY MODERATE; SINGH REPORTEDLY IS ONE OF STRONGEST ADVOCATES OF IMMEDIATE AND TOTAL NATIONALIZATION.) THERE MAY BE OTHERS. ALL THE RESOURCES OF GOG WILL BE HELD AVAILABLE TO RENDER TECHNICAL ADVISE AND COUNSEL.

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8. UNDERSTAND ALCAN BELIEVES COULD GET ALONG IF NECESSARY WITHOUT GUAYANA’S BAUXITE, AS IMPLIED LAST SENTENCE REFTEL. HOWEVER, IS EXTREMELY WORRIED ABOUT PRECEDENTS WHICH MIGHT BE SET HERE AND THEIR EFFECT ON OPERATIONS ELSEWHERE, ESPECIALLY JAMAICA. CONSEQUENTLY, HAD INTENDED BE FAIRLY HARD-NOSED IN NEGOTIATIONS ALTHOUGH HOPED IT WOULD BE POSSIBLE IN LONG RUN REACH SOME MUTUALLY SATISFACTORY AGREEMENT WITH GOG.

9. IN VIEW NON-NEGOTIABLE POINTS GOG HAS SET FORTH, WHICH ARE TOTALLY UNACCEPTABLE TO COMPANY, ALCAN NOW WONDERS WHAT THERE IS TO NEGOTIATE. I HAVE STRONG IMPRESSION COMPANY MAY PREFER PRECIPITATE NATIONALIZATION RATHER THAN TO AGREE TO CONDITIONS WHICH MIGHT WELL ADVERSELY AFFECT SOME PERCENT OF NORTH AMERICA’S SOURCES OF BAUXITE. IT MAY BE SIGNIFICANT THAT AIRCRAFT WILL BE STANDING BY FROM TUESDAY EVENING TO RETURN ALCAN OFFICIALS TO MONTREAL.

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10. MEANWHILE, GOG IS MAKING TRANSPARENT EFFORT GENERATE MASS PUBLIC SUPPORT FOR ITS DEMANDS. HEAD OF MINE WORKERS UNION, WINSTON VERBEKE, ADDRESSED RALLY OF WORKERS AT MACKENZIE THURSDAY CALLING FOR SUCH SUPPORT. OTHER UNIONS ISSUING STATEMENTS BACKING GOG. RALLY ALSO HELD AT UNIVERSITY FRIDAY EVENING. SATURDAY’S “GRAPHIC” REPORTED A STATEMENT ISSUED BY ASCRIA (RADICAL BLACK POWER ORGANIZATION) TERMING ALCAN’S STATEMENT “A DECLARATION OF WAR AGAINST ALL OUR PEOPLE” AND CHARGING THAT ALCAN “THREATENING BREAK UP THE TALKS FROM THE FIRST DAY UNDER THE PRETEXT OF SEEKING CLARIFICATION THE POINTS RAISED”.

11. CANADIAN HIGH COMMISSIONER HAS RECEIVED REPORTS THAT BAND OF GUYANA BUILDING, WHERE NEGOTIATIONS WILL BE HELD (AND WHERE COINCIDENTALLY CANADIAN HIGH COMMISSION IS HOUSED) WILL BE PICKETED BEGINNING MONDAY MORNING TO IMPRESS ON ALCAN OFFICIALS DETERMINATION OF GUYANESE PEOPLE STAND BEHIND GOG IN ITS STRUGGLE WITH “IMPERIALISM”.

COMMENT: DAYS AHEAD WILL OBVIOUSLY BE DIFFICULT ONES FOR ALL CONCERNED, WITH EMOTIONS RUNNING AT INCREASINGLY HIGH LEVELS. POSSIBILITY THAT DEMONSTRATIONS COULD GET OUT OF HAND CANNOT BE DISCARDED. IT IS DIFFICULT TO SEE HOW NEGOTIATIONS CAN LEAD TO AGREEMENT AND GOG MAY FEEL IT HAS NO CHOICE BUT TO NATIONALIZE. GP4. KING

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 785, Country Files, Latin America, Guyana, Vol. 1. Secret; Priority. Copies sent to Bridgetown, Caracas, Kingston, London, Ottawa, Port of Spain, USINCO POLAD, and Paramaribo UNN.
  2. The Embassy discussed the upcoming negotiations between Guyana and ALCAN, and predicted an agreement would not be reached. Because the issue was very important to many Guyanese citizens, there was a possibility of large demonstrations, which could turn violent.