292. Telegram 223776 from the Department of State to the Embassy in Peru1

223776. Subj: US Vote on IBRD Loan for Peru. For Ambassador.

1. Deputy Assistant Secretary Shlaudeman called in Peruvian Chargé Roca afternoon November 12 to convey USG position on dols 24 million IBRD Education Loan for Peru which scheduled for vote November 13.

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2. Mr. Shlaudeman said we wanted to inform the Peruvian government in advance of our vote on the loan in order to avoid any misunderstanding. He said we were going to abstain for reasons which the Peruvian Government would understand from its conversations with Mr. Greene. Shlaudeman then emphasized our view that it would be highly desirable if no further loans for Peru were to come up in the IFI’s and especially in the IDB until the Greene mission is successfully completed. He explained that we wish to avoid any possible confrontation with Peru and to maintain a propitious climate for the Greene negotiations. It is our hope that the Peruvians will avoid any actions that could adversely affect that climate. Shlaudeman said the USG believes prospects for a settlement in the near future are good and that, when we have such a settlement, the problem with the IDB and IBRD will disappear. Finally, he asked Roca to transmit the foregoing to his government.

3. Roca said he would gladly transmit the information to his government, noting that his task would be eased by the fact that his government already knew from Mr. Greene the reasons for the US abstention. With respect to the IDB he said he understood the situation. He noted that he had reported often to his government on the atmosphere in Congress and had explained at length such legislative restrictions as the Gonzalez amendment. He said that he always tried to report objectively to his government and would also do so in this instance, particularly in the interest of preserving the climate for a successful conclusion of the Greene mission. He said he would emphasize our view on the desirability of not moving forward in the IDB but would also mention the IBRD—observing however that in the latter institution the US does not have a veto.

4. US Executive Director at IBRD, Charles Sethness, also gave advance word to IBRD Management and Peruvian alternate Executive Director. Sethness will make the following statement when Peru loan comes to a vote: Quote. Our abstention today on the loan to Peru now before the board, which we request to have entered in the minutes, reflects the facts that both progress has been made in the negotiations presently underway but a settlement has not in fact been reached on numerous investment disputes. We continue to be seriously concerned about the settlement of these issues and hope that a settlement can be reached at an early time so that we may be able to support future lending to Peru.

Rush
  1. Summary: Shlaudeman informed Peruvian Chargé Roca that the U.S. Government would support IFI loans to Peru once the dispute over the expropriated properties of U.S. companies was resolved.

    Source: National Archives, Nixon Presidential Materials, NSC Files, Country Files, Box 793, Latin America, Peru, Vol. 3, January 1972–December 31, 1973. Confidential; Immediate; Nodis. Drafted by Frechette; cleared by Shlaudeman, Weintraub, Sternfeld, Weber, and Hennesy; approved by Kubisch.