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

626. Memorandum From the President’s Assistant for International Economic Policy (Peterson) to President Nixon¹ ²

Washington, May 1, 1971

SUBJECT:

• U.S. Vote in the Inter-American Development Bank on a Loan to Peru

A loan by the Inter-American Development Bank (IDB) to Peru is scheduled for a vote on Tuesday. As instructed by NSDM 21 we delayed this loan on technical grounds as long as possible. When we had exhausted all technical reasons for delay, we agreed that the U.S. would cast an affirmative vote when the loan came to the Board for decision.

The Secretary of Treasury has indicated to the U.S. Executive Director at the IDB that he wishes him to make a strong statement on Peru’s economic policy and its treatment of U.S. private investment. We believe that such a statement could only cause a sharp nationalistic reaction and create serious problems with Peru. It is also likely to affect the U.S. position in other Latin American countries, particularly Chile. Finally, and very important, it would affect your invitation to the President of Peru.

Your policy towards Peru has been designed to avoid a confrontation over the IPC issue (the Jersey affiliate which was expropriated) which would rally nationalist sentiment throughout the Hemisphere against the U.S. This approach has been successful. Although there has been no resolution of our bilateral problems with Peru, the possibilities for solution are still open and the climate has improved considerably. The continuation of this approach is essential, particularly in view of developments in Chile.

I would like to call Secretary Connally and ask him to limit his instructions to our Executive Director to a simple affirmative vote on the pending Peruvian loan. Since my man in the field has been told that Treasury staff is under the impression that Mr. Connally has already discussed this with you, I did not want to take any further step without guidance from you. I would like your confirmation that you agree that we should avoid raising the issue of Peru’s economic and foreign investment policy in the IDB at his time and that we should avoid any unnecessary frictions prior to the visit of the Peruvian in President. (Also, we need to define within our Council a broader policy of how best to protect U.S. investments.)

Dr. Kissinger, and the Acting Secretary of State, feel strongly that any negative or threatening statement will have adverse foreign policy implications and they concur in the recommendation.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 793, Country Files, Latin America, Peru, Vol. 2, July 1970–13 December 1971. Secret. Sent for action. Haig wrote “done” in the margin next to Nixon’s approval. Nachmanoff sent the memorandum to Haig on May 3. NSDM 21 is published as Document 607.
2. Peterson requested President Nixon’s agreement that the United States should avoid raising the issue of Peru’s economic policy in the Inter-American Development Bank. Peterson said Kissinger and Irwin concurred with his views.