284. Transcript of Telephone Conversation1
S: Your comments on the Watergate and so on were marvelous.
K: Aren’t you nice.
S: It’s a great talk that we need more of, so good work.
K: Well, I appreciate your saying that.
[Omitted here is discussion not related to Peruvian affairs.]
S: I had a different problem I wanted to check with you on. Are you familiar with the question of a vote of a loan to Peru.
K: No.
S: That is coming up.
K: Yeah I was with it once, now I’ve forgotten it again.
S: Well you know, we have our expropriation policy. There are various laws and what not that surround it, but the operative thing is the President’s policy that we don’t approve loans through international financial institutions where a country has expropriated without making compensations for where negotiations are not probably under way. We have this long standing dispute with Peru over their international petroleum corporations—
K: That I know.
S: And more recently they have sold the property that was expropriated and since there were presumably negotiations about that, that seems like a pretty hard line action on their part. Now we had put together a mission that is a secret mission undertaken by a man named Greene to see if we couldn’t sort of wrap all of the different parts of our Peru problem in one piece and negotiate it out and be done with it. He seemed to be making some progress and then the last go the President got sick and sort of postponed it and whether it is on the [Page 761] track or not is hard to say. There’s apparently lots of maneuvering in Peru about who would succeed if [it] does and he had the typical various elements of radicals, moderates, and so on. Now we have a loan coming up in the Inter-American Development Bank tomorrow. It’s possible to postpone the decision for a few days in which there is a difference of view about how we should vote. With the State Dept and the Defense Dept taking the position that we could vote yes for the loan on the grounds that there is this Greene mission and that there is at least some expectation he’ll be invited back. And that is a show of good faith and we have to be careful that we don’t undermine our foreign policy and defense policy with Peru. The NSC had a meeting this morning as well as Flanigan, has the view that we should abstain. Our vote is not going to control this issue, they are going to get the loan anyway, but we should abstain and talk about how we don’t like the expropriation. But at any rate this would be a last hard approach and we could see then whether or not they continue on in good faith. The Treasury Dept’s view has been that we have our hard line policy on expropriation that clearly they are in violation of it and we should stick to our hard lines. The State Dept and Defense Dept arguing that well if you do that you only encourage the radicals and they will explode over that. And we arguing maybe it would work just the other way around. You have to be willing to stand up to these things in order to make an impact. I call you because under the rules of how this is administered, one of the Departments such as State or Defense have a right to insist that the matter goes to the President, and it can’t be decided by the Secretary of the Treasury under those circumstances. I have the authority to instruct our vote. They would go along with an abstension approach such as the NSC, I think a Mr. Jordan was I’m told there, I don’t know him, but he was your representative.
K: Yeah.
S: Really it involves from a straight economic commercial standpoint it seems to me clear that we could vote no. The arguments that may have to do with things assessing our foreign policy objectives, our defense policy objectives and whatever anybody knows about the internal politics of Peru, and how—
K: When do you have to know. Let me think about it.
S: Well I ought to know, we have to do something about it today and I’m looking to you as the proxy president more or less. I don’t really see how we can get to the President so he can decide it.
K: Well, we can certainly not vote for it. I mean that’s out of the question. The only choice is between abstaining and voting against it.
S: That’s my view.
K: What’s your view on that.
[Page 762]S: Well my view is that we can vote against. We can undoubtedly get them to postpone the vote for three or four days which puts it right into the context of the IDB meeting that I’ll be going to.
K: Let me see if I can get you an answer before the end of the day. I’m not going to take it to the President, but let me think about it.
S: All right, that would be good.
K: I don’t tend to lean towards voting against. I tend to lean for a hard line. I think when you are in as much trouble as we are you might as well be tough.
S: Yeah, that’s my instinct. But I don’t know that much about the other aspects of Peru. Which is why I’m calling you. Now if we are going to go for a postponement we have to get going on that this afternoon, so the sooner you can—
K: I’ll call you before 3:00 I hope.
S: Thank you.
K: Bye.
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Summary: Kissinger and Shultz discussed how the United States should vote on an Inter-American Development Bank loan to Peru.
Source: National Archives, Nixon Presidential Materials, Kissinger Telephone Conversation Transcripts (Telcons), Box 19, Chronological File, April 24–25, 1973. No classification marking. In a telephone conversation that took place at 4:30 p.m. on April 24, Shultz informed Kissinger that the President of the IDB, Antonio Ortíz Mena, had told him that “abstention would be be appropriate,” in his view, “because the Peruvians would regard this as a gesture of good faith on our part”; Kissinger and Shultz agreed that the United States should abstain. (Ibid.) In telegram 77610 to Lima, April 25, the Department instructed the Embassy to inform the Peruvian Government that the abstention was intended to express deep concern over U.S.-Peruvian investment disputes while also showing “good faith as a step towards successful conclusion of the Greene mission.” (National Archives, Nixon Presidential Materials, NSC Files, Country Files, Box 793, Latin America, Peru, Vol. 3, January 1972–December 31, 1973)
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