414. Airgram A–90 From the Embassy in Jamaica to the Department of State1 2

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The Future of the Jamaican Bauxite Industry

Transmitted as an enclosure to this airgram is a paper assessing the possibility of a Jamaican drive for greater participation in the local bauxite industry. The paper suggests a course of action designed to precipitate negotiations between the companies and the Jamaican Government which will hopefully clear away the current uncertainty and produce a new, mutually agreed-upon relationship.

The rise of Black Power in the Caribbean, accompanied by a hue and cry for economic integration And nationalism, is seen as the strongest force pushing for greater Jamaican participation in the bauxite industry. Working in concert with such less radical forces as normal Jamaican nationalism and a normal Jamaican desire to earn as much as possible from the island’s bauxite, Black Power has produced an atmosphere of uncertainty which benefits neither Jamaica nor American investors.

In order to clear away this uncertainty and promote the working out of a new arrangement between the companies and Jamaica, the paper recommends that the execution of any new investment guarantees in the Jamaican bauxite industry be suspended. Our public [Page 2] line might be that we are re-examining the situation in the light of recent events in the Caribbean and in the light of a possible overcommitment in an economy as small as Jamaica’s. Privately, our line should be that Jamaican public and private statements about greater participation in the industry have created an uncertainty which must be cleared away by negotiations and the working out of a new relationship between the companies and the Jamaican Government. The U.S. Government should try to stay out of these negotiations which might, for example, produce an arrangement whereby the Jamaicans receive equity in exchange for foregone taxes and royalties. We should, however, start preparing ourselves now for the possibility that the companies and the Jamaicans would agree on an arrangement whereby the U.S. in effect, buys Jamaica a share of the bauxite industry through some sort of “rebate” of U.S. taxes. The cost of such an arrangement would then have to be judged against the cost of possible complete nationalization, polarized confrontations, and unrest later on.

De Roulet
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 786, Country Files, Latin America, Jamaica, Vol. I. Confidential. Drafted on May 6 by DCM Roberts; cleared by Rogers and Goodman; and approved by Ambassador de Roulet. The airgram is unsigned. Enclosed but not published is a study titled “The Future of the Jamaican Bauxite Industry.” An attached forwarding note indicates that the Airgram and its enclosure were forwarded to Kissinger on May 12. A handwritten note, May 18, reads: “No further action required per Vaky.” In Airgram A–85 from Kingston, April 27, 1970, the Embassy analyzed the Black Power movement in Jamaica. (Ibid., RG 59, Central Files 1970–73, POL 13–10 JAM)
  2. The Embassy reported on the future of the Jamaican bauxite industry and concluded that the rise of Black Power in the Caribbean and increased economic nationalism in Jamaica were the forces pushing the Jamaican Government to press for equity participation in the bauxite industry.