Foreign Relations of the United States, 1969–1976, Volume E–11, Part 2, Documents on South America, 1973–1976

220. Memorandum of Conversation¹

Washington, May 11, 1976.

SUBJECT

• Ambassador Popper’s Meeting with the Deputy Secretary—May 11, 1976—CHILE

PARTICIPANTS

• The Deputy Secretary
• Ambassador David H. Popper

Popper: Congratulations on your new position. The pace of the Department’s work never slows down. Domestic politics are interfering with foreign policy-making. A veto of the Angola UN membership application as hinted in press today, would be harmful. The delivery of aircraft purchased by Chile is also affected by domestic political considerations.

Robinson: The President said the other day we must go forward on creating a long term foreign policy and not allow ourselves to be shunted off by election year problems. How are things going in Chile?

Popper: I see Simon has made some small but significant progress, especially on prisoners. But after all the statements are made, Chile must change its internal security system and not its words to improve its image. The Church reports that arrests have gone down from 150 a month, to 30. My feeling is that the GOC is more self confident and has eased up. Part of it certainly is improved copper prices. The Treasury sees 80 cent copper by the end of the year.

Robinson: During the recession, I foresaw prices rising rapidly once the price started going up. The African mines and development of new sources are very shaky. When people understand that, the price is bound to go up. When I first went to Zambia, I said that copper would rise to .85 cents a pound. They were amazed. When I went back two weeks ago, everything was in pretty bad shape. But now the price is .725 a pound and they allow I might be right. There might be a temporary drop in the price, but ultimately, it will be $2.00 a pound.

Popper: Chile prepared its budget on the basis of 60 cents a pound. They are going to be way ahead. They are going to finish the year with less foreign indebtedness than they started with. What reception have you had for your International Resources Bank proposal?

Robinson: Many people are not especially interested in the proposal. The New York Times article by Silk was the most balanced appraisal of the proposal. The Wall Street Journal was very critical.

Popper: We need some sort of mechanism to protect investors’ rights so that they will take risks. The word “bank” is a misnomer.

Robinson: Basically, it is a guarantee fund through which the private sector can acquire a performance guarantee through the Bank.

Popper: What progress has been made on our initiatives at the 7th Special Session of the UNGA?

Robinson: Basically, the third world is suspicious, but we see signs for constructive dialogue on all elements of our complicated proposals. The complexity is essential. We presented the proposals in broad brush form so everybody can contribute to their ultimate formulation. We got as much done as we could in Kenya. Many delegates there said we saved the conference, which was headed for disaster.

Popper: After a year the world economy looks better; accordingly, the pressures are eased. When the economy is at its worst, the pressure on LDC’s makes progress very difficult. I hope the Department keeps pushing on the producer/consumer conference.

Robinson: Copper bonds would be a precedent-making measure of improving the copper market. They would be geared to each producing country’s circumstances. The bonds would finance intergovernmental production. The sale of the copper would be made at close to the gross average sales price over a period. Copper would not depress the market, but would be held until the price rose. You could use market prices, the current or the deferred price, whichever is best, or you could use average prices. The arrangement would give the consumer a long term price. The USG could buy bonds. They would replace aid. We might look for ways to accept commodities in lieu of repayment on the bonds. The bonds would be redeemed by periodic payments. Their advantage is they are a flexible instrument. If someone were to come out with such a proposal, we would like to look at it. But the initiative ought to come from the producing countries. We would be suspect if we proposed it.

Popper: But the human rights position in Chile is bad. There are political objections for our doing anything with or for the Chileans. Human rights considerations affect everything.

Robinson: That would make more sense in Peru, where they really have human rights violations.

Popper: That is probably so. The question of arms sales to Chile is a perplexing one. Essentially, they have paid for F–5 and A–37 aircraft, but it is very difficult to get the Executive Branch to decide to allow their delivery. We will be in breach of contract if we do not deliver. It places a question on our reliability as a supplier. According to law, Chile can buy, but the Executive Branch is reluctant to move anything. I mention this for your information. Congress is cutting back on economic aid. I can understand that. Chile should not get a disproportionate share of our aid, but there is a danger of increasing the junta’s paranoia if we cut too quickly and sharply. They feel they are the victims of a double standard. Current Congressional efforts to cut off aid are counter-productive and are not favored by the democratic opponents of the regime. If aid is to be phased down, it should be done gradually. The new bill has a limit of 25 million, which is drastic indeed. The parole program under which we are bringing people to the U.S. is progressing satisfactorily. The delays are not our fault. We are constrained to limit our program to those the GOC will let go. We are trying to compensate for those we had expected to take from Peru, by adding that shortfall to the target for Chile. I understand Congressional consultations are involved: this is a tactic that can be used today to obstruct almost any desired action. This little program for Chile is an expensive program per capita. But I am sure it is responsive to our traditional humanitarian concerns.

Robinson: The expense was on the order of $1,000 per head in the Viet-Nam program.

Popper: I don’t know the cost breakdown. It takes a lot of our Consulate’s time. The Inter-Governmental Committee of European Migration manages the program, and they work with the Voluntary agencies. The cost of the Vietnamese program could not be much lower than ours.

Robinson: Do you favor giving the unused portion of the program for Peru to Chile?

Popper: Yes. When I return to post, I will submit a proposal. We are caught between the liberals and the conservatives in this.

Robinson: When do you go back?

Popper: I am planning to see the Secretary before I go, in a week or so. Can you give me any advice on whether he is going to the OAS?

Robinson: I think he is going to go. At first he said that he did not want to and suggested that I go in his place. But I pointed out to him that the Marcona problem is still unsettled. I cannot break my policy of not appearing on the west coast of Latin America until it is.

I am generally doubtful about any sort of working relationship with the OAS. What comes out of there is usually the lowest common denominator. It is difficult in the domestic political context to come up with anything concrete. The Panama Canal is an issue in the election. The Secretary should go, but it may be difficult because we cannot offer anything beyond UNCTAD IV. This will not be enough for the Latins. But we can lose more by not going than by going. I suppose he will have to see Pinochet while he is there.

Popper: I don’t see how he can avoid a presidential invitation.

1. Summary: Popper and Robinson discussed the Chilean economy, human rights, U.S. military sales to Chile, and Kissinger’s trip to the OAS General Assembly.

   Source: National Archives, RG 59, Central Foreign Policy File, P760080–1912. Confidential. Drafted by Driscoll; approved by Loving on May 21. In a May 11 briefing memorandum to Robinson in anticipation of a meeting with Popper, Rogers informed the Deputy Secretary that Popper was interested in discussing foreign investment and the Chilean economy, the human rights situation, a prospective Bolivian outlet to the Pacific Ocean, and Chile’s conduct in international forums. (Ibid., P760069–1419) On September 23, the Embassy in Peru reported on the U.S. and Peruvian Governments’ settlement of the Marcona expropriation case. See Document 323.