636. Memorandum From Director of Central Intelligence Helms to the President’s Assistant for National Security Affairs (Kissinger)1 2
SUBJECT:
- Comments of Peruvian President Juan Velasco Alvarado Regarding His Discussions with John B. Connally, Special Emissary of President Nixon
1. [text not declassified]
2. During an informal discussion it personal friends on 2 July 1972, Peruvian President Juan Velasco Alvarado said that the Government of Peru was carrying forward the economic development of the country by merging the good ideas of former planners and adding to them the new concepts of the military government. This development planning, he went on to say, was progressing despite the “negative intransigence” of the United States Government which had not been content with cutting off credits to Peru, but had gone further by influencing banks and international institutions of credit to delay negotiations for loans and to give little consideration to Peruvian requests. Although Peru had foreseen that the United States would not provide credits for Peru’s development plans, Velasco said the visit of John B. Connally, President Nixon’s emissary, had clarified the picture.
3. Velasco said that the message passed through Connally from President Nixon was essentially an attempt to find agreement between the Government of Peru and the International Petroleum Company (IPC). Connally proposed that Peru acknowledge the right of the IPC to indemnification by a symbolic [Page 2] payment of one dollar for the expropriated property of IPC at Talara. The Standard Oil Company, the parent company of IPC, Connally reportedly said, needs this demonstration to show those countries where it has large investments that standard Oil cannot be stripped of its property with impunity. Velasco cited Connally as stating that the net worth of the IPC investments which were expropriated was “only a crumb” when compared with the investments that are at stake in other parts of the world. This was the point that President Nixon wanted understood by Velasco. In exchange for an agreement between the Government of Peru and IPC, the United States would, Connally reportedly said, open credit to Peru from all sources.
4. Velasco indicated that the discussion with Connally became heated, with both pounding the table; but he said that he did not allow himself to be intimidated. Velasco added to his friends that he was now completely convinced that the United States will continue to block credits for Peru. But he said that, fortunately, there are purchases and credits available from the Socialist countries. In reflecting upon relations between the United States and the Soviet Union, Velasco forcefully stated that the conversation with Connally proved that the United States and the Soviet Union have reached an understanding and have divided the world between them. [text not declassified]
- Source: Central Intelligence Agency, Executive Registry Subject Files, Job 80–B01086A, Box 14, Folder 448, P8 Peru. Secret. The DDP concurred. Printed from a copy that bears Helms’s stamped signature.↩
- Helms reported a discussion in which Secretary of the Treasury Connally told President Velasco that Peru must offer a symbolic payment of $1 as compensation for IPC to reinforce that uncompensated expropriation was unacceptable. In exchange for an agreement between the Peruvian Government and IPC, the United States, according to Connally, would open credit to Peru from all sources.↩