590. Memorandum From the President’s Assistant for National Security Affairs (Kissinger) to President Nixon1 2

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  • Housing Bank Loan for Peru from the Inter-American Development Bank

The Board of Directors of the Inter-American Development Bank is expected to vote Monday (April 14) on whether to go forward with a $12.8 million housing bank loan to Peru. This loan was approved by the Board last April, but the six month period for concluding formalities expired in October. Because of the IPC expropriation, we have been delaying a vote which would allow the loan to go forward. However, the Peruvians have increased pressure for a vote during the past few weeks.

The Bank management has been postponing a vote week by week, but Felipe Herrera, the Bank President, has insisted on a vote next week. (The IDB Board of Governors meeting begins the following week and he will be vulnerable to charges that he is a US stooge if he continues to delay because of our pressure.) State believes we have exhausted any further credible means of holding off a vote. The only way we could force a further delay would be by an arbitrary unilateral action, such as threatening to walk out before the vote.

The State Department and Ambassador Irwin strongly recommend a favorable vote on the loan Monday. Irwin especially stresses the importance of going ahead with this loan while sanctions are deferred as a demonstration of our good faith and also to prevent Peru from using this as an excuse to disrupt the administrative procedures which IPC is to pursue. State believes it is important to approve the loan before the Peruvian negotiating team arrives here toward the middle or end of next week.

The Treasury Department wants to hold Congressional consultations to avoid any misunderstanding that approval of this loan would be inconsistent with our of keeping the economic pressure on Peru. Treasury believes that if Congressional soundings cannot be completed before Monday, we should again try to delay a vote. State, however, believes that an adverse Congressional reaction is unlikely, and, therefore, we should not take the risk of attempting a further delay.

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My own view is that we should avoid any overt action which the Peruvians—and other anti-US nationalists—could seize upon to charge us with bad faith or economic aggression. It seems clear that a negative vote by us in the IDB would give Peru just such an issue, and would negate the favorable results achieved in Latin America by deferring the Hickenlooper sanctions.

A favorable vote, on the other hand, would not offset the economic squeeze on Peru during the next few months because very little, if any of the loan funds would be available to Peru before six months.

If a vote on the loan could be delayed, that would be the best solution. However, an attempt to force a further delay by unilateral action would be taken by the Peruvians and others, in effect, as a negative vote. Therefore, I think we should face the issue squarely and vote favorably on Monday.


That you authorize a favorable vote on the IDB housing bank loan for Peru on Monday.

See me

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 792, Country Files, Latin America, Peru, Vol. I, Through June 1970. Confidential. Sent for action. Nixon approved the recommendation. On April 11, Kissinger sent a memorandum to Rogers and Kennedy informing them of Nixon’s decision. (Ibid.)
  2. After reviewing the opinions on the Inter-American Development Bank (IDB) loan to Peru put forth by the Departments of State and Treasury, Kissinger recommended President Nixon approve the loan.