305. Telegram From Secretary of State Vance’s Delegation to the Department of State1

Secto 10026. Subject: Secretary’s Bilateral With Peruvian Foreign Minister

Summary: In Secretary-Foreign Minister bilateral, de la Puente touched on serious financial crisis, the recent agreement with IMF, and GOP intention to ask donor nations to suspend for two years the requirement of GOP counterpart financing in on-going and new development projects. Foreign Minister revealed he had met in New York with Chilean and Bolivian colleagues on question of access to sea for [Page 867] Bolivia. Dialogue will be continued through high-level special representatives which the three will be appointing (Marchand, Filippe and Murido). De la Puente also had had good talk with Ecuador Foreign Minister (apparently on access to Amazon). Secretary asked what concrete steps might next be taken in North-South dialogue, also on energy question. Foreign Minister criticized CIEC framework for discussion, claimed it had been a mistake to have left U.N. for CIEC, and strongly recommended working henceforth within UNCTAD context. Secretary asked for Peruvian support for widening adherence to Treaty of Tlatelolco, specifically citing non-signatories Argentina and Cuba. De la Puente referred to close relations to Argentina, urged approach by U.S. to it through friendly third countries, and agreed to speak to Buenos Aires on matter. End Summary

1. Following is the report of a 30–minute meeting in New York, September 29, between the Secretary and Peruvian Foreign Minister de la Puente. Ambassadors Garcia Bedoya (to U.S.), Alzamora (to U.N.) and Marchand (to OAS) sat in; also Deputy Assistant Stedman and Peru Desk Officer Fuller.

2. Secretary expressed thanks to the Peruvians for attendance at Panama Canal Treaty Signing and various meetings in Washington.2 He reported that the President had found conversation with Morales Bermudez useful; it made a difference for leaders to have face-to-face contact.

3. De la Puente stated Finance Minister Saenz had had interesting talks subsequently in Washington3 and a “satisfactory” agreement had been reached with the IMF. He acknowledged, however, that problems remained and “sterner measures”, which might have social and political repercussions, would have to be taken in the Austerity regime in Peru. Nevertheless, Peru is honoring all debt. In doing so, de la Puenta continued, little was left over for development expenditures. The Foreign Minister disclosed that once back in Lima he planned to invite in Ambassadors from all developed countries to discuss the current development crisis. GOP hoped to obtain understanding from aid donors that in 1978 and 1979 GOP would not, repeat not, be asked to contribute counterpart funding to outside-financed development projects.

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4. Secretary stated that agreement with IMF should help Peru in getting additional private resources. De la Puente added he hoped it would also be helpful in getting central-bank-to-central-bank assistance. He then reverted to discussion of proposed waiver of counter part financing requirements, reporting that Canada might agree to such in respect to a $300 million (?) aid program planned for Peru.

5. Peru development problems were critical, de la Puente said. Population growth was 3½ percent a year, while the growth rate in GDP was only 1 percent. Five hundred thousand new workers entered the labor market each year, in a situation where unemployment was as high as 20 percent and under-employment even higher.

6. The Secretary assured the Foreign Minister that the U.S. will try to do what it can to help and cited “commodity credits” (CCC) and food aid under P.L. 480.4

7. In response to a question about further talks with Chile and Bolivia on the question of a sea corridor for latter, de la Puente announced he had just had a serious meeting with his Chilean and Bolivian counterparts. The Bolivian Foreign Minister had delivered a UN speech suggesting that the solution was up to Peru. This was unfair, de la Puente said, since first Bolivia and Chile must agree on a solution. Pinochet was still insisting on territorial concessions from Bolivia in exchange for a sea corridor; a majority of Bolivian public opinion is opposed to such a concession. De la Puente reported that three Foreign Ministers were issuing a press release affirming that the three states would continue the dialogue and were appointing special representatives to do so. De la Puente was appointing Marchand (who, when in Foreign Ministry last year, handled a similar assignment); Chile was appointing Dr. Filippe and Bolivia, Ambassador Murido.

8. Secretary asked whether Peru had had any discussions with its neighbors on GOP’s “completion of its arms purchases.” De la Puente said vaguely that relations were “seen to be satisfactory” and an exchange last week was “excellent.”

9. He then revealed that he had had a 2½ hour talk with the Foreign Minister of Ecuador which he characterized as “very constructive” and “very easy.” De la Puente added that between talks in Washington and talks now in New York, matters were moving forward. (The discussion with the Ecuadorian was apparently not on arms purchases but on access to the Amazon for Ecuador.)

10. Secretary asked de la Puente’s opinion as to what concrete steps might next be taken to further the North-South dialogue. Taking that as a reference to the CIEC conference, de la Puente advised he had [Page 869] been talking with colleagues in G–77 and they had concluded that the structure of foreign trade would have to be changed and an integrated program for basic commodities advanced. He argued against any replication of a “sui generis” conference like CIEC, characterizing it as something of a “political scheme” devised by the French, which the U.S. and other industrial countries entered not knowing too much what their aims were, and which the 19 LDCs entered without knowing whether any agreements achieved would be acceptable to all the other members of the G–77. Secretary said he had been urging his colleagues to get down to the formulation of concrete actions in further discussion. De la Puente repeatedly recommended that that discussion never again leave the U.N. framework.

11. The Secretary raised the question of future discussions on the energy problem, asking where they might be productively held. De la Puente recommended that the forum should be UNCTAD, where Peru and others had had “good experience.” Again he commented that CIEC had resulted in a loss of faith on the part of the LDCS. It did not constitute “a dialogue—rather simply two excellent monologues.” It had been a great mistake, leaving the UNCTAD framework, CIEC in effect had delayed the resolution of problems by two years.

12. Secretary switched the subject to development of wider adherence to the Treaty of Tlatelolco and reported that the U.S. had talked to Argentina and had asked others to talk to Cuba about signing the agreement.5 De la Puente thought Argentina would ultimately go along. He suggested that the U.S. work through other friendly countries in moving Argentina to sign the agreement and said Peru would speak to Argentina and report the reaction. He noted that Peru-Argentina relations were close and Lima was in good position to discuss the matter with Buenos Aires.

13. In closing, the Secretary stated that U.S. officials had been impressed with Videla. De la Puente had similarly kind words for the Argentine President.

  1. Source: National Archives, RG 59, Central Foreign Policy File, D770358-1212. Confidential; Immediate; Exdis. Vance was in New York for the UN General Assembly.
  2. See Document 304. In telegram 220508 to Lima, September 14, the Department reported on Morales Bermudez’s September 8 meeting with Blumenthal. (National Archives, RG 59, Central Foreign Policy File, D770333-1190)
  3. In telegram 252027 to Lima, October 20, the Department reported on the September 29 working-level meeting, which was a follow-up to the September 26 meeting between Saenz and Solomon. (National Archives, RG 59, Central Foreign Policy File, D770387-0088)
  4. See footnote 6, Document 304.
  5. See Foreign Relations, 1977–1980, vol. XXVI, Arms Control and Nonproliferation, Document 419.