371. Telegram 263802 From the Department of State to the Embassy in Guyana1
263802. Subject: Future Status of AID Operations. Refer: Georgetown 2085. Joint State/AID Message.
1. We fully share desire for amicable settlement Reynolds nationalization case in manner that would avoid deterioration of overall [Page 963] U.S.-Guyana relations and provide prompt, adequate, and effective compensation for Reynolds. However, we would not consider it appropriate to imply to GOG that we would be forthcoming on economic assistance as sweetener in order to secure favorable Reynolds settlement. Such action could be viewed as tantamount to utilizing AID monies to subsidize or offset payments resulting from GOG act to nationalize U.S. company.
2. As Embassy knows, contrary to Burnham’s accusations, USG has not imposed any economic sanctions despite GOG actions to date. We are continuing with implementation of AID projects for which there are executed agreements and at present AID is prepared to consider adjustments to New Amsterdam and Georgetown road projects within scope of existing loan authorizations and as compatible with good management of the pipeline.
3. Given GOG’s unilateral imposition of bauxite tax levy and GOG’s intention to nationalize Reynolds before year’s end, Department believes that we should defer for the present any further actions regarding FY 1975 AID program activities that involve or imply commitments for new projects. (Utilization of already alloted dols. 25,000 [garble] will be at [garble] discretion.)
4. Would appreciate your views ASAP.
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Summary: The Department informed Krebs that increased economic assistance could not be used as a sweetener in negotiations with the Guyanese Government over compensation for Reynolds assets that were to be nationalized.
Source: National Archives, RG 59, Central Foreign Policy File, D740347–0566. Confidential; Priority; Exdis. Drafted by Wheeler; cleared by Shlaudeman, Burke, Kleine, Smith, and Eltz; and approved by Rogers. All brackets are in the original except those indicating garbled text. In telegram 2085 from Georgetown, November 25, Krebs requested guidance on whether an increase in U.S. assistance could be used to facilitate an agreement in the Reynolds negotiations. (Ibid., D740345–0250, D740341–0601) In telegram 2124 from Georgetown, December 3, the Embassy informed the Department that it agreed with the position laid out in telegram 263802, adding that it had not intended to suggest that “economic assistance be offered as sweetener or offset to compensation agreement” but rather it had thought that previously approved AID projects could be mentioned as evidence of U.S. good faith should talks between Reynolds and the Guyanese Government reach a point at which such an act could help to close the gap between the two parties. (Ibid., D740350–0633) In telegram 2257 from Georgetown, December 31, the Embassy reported that Reynolds and the Guyanese Government had reached an agreement on compensation for the company’s assets. (Ibid., D750001–0532)
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