612. Telegram 26 From the Embassy in Peru to the Department of State1 2
For Asst Sec Meyer from Ambassador
Subject:
- Comments on US-Peruvian Policy
1. As I know you will soon be reviewing various policy alternates to confront situation arising from actions of Peruvian MilGov, I am sending what we consider most important comments on draft memorandum for President, prepared by John Crimmins, dated Dec 10, copy of which given me at Mexico City.
2. Mission officers who have studied draft and I consider overall recommendations made to be appropriate and adequate for present although, as I shall stress later, situation here is far from stable.
3. Our principal comment on draft recommendations is that none of us here believes it a feasible alternative to attempt to provide for compensation for IPC through mining contracts being negotiated between US companies and GOP. We doubt mining companies would wish to become involved and we fear any attempt to link two matters might cause us more difficulties than might be solved. Some of us here continue to feel that indirect IPC compensation best accomplished within program of large investment and expansion Peruvian petroleum industry, time for which now premature.
[Page 2]4. We furthermore believe it is highly important constantly to review of policy of non-overt financial pressures. These have to some extent succeeded in mitigating GOP policies, though GOP policies themselves by far more “successful” in affecting investment climate here than anything we have done. We should make every effort to assure that US not blamed for situation for which GOP policies are mainly responsible, and that especially re EXIM Bank policies they be flexible enough to permit credits to US companies where there is a clear advantage to US commercial interests. In this connection please see my tel 8023 of Dec 19 and my letter to you of Sept 30 on this subject. We had best be very conservative in our judgments of real or applicable leverage EXIM credits or AID assistance affords us. In this regard our estimates re importance to US interests of Peru’s copper resources should be carefully and objectively calculated.
5. Regarding Ambassador Irwin’s return to Lima, we all agree he be held “in reserve” for a time when situation requires visible action on our part.
6. Our judgment corroborates that of the Dept in that we do not now foresee any circumstance whereby present MilGov could feel it could run risk of paying compensation to IPC that had any possibility of becoming known.
7. As you are aware, GOP is embarked on a new round of major military purchases. Fortunately, many of these have civic action uses and cost of all of them is to be spread out over many years. However, we recognize the difficulties these purchases will cause us in connection with Symington and Conte-Long Amendments. We are preparing a study of this.
8. As our recent reporting may have indicated, we see little cause for optimism on fisheries problem unless we are prepared to alter our policy or unless we can come up with imaginative new approaches. Now that tuna fishing season upon us, we fear any day that Peruvians will feel goaded into capturing or otherwise [Page 3] molesting US fishing boats. Draft memorandum seems overly optimistic on this score.
9. We furthermore believe that paper should take into account more than it does what our public position must be, bearing in mind that events in Peru have hemisphere-wide application.
10. In making above comments we emphasize again that internal situation here is far from being stabilized. While moderates appear to have been strengthened and Cuajone contract represents dramatic watershed in MilGov policies, more recent steps by MilGov towards greater authoritarianism and statism inevitably will affect US overall interests. Short-run prospects of further deterioration in economic, social, and political conditions here make us less than sanguine about situation. Therefore, to assure meeting even minimum US policy interests, we must remain adequately flexible and sufficiently responsive. In other words, our policy must of necessity be continually reviewed and formulated on a somewhat ad hoc basis.
- Source: National Archives, RG 59, Central Files 1967–69, POL 1 PERU–US. Confidential; Priority; Limdis. The December 10, 1969, draft memorandum for the President, referred to in the first paragraph, was not found. A December 24 version of the memorandum is ibid., Executive Secretariat National Security Memoranda, 1969–1977: Lot 83 D 305, NSDM 21. This memorandum suggested that U.S. corporations explore with IPC the possibility of obtaining compensation for IPC’s expropriated assets in its contracts with the Peruvian Government.↩
- Ambassador Belcher noted that he did not think it possible the IPC compensation could be written into contracts being negotiated between U.S. companies and Peru. He also questioned the utility of non-overt financial pressure.↩