Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

412. Memorandum From Viron P. Vaky of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)¹ ²

Washington, January 7, 1970

SUBJECT:

• Potential Problem in Jamaica

The largest single concentration of U.S. private investment in the Hemisphere is in the bauxite/alumina industry in Jamaica. Six major U.S. firms have investments in Jamaica totalling about $700 million; these investments are expected to rise to about $1 billion within the next year or so. The U.S. Government is deeply involved, since Jamaica provides two-thirds of our domestic alumina requirements and AID has provided investment guarantees for about $350 million of the bauxite /alumina investments.

In the cable at Tab A, Ambassador De Roulet reports an “early warning signal” that Jamaican Prime Minister Shearer may try to obtain GOJ equity participation in the bauxite /alumina companies. Shearer apparently feels he is under some pressure to seek direct government participation in the bauxite/alumina companies before the next elections which will probably be held in 1971.

Ambassador De Roulet believes we should try to develop a plan to defuse this issue before the elections. He has in mind as a plan some sort of phased buy-out of shares by the GOJ. De Roulet believes the U.S. Government should start exploring this idea with top management of the companies. He feels he is personally qualified to carry out such talks because of his family connections in the business community. (De Roulet is the nephew of Jock Whitney and the son-in-law of Mrs. Charles Payson, owner of the New York Mets. He apparently has had little active business experience himself, however.) De Roulet reportedly discussed this idea recently with Bob Haldeman.

The aluminum companies are not very anxious to give up any of their equity to the GOJ. They are likely to take a fairly hard line, particularly since much of their investment is guaranteed against expropriation by AID. Some of the companies apparently are aware of De Roulet’s proposal; one aluminum company official called Peter Flanigan to complain about De Roulet’s involvement in their business affairs.

There is no immediate problem, and there are several factors which tend to offset the kind of economic nationalism we are now seeing in places like Peru and Bolivia. Jamaica is basically private enterprise oriented and is very heavily dependent on U.S. tourism. However, State is giving consideration to the implications of a GOJ effort to seek equity participation in the bauxite/alumina companies, and has called Ambassador De Roulet up to Washington for consultation next week. In the interim, De Roulet has been instructed not to respond to Shearer’s comment nor to discuss it with the companies.

I will follow this situation closely and will keep you informed of any further developments.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 786, Country Files, Latin America, Jamaica, Vol. I. Secret; Limdis. Sent for information. Attached but not published at Tab A is telegram 12 from Kingston, January 5. A stamped notation on the memorandum indicates that Kissinger saw it on January 15. A handwritten message, apparently written by Kissinger, reads: “De Roulet should take it easy.”
2. Vaky reported an “early warning signal” indicating that Jamaica might attempt to gain equity participation in the bauxite industry.